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FWIW - VMOT is fully hedged, both US and international. So, it is effectively cash since January 1st. Also, their website is now updated with the historical composition by month over the previous five years.
@00BY My, what are these folks attempting with this etf? Always positive and hopeful plans and thoughts with a better mouse trap one may suppose. Do you think this etf is algo/machine only; or are humans involved with the function of choices. I'll play elsewhere. Thanks for the peek, Catch
Hi Catch, I like the theory behind the fund and I like Wes Grey, but I am not sure if the fund will work well in practice. Interesting though. It is a rules based etf, so it shouldn't have human management (until they change the rules). But the guys are transparent and up front about all their ETFs. Best, BY
@MikeM It has a short position that matches its long position in both us and international. So, when their hedge is triggered, they hedge the beta exposure. I shouldn't say cash, but it is a market neutral fund right now. The exposure is zero, but if their value, momentum, and trend picks outperform their will be some alpha. When their moving average and momentum indicators are positive, it will be a long only fund.
Yes, @gmarceau geeks asking for your money can be dangerous!
In the past I’ve shunned gimmick funds. However these seem not like normal times. So, for some investors I think a “gimmick of choice” in the range of 10% of holdings might not be a bad idea.
My experience is these types of funds get into cash to late and jump back into the market too late. See GMOM for example when it went to all cash early in its history and then missed the roaring market comeback. VERY hard to recover from. OK to play around with but never commit real money to such strategies, IMHO.
@Hank, these are not normal times when HSGFX has a better 1 year return than PRWCX
I tend to agree with @wxman123. These long/short or market neutral funds generally under-perform over time compared to a good balanced fund. So moral of the story is simply, they are not worth holding over a long period of time. And if you are going to trade in and out of them, the manager has to time the market correctly and you have to time when you think holding the fund makes sense - correctly. Tough game.
@Hank, these are not normal times when HSGFX has a better 1 year return than PRWCX I tend to agree with @wxman123. These long/short or market neutral funds generally under-perform over time compared to a good balanced fund. So moral of the story is simply, they are not worth holding over a long period of time. And if you are going to trade in and out of them, the manager has to time the market correctly and you have to time when you think holding the fund makes sense - correctly. Tough game.
@MikeM, Pretty much agree with everything you’ve said here. These are not normal times. Utter chaos in DC. Self-inflicted trade wars. Predictable backups at airport security lines. Terminals closing. Payless paydays for many government workers - now including the FBI and U.S. Coast Guard. Enough to make one forget that the European Union is also in upheaval. Now - let’s toss in the fact that those bonds balanced funds hold are very susceptible to a sharp decline in value should rates spike. With only 2.7% on the 10-year Treasury, bonds themselves constitute a risk asset.
Gimmicks vary greatly in approach. (I’m currently sampling T. Rowe’s 5-manager octupus TMSRX.) As you indicate, most are high fee and doomed to deliver poor long term results. Would never recommend one for someone not yet retired. Where a 10% (+ -) holding might make sense is for an older retired person who wishes to remain invested in traditional risk assets like equities, commodities and bonds - but who also wishes to include in the mix a wild card - something that’s not necessarily correlated to any of those other assets and which has the potential to outperform when all of the others are falling.
No guarantees or pie-in-the-sky expectations for those gimmick funds. But extreme circumstances may elicite extreme solutions. Since you and @Ted enjoy discussing football here, there are some interesting parallels / gimmicks in the sport which might constitute the equavanant of adding one of these funds. The Hail Mary pass is one. The intentional safety another. Then there’s there’s the on-side kick. And on rare occasion a team may throw a long pass down field hoping the opponent intercepts - in effect, an intentionally thrown interception.
@Hank, I agree with all you said. Not normal times.
I am playing a "gimmick" so to speak myself. I made a second momentum play in gold today, IAU. It has been trending up since Dec. 1st. It has paused slightly the past week or two, but there is a lot of political upheaval to come. I don't think we've seen anything yet! Gold may be the safe haven that will give back handily in a crisis. But, what do I know...
Well, the trend (momentum) I'm watching has been 6 weeks (since dec. 1st). I see by definition calling it a trend seems to fit. It's been a gradual increase of 6% over the past 6 weeks. Now, is the momentum sustainable is the real question. I'm really betting on the continuation or escalation of our political chaos I guess.That does seem sustainable
What are trends in data? A pattern of gradual change in a condition, output, or process, or an average or general tendency of a series of data points to move in a certain direction over time, represented by a line or curve on a graph.
Comments
My, what are these folks attempting with this etf? Always positive and hopeful plans and thoughts with a better mouse trap one may suppose.
Do you think this etf is algo/machine only; or are humans involved with the function of choices.
I'll play elsewhere.
Thanks for the peek,
Catch
I like the theory behind the fund and I like Wes Grey, but I am not sure if the fund will work well in practice. Interesting though. It is a rules based etf, so it shouldn't have human management (until they change the rules). But the guys are transparent and up front about all their ETFs.
Best,
BY
It has a short position that matches its long position in both us and international. So, when their hedge is triggered, they hedge the beta exposure. I shouldn't say cash, but it is a market neutral fund right now. The exposure is zero, but if their value, momentum, and trend picks outperform their will be some alpha. When their moving average and momentum indicators are positive, it will be a long only fund.
Yes, @gmarceau geeks asking for your money can be dangerous!
Thanks @00BY for enlightening us about this one.
I tend to agree with @wxman123. These long/short or market neutral funds generally under-perform over time compared to a good balanced fund. So moral of the story is simply, they are not worth holding over a long period of time. And if you are going to trade in and out of them, the manager has to time the market correctly and you have to time when you think holding the fund makes sense - correctly. Tough game.
Return comparison, M* data:
VMOT: 1Y= -19%, YTD= 2%
PRWCX: 1Y= 0% , YTD= 2%
DODBX: 1Y= -6%, YTD= 3%
Maybe this "gimmick" fund is different, but I've sworn off these gambles. I'll take a good balanced fund any day.
Gimmicks vary greatly in approach. (I’m currently sampling T. Rowe’s 5-manager octupus TMSRX.) As you indicate, most are high fee and doomed to deliver poor long term results. Would never recommend one for someone not yet retired. Where a 10% (+ -) holding might make sense is for an older retired person who wishes to remain invested in traditional risk assets like equities, commodities and bonds - but who also wishes to include in the mix a wild card - something that’s not necessarily correlated to any of those other assets and which has the potential to outperform when all of the others are falling.
No guarantees or pie-in-the-sky expectations for those gimmick funds. But extreme circumstances may elicite extreme solutions. Since you and @Ted enjoy discussing football here, there are some interesting parallels / gimmicks in the sport which might constitute the equavanant of adding one of these funds. The Hail Mary pass is one. The intentional safety another. Then there’s there’s the on-side kick. And on rare occasion a team may throw a long pass down field hoping the opponent intercepts - in effect, an intentionally thrown interception.
Regards
I am playing a "gimmick" so to speak myself. I made a second momentum play in gold today, IAU. It has been trending up since Dec. 1st. It has paused slightly the past week or two, but there is a lot of political upheaval to come. I don't think we've seen anything yet! Gold may be the safe haven that will give back handily in a crisis. But, what do I know...
Derf
FWIW - I compared Hussman’s HSGFX with the Oppenheimer gold fund I own.
10-year performance: HSGFX -5.02%. OPGSX +1.40
Based on that, you’d have been substantially better off in gold. Admittedly, he’s a pretty “low bar” to top.