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I know Dave Giroux is held in high regards here. My question is how his new ETF doing attracting new money? Has the launch been successful and what level of AUM would it need to be viable?
There are people posting here who have or are running funds; they are much better positioned to say what is needed for viability, though one has to believe that $200M+ is more than enough. (Though how much of this is seed money, we don't know.)
It's about the same size as FAN, XTN, ICSB, FXY, WDIV, and PBJ (gotta like that ticker). Generally not the broadest based ETFs around, but all seem viable. https://www.tipranks.com/etf/etfs-by-aum
Thanks for the responses. Given that Mr Giroux is widely acknowledged to be a brilliant fund manager and the access to his talent has been limited for years I would have expected faster growth. After all, investors have been waiting to invest with Giroux for years.
Giroux made his rep on a low-volatility balanced fund. Now he is on a different playing field. And it's crowded.
MFO premium says you can screen for top-ten holdings, but really only allows five. As it is, Giroux is competing with 98 funds that charge .50 or less, and feature the same top five holdings. If you knock out the index funds, that still leaves 27 active competitors. Ten of those competitors charge less than .31 cents.
Just looking at the etf's from those ten funds, his competitors from least to most expensive are: DFUS, PLRG, JUSA, and DFSU.
M* Performance tab shows that the new TCAF (6/14/23- ) had inflows of about $70 million/mo. Its $222.4 million AUM (M*) is decent for a new ETF. A survivable ETF typically has $50+ million AUM. True, there have been hot ETFs from other hot managers that ran up the AUM to billion soon after inception. Some new funds may be seeded by the sponsoring firms (with $50-100 million) but Price didn't do that for TCAF. Also be aware that the stocks haven't done much since mid-June as the rally has stalled.
PRWCX has an absolutely incredible long term record under Giroux. Looking nearer term, the M* numbers say the fund lost 11.94% in 2022 and is up about 12.55% so far in 2023. Since it takes a larger % increase to make up a loss, this would mean that investors in the fund are roughly back to where they were at the beginning of 2022?
That’s more of a question than an assertion. As I said, long term there is no disputing the manager’s success. I know 20.5 months is a very short term in investing. Just find it interesting to pick apart numbers in various ways. (And investors’ investment horizons appear to be getting shorter. Giroux has mentioned in the past that 3 years is a reasonable “break-even” point for this fund. There’s little doubt he has exceeded that.
I also appreciate that no one has slammed me for being sacrilegious re this great fund. Like I said, it’s fun to slice and dice the numbers in a variety of ways. I suspect most who were heavy into equities at the start of ‘22 would be happy to be back to break-even, or to 99% of the original amount at this time. BTW - The 1-year return is much better as it’s measured from a low point in ‘22.
@hank, FWIW, I believe Giroux's stated goal for PRWCX is to obtain S&P 500 like returns with lower volatility over a market cycle.
Sounds right Mike. I’ve heard him allude to both 3 and 5 year time horizons in various interviews. He’s also very good at discussing this in his semi & annual reports as well. I’ve stopped reading them, however, since exiting the fund maybe 18 months ago.
My approximation for the closed PRWCX is a mix of TCAF + PYLD + USFR. Don't try backtesting as there is no history. But you must, use suitable mutual fund replacements that have existed for longer.
My approximation for the closed PRWCX is a mix of TCAF + PYLD + USFR. Don't try backtesting as there is no history. But you must, use suitable mutual fund replacements that have existed for longer.
If you care to share, how would you apportion the three funds to approximate PRWCX? Thanks, Fred
@YBB. As always thank you for sharing your knowledge. I am curious about choosing PYLD which seems new and lacking any track record. . What make it worth 20% of this slice and dice exercise?
My approximation for the closed PRWCX is a mix of TCAF + PYLD + USFR.
PRWCX - often imitated, never duplicated.
It varies its equity sleeve between 56% and 72% of its assets (per M* analysis report). That's going to be hard to mirror, let alone track in real time.
Similarly, its bond holdings can vary greatly. M* shows it as "currently" (as of June 30th) having a barbell quality distribution: almost 30% AAA and over 40% single B. At first blush a 50/50-ish mix of multi-sector and AAA (treasury) funds seems like a reasonable fit. But virtually none of PYLD is below BB.
FWIW, using PIMIX as a proxy for PYLD (despite its somewhat higher average credit rating), I've identified a couple of combos (equity fund, PIMIX, and USFR) that come close to tracking PRWCX retrospectively. (An interesting, if somewhat hypothetical, exercise).
For the equity fund I used either QGIAX or CEYIX. I selected these in part because their style boxes are reasonably similar to PRWCX's - blend/growth leaning growth, large cap but not above category average.
These combos have very close but slightly lower std dev than PRWCX (10.41% vs. 10.47 for PRWCX), very close but slightly lower Sharpe ratios (0.81 and 0.82 vs. PRWCX's 0.83). and somewhat close but lower annualized returns (9.55% and 9.43% vs. PRWCX's 9.78%).
PYLD begs the question: why? A respected management team for sure. But its track record is shorter than four months, during which time it underperformed PIMIX. I could see jumping in if there were no open alternative (e.g. buying TCAF since one cannot get into PRWCX), but that's not the case at Pimco.
I don't expect it to flounder, so buying in early doesn't seem high risk. Still, it's somewhat of a blank slate, especially at Pimco where funds are rather inscrutable.
@msf and other, I want to draw your attention to market correlation in PV.
I added VFINX to your link (by adding a benchmark ticker). Add VFINX
Your three portfolios have market correlation that range from 94% - 96%. This leads me to believe they are highly correlated to market (VFINX = 1.0%), yet their standard deviation as well as their Max DD appear to be about 2/3 less correlated to “the market”. Though VFINX deviated (deeper) during Max DD (15% vs 10%) they all took the same amount of time to heal from their losses. One can get this information by clicking on the “I” symbol next their respective MaxDD figures.
Over the long run (your charts timeframe is 8 years), if we can accepted the higher SD (the ups as well as the downs of VFINX) it appears we achieve market returns.
Most investors don’t enjoy losing money and appreciate losing less even though the timeframe for “shallow losses” and “deep losses” appears to be the same (at least in this chart).
PRWCX’s goal of providing market returns on the up side while losing less on the downside is an investor’s challenge as well. Hope it succeeds!
For me, this started out as a broader mini-project in response to Vanguard's request to bring up several Admiral accounts for VG hybrid funds to min $50K - I posted on that. I have finally DUMPED all those hybrid funds, and some more VG hybrids, and REPLACED them with the ETFs at VG. I also wrote to VG about this that we weren't happy with its orders for our accounts that were within stone throws of Admiral min in the next rally, if/when it came. So, I told VG that it lost assets in VG funds, although that money remains in the VG Brokerage "for now".
Using TCAF + PYLD + USFR is just an example of what I did to approximate PRWCX. I investigated the general idea of creating broad and flexible portfolios with 3 ETFs and did some backtesting with PV too. This can be found in the link below. One may see this as a variation of the Bogleheads concept of using 2-4 funds but I find their use of total markets too constraining. https://ybbpersonalfinance.proboards.com/thread/512/portfolio-allocation-3-etfs
According to TRP website, TCAF has reached $1 Billion in assets.
Would be Interesting to know how much of this money moved from other TRP funds and how much of it is new to TRP.
May be but that can be a good thing. I was very circumspect about tcaf but it has done remarkably well and kept up with SPY, notwithstanding its idiosyncratic sector allocation.
Comments
https://www.morningstar.com/etfs/arcx/tcaf/quote
NAV (as of Sept 15): $25.66
=> AUM = $216.827,000
https://www.troweprice.com/personal-investing/tools/fund-research/etf/TCAF
There are people posting here who have or are running funds; they are much better positioned to say what is needed for viability, though one has to believe that $200M+ is more than enough. (Though how much of this is seed money, we don't know.)
It's about the same size as FAN, XTN, ICSB, FXY, WDIV, and PBJ (gotta like that ticker). Generally not the broadest based ETFs around, but all seem viable.
https://www.tipranks.com/etf/etfs-by-aum
MFO premium says you can screen for top-ten holdings, but really only allows five. As it is, Giroux is competing with 98 funds that charge .50 or less, and feature the same top five holdings. If you knock out the index funds, that still leaves 27 active competitors. Ten of those competitors charge less than .31 cents.
Just looking at the etf's from those ten funds, his competitors from least to most expensive are: DFUS, PLRG, JUSA, and DFSU.
That’s more of a question than an assertion. As I said, long term there is no disputing the manager’s success. I know 20.5 months is a very short term in investing. Just find it interesting to pick apart numbers in various ways. (And investors’ investment horizons appear to be getting shorter. Giroux has mentioned in the past that 3 years is a reasonable “break-even” point for this fund. There’s little doubt he has exceeded that.
Here: (1 - 11.94%) x (1 + 12.55%) = 99.11153%, meaning that an investor's got "just" 99% of what they started with at the beginning of 2022.
I also appreciate that no one has slammed me for being sacrilegious re this great fund. Like I said, it’s fun to slice and dice the numbers in a variety of ways. I suspect most who were heavy into equities at the start of ‘22 would be happy to be back to break-even, or to 99% of the original amount at this time. BTW - The 1-year return is much better as it’s measured from a low point in ‘22. Sounds right Mike. I’ve heard him allude to both 3 and 5 year time horizons in various interviews. He’s also very good at discussing this in his semi & annual reports as well. I’ve stopped reading them, however, since exiting the fund maybe 18 months ago.
5,10, 15 years: top 1% of category.
OK by me. If additions to my account would not be non-deductible, I'd be adding.
My approximation for the closed PRWCX is a mix of TCAF + PYLD + USFR. Don't try backtesting as there is no history. But you must, use suitable mutual fund replacements that have existed for longer.
If you care to share, how would you apportion the three funds to approximate PRWCX?
Thanks,
Fred
Fred
PRWCX - often imitated, never duplicated.
It varies its equity sleeve between 56% and 72% of its assets (per M* analysis report). That's going to be hard to mirror, let alone track in real time.
Similarly, its bond holdings can vary greatly. M* shows it as "currently" (as of June 30th) having a barbell quality distribution: almost 30% AAA and over 40% single B. At first blush a 50/50-ish mix of multi-sector and AAA (treasury) funds seems like a reasonable fit. But virtually none of PYLD is below BB.
FWIW, using PIMIX as a proxy for PYLD (despite its somewhat higher average credit rating), I've identified a couple of combos (equity fund, PIMIX, and USFR) that come close to tracking PRWCX retrospectively. (An interesting, if somewhat hypothetical, exercise).
For the equity fund I used either QGIAX or CEYIX. I selected these in part because their style boxes are reasonably similar to PRWCX's - blend/growth leaning growth, large cap but not above category average.
69/20/11 allocation for each equity/PIMIX/USFR combo. The Portfolio Visualizer comparison (annual rebalancing) is here:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=7YbNGfKVXrFqHWqj0iKqUi
These combos have very close but slightly lower std dev than PRWCX (10.41% vs. 10.47 for PRWCX), very close but slightly lower Sharpe ratios (0.81 and 0.82 vs. PRWCX's 0.83). and somewhat close but lower annualized returns (9.55% and 9.43% vs. PRWCX's 9.78%).
PYLD begs the question: why? A respected management team for sure. But its track record is shorter than four months, during which time it underperformed PIMIX. I could see jumping in if there were no open alternative (e.g. buying TCAF since one cannot get into PRWCX), but that's not the case at Pimco.
I don't expect it to flounder, so buying in early doesn't seem high risk. Still, it's somewhat of a blank slate, especially at Pimco where funds are rather inscrutable.
I added VFINX to your link (by adding a benchmark ticker).
Add VFINX
Your three portfolios have market correlation that range from 94% - 96%. This leads me to believe they are highly correlated to market (VFINX = 1.0%), yet their standard deviation as well as their Max DD appear to be about 2/3 less correlated to “the market”. Though VFINX deviated (deeper) during Max DD (15% vs 10%) they all took the same amount of time to heal from their losses. One can get this information by clicking on the “I” symbol next their respective MaxDD figures.
Over the long run (your charts timeframe is 8 years), if we can accepted the higher SD (the ups as well as the downs of VFINX) it appears we achieve market returns.
1991- 2023 Comparison:
VFINX, PRWCX, QGIEX, CSIEX
Most investors don’t enjoy losing money and appreciate losing less even though the timeframe for “shallow losses” and “deep losses” appears to be the same (at least in this chart).
PRWCX’s goal of providing market returns on the up side while losing less on the downside is an investor’s challenge as well. Hope it succeeds!
For me, this started out as a broader mini-project in response to Vanguard's request to bring up several Admiral accounts for VG hybrid funds to min $50K - I posted on that. I have finally DUMPED all those hybrid funds, and some more VG hybrids, and REPLACED them with the ETFs at VG. I also wrote to VG about this that we weren't happy with its orders for our accounts that were within stone throws of Admiral min in the next rally, if/when it came. So, I told VG that it lost assets in VG funds, although that money remains in the VG Brokerage "for now".
Using TCAF + PYLD + USFR is just an example of what I did to approximate PRWCX. I investigated the general idea of creating broad and flexible portfolios with 3 ETFs and did some backtesting with PV too. This can be found in the link below. One may see this as a variation of the Bogleheads concept of using 2-4 funds but I find their use of total markets too constraining.
https://ybbpersonalfinance.proboards.com/thread/512/portfolio-allocation-3-etfs
Would be Interesting to know how much of this money moved from other TRP funds and how much of it is new to TRP.
I do not own it.