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MOAT vs. DSEEX/DSENX

BenWPBenWP
in Fund Discussions
Most of the MFOers who held the DoubleLine CAPE funds were displeased (shocked?) at their performance during market downturns, first in 2018, then this year. Almost since the inceptions of DSENX and MOAT (Morningstar Wide-Moat ETF),
I have held both funds and I periodically owned CAPE, the ETN. Up until the past few months, performance was quite similar, with both methodologies regularly besting SPY. This is no longer the case as MOAT has shown itself to be the superior fund. As I may have previously mentioned, I have exited all CAPE strategies while maintaining my MOAT positions. I won't quibble here about whether the CAPE approach is value or blend. MOAT is LCB without argument. My finding is that wide-moat investing works and that the CAPE strategy, dependent as it is on the bond "sauce," does not work as well. FWIIW, I have not found a member of this board who owns MOAT, although I have mentioned it before. Please come out of the woodwork because it's lonely at the head of the train (LOL).

Comments

  • davidrmorandavidrmoran
    Except for the last few days, VOOG has outperformed MOAT, going way back, so why not VOOG instead? (>5x as many holdings, fwiw.) That's what I'm replacing DSEEX with, along w CAPE.
  • expatsp
    For a while now growth has outperformed value or blend. If that continues, which is very possible, then sure, VOOG (1/3 tech) will outperform. If it doesn't, MOAT is more balanced, and CAPE (or DSENX) should maybe benefit when currently undervalued (or less richly valued) sectors make up for lost time?
  • Bitzer
    I'm sure disappointed in DSENX's performance in the past year or so. It seems, though, to have "perked up" a bit since the stock market last bottomed (by my calculation March 23rd, or so).

    I use this fund as a "core" domestic holding (could be a mistake on my part). If I sold DSENX, I would substitute VTI. Any opinions as to DSENX's suitability as a core domestic holding going forward?
  • MarkMark
    @Bitzer - there was an earlier discussion re: DSEEX/DSENX you might care to look over. I'm not sure if it addresses your question but maybe.

    DSEEX/DSENX
  • BenWPBenWP
    @davidmoran: I understand that a fund such as VOOG could outperform, especially in a growth atmosphere as @expatsp pointed out. MOAT is not an index fund. It’s stocks are chosen according to a methodology, which includes the determination of the moat the company enjoys as well as a valuation metric that determines whether a stock is trading above or below its worth. Turnover is north of 50%, so it’s actively managed. With 47 stocks now, MOAT can be considered high-conviction. The Barron’s 400, the GAARP EFT (BFOR) has an identifiable stock-picking system, but it’s performance has been quite disappointing. It debuted at the same time as MOAT making a comparison valid since both funds have operated in the same bull market. I could still see CAPE as a trading holding, but it is tough to get good pricing. MOAT, however, trades in a very orderly fashion, with very small spreads. FWIIW, I don’t own any index funds in my accounts, even though I recognize that over time I probably won’t come out ahead of a passive portfolio.
  • davidrmorandavidrmoran
    edited May 2020
    Roger all points; you just seemed focused on moderate and incremental outperformance and added value, and it is impossible to find any period in which VOOG has not outperformed since its inception. I understand about passivity vs various degrees of process and selection action (which might include the monthly auto-churning of CAPE).
    I have been heeding the 'growth has got to end at some point' arg for over 40 years and have 'sacrificed' mucho dollars investing prudently in value funds, all the best ones.
    Could hardly care less about pricing and spreads unless egregious.
    DSE_X has suffered from the bond discombobulation, yes. I would not advise anyone to bail out of it tho unless they were simply going to shift to CAPE, which gives many investors fits, for extraneous reasons.
    If you want to hold the equities and are eyeing VTI, don't forget about considering RSP.
  • expatsp
    @davidrmoran, All good points, and I've made the same mistake of expecting growth to end at some point.
  • Bitzer
    @davidrmoran Again not trying to hijack this thread How would you evaluate DoubleLine's contribution to the "secret bond sauce" component of DSENX? @Mark pointed out a more suitable thread and I could move this discussion there.
  • BenWPBenWP
    @davidmoran: a slightly better performing growth ETF is Vanguard’s VONG, which tracks the Russell 1000 growth index. Should growth continue to outpace value, that would be the place to put some dough. « Where has all the value gone, gone to graveyards, every one. » Thanks for your insights.
  • davidrmorandavidrmoran
    @Bitzer, it ain't been a plus, obvs, but as someone who also holds PONAX and PDVAX (and MINT and GSY, fer krissake, also VCSH, and PCI and PDI in the recent past), I am not seeing that Gundlach's recent work and decisions are any worse. This even though I think he's a putz politically and in other ways.
    Others smarter here have delved the various gogo bond areas each of these funds works in. Regardless, I am willing to believe that CAPE will do as well as / better than DSE_X in the near term and perhaps beyond, and am looking forward to getting out of my Pimco holdings when back to breakeven and into less gogo.
    @BenWP, ty for VONG mention, was looking at that, had been thinking that in retirement I would just stick with the varsity, but will continue to, or perhaps resume is better, mull and reconsider. Some days I remain in poky mode.
  • BenWPBenWP
    For some reason, a hold I had on my Libby e-reader account came though this week and I am now reading "The Big Short" for the first time. I am quite familiar with Michael Lewis, however. One of the best take-aways so far is the idea that, as opposed to the purchase of a stock, the purchase of a bond involves getting f&$%#ed by the counter party. In other words, the really smart bond traders (and there are a couple in this book) know that the game is rigged and that your job is to figure out how the other guy is trying to f%$# you. Quite frankly, I'm not sure this applies to DSENX, but I have to say I wasn't smart enough to figure out how the "secret bond sauce" could destroy my profits.
  • VintageFreakVintageFreak
    My broken record sings - It is more important WHEN you buy vs WHAT you buy - I'm holding on to my DSENX.
  • Bitzer
    @davidrmoran Since I have limited tax deferred space, I hold my PONAX in a taxable. Despite holding it for many years, I am showing a loss due to taxable distributions and recent price declines.

    I'm also going to get out (or mostly out) if/when PONAX breaks even. I know that's not necessarily a good investment strategy, so I may act earlier and book a loss.
  • davidrmorandavidrmoran
    ooh, ooh, DSEEX the last 10 days has rocked past SP500 (rocked meaning slightly outpaced)
  • Bitzer
    @davidrmoran Yes, trailing S&P500 by "only" 9% or so YTD. I've added DSEEX to my "good until it wasn't" list (along with PONAX, IOFIX, just about anything AQR, etc.), but will hold this one.
  • davidrmorandavidrmoran
    Since Feb 23, the start, CAPE has tracked VOO w only slight lag and at close today appears likely to match it, so by my read it is the bond sauce chiefly which has detracted. I too am holding though may go in part directly to CAPE.
  • davidrmorandavidrmoran
    Starting end April DSEEX pulled ahead of CAPE and then a week or so ago ahead of SP500. Maybe the bond sauce has been reformulated. (Some of the Pimco gogo vehicles have perked up also.)
  • StarchildStarchild
    Bitzer said:

    @davidrmoran Since I have limited tax deferred space, I hold my PONAX in a taxable. Despite holding it for many years, I am showing a loss due to taxable distributions and recent price declines.

    I'm also going to get out (or mostly out) if/when PONAX breaks even. I know that's not necessarily a good investment strategy, so I may act earlier and book a loss.

    I'm thinking the same thing about PIMIX. I've only held it for a few years as my core bond fund, but it has done nothing but lose money, and at my age, I don't need income from it. It would have been better leaving it in a bank. Amazon has been a waaay better buffer for recent bear markets. I'm considering adding to my AMZN position and dumping Pimco, balls to the wall.
  • msf
    Using your "good until it wasn't" Pimco bond fund PONAX, one sees that DSEEX's performance since April 30th was roughly the sum of CAPE's and PONAX's. (Remember that DSEEX is leveraged for 200% exposure: 100% CAPE, 100% bond.)

    See graph here. (Graph only shows CAPE through 5/21; it closed up 0.24% on 5/22)

    The graph does show fairly clearly that the bond portion of DSEEX is not, however, mimicking PONAX. If it were, the spread between DSEEX and CAPE would have been microscopic until a week ago (since PONAX was roughly flat for the first couple of weeks in May).

    DSEEX: +1.86%

    PONAX: +1.20%
    CAPE: +0.35% + 0.24% (Friday)
    Total: +1.79%
  • carew388carew388
    I sold PONAX and PMZAX when they started declining to keep some of my profits. Kept PFOAX and redeployed assets into various bond funds including JAFIX SNGVX and NEFRX . At this point for me return of capital outweighs return on capital.
  • carew388carew388
    Also PTTAX
  • VintageFreakVintageFreak
    Curious as to why VFINX has reclaimed YTD loss pretty much, while DSENX still have 5% to go. Anomaly, or has something broken in DSENX?
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