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

RiverPark Short Term High Yield Instl RPHIX vs NexPoint Merger Arbitrage Z HMEZX

edited August 2022 in Fund Discussions
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

  • Interesting funds but very different funds. The risk return metrics even if they’re similar don’t measure how different they are in other ways, with completely different strategies and different kinds of risks the metrics don’t capture.
  • edited August 2022
    I agree with @LewisBraham. Two very distinct funds. RPHIX does not have many comps except either Crossingbridge's Low Duration High Yield Fund or Ultra Short Duration Fund, both of which have the same manager with different fund families. HMEZX would most likely compare to something similar to Virtus' Merger Fund (MERFX).

    The type of fund you seek depends on what your objectives are and your time horizon.
  • edited August 2022
    Please explain the Appeal of MERFX ? Gross ER 1.71%
    1 yr -8.57 / 3 year 0.22 / 5 year 2.17 / 10 year 2.22
  • edited August 2022
    Also, Mav123, please explain the appeal of RPHIX? The fund's total return % for 1 and 3 years is 1.70 and 1.78, respectively. Over the past 5 years its 2.21%.

    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?
  • edited August 2022
    The OP discussed HMEZX, a merger type fund, which is quite different from that of RPHIX. I selected a comparable fund, MERFX, which by coincidence, I have owned for numerous years.


    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.
  • edited August 2022
    Some notes from the RPHIX/RPHYX 06-30-2022-Shareholder letter (I've added the bold):

    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.



  • edited August 2022
    I was interested in HMEZX, but then I was concerned by the unimpressive performance of other funds managed by the same manager (Dondero), and by general comments that can be found here: https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera
  • Nice find, @finder. Monday can’t come soon enough for me to buy a Dondero-managed fund. No wonder there is so much pessimism about our legal system.
  • edited August 2022
    Thank you for the comments, my appeal to both funds because although they may have different investment approaches can be used as "cash" when the funds are not invested, like right now. I am about 95% in RPHIX. Why wait when the markets break moving averages as even smart people like Meb Faber in Tactical Asset Allocation use tools to reduce the drawdowns and stomach ulcers, Ulcer Index. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461.

    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

  • JD_co said:

    Some notes from the RPHIX/RPHYX 06-30-2022-Shareholder letter (I've added the bold):

    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.



    yes, thank you, I've seen that article. Are the concerns still valid today?
  • edited August 2022
    To evaluate HMEZX it may be useful to look at other funds managed by Dondero, such as HHCZX, HSZAX. I looked, and I did not like them. It does not necessarily mean that HMZEX is bad, but it just made me less interested in this fund.
  • @finder, Yes, it makes sense. Thank you
Sign In or Register to comment.