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.
WABAC, My plan penalizes rollovers for those under 59 1/2. -- The punishment is 6 months of no contribution (which means I pay more taxes this year) -- which also means 6 months without a 7% company match.
Thanks. I was jumping the gun. You still need to retire.
Only problem I see with REMIX/BLNDX, is that 50% of the portfolio is in ultra cheap ETFs to get market “beta” and the other half is in the actual alternative strategy. The expense ration is 1.5% for the cheaper share class. Most of us have the market exposure already so might as well save the 1.5% and get a fund that just concentrates on the strategy your interested in and doesn’t just charge you an exorbitant fee for 50% exposure to what you most likely already own.
Well, Dutch, that sounds simple enough. But, can you give me an example of how you would replicate BLNDX's other half "in the actual alternative strategy"? Thanks, Fred
And the issue which you cite -- essentially paying a E/R on the whole portfolio, even though you could replicate half the portfolio on a DIY basis -- is a real issue. That issue has existed for decades in the bond fund arena. Where core bond managers are loaded to the gills with Treasurys/Agencies, and then sprinkle in 5% junk bonds. -- We can do Treasurys/Agencies on our own, but given the enormous amounts of AUM in the core bond space, a lot of investors choose to alleviate themselves of DIY management.
In the case of BLNDX/REMIX, the manager addressed the issue in a YT interview several months back. Specifically, the asset mix is in part, intended to address behavioral finance behavior on the part of individual investors. To the extent the disparate parts of BLNDX decrease volatility, it is hoped investors don't panic and sell at the worst possible moment. That is why they market this fund as an 'all-weather' fund.
Of course the manager's argument is self-serving. But I find the rationale he offers as reasonably persuasive.
We have been discussing alternative (several categories here) funds for over 10 years. They look great SOMETIMES when markets go down but then don't keep up with the market. I have looked at AQR years back too. Many of their funds are a black box, no way to know what their model would do. AQR managers have been doing this for many years. QDSNX invests in other AQR funds. REMIX is a multi-asset and keeps changing funds.
Since you are looking at alt funds, I would look at others. I sorted by highest Sharp and used the following screen(link) Then, I used SD < 10 + Sharpe > 1 and clicked on overview(link) Then, I looked for the best combo for 1-3 years of performance + YTD=good performance + good 1 month performance. The idea is to find good funds with good risk/reward for 1-3-12 months(for traders) + 1-3 years(less traders). I believe that these funds are more for traders and holding for years is too long.
GONIX=L/S This one has the best combo of Sharpe, SD, and performance QDSNX=Multistrategy. Another good combo of Sharpe, SD, and performance VMNIX=Equity Market Neutral QQMNXEquity Market Neutral
I like GONIX+QDSNX/QDSIX, but prefer QDSIX right now.
What's the key word in this sentence? "Right now".
If you compare these alternative funds to other more traditional equity funds you own, they are either going to look real good, or look bland when the market is spiking up. I don't think you chase them for 'right now' and give up on it when it's not returning the same as your straight equity funds. I see a fund like BLNDX as a complimentary fund in a overall portfolio to smooth out the ride. It could be QDSNX or even the long standing all weather fund, PRPFX, for that matter.
Are alternative strategies needed? Of course not. I'm a believer a balanced equity/bond/cash portfolio will do everything you need. But I still hold BLNDX and a couple other funds to reduce volatility even in the slightest.
Mike, you are correct, we don't need ALT funds. Why not go even further, Buffett has been telling us that all you need is the SP500. The idea is to discuss all kinds of subjects and let investors decide what to do.
If I'm not mistaken, Fred is looking at a very risk/reward portfolio, I'm looking for a very low SD portfolio at all times(never lose more than 3% from any last to) + beat 50/50 + make money annually ...and balanced equity/bond/cash can not achieve it...but I did.
I see MikeM mentioned PRPFX above. It's been on a roll for awhile. The question I'll ask, is it time to buy more ? Reply if you have time & thanks for any replies .
@Derf, in one of the rare times now, energy and gold/silver are both moving up, and PRPFX is overweight in both of them. It's stocks are doing well too. That explains why it's on a roll.
QDSNX looks like an interesting fund. Rather than invest directly with this fund, I decided to put money into sort of a modified “best of” of this fund and made a combination of 3 of the underlying funds. Looking at the returns, the diversified arbitrage fund component seemed like dead money, so I wanted to eliminate that. I wanted to choose one fund between Macro opportunities fund, managed futures strategy HV fund, and style Premia alternatives fund (as these seem to be in a similar category of funds). I went with the premia alternatives fund, as plotting the returns of these funds on a chart, just going with the “eyeball” test, that fund looks the best (it also has the best alpha and sharpe ratio for the past 3 years among the 3), The market neutral fund is another component of QDSNX, but comparing it to the long-short fund by AQR (which is not in QDSNX), the long-short fund passes the eyeball test looking at the chart beteeen the 2. The long-short fund has better alpha and sharpe ratio over the last 3 years, and the standard deviation isn’t much different. The long-short fund looks close to a market neutral fund (the website describes it’s holdings as 237% of NAV long, 216% of NAV short). So I decided to go with 1/3rd multi-asset fund (another underlying fund of QDSNX), 1/3rd style premia alternative fund, and 1/3rd long-short fund. We’ll see if that combination beats out QDSNX.
@Chinfist Did you read my mind ? I didn't get around to looking at each of the funds that make-up QDSNX. Thanks for doing the leg work. Will you keep us inform as you go forth with your combo. How is the ER going to work out going with the three of your choice ?
Using Chinfist's above three fund suggestions, I decided to use Portfolio Visualizer to compare 1/3rd multi-asset fund (AQRNX)), 1/3rd style premia alternative fund (QSPNX), and 1/3rd long-short fund (QLENX) with QDSNX for the available period of July 2020 to March 2024:
Fund: CAGMAX DDSD SHARPESORTINO
QDSNX 13.4% -4.6% 6.9% 1.5 3.1
CHINFIST 18.5 -13.6 12.2 1.3 2.6
As a conservative and retired investor I might still go with QDSNX. At this later stage of my life, and quoting a poster from another forum (BBI): " I don't really need a lot more money, but I certainly don't want to lose a lot".
According to M* QDSNX has 6 funds + cash. The idea of this fund is that the managers may change the number of the funds and definitely the % invested in each. I wouldn't invest in 3 or 6 funds instead of QDSNX.
What stood out for me as a retired and conservative investor in the above Portfolio Visualizer results were the significant differences in Standard Deviation (6.9% vs. 12.2%), and Maximum Drawdown (-4.6% vs. -13.6%).
Investors with a different time horizon will probably see it differently.
All this love for QDSNX...kiss of death. It finally had a down day. Let's see if we are still enamored with this fund a year from now. Hopefully that low SD continues via it's diversified holdings.
Thinking of pairing it with PRCFX to see if a moderately-conservative allocation can beat it going forward, albeit with higher expected SD....just in case the "black box" lays an egg.
Thanks @Edmond. I was just going take a peek , & guest I'll check on PRCFX. DOWN .8%.
On that day, both equities and bond indices took a hit (approx. -1%). Allocation funds like PRCFX cannot be expected to weather that type of storm as well as a wild card like QDSNX. Thus the value of holding a QDSNX.
The Fed has mentioned less # of interest rate cuts in late 2024 than previously projected, but this market just keeps truckin (for now). Agree with @Edmond, waiting to add to other funds if/when we get a broad selloff. Feels like it will never arrive, though futures are down today.
Side note: MAFIX (MAFAX) is another fund that CAN hold up on down market days. Holds futures.
What else is working over the past month is commodity funds, agriculture specifically (DBA), but commodities such as gold, energy and others seem to be zigging when the general stock market zags. For momentum followers, is commodities the place to be now?
It doesn’t appear that QDSNX is available to individual investors at Schwab ….only for Institutional. Please let me know if you see otherwise. I can purchase it in my TSP…
I entered the trade at Schwab and get "We cannot process your order for this fund. Please contact a Schwab representative for assistance." The above = not available.
Comments
Thanks,
Fred
And the issue which you cite -- essentially paying a E/R on the whole portfolio, even though you could replicate half the portfolio on a DIY basis -- is a real issue. That issue has existed for decades in the bond fund arena. Where core bond managers are loaded to the gills with Treasurys/Agencies, and then sprinkle in 5% junk bonds. -- We can do Treasurys/Agencies on our own, but given the enormous amounts of AUM in the core bond space, a lot of investors choose to alleviate themselves of DIY management.
In the case of BLNDX/REMIX, the manager addressed the issue in a YT interview several months back. Specifically, the asset mix is in part, intended to address behavioral finance behavior on the part of individual investors. To the extent the disparate parts of BLNDX decrease volatility, it is hoped investors don't panic and sell at the worst possible moment. That is why they market this fund as an 'all-weather' fund.
Of course the manager's argument is self-serving. But I find the rationale he offers as reasonably persuasive.
REMIX is a multi-asset and keeps changing funds.
Since you are looking at alt funds, I would look at others. I sorted by highest Sharp and used the following screen(link)
Then, I used SD < 10 + Sharpe > 1 and clicked on overview(link)
Then, I looked for the best combo for 1-3 years of performance + YTD=good performance + good 1 month performance.
The idea is to find good funds with good risk/reward for 1-3-12 months(for traders) + 1-3 years(less traders). I believe that these funds are more for traders and holding for years is too long.
GONIX=L/S This one has the best combo of Sharpe, SD, and performance
QDSNX=Multistrategy. Another good combo of Sharpe, SD, and performance
VMNIX=Equity Market Neutral
QQMNXEquity Market Neutral
YTD chart (https://schrts.co/XyAvVZZW)of QDSNX,GONIX,QQMNX,REMIX,VMNIX. Then I changed to one years.
I like GONIX+QDSNX/QDSIX, but prefer QDSIX right now. See 2 months chart, and especially the last 2 weeks (https://schrts.co/TvuGTWaT).
Fred, thank you for an interesting research.
If you compare these alternative funds to other more traditional equity funds you own, they are either going to look real good, or look bland when the market is spiking up. I don't think you chase them for 'right now' and give up on it when it's not returning the same as your straight equity funds. I see a fund like BLNDX as a complimentary fund in a overall portfolio to smooth out the ride. It could be QDSNX or even the long standing all weather fund, PRPFX, for that matter.
Are alternative strategies needed? Of course not. I'm a believer a balanced equity/bond/cash portfolio will do everything you need. But I still hold BLNDX and a couple other funds to reduce volatility even in the slightest.
The idea is to discuss all kinds of subjects and let investors decide what to do.
If I'm not mistaken, Fred is looking at a very risk/reward portfolio, I'm looking for a very low SD portfolio at all times(never lose more than 3% from any last to) + beat 50/50 + make money annually ...and balanced equity/bond/cash can not achieve it...but I did.
But the platforms I use (Fido, Schwab), the high minimums are a non-starter for me.
PRPFX the perm fund is behind for years + much higher volatility. See (https://schrts.co/ygVNgMYi)
Fund: CAG MAX DD SD SHARPE SORTINO
QDSNX 13.4% -4.6% 6.9% 1.5 3.1
CHINFIST 18.5 -13.6 12.2 1.3 2.6
As a conservative and retired investor I might still go with QDSNX. At this later stage of my life, and quoting a poster from another forum (BBI): " I don't really need a lot more money, but I certainly don't want to lose a lot".
Good luck,
Fred
What stood out for me as a retired and conservative investor in the above Portfolio Visualizer results were the significant differences in Standard Deviation (6.9% vs. 12.2%), and Maximum Drawdown (-4.6% vs. -13.6%).
Investors with a different time horizon will probably see it differently.
Fred
Thinking of pairing it with PRCFX to see if a moderately-conservative allocation can beat it going forward, albeit with higher expected SD....just in case the "black box" lays an egg.
DOWN .8%.
The Fed has mentioned less # of interest rate cuts in late 2024 than previously projected, but this market just keeps truckin (for now). Agree with @Edmond, waiting to add to other funds if/when we get a broad selloff. Feels like it will never arrive, though futures are down today.
Side note: MAFIX (MAFAX) is another fund that CAN hold up on down market days. Holds futures.
S&P -(1.46%), Nasdaq -(1.62%), Bonds (AGG) + 0.19%
QDSNX +0.16%
REMIX -(1.12%)
PVCMX -(0.24%)
The above = not available.