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VELIX Portfolio Parameters: Benchmark Russell 100; Typical Number of Positions Long: 40-60, Short 20-30; Typical Net Exposure 100%; Typical Total Long Exposure 80-100% of net assets; Total Short Exposure 0-30% of net assets; Maximum Industry Exposure 20%; Maximum Position Size 6%; Minimum Market Cap $3B (at cost); Maximum Cash Position 20%.
@Baseball_Fan In response to your July 21 question about VELIX being a 130/30, the co-manager, Lisa Wesolek, with whom I have been pretty tight since my profile ran, writes as follows. "Yes, we did initially intend it to be a 130/30. We knew they had fallen out of favor but thought it would be a good idea/timing to Introduce a new strategy with the experience we had as you noted above.
We had some strategic conversations with a couple of outside analysts that knew us and the reputation for Ric's experience with Diamond Hill's long- short (Dennis here: Rick Dillon ran a long-short fund at Diamond Hill asset management when he worked there.) as you also aptly noted. (After we launched, they became aware Ric was back in business and contacted us).
With respected input and much discussion, Ric and Kyle made the decision to change the focus and name to allow the team to not be "constrained" by the "having" to maintain a short position if the market conditions and therefore the managers felt the value was not there on finding good shorts. Also making the decision of adding the use options, puts, and calls.
I don't think there is anything to read into the decisions via the DHIL L/S necessarily. In some of our discussions regarding previously managing long short it was noted one of the challenges received most from investors, concerned the shorts. The performance would most often be in the long book, finding short ideas was often challenging. (Disclaimer, no idea what or how DHIL manages L/S post 6/30/2018).
Ric and Kyle (Dennis here. Ric and Kyle are the co-managers of VELIX) felt going Large Cap Plus eliminating the constraint of having to maintain a percentage of shorts but using shorting more strategically and adding the additional mechanisms for helping to hedge would be more compelling.
I hope that helps. Happy to chat more or set you up with a call with Ric or Kyle."
Are there any :L/S funds with a strict mandate to have X% of shorts? I have not delved into this space enough but what would be the reason to have a minimum short requirement, unless it is a fund?
@Dennis Baran, thanks again for not only your reply but also soliciting a reply from a principal at the fund company. Very helpful.
@BaluBalu... getting back to you with my reply... I've made it clear in prior threads that I'm extremely risk averse... I do have substantial financial assets ( 8 figures) and am not looking to get greedy. Furthermore, I'm of the opinion that the markets have been juiced by insane fiscal and monetary inputs as well as the somewhat ponzi structure of it due to index fund flows and stock options issuance as well as buy backs. Not sure.
So I'm on the look out for what some have recently described as boomer candy. Exposure to markets but with a shock absorber approach that might mitigate a severe downturn in the markets.
PHEFX t Rowe hedged equity is one fund mentioned prior but I also believe that VELIX likely is a very good candidate. I also really like that you have a veteran running the fund along with a still experienced and well educated co manager who is younger also at the helm.
VELA will see some of my investment monies in the near future... I'll be phasing in slowly over the next several months.
Not all boomer candy provide downside protection. VELIX May provide downside protection through its shorts and options but as an active fund that does not have mandatory hedging like JHEQX, VELIX hedging results can only be viewed in hindsight but can not be anticipated. Let us know how the manager fared during Covid vs JHEQX.
For the results you are looking for, there can be plenty of opportunities in fixed income, and perhaps with much less volatility. Good luck.
Fixed income, even in junk land, is holding up pretty well today. Even though spreads are suffocatingly tight, look forward to VELIX performance against fixed income during the current equity reset.
@BaluBalu...I already have a high majority of my investment portfolio in Tbills, US Treasury mmkt's, Tnotes 2 years or less and some CDs from major banks...am looking at VELIX for exposure to the stock market...not sure having shorts on all the time makes sense...I'd then just lower exposure to stocks and add to cash holdings.
A better comparison set would be VELIX vs VFINX (Vanguard equiv to SP500), no?...and looking out over the next 5 years...I'd would and AM taking the VELIX side of that wager...we'll see...
I am reading your objective with VELIX is to beat SPY over a 5 yr period, starting now, which is a narrow, targeted focus than the broader theme you explained 2 days ago which prompted my suggestion to look at the broader fixed income space.
What %age of your portfolio are you targeting VELIX and equities in general?
BTW, I personally know people of 8 and 9 figure portfolios with 95% equity exposure. I also know people with 8 and 9 figure portfolios that are 100% in fixed income. Each group is motivated by maximizing their long-term wealth for the unit of Risk they take. The definition of Risk likely varies but they all play primarily in equity or below A rated credit.
I could see over the next several years stepping into VELIX to be 10%-15% of the portfolio...I'm likely a couple years away from stepping away from the corporate work environment...who knows, still enjoying most days what I do...and am therefore in that danger zone, within 5 years of retirement (whatever that means, right?) and post 5 years retirement...I'm very very high in cash equiv's, like over 90%...works for me, wouldn't recommend it for most but I should be transparent and state my wife and I were in the highest tax bracket for quite a few years...so what we left on the table with the uptick in markets we overcame slippage of inflation with salary/bonus/stock options etc...fully acknowledge that I've been actually taking on risk by being too conservative but on days like this, I'm going for a bike ride this evening and not overly concerned about what the markets are doing...back in my younger days, in the 20's and 30's, was uber aggressive in the stock market...not anymore...
Did MRFOX say if they are going to provide month end portfolio stats (or at least cash level) or do we have to wait for quarter end stats? Monthly commentary could be a lot to ask for.
Comments
Investment Objective: Long-term capital appreciation.
As of 6/30,
Number of Holdings Long/(Short)/Options 66/(24)/60
Gross / Net Exposure 109%/93%
$67M AUM (inception date 9/30/2020)
At the bottom of the page are risk statistics.
@baseball_fan, Do you mind cluing us in what your goal with this fund is (i.e., what role you would like this fund to fill)?
We had some strategic conversations with a couple of outside analysts that knew us and the reputation for Ric's experience with Diamond Hill's long- short (Dennis here: Rick Dillon ran a long-short fund at Diamond Hill asset management when he worked there.) as you also aptly noted. (After we launched, they became aware Ric was back in business and contacted us).
With respected input and much discussion, Ric and Kyle made the decision to change the focus and name to allow the team to not be "constrained" by the "having" to maintain a short position if the market conditions and therefore the managers felt the value was not there on finding good shorts. Also making the decision of adding the use options, puts, and calls.
I don't think there is anything to read into the decisions via the DHIL L/S necessarily. In some of our discussions regarding previously managing long short it was noted one of the challenges received most from investors, concerned the shorts. The performance would most often be in the long book, finding short ideas was often challenging. (Disclaimer, no idea what or how DHIL manages L/S post 6/30/2018).
Ric and Kyle (Dennis here. Ric and Kyle are the co-managers of VELIX) felt going Large Cap Plus eliminating the constraint of having to maintain a percentage of shorts but using shorting more strategically and adding the additional mechanisms for helping to hedge would be more compelling.
I hope that helps. Happy to chat more or set you up with a call with Ric or Kyle."
Lisa
@BaluBalu... getting back to you with my reply... I've made it clear in prior threads that I'm extremely risk averse... I do have substantial financial assets ( 8 figures) and am not looking to get greedy. Furthermore, I'm of the opinion that the markets have been juiced by insane fiscal and monetary inputs as well as the somewhat ponzi structure of it due to index fund flows and stock options issuance as well as buy backs. Not sure.
So I'm on the look out for what some have recently described as boomer candy. Exposure to markets but with a shock absorber approach that might mitigate a severe downturn in the markets.
PHEFX t Rowe hedged equity is one fund mentioned prior but I also believe that VELIX likely is a very good candidate. I also really like that you have a veteran running the fund along with a still experienced and well educated co manager who is younger also at the helm.
VELA will see some of my investment monies in the near future... I'll be phasing in slowly over the next several months.
Thanks again,
Baseball fan
For the results you are looking for, there can be plenty of opportunities in fixed income, and perhaps with much less volatility. Good luck.
A better comparison set would be VELIX vs VFINX (Vanguard equiv to SP500), no?...and looking out over the next 5 years...I'd would and AM taking the VELIX side of that wager...we'll see...
I am reading your objective with VELIX is to beat SPY over a 5 yr period, starting now, which is a narrow, targeted focus than the broader theme you explained 2 days ago which prompted my suggestion to look at the broader fixed income space.
What %age of your portfolio are you targeting VELIX and equities in general?
BTW, I personally know people of 8 and 9 figure portfolios with 95% equity exposure. I also know people with 8 and 9 figure portfolios that are 100% in fixed income. Each group is motivated by maximizing their long-term wealth for the unit of Risk they take. The definition of Risk likely varies but they all play primarily in equity or below A rated credit.
I could see over the next several years stepping into VELIX to be 10%-15% of the portfolio...I'm likely a couple years away from stepping away from the corporate work environment...who knows, still enjoying most days what I do...and am therefore in that danger zone, within 5 years of retirement (whatever that means, right?) and post 5 years retirement...I'm very very high in cash equiv's, like over 90%...works for me, wouldn't recommend it for most but I should be transparent and state my wife and I were in the highest tax bracket for quite a few years...so what we left on the table with the uptick in markets we overcame slippage of inflation with salary/bonus/stock options etc...fully acknowledge that I've been actually taking on risk by being too conservative but on days like this, I'm going for a bike ride this evening and not overly concerned about what the markets are doing...back in my younger days, in the 20's and 30's, was uber aggressive in the stock market...not anymore...
Kind Regards,
BF
Did MRFOX say if they are going to provide month end portfolio stats (or at least cash level) or do we have to wait for quarter end stats? Monthly commentary could be a lot to ask for.