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High Yield Bond

I am looking for funds or ETF's to add to my watch list. What funds are best in class? Looking for a fund or ETF with SD of 5.20% or less. Anything better than OSTIX's metrics? PIMIX.

Comments

  • I assume you must be looking at 10 yr SD? Because OSTIX and PIMIX have SD higher than 5.20 for 5 yr and 10 yr according to Morningstar (as of 9/30).

    Below is a comparison of RSIIX, OSTIX and PIMIX per Morningstar:

    3 Yrs 5 Yr 10 Yr

    RSIIX
    Returns (10/27/23) 6.21% 3.90% 3.88%
    Risk (09/30/23)
    Sharpe 1.05 0.31 0.54
    Std Dev 3.63 7.01 5.23
    Upside 61% 62% 65%
    Downside (22%) 10% 1%

    OSTIX
    Returns (10/27/23) 2.91% 3.40% 3.63%
    Risk (09/30/23)
    Sharpe 0.31 0.27 0.57
    Std Dev 5.44 5.95 4.68
    Upside 89% 72% 69%
    Downside 14% 27% 9%

    PIMIX
    Returns (10/27/23) 0.07% 2.12% 3.73%
    Risk (09/30/23)
    Sharpe (0.21) 0.11 0.60
    Std Dev 5.77 6.18 4.67
    Upside 105% 86% 91%
    Downside 48% 55% 33%

  • Also, not sure SD would be my only filter.
  • Thanks for data. SD is the first filter to narrow ideas for what I need. I think you mean 3 and 5 year.
  • Unlike Mr. Sherman, I assumed the OP was talking about 3 yr stddev, because OSTIX's 5.46% is close to the target 5.20%. The latter is just enough lower to make it worth looking at a fund that is at least that much "better". In contrast, OSTIX's 10 yr stddev of 4.68% is not close to the 5.20% target.

    Here's another fund that beats OSTIX over 3, 5, and 10 years with 3 year std dev below 5.2%.

    MDHIX (avail @$2500 min in Fidelity IRAs)
    Returns (10/27/23) 3.68% 3.64% 3.96%
    Risk (09/30/23)
    Sharpe 0.46 0.28 0.58
    Std Dev 4.24 6.26 5.13
    Upside 78% 75% 78%
    Downside 6% 29% 14%
  • I used PV to get the SD. Long enough ball park time frame. 1/2008 to 9/2023 for PIMIX and OSTIX. Time period year to year. Thanks for MDHIX. I will look at it.
  • edited October 2023
    Funds mentioned have a bulge in 5-yr SDs. That is because they have full impact of pandemic 2020. The 3-yr window is just getting out of the main pandemic hit, and 10-yr reduces the pandemic impact as there are many non-pandemic years. That is why it is also useful to look at charts beyond summary statistics.

    Another thing to note is that funds evaluated are of different types - ST-HY, IT-HY, multisector (that includes sovereigns + corporates + HYs + EMs), so they are expected to behave somewhat differently.

    HY indexed ETFs are HYG, USHY, JNK, etc.
  • Lets drill down. Are there any funds or ETF's with less than PIMIX 15 year SD of 5.18% that has a CAGR greater than PIMIX 6.50%? Category doesn't matter to me.
  • edited October 2023
    @shipwreckedandalone ( do you know that MFO doesn't auto-fill-in usernames, and all letters in your name have to typed for MFO tag?), I have PIMIX available in my 403b. It's a giant fund and has been in the news for large inflows (see a thread nearby). But its 30-day SEC yield on 5.46% (only; 9/30/23) gave me a pause - that is its potential future LT return. I have higher paying SVs (TIAA Traditional) also available. I am looking into it - may be it is very conservatively positioned now.

  • edited October 2023
    BINC is a new fund on my watch list. Inception 5/19/23. MultiSector Bond fund with Rieder. Too early to tell ...but probably higher SD than PIMIX.
  • edited October 2023
    There is PIMIX cousin etf PYLD too (30-day SEC yield 5.85%, 10/27/23).
  • edited October 2023
    Yogi, as always thanks for your input. Sorry about the long user name. OSTIX PIMIX has metrics comparable to some good Mod Cons balanced funds but much less MD.
  • I also have HY VWEAX available in my 403b. Surprisingly, VWEHX and multisector PIMIX track each other quite well although they are very different funds. VWEHX SDs are a bit higher: 7.83, 8.74, 6.77, but its 30-day SEC yield is better at 7.84%. So, I have decided to add some to VWEHX instead of PIMIX.
    https://stockcharts.com/h-perf/ui?s=PIMIX&compare=VWEAX&id=p55691218153
  • I'll add VWEAX to watch list with note of higher SD.
  • PHYSX (PIA High Yield) has performed quite admirably over pretty much every time period.
  • edited October 2023
    I noticed that VWEAX had double the MD of OSTIX in both 2020 and the GFC era. However, CAGR over 15 years is OSTIX 5.23% VWEAX 5.38% relatively close.
  • Periods like GFC 2008-09, pandemic 2020, recession and credit freeze are problematic for ALL HY - ST-HY, IT-HY, even multisector funds that include HY.

    But the current thinking is that recession has been cancelled for now.
  • M* has OSTIX as High Yield. My research showed David wrote an article on OSTIX.
  • I have watched OSTIX for years but never got into it. It has strategic in its name but has never ventured beyond HY. Here is the MFO piece,
    https://www.mutualfundobserver.com/2023/04/osterweis-strategic-income-ostix-fund/
  • edited October 2023
    +1 Yes - Nice interview. Some insights into bond investing. This week’s Barron’s refers to BINC (incorrectly) as a “high yield” fund. Not really. Rieder addresses various allocations. My readings on M* previously suggested around 35% HY. But it looks like it’s currently a lot lower than that. He really likes international. Perhaps waiting for ”the worm to turn” (against the Dollar) in the FX markets …

    Interviewer (Bob Pisani / CNBC) mentions the .40% ER. Neglected to add that that’s after a fee waiver.
    From the Prospectus: ”As described in the “Management” section of the Fund’s prospectus beginning on page 21, BFA has contractually agreed to waive 0.10% of its management fee payable, through June 30, 2025.”

    FWIW - I recently moved from JPIB into BINC. But the former is an excellent fund. Folks wanting to overweight international bonds might take a look at it. If I wanted an additional bond etf it would be JPIB.
  • @hank and @shipwreckedandalone: I watched the interview also. Did either of you get the sense that Rieder, for all his smarts, was making the best case for his fund with the goal of attracting assets? I suppose one could feel the same way about any of the PMs who give interviews, but I don’t normally find them to be doing marketing.
  • edited October 2023
    Raider is a glass half full guy. Good interview.

    When does ETF Edge air?
  • edited October 2023
    BenWP said:

    Did either of you get the sense that Rieder, for all his smarts, was making the best case for his fund with the goal of attracting assets?

    Great question @BenWP

    Hard to say. What manager doesn’t want more assets? Nearly included in my earlier post: ”Rieder could sell ice to (the proverbial) Eskimo”

    But I felt it would be a bit unfair. Have watched him a few times on Bloomberg Wall Street Week and that’s just the way he typically is. Always seeing the glass ”half full” as BaluBalu said. In my mind, his professional integrity is very high.

    Certainly a lot of “experts” extolling bonds in today’s climate. Someone (likely a Barron’s contributor) commented that 1-3 years out they thought bonds would do better than equities, but that 5+ years out they liked equities better. Personally, I’ll side with a Mark Twain comment from Life on the Mississippi when his riverboat mentor asked him what the next bend in the river ahead was called - “I told him I didn’t know.”

    Anybody see a likeness to Peter Lynch? Lynch was a glass half-full guy. Always finding something good to invest in. Claimed his wife would return home from shopping for clothing & accessories with valuable insights into what companies to buy. I don’t know whether or not Lynch attracted any new assets into Magellan … Anybody remember?:)
  • Great interview on BINC.

    https://www.cnbc.com/etf-edge/

    He knows what he's talking about. I like to listen to him. So much crammed into 12 minutes, eh?
  • My all-time favorite glass half full guy: Frank Capiello, Wall Street Week.
  • @BenWP Always talk your book.
  • Reider (BlachRock), Ivascyn (Pimco), Giroux (T Rowe Price) are fund managers as well as CIOs of their respective firms. It's now part of their JOBS to talk up their firms to pickup some loose change. In fact, any fund manager on TV has some agenda and he/she isn't there out of goodness of heart or for public service.
  • truth. And yet, they are so knowledgeable.
  • @shipwreckedandalone: when I start thinking that an EM bond sounds like a can't-miss idea, I need to pinch myself.
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