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AlphaCentric Income Opportunities - A Cautionary Tale
"No matter AlphaCentric Income Opportunities’ fate, it offers a cautionary tale about the role of bonds in a portfolio. This Fund Spy will tell that tale. Along the way, we will see why the risks the fund courted and the corners it cut laid the seeds for its rise and fall. In the end, the lesson here is simple. Investors who chase performance in an increasingly complicated and obscure fixed-income market should beware lest years of returns evaporate in a matter of months—or less." Link
Another piece of the puzzle, at least in 2021, last time I held any shares in it, was that a chunk of the distribution was ROC. At one point in the last quarter, the ROC for the year was 50% of the total distribution. The actual income was pitiful.
That was one of several threads I had comments on, but little time now. Quick post ...
Whatever happens, AlphaCentric Income Opportunities’ rise and fall is yet another example of a bond fund that flew too close to the sun and got burned.
That's a fair description of many funds, equity as well as fixed income. Funds can take on risk that don't show up in statistics like volatility or risk adjusted returns because the risks don't play out frequently. But the risks are there; not exactly in plain sight, but often clear if one looks and expands one's definition of risk beyond the usual metrics.
It's somewhat like living on a fault line. You may not experience anything for decades. Still the risk is there and sooner or later something bad is going to happen. The fault line is below ground, so you have to look for it. But it's not exactly hidden in the sense of being unknown and/or undiscoverable.
"Latent" (M*'s word)? Maybe. Discoverable? Often, and if not, that alone can serve as a yellow flag.
Just like FAIRX,SGIIX,OAKBX during 2000-10, and later 2010-17 mostly in LC tilting growth, I slowly changed to bonds, by selecting PIMIX as my first bond fund in 2010 and increasing it to over 50%, but I sold in 01/2018 and never looked back.
Then I replaced it with IOFIX for over 50% of my portfolio again. But the world experienced covid and I sold at the end of 02/2020, which is part of my system. I posted about it on the current site (https://www.mutualfundobserver.com/discuss/discussion/55299/bond-mutual-funds-analysis-act-2/p2). I started buying again at the end of March 2020 and was fully invested by April. But, IOFIX lost it's mojo in 2021 and I discarded it like I did with many others before. The lesson, I make good money with special bond funds, but I'm very careful and sell immediately when the risk is high; in fact, I sell everything anyway. I follow this song (https://www.youtube.com/watch?v=7hx4gdlfamo)
I too was heavy IOFIX from beginning of 2018 through that awful 3rd week of March 2020. A champion of the strategy and the firm, especially Tom Miner.
Junkster called it the greatest fund ever ... and I agreed with him.
IOFIX was in good company during Covid. Many got slammed. Terrible, fearful time in the markets. Perfect storm for them though.
Fortunately, they well recovered, but others like BDKNX never did. I think it's a credit to GP.
My last update with GP was November 2019, I believe. Met with them in person. The last time world was normal. And all seemed right with the fund.
I was disappointed with the odd-lot violation, but many firms (PIMCO) have been tagged with that one. The fabricated bidding for bonds they already owned is more troubling. Not sure when that occurred.
I did get back into IOFIX in late spring 2020, if I remember, thanks to Junkster's encouragement. Heavy again. I rode it all the way back, which I am very grateful for, exiting the position when it started to roll in 2022. I think many investors were quick to exit this time, as you can see in the flow data. Not wanting to make same mistake twice.
I do not know what happened after that. Do not know when Tom left GP. But IOFIX appears broken ever since. A disappointment for the firm, its investors, and me.
Comments
https://www.mutualfundobserver.com/discuss/discussion/60008/m-on-iofix#latest
I missed the prior IOFIX post.
Whatever happens, AlphaCentric Income Opportunities’ rise and fall is yet another example of a bond fund that flew too close to the sun and got burned.
That's a fair description of many funds, equity as well as fixed income. Funds can take on risk that don't show up in statistics like volatility or risk adjusted returns because the risks don't play out frequently. But the risks are there; not exactly in plain sight, but often clear if one looks and expands one's definition of risk beyond the usual metrics.
It's somewhat like living on a fault line. You may not experience anything for decades. Still the risk is there and sooner or later something bad is going to happen. The fault line is below ground, so you have to look for it. But it's not exactly hidden in the sense of being unknown and/or undiscoverable.
"Latent" (M*'s word)? Maybe. Discoverable? Often, and if not, that alone can serve as a yellow flag.
IOFIX has not recovered and outflows continue.
I also see that Tim Miner has departed Garrison Point. I was a big fan. Garret Smith, Brian Loo, and Jonathan Tran remain.
Just 2 years ago, IOFIX enjoyed more the $4B in AUM. Now, under $250M.
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IOFIX Flows and Return Data Since Inception (Absolute Scale)
Then I replaced it with IOFIX for over 50% of my portfolio again. But the world experienced covid and I sold at the end of 02/2020, which is part of my system. I posted about it on the current site (https://www.mutualfundobserver.com/discuss/discussion/55299/bond-mutual-funds-analysis-act-2/p2).
I started buying again at the end of March 2020 and was fully invested by April. But, IOFIX lost it's mojo in 2021 and I discarded it like I did with many others before.
The lesson, I make good money with special bond funds, but I'm very careful and sell immediately when the risk is high; in fact, I sell everything anyway.
I follow this song (https://www.youtube.com/watch?v=7hx4gdlfamo)
I too was heavy IOFIX from beginning of 2018 through that awful 3rd week of March 2020. A champion of the strategy and the firm, especially Tom Miner.
Junkster called it the greatest fund ever ... and I agreed with him.
IOFIX was in good company during Covid. Many got slammed. Terrible, fearful time in the markets. Perfect storm for them though.
Fortunately, they well recovered, but others like BDKNX never did. I think it's a credit to GP.
My last update with GP was November 2019, I believe. Met with them in person. The last time world was normal. And all seemed right with the fund.
I was disappointed with the odd-lot violation, but many firms (PIMCO) have been tagged with that one. The fabricated bidding for bonds they already owned is more troubling. Not sure when that occurred.
I did get back into IOFIX in late spring 2020, if I remember, thanks to Junkster's encouragement. Heavy again. I rode it all the way back, which I am very grateful for, exiting the position when it started to roll in 2022. I think many investors were quick to exit this time, as you can see in the flow data. Not wanting to make same mistake twice.
I do not know what happened after that. Do not know when Tom left GP. But IOFIX appears broken ever since. A disappointment for the firm, its investors, and me.