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Holbrook Income Fund - a rising star?

JunksterJunkster
edited June 2018 in Fund Discussions
It is hard to miss the Holbrook Income Fund - HOBEX/HOBIX - #1 in the short term bond fund category at Morningstar YTD and one year. Since apparently this fund will be featured in July’s monthly commentary here on MFO, I don’t want to steal anyone’s thunder and just mention it briefly. Holbrook is a new fund (July 2016) with only 14 million under management. The reason for the low AUM is that it is only available in 25 states and on two platforms - TD Ameritrade and Schwab - at least for now as Holbrook is actively looking to expand its reach. I have always been enamored of small newer funds and especially ones with a niche. Holbrook’s niche are the bonds of BDC’s ( Business Development Companies). These higher yielding bonds go by the moniker of “Baby Bonds” and are rated investment grade. None of these BDC bonds have ever previously defaulted on their obligations.

Yes, I know, a relatively high expense ratio (common for a new fund with low AUM, but I heard the same thing last year about IOFIX. Presently I am around 90% in non agencies via IOFIX (42%). DPFNX (29%) and SEMPX (19%). These funds have bucked the overall downtrend in bonds YTD. But so has the Holbrook Income fund. It first caught my attention by its tight rising channel price action. I was able to purchase HOBIX through TD Ameritrade after contacting Holbrook. I spoke with the head of marketing Mike Burns and was also able to speak with the fund manager Scott Carmack. I was extremely impressed with both. This fund is not ordinarily my cup of tea as they aim for 4% to 5% annually with minimal drawdown along the way. But In this current bond environment though 4% to 5% sounds pretty good. So we shall see how it goes but with of course an exit point in place.

Again, there will be a more detailed description of this fund in them July MFO monthly commentary.

Comments

  • Derf
    Junkster: I'm guessing you hold HOBIX ?
    Derf
  • JunksterJunkster
    edited June 2018
    Derf said:

    Junkster: I'm guessing you hold HOBIX ?
    Derf

    Correct. I corrected that in my post thanks. Very small position for now. Slim pickings in the current bond environment besides the non agencies. Money market funds at Fidelity now over 2% and rising with CDs even higher would more than fund my retirement. I wonder sometimes why I just don’t camp out there until the next junk corporate or muni junk bond debacle. My best years seem to come after such debacles.

  • carew388carew388
    Recently bought HOBEX at Schwab- thanks to @Junkster for the info. VMMXX SEC yield now at 2.00%
  • VintageFreakVintageFreak
    edited June 2018
    HOBEX yield is 3%. RPHYX is 2.3%. RSIVX is 5%. And VMMXX is a "risk free" 2.0%.
    I am all bonded out. So not buying HOBEX or ZEOIX for that matter. If interest rates keep rising VMMXX will keep up with it. Just does not make sense to me to go further out to make an extra % and risk a break. Wish such funds were available 3 years back.
  • expatsp
    I wonder why the difference in er between the two classes is 50bp, rather than the more typical 25 or 30 on Schwab.
  • LewisBraham
    Anyone buying CDs?
  • Old_Skeet
    Yes on buying CD's
  • VintageFreakVintageFreak
    Can you buy, and "break" CDs if you want online and instantaneously? Then I would do it. I want liquidity so forgoing the extra interest on even 6 month CDs. Unless I can do what I asked in the first sentence, I should also be investing in CD. 6 CDs each for 6 months, staggered to be rolled over if every month would work nicely.
  • chuck
    Ally https://ally.com/bank/no-penalty-cd/
  • CharlesCharles
    Thanks Junkster! Yes, openice has been working hard on the Holbrook profile. I've stayed heavy in IOFIX, despite your cautions ... which I'm always sensitive too. But sounds like you've stayed in too, even with the aum increase, so that makes me feel better. I also recently picked up ZEOIX after the er reduction ... a proxy to a 3 year cd w/o the hold period restriction. Hope all is well. c
  • TheShadowTheShadow
    edited June 2018
    Here is a filing for HOBEX for its quarterly holdings as of 1/31/18:

    https://www.sec.gov/Archives/edgar/data/1552947/000158064218001813/holbrook_nq.htm

    I am glad to see they have a bond position from CSWC, a BDC, in their portfolio; CWSC is one of my favorite stock holdings as well as CSWI, a spinoff from CSWC.
  • MikeMMikeM
    @VintageFreak, what rate is acceptable for safe liquid assets? Junkster mentioned you can get 2% in a money market at Fidelity. I have my cash in a money market at Schwab paying 1.8%, and it continues to rise with rate increases. With a 6 month CD you can likely be in the +2% range.

    Just go to Bankrate.com and check out whats available both taxed and tax deferred. CDs and MM have certainly gotten closer, if not surpassed, that unpredictable short term bond choice - I think.
  • TheShadowTheShadow
    @VintageFreak,

    Or you can go to DepositAccounts.com by Ken Tumin, the founder and moderator for the website.

    Every week there is a CD summary list of the best CD rates offered. Here are the best CD rates for the week of June 19:

    https://www.depositaccounts.com/blog/cd-rates-survey/

  • Bobby
    thanks for posting this. sent him a little $ as I like his diverse holdings.
  • VintageFreakVintageFreak
    @MikeM Exactly. You made my point. I've said many times on the forums I have large chunk in VMMXX.

    @chuck Thanks! Will check out Ally.
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