Good evening MFO members,
Like many (most) of you, I am periodically assessing and reassessing funds. A great thank you to David and many of you who favorably talked about one of the good-stable funds, RPHIX. I greatly appreciate the fund manager for navigating the fund with great care and stability.
Recently, I came across another promising fund, HMEZX. I saw a talk on this site about potential bankruptcy/lawsuits involving the fund and its manager, but it has been a year ago. When I plugged RPHIX and HMEZX into the portfolio visualizer, it seemed the Merger fund had better potential.
What are your thoughts?
Comments
The type of fund you seek depends on what your objectives are and your time horizon.
1 yr -8.57 / 3 year 0.22 / 5 year 2.17 / 10 year 2.22
On the other hand, you currently can get a 1-year FDIC insured CD at Fidelity or Vanguard that pays 3.05%. Why bother with RPHIX?
You can see the returns here for MERFX since its inception:
https://finance.yahoo.com/quote/MERFX/performance/
MERFX was closed to new investors as of June 1, 1996 and resumed sales in 1998.
(closed)
https://www.sec.gov/Archives/edgar/data/701804/0000950123-96-002625.txt
(re-opened)
https://www.sec.gov/Archives/edgar/data/701804/0000950123-98-008974.txt
MERFX's YTD return is (1.61%) according to Google which is better than many of my other mutual funds.
Concerning one year cd rates, the rates have only increased due to the FED increasing interest rates in the last several meetings. Before those meetings. short term CD rates were abysmal in comparison to RPHIX.
As of June 30, 2022, the portfolio was comprised of securities with an average maturity of 4.43 months. At quarter-end, the invested portfolio had a weighted average Expected Effective Maturity of 11/10/22, and 43.10% was comprised of securities with an Expected Effective Maturity of 30 days or less.
As of June 30, 2022, the Weighted Average Market Yield to Effective Maturity was 7.17% for Effective Maturities of 31 days or more. That comprised 57% of the invested Portfolio.
This is my personal view, in contrast to a view by the bogleheads crowd to hold the allocation no matter what. Yes, I am using various tools to gauge the risk levels and premiums. Let's just say that even if you hold equities, it is a very smart idea to add put options as well in today's environment. I don't "play" too much with options, but the tools are handy. Why sit in the 17%-20% drawdowns, especially knowing that the Fed will continue to reduce liquidity from the market?
And as @TheShadow mentioned Fed just raised the CDs and you are locking yourself for several years and risking paying early withdrawal penalties. I do have 3% CDs with Andrews. I locked right when Covid hit. It doesn't make sense to have all my money in CDs.
The appeal of HMEZX is that although it has a bit higher st deviation, the return is higher with this vs RPHIX. I use portfoliovisualiser extensively, and although, it is a backward-looking tool, it provides clues about the stability of funds and how they fared in various environments.
So, I goal is to ask if you have valid reasons to avoid HMEZX, but also looking forward to your thoughts/ideas. Thank you