I’ve been really impressed with Charles Lynn Bolin’s articles on investing for a lower return/ higher volatile projected time ahead. I’m looking for thoughts on swapping portions of my low vol funds (VMVFX, EFAV, USMV) for GAVAX and COTZX. My current allocations in these low vol funds were supposed to provide some safety, but this year not so much. I understand that the question is sort of apples to oranges, but my goal for this part of my portfolio is for safer, lower vol funds, and Lynn’s analysis makes for a compelling case. I have already purchased some SWAN for this purpose.
Thanks in advance for any and all thoughts.
Rick
Comments
I am looking into CLIX, a long-short ETF (long online Retailers, short brick & mortar) which performed well back in March and has had an excellent year for obvious reasons.
Going for lower risk, but lower return i like HMEAX and SMASX.
JD: I do like both SWAN and DRSK, may add DRSK next. In terms of alts, I already added TMSRX.
Wxman: I also think VMVFX has some positives going for it, esp. tilts towards small/mid caps, and its global portfolio. It hedges currency, so that is another factor which may add/subtract at times, but should even out over time. I won't abandon LVol entirely, as it has compelling track records over full investment cycles.
My OP question really is focused on getting more insight on the Low Vol factor, vs. some of the defensive funds Charles Lynn Bolin wrote about. I hold my Low Vol funds to be defensive, and they failed in March. I am leaning towards swapping some of my Low Vol $$$ to GAVAX or CTFAX.
Additional thoughts welcome.
Rick
Best regards,
Rick
It is true that COTZX has raised its threshold for equities which makes it less defensive that it was earlier this year. For me, COTZX is attractive because my equity allocation is only 26% so I am willing to take on more risk and like that COTZX will increase allocations when the market falls. Had they not increase the thresholds I might have purchased more. I also like combining TAIL, SWAN and DRSK
I will be researching some of the other funds in the list in the near future.
Kind Regards and Safe Holidays
Charles Lynn Bolin
I still am looking for help comparing the so-called low volatility factor/funds with these more defensive fund ideas. I am wondering if I can achieve comparable or better risk adjusted returns with flex. allocation funds, alts, conservative allocation funds, etc. Your articles I believe did not consider low vol funds for defense.
Thanks again for your thoughts, stay safe.
Rick
Low volatility funds are going to be mostly equities which are invested in consumer staples and other necessities. The average drawdown of low volatility funds that I track was -19% for the past 18 months. The more defensive funds are typically mixed asset or use options to reduce volatility. The average drawdown of the flexible portfolio funds was -10%. Absolute return funds has a drawdown of -8%.
The risk adjusted return (Martin Ratio) for low volatility, flexible portfolio, and absolute return funds that I track was 0%, 7%, and 5% respectively although performance can vary widely.
Multi-Strategy Funds had a maximum drawdown of -6%, and Martin Ratio of 3.
There are many types of multi-asset funds that have lower risk, and higher risk adjusted returns than low volatility funds. I used to own several low volatility funds, but mostly look for multi-asset funds now because of the higher-sleep-well-at-night-factor.
My articles are based on risk and risk adjusted return among other considerations. Low volatility funds have higher risk that what I am looking for.
Lynn
Much appreciated,
Best regards,
Rick