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I’ve had this one nearly since its 2013 inception. After two mediocre (but positive) years it managed to lose 6.2% in 2015. So, the relationship got off to a rocky start (which should also inject a note of caution). As you are likely aware, the fund has now become one of the best in its category.
Some quick takes:
- Roughly 50% is typically invested in U.S. denominated credit instruments, with the remainder scattered around the globe.
- D&C Is generally cautious on duration in its bond holdings, so I’d expect DODLX to be at or somewhat below the average duration for similar funds.
- It’s predominantly investment grade - but dabbles in lower rated / EM bonds.
- The managers sounded reasonably optimistic in the (most recent) June 30 report - but they’re generally an optimistic lot.
- Like all DC funds, this one has a very reasonable ER (.45%) for a managed fund. Global bond investing generally carries higher costs.
- DODLX currently represents 9.5% of my portfolio. (My overall allocation to bond funds is 25%.)
- I’ve been slowly reducing exposure to this one for the last 9-10 months because it’s had a very good run in recent years and may be nearing some sort of retrenchment. The “slack” (so to speak) has been taken up by PBDIX and PRIHX, both of which I consider less risky - the former because of its higher credit quality (and lower ER) and the latter because of its shorter duration.
Sidelight- Ive held DODFX International fund since its inception and had been thinking about dumping it in favor of say Vanguard Dividend Appreciation, International has been out of favor however, it FINALLY did upwards of recent note- about bloody timE!!!
DODFX is foreign LARGE value. It scores in the 39th percentile in its category, just now. But that's not saying much. PRIDX is Foreign smid-growth, but they're not taking anyone new, these days. Most of my 9% in foreign stocks is in there. Years ago, I owned the Third AvenueInternational Value Fund. Forgot the ticker. Are they still around? Your post just makes me wonder how they're doing. They did great, until they didn't. Things in general there just seemed to fall off a cliff. Marty Whitman retired... https://money.usnews.com/funds/mutual-funds/rankings/foreign-large-value
- I’ve been slowly reducing exposure to this one for the last 9-10 months because it’s had a very good run in recent years and may be nearing some sort of retrenchment. The “slack” (so to speak) has been taken up by PBDIX and PRIHX, both of which I consider less risky - the former because of its higher credit quality (and lower ER) and the latter because of its shorter duration.
There are reasons to prefer muni bonds to taxable bonds (e.g. IRMAA in retirement, net investment income tax, etc.), but all else being equal, I'm missing some of the appeal of PRIHX.
As of Sept 30th, the effective duration of PRIHX was 4.34 years vs. 3.40 for DODLX (both per M*). The SEC yields are 2.07% for PRIHX (as of Nov 30th), and 2.69% for DODLX (as of Sept. 30th). The latter translates to 2.04% after federal taxes of 24%, a virtual wash (albeit with a different reference date).
Where PRIHX looks better as a "regular" bond fund is in its much lower volatility (4.81 vs. 7.42 standard deviations) and much lower correlation with the equity market (0.21 coeff of correlation vs. 0.71 for DODLX), per Portfolio Visualizer.
As you wrote elsewhere, DODLX shifted 20% of its portfolio (into corporate bonds) in the first half of the year. It's a fund that (tries to) go where the market is moving, so I'm not particularly concerned about retrenchment. Though I do appreciate the desire to take some money off the table from the winners.
@msf - You are absolutely correct re duration. I had no idea D&C was running that short a duration on DODLX. (I’ll have to read those fund reports even more closely.) FWIW - Yahoo puts the category average at 7.4 years - more than double what DODLX is at. I can’t explain it. Judging by DODLX’s recent performance & behavior I’d have guessed a longer duration than 3.4 years.
This won’t convince me that DODLX is less risky than PRIHX. I read a lot into a fund’s daily behavior and the latter certainly looks less dicey. (I’ve even begun stashing some excess budgetary cash in it - though I don’t recommend that to anyone else.)
FWIW - David Geroux might just agree with me re PRIHX’s relative attractiveness, writing in the earlier referenced fund report: “We find the rest of the fixed income market, outside of short-duration high yield bonds, to be extremely unattractive and in fact the most unattractive it has been in my whole career.”
Some fund categories are very broad while others are more focused. For example, M* divides broad based (i.e. not government or HY) taxable bond funds into short, intermediate, and long term. Recently it went to even finer granularity, dividing intermediate into intermediate core and intermediate core plus.
For funds in these categories, one would naturally expect their duration to be close to their category average.
OTOH, all investment grade bond funds with a significant amount of foreign bonds are classified as "world bond funds", regardless of whether they are foreign or global, and independent of their average duration. Only recently did M* partition this broad category into two parts, hedged and unhedged. DODLX is called "unhedged" even though generally only 20% of its portfolio consists of unhedged foreign bonds.
(Lipper divides these funds along a different axis. It groups them into international and global, but each category includes both hedged and unhedged funds.)
So it's no surprise that world bond funds look little like the "average" category fund.
Comments
Some quick takes:
- Roughly 50% is typically invested in U.S. denominated credit instruments, with the remainder scattered around the globe.
- D&C Is generally cautious on duration in its bond holdings, so I’d expect DODLX to be at or somewhat below the average duration for similar funds.
- It’s predominantly investment grade - but dabbles in lower rated / EM bonds.
- The managers sounded reasonably optimistic in the (most recent) June 30 report - but they’re generally an optimistic lot.
- Like all DC funds, this one has a very reasonable ER (.45%) for a managed fund. Global bond investing generally carries higher costs.
- DODLX currently represents 9.5% of my portfolio. (My overall allocation to bond funds is 25%.)
- I’ve been slowly reducing exposure to this one for the last 9-10 months because it’s had a very good run in recent years and may be nearing some sort of retrenchment. The “slack” (so to speak) has been taken up by PBDIX and PRIHX, both of which I consider less risky - the former because of its higher credit quality (and lower ER) and the latter because of its shorter duration.
https://money.usnews.com/funds/mutual-funds/rankings/foreign-large-value
As of Sept 30th, the effective duration of PRIHX was 4.34 years vs. 3.40 for DODLX (both per M*).
The SEC yields are 2.07% for PRIHX (as of Nov 30th), and 2.69% for DODLX (as of Sept. 30th). The latter translates to 2.04% after federal taxes of 24%, a virtual wash (albeit with a different reference date).
Where PRIHX looks better as a "regular" bond fund is in its much lower volatility (4.81 vs. 7.42 standard deviations) and much lower correlation with the equity market (0.21 coeff of correlation vs. 0.71 for DODLX), per Portfolio Visualizer.
As you wrote elsewhere, DODLX shifted 20% of its portfolio (into corporate bonds) in the first half of the year. It's a fund that (tries to) go where the market is moving, so I'm not particularly concerned about retrenchment. Though I do appreciate the desire to take some money off the table from the winners.
This won’t convince me that DODLX is less risky than PRIHX. I read a lot into a fund’s daily behavior and the latter certainly looks less dicey. (I’ve even begun stashing some excess budgetary cash in it - though I don’t recommend that to anyone else.)
FWIW - David Geroux might just agree with me re PRIHX’s relative attractiveness, writing in the earlier referenced fund report: “We find the rest of the fixed income market, outside of short-duration high yield bonds, to be extremely unattractive and in fact the most unattractive it has been in my whole career.”
For funds in these categories, one would naturally expect their duration to be close to their category average.
OTOH, all investment grade bond funds with a significant amount of foreign bonds are classified as "world bond funds", regardless of whether they are foreign or global, and independent of their average duration. Only recently did M* partition this broad category into two parts, hedged and unhedged. DODLX is called "unhedged" even though generally only 20% of its portfolio consists of unhedged foreign bonds.
(Lipper divides these funds along a different axis. It groups them into international and global, but each category includes both hedged and unhedged funds.)
So it's no surprise that world bond funds look little like the "average" category fund.