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@Crash - Looks like they can pretty much do anything they want with your money as long as it's somehow related to debt (including derivatives related to debt). Very wide latitude. Domestics or foreign (up to 25%). No limits on junk bond exposure. May also invest up to 20% in equities.
I haven't a clue what they're trying to do here. Garner more AUM, I'd guess, in order to stay competitive in a world of giants.
Here's their stated rationale, I'd guess. "The fund’s investment approach provides the flexibility to invest across a wide variety of global credit instruments without constraints to particular benchmarks, asset classes, or sectors in an effort to create a portfolio with consistent risk-adjusted returns over a full market cycle. The fund generally places a greater emphasis on its overall exposure to credit risk while also considering its overall exposure to interest."
This looks like an unconstrained bond fund on steroids, if that is possible.
It can short any bond - I'm not finding that much flexibility when spot checking the prospectuses of other unconstrained bonds funds - they seem to not explicitly mention shorting or if they do they limit shorting to certain types of bonds.
It explicitly uses swaps not only for defensive purposes but for "offensive" purposes (i.e. to enhance returns) as well.
Similar to Spectrum Income (RPSIX), it can invest up to 20% in equities, but here, that can include shorting those equities.
Don't expect to see this fund any time soon: "(d) It is anticipated that the fund will incept on or around January 10, 2019".
When this finally does show up, welcome to the wild west. Maybe this fund isn't less "tame" than other unconstrained bond funds; it's not a category I've paid that much attention to. Personally, I like wide ranging funds, but this is a bit too wide for my taste.
Principal Investment Strategies The fund normally invests at least 80% of its net assets (including any borrowings for investment purposes) in credit instruments and derivative instruments that are linked to, or provide investment exposure to, credit instruments. The fund defines credit instruments broadly to include any debt instrument, including corporate and sovereign bonds, bank loans, municipal securities, and securitized instruments (including mortgage- and asset-backed securities). The fund may invest in debt instruments of any maturity, duration, or credit rating, and there are no limits on the fund’s investments in high-yield (“junk”) bonds and securities in default. There is no limit on the fund’s investments in securities issued by foreign issuers, including issuers in emerging markets, although the fund’s overall net exposure to non-U.S. currencies through direct holdings and derivatives is normally limited to 25% of its net assets. The fund may invest up to 20% of its net assets in equity securities, including common and preferred stocks, convertible securities, warrants, and other equity securities in addition to derivatives that provide exposure to equity securities.
... It is expected that the fund will normally invest a larger percentage of its assets in the securities of a smaller number of issuers. As a result, the fund is “nondiversified,” ...
The fund has the ability to take both long and short positions on individual bonds ...
the fund also uses credit default swaps (on both indexes and specific bonds or issuers), total return swaps (on both indexes and specific bonds or issuers), interest rate futures, interest rate swaps, forward currency exchange contracts, and options on such instruments. The fund buys or sells credit default and total return swaps in order to generate returns, ... or protect the value of certain portfolio holdings
Under risks are more strategies not explicitly mentioned in the strategy section:
The fund’s attempts at hedging and taking long and short positions in currencies ...
The fund sells securities short [as noted in the strategies section about selling bonds short] and enters into short positions through its use of derivatives. ...
We should be thanking you for peeking our interest @Crash. (msf picked up on the short sales which I missed.) Yikes! I've got maybe 6-8 funds with those guys. I 've held all of them for 10 years or longer - with the exception of TMSRX which just opened. Sure makes me wonder why they need to offer so many different funds - and whether they're spreading themselves too thin.
The bulk of my stuff is with TRP, too. TMSRX is "multi-alternative." You are brave. I see it's both stocks and bonds, but not labelled as a "balanced" fund. Jeez. How fancy do ya have to get?
The bulk of my stuff is with TRP, too. TMSRX is "multi-alternative." You are brave. I see it's both stocks and bonds, but not labelled as a "balanced" fund. Jeez. How fancy do ya have to get?
Actually only about half of my "stuff" is at TRP. I like to spread my vast wealth around. All of my Traditional IRA and some of my Roth holdings are at Price. It sure simplifies RMD distributions / taxes having the Traditional under one roof. FWIW - I have Roths at Dodge and Cox, Permanant Portfolio Funds, Oakmark and Oppenheimer.
Yeah - TMSRX is a long shot. It should prosper if both stocks and bonds fall into the sewer. Until such scenario unfolds, one will be fortunate to break-even with that one. All depends where you are in life and what you're attempting to do. I liken my situation to an aircraft holding pattern. I'm a lot more concerned about not crashing than I am at setting any speed records.
Comments
I haven't a clue what they're trying to do here. Garner more AUM, I'd guess, in order to stay competitive in a world of giants.
Here's their stated rationale, I'd guess. "The fund’s investment approach provides the flexibility to invest across a wide variety of global credit instruments without constraints to particular benchmarks, asset classes, or sectors in an effort to create a portfolio with consistent risk-adjusted returns over a full market cycle. The fund generally places a greater emphasis on its overall exposure to credit risk while also considering its overall exposure to interest."
It can short any bond - I'm not finding that much flexibility when spot checking the prospectuses of other unconstrained bonds funds - they seem to not explicitly mention shorting or if they do they limit shorting to certain types of bonds.
It explicitly uses swaps not only for defensive purposes but for "offensive" purposes (i.e. to enhance returns) as well.
Similar to Spectrum Income (RPSIX), it can invest up to 20% in equities, but here, that can include shorting those equities.
Don't expect to see this fund any time soon: "(d) It is anticipated that the fund will incept on or around January 10, 2019".
When this finally does show up, welcome to the wild west. Maybe this fund isn't less "tame" than other unconstrained bond funds; it's not a category I've paid that much attention to. Personally, I like wide ranging funds, but this is a bit too wide for my taste.
Principal Investment Strategies The fund normally invests at least 80% of its net assets (including any borrowings for investment purposes) in credit instruments and derivative instruments that are linked to, or provide investment exposure to, credit instruments. The fund defines credit instruments broadly to include any debt instrument, including corporate and sovereign bonds, bank loans, municipal securities, and securitized instruments (including mortgage- and asset-backed securities). The fund may invest in debt instruments of any maturity, duration, or credit rating, and there are no limits on the fund’s investments in high-yield (“junk”) bonds and securities in default. There is no limit on the fund’s investments in securities issued by foreign issuers, including issuers in emerging markets, although the fund’s overall net exposure to non-U.S. currencies through direct holdings and derivatives is normally limited to 25% of its net assets. The fund may invest up to 20% of its net assets in equity securities, including common and preferred stocks, convertible securities, warrants, and other equity securities in addition to derivatives that provide exposure to equity securities.
Yeah - TMSRX is a long shot. It should prosper if both stocks and bonds fall into the sewer. Until such scenario unfolds, one will be fortunate to break-even with that one. All depends where you are in life and what you're attempting to do. I liken my situation to an aircraft holding pattern. I'm a lot more concerned about not crashing than I am at setting any speed records.
Regards