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PRPFX has approximately 35% of its assets in Treasuries. Some commentators are suggesting that there is a "bubble" in Treasury prices and it is about to burst. I'm not one to try to time the market, but is it time to sell PRPFX?
Well, I sold. This fund has had a great 10 year run (same as gold and bonds) and was very good to me in reducing overall portfolio volatility. I don't see it doing as well in the next 5-10 years. I think it will still be low risk, but I would guess lower returns going forward.
Last year PRPFX was 15% of my portfolio. I've since distributed that money into PGDPX and PAUIX.
Depends why you bought it. Mike's probably right. I don't expect anything going forward like the outsized returns of the past decade - helped by the once in a lifetime bull markets in gold and Treasuries. And I'm probably not the only person around here who's somewhat skeptical of the "one-man band" running the show and his propensity for mug shots at CNBC. To its credit - and to the surprise of many - the fund achieves a low-moderate degree of volatility by investing in some pretty volatile areas (long bonds, precious metals, foreign currencies, real-estate, natural resource companies, and growth stocks). Up until now they've been successful in balancing one or more of these against the other(s). I'm not sure whether that will continue to work over the next decade. (And, I'm not entirely clear on how he makes it work.) I do think the fund's reputation as a "satic" allocation fund is a bit over-stated. They do make changes in duration on the bonds and have shortened in recent years. I believe similar adjustments take place among their other allocations as well - based on their analysis of past and current market trends. (In other words, they're not idiots.) I purchased a small slice a year ago to include In the "alternate investments" portion of my portfolio. As such, it represents around 5-7%. As a diversifier - in this sense, I'm pleased. However, not expecting anything like the past stellar returns. One more note: Fund flows for PRPFX in recent year(s) have been negative. Not a good sign - and could adversely affect near-term performance. Also, David's written extensively on the fund within the past year. A "must-read" for anyone considering this fund. Regards
It has always been a small part of my IRA portfolios, including taxable since has good tax efficiency and I'm 15% tax bracket. However, percent varies and is in lower end now.
Reply to @hank: Thanks for the recap Hank. David's article is what got me thinking of divesting from this fund. Not that I think it's a bad fund. I just think there are better alternative/allocation funds going forward.
Thank you all for the amazing analysis and links. I have been a bit over extended in PRPFX, by by that I mean not fully understanding it. I have always been troubled by their rigid allocations (now I understand that is the philosophy they follow). I think it would be better if they could work within ranges within each of the 4 classes, but still maintain exposure within each.
I would not get too excited about what "might" happen to PRPFX. Yes, the fund has benefitted from a long period of declining interest rates and a period of time when Treasuries have been very popular. The total bond allocation has dropped from about 35% in 2008 to 28% this year. The fund's average duration is between 3 and 4, which puts it in the low end of government bond funds. For example, VUSTX has a duration of more than 15. THAT could be a disaster in the making. I don't think PRPFX's Treasury holdings are any real danger, given Mr. Cuggino's working to reduce duration and total bond holdings. Yes, there is risk with PRPFX, but less risk than owning a portfolio of long-term bonds or a portfolio of growth stocks. The fund's ability to withstand tsunamis is pretty decent. But I would capture gains to keep the allocation percentage in check, just like any fund.
Comments
Last year PRPFX was 15% of my portfolio. I've since distributed that money into PGDPX and PAUIX.
http://www.mutualfundobserver.com/2012/04/april-1-2012/
http://www.mutualfundobserver.com/discussions-3/#/discussion/comment/10384