I only started following this fund in the last several months.
SVARX is a fund of other fixed income funds. The ER=2.95 is very high, but the results are very good. Several of these funds have ER of 1.5% already. BTW, in 03/2020 the fund lost less than 2% peak to trough. The risk-adjusted performance easily beat VBINX+VWIAXAs of 1/15/2020:
(One year SD is from PortVis)
SVARX performance/SD...............1 year=23.4%/6.4.......3 year=10.4% annually/5.4.....5 year=11.4% annually/4.9.
VBINX (60/40) performance/SD.....1 year=23.4%/16.8.....3 year=11.2% annually/11.9...5 year=11.15 annually/9.7.
VWIAX (40/60) performance/SD.....1 year=23.4%/11.55...3 year=7.2% annually/7.7......5 year=8.0% annually/6.3.
When you look at their (site
) they do a good job not to mention the fact they invest in other fixed income funds.Their top funds from M* as of 9/30/2020
are and by now it's probably different
Recv Nuveen Prf Secs Inc
Pimco Govt Mm Instl
Eaton Vance Floating=bank loans
Ishares Tr Pfd Inc S (-10%)
The yield is low under 1% for 2020 and about 3-3.5% for 2019 and about 2.5% in 2018.
So, if you are looking for a good risk/reward fund, maybe that's the one. See one year (chart
) and change to 3-5.
I'm not sure what the managers of SVARX are doing, but I managed my own portfolio with the following goals: making more than 6% annually, never losing more than 3% from any last top, SD under 3
. In the last 3 years, since retirement in 2018, I have used mainly bond funds with several very short term (hours-days) of stocks/ETF/CEFs, usually very concentrated in 2-3 bond OEFs, using momentum and switching between best performing funds but also selling to cash when risk is very high as I did in Q4/2018 and Q1/2020. My portfolio risk-adjusted performance below as of 12/31/2020 are actually even better. Directly from Schwab, you can see below that SD=2.3 for both one and three years. The portfolio never lost more than 1% from any last top during 2018-2020.
His funds have performed extremely well with limited volatility. SVARX has 3 and 5 year returns just over 10%, and its worst ever Quarter in 7 years was a -2.06% loss. Nice track record.
Anyway: PTIAX is 7.63% of my portf. (2020 perf. +5.73%)
PRSNX 22.63% of portf. (2020 +8.14%)
RPSIX 22.88% of portf. (2020 perf. +6.06%)
I worked out a weighted average and it comes to +6.9% for 2020, which seems just a bit high, but I did use a specific online tool which gives weighted averages. You just have to be accurate with the numbers you're entering. I sat on these three funds through the year, and did nothing. Zilch. I'm pretty happy.
I initiated an investment on 11/30. It's performance has closely tracked with IOFIX (another investment) since then ( chart ). I suspect SVARX still owns some IOFIX.
2019 ..... 9.42%
2018 .... -0.99%
2017 .... 8.26%
2016 ... 16.45%
2015 .... 1.08%
2014 .... 2.41%
Whatever instruments SVARX uses behind the scenes have certainly helped it maintain a very low down-market capture rate. Wish there was more color on that.
The 49% leverage and the huge position in swaps.
With the recent spike in the 10 year and if the rise in interest rates continues, the higher borrowing costs will be detrimental to this funds huge position in leverage.
Do your own due diligence on this fund.
I found the semi-annual report from 3/31/2020 (link)and more than 50% is in treasury bills, mutual funds about 30%, MM at 13.8%(maybe used for leverage).
JD_co: that's correct, Ralph Doudera, also runs HFSAX/SFHYX which also has a good risk/reward, but the min is 1 million for HFSAX at Schwab and the other is only for institutional customers. I can still buy SVARX at $5000 min + $49.95 fee, but I can't buy the Ins SVASX, Schwab doesn't recognize it.
3 years performance/SD...HFSAX 14.5/7.6...SPY 14.1/18.7
THE FULL SPECTRUM - April 2020
Stay Safe, Derf
It means you can't predict where the leverage will be next week or in 4 weeks. Leverage was used years ago. Example: the 10 year treasury is around 1.1%, in 2018 it was over 3% and in 2019 over 2%...mmm...are we anything close to that?
In fact, in 2017-2019 the 10 year was higher than 2%.
But since 2020 SVARX made so much more than these funds, see 1 year (chart) and how PIMIX lost more than 12% while SVARX lost less than 2%
Reminder: there is no guarantee that risk/reward will continue. I'm not going to buy it because I have been doing my own trading and portfolio protection.
A fund manager can control the *amount* of leverage they use.
(aka the amount/quantity of swaps & margin in their fund)
The cost of leverage is what they don't directly control.
The cost of leverage is what is determined by interest rates.
If a fund manager uses a excessive *amount* of leverage and the *cost* of leverage goes up (interest rates) they will be pressured to sell something.
Your example talks about the interest rate (cost) of leverage but just because the *cost* of leverage was higher back in 2018 doesn't mean the fund manager was excessively leveraging a fund (amount) at that point.
There is a huge amount of leverage in the fund now and if investors want to ignore that risk than its on them.
Also, there have been numerous examples of funds going bell up due to excessive leverage and/or non-liquid securities.
But go ahead and keep pushing highly leveraged and/or non-liquid funds...
So what's next?
Are you going to start pushing 2x and 3x leveraged funds like Profunds & Direxion too?
So what's next?
Are you going to start pushing 2x and 3x leveraged funds like Profunds & Direxion too?"
Please, let's keep this thread on topic and let's not start insinuating or projecting motives on other posters that are unfounded. I have not found FD "pushing" any funds, leveraged or otherwise, on this thread.
You ask, "So what's next?" Hopefully not the same tiresome personal feuds that drove a lot of excellent posters away from the M* forum.
Appreciate your cooperation,
"You ask, "So what's next?" Hopefully not the same tiresome personal feuds that drove a lot of excellent posters away from the M* forum."
Thanks for providing a snarky response instead of well thought out response about the issue of rising rates and the impact of it on this highly leveraged fund.
In the past, FD has pushed SEMMX as a money market substitute and it cratered.
So maybe take some credence into my warnings...
Anyway, you made your point, and it doesn't bother a bit.
Each poster must do their own due diligence and there is no way to know or guarantee what SVARX will do in the future or how much leverage or other derivative they will use.
I already posted several warnings and what I have done with my own portfolio.
Why did you mention 2x and 3x funds, did I posted these?
1. Spectrum Investment Advisors - archive of links to quarterly Newsletters:
2. Spectrum Financial Inc. - Archive of links to the quarter Full Spectrum newsletter. Scroll down the page to get to the archived links:
You didn’t post any warnings in your original post!
You never mentioned the fund was highly leveraged.
You didn’t post any warnings in your original post!
You never mentioned the fund was highly leveraged.
From what he has posted on this and other forums about this fund, it appears he did not know it was highly leveraged until other posters noted it.
To wit: "I'm not sure what the managers of SVARX are doing..."
He's also posted elsewhere that (paraphrasing), " We'll never know how long they've been using leverage or to what extent."
Other posters are digging into that here and elsewhere.
That said, call me silly but I'm pretty sure if someone uses their internet/camera device to make a phone call (You can do that?), someone at Spectrum Funds might just share that information. Looks like this is their number...888-572-8868
BT2020 or BigTom have been following my posts for years over 3 different sites where he tries to find anything(even one word) wrong and/or one number out of order and claim...haha, this time I got you...just, laughable.
stillers claimed years ago that I will never retire, I will never have enough, and I will never make it...the fun continues.
All I did is presented a fund and its performance and SD. I don't owe you anything more. I'm not anybody's financial advisor or get paid by anyone. It's common sense to do your own due diligence regardless if I mentioned it or not. This is a message board where we post ideas. It doesn't matter if I made the warning in the first post or third post. Of course, I knew about the leverage, it's the first thing you see when you look at M* holdings(link) but as usual, you look at any word I post for anything for a gotcha...again, old news...mmm...maybe jealousy, after all, your predictions were far from the truth.
He "Introduced" this fund to the world (sic) on two forums recently BUT had to be informed by other posters that it was highly leveraged. Read this full thread and his parallel thread on armchairinvesting and it's pretty clear that's the case.
No reason to take it personally or claim after the fact that he actually knew it was leveraged. He did NOT know that, or at least he forgot to note that critical point (sic) in any of his posts about it until AFTER other posters pointed it out to him.
Hey, we ALL make mistakes and most of us freely admit them. Some though try to drag tired old stories into every discussion as though they provide absolution or are relevant to the topic at hand.
There was not a mistake. As I said before, I don't owe you ALL the information. I presented several numbers. If there are errors in these numbers I will fix them. So far in the last several years the leveraged didn't affect the results, and we know that past performance isn't a guarantee of future results.
BTW, in my first post I have a link (site) and if you open it you can see SVARX total = 148.89%(clearly leveraged)
But, your supposedly "innocent" remarks are nothing new. Your posts over several years are far from it but nice try.
Did you post in the past (I have the link) that I have "NO CHANCE of meeting my annual TR performance goals, this year and for the foreseeable future"? Were you wrong?
I found the semi-annual report for SVARX (link) from 3/31/2020 and more than 50% is in treasury bills, mutual funds about 30%, MM at 13.8%(maybe used for leverage).
What was the leverage 3-6-12 months prior at any time? no way to know
SVARX successfully navigated bond market changes as the pandemic unfolded last year. The pandemic will continue to impact market conditions as vaccines get distributed this year. Perhaps this will bodes well for SVARX's prospects this year.
It makes sense for SVARX to describe its investments based on bond market sector exposures. It invests in more than one fund per sector at any one point in time and as time passes. Describing its investment exposure by sector allows changes in it's investments to be meaningfully expressed through time.
The bond markets are currently bumping along a bottom (unless the Fed alters its policy on negative interest rates). But how long will that last? And, how far and how rapidly might rates rise in the future? It makes sense to be aware that a rate increase may impact leverage expenses. But, how much will any expense increase be per unit rate increase? And, how much will any incremental expense increase reduce the total annual return of SVARX? There is much that is uncertain and that I don't understand here. So, the leverage cost issue is just something I will keep in mind for now.
SVARX has thus far successfully mitigated its investment risks by diversifying its investments, by rapidly entering and exiting individual investment positions (its investment positions can be traded daily), and by rapidly varying its use of leverage. It appears unlikely it will suffer a perfect storm event similar to what IOFIX experienced last year. For example, this chart provides a look at how it varied its investment exposure during a recent two year period.
Can SVARX succeed while facing the next wave of market challenges (i.e. rising rates or the next black swan)? You would be trusting that "active management". The fund is nimble and the PM is not afraid to pivot.