Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

FMSDX - Time to Sell?

The Fed is now talking about significantly accelerating raising interest rates and unwinding its huge balance sheet of Treasuries and MBS.

Last week, for example, FMSDX, an allocation fund with 40% in bond holdings, lost 2.2%. M* still reports that as of 12/31/21 the fund has "extensive interest rate sensitivity" with a duration of 8.5 years.

In light of the Fed's release of the minutes of its March meeting, was last week's poor performance due primarily to the fund's bond holdings? Is it possibly a forerunner of things to come? Is it time to consider selling FMSDX?

Opinions/suggestions are appreciated.

Thanks,

Fred

Comments

  • What do you think the possibility is that the market has already priced in those scheduled interest rate increases?
  • edited April 2022
    It might make sense to see what the March 31 quarterly commentary will have to say about their recent thinking and positioning. The Outlook and Positioning section of the 12/31 commentary provides a review as of that date. But, the Trended Allocation section suggests changes sometimes occur fairly rapidly....

    FMSDX Commentary


  • I’m continuing to hold FMSDX and have no plans to sell. It is outperforming most hybrid funds that I track, including many that have prior records of doing well in down markets. We are in an unusual period in which both stocks and bonds are down, and many bond funds are doing worse than stock funds. If you sell now, you still have to decide where to reinvest. Cash is still yielding close to nothing, so decreases in value by the inflation rate. Market sectors that have done well recently are primarily risky assets that could easily lose value very quickly. I presume that FMSDX’s managers have a better sense of areas to invest than I do.
  • @Tarwheel. +1.
    Just read the referenced link from Fidelity, above. Conclusion, from 31 December:
    "...Within the equity subportfolio, we're especially interested in opportunities among value stocks, which tend to offer more downside protection and income than growth stocks. On December 31, the fund held sizable overweightings in energy, financials, materials (gold miners) and real estate. Elsewhere, we believe high-yield bonds and bank loans – which are not in the Composite index and together represent more than 20% of the fund's assets – offer attractive risk/reward. The fund ended the period with increased exposure to government debt (about 16% of assets) and convertibles (roughly 6% of assets) and a reduced weighting in emerging-markets debt (about 2% of assets)."
  • edited April 2022
    Per Fido - FMSDX:

    Portfolio Data Portfolio Data Additional Information

    30-Day Yield 4
    2.62%
    3/31/2022

    Duration
    4.20 Years
    3/31/2022

    Distribution Yield (Daily)
    1.41%
    4/7/2022

    FMSDX is about 50th out of 512 NTF "Allocation" funds offered by Fido, DOWN ~3% YTD. Not bad for an allocation fund this year.

    If you sell it, where do you re-deploy to?

    US? We sold ALL of our dedicated bond funds earlier this year except a toe-hold in two closed funds. We also sold a few allocation funds but DID hold onto FMSDX due to its strategy and holdings. We however cut its allocation in half. We still think it's a LT keeper and would NOT want to be closed out of it down the road.

    Proceeds were immediately used to replace the equivalent stock %'s using dedicated stock funds instead, and the remainder (bond portion proceeds) are being re-deployed throughout the year into 1-2 yr (the sweet spot) CDs and TNotes.

    This is a really worthy strategy this year and has been paying off well now, and expected to continue until such time, if ever, that "bond" is no longer akin to a four-letter word for us.
  • edited April 2022
    We had a pretty good discussion about this fund a while back. Here

    If you liked FMSDX when you bought it and if those reasons are still pertinent today, I don’t think I’d sell. However, that’s not intended as investment advice. I checked another very good allocation fund, that has in the past been sometimes praised on this forum, PRSIX. It’s down about 6% YTD - almost double what FMSDX is. So they’re doing something right to limit the losses in such a hostile bond environment.
  • stillers said:

    Per Fido - FMSDX:

    Portfolio Data Portfolio Data Additional Information

    30-Day Yield 4
    2.62%
    3/31/2022

    Duration
    4.20 Years
    3/31/2022

    Distribution Yield (Daily)
    1.41%
    4/7/2022



    Thanks, stillers, I should have checked Fidelity first instead of taking M*'s stale data for granted. This changes my outlook significantly.

    Much appreciated.

    Fred
  • edited April 2022
    I was sure that there was a MFO piece on FMSDX but I couldn't find it on search. Then I realized that MFO Home is a different site than MFO Discussion, and there I found that piece by @lynnbolin2021 that I was looking for (LINK0). This piece compared 5 funds for 5 years then from 10/2017 using Fido charting. I have updated that for 3 funds, FMSDX, FSRRX, FADMX (FAYZX, FSRIX used for longer PV run) using PV charting (it allows 3 funds only) since 10/2017. LINK1

    Looking for FMSDX piece in October 18, 2021 Barron's? Check Summary, Part 2 in LINK2.
  • Hi @yogibearbull
    I am reducing risk in my portfolios by looking at how funds are doing in this volatile, inflationary year. Some funds are up and down and time will tell whether it one should sell.

    I have reduced exposure to FMSDX by exchanging some of it for FSRRX, but I still hold FMSDX as core fund.
Sign In or Register to comment.