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Today, EMPIX is down 2.4%, SHRIX down 3.13%, but CBYYX is unchanged. Very inconsistent if the effect is from Helene devastation. On May 3rd, CBYYX was hit the hardest and SHRIX was unchanged.
@BaluBalu. You may have seen the above update on the pricing discrepancies. Reminds me of the fair market pricing of international funds. The cat bond managers marked down the navs of their cat bonds at their discretion due to the impending hurricane. The CBYYX managers chose not to.
Today, EMPIX is down 2.4%, SHRIX down 3.13%, but CBYYX is unchanged. Very inconsistent if the effect is from Helene devastation. On May 3rd, CBYYX was hit the hardest and SHRIX was unchanged.
@BaluBalu. You may have seen the above update on the pricing discrepancies. Reminds me of the fair market pricing of international funds. The cat bond managers marked down the navs of their cat bonds at their discretion due to the impending hurricane. The CBYYX managers chose not to.
I mentioned earlier in the thread about the potential for the smooth ride and then sudden drops as a feature of mark to market discretion of thinly traded securities. You are well versed with this notion with IOFIX. So, one may not be enthralled with the smooth ride or despair with the sudden drops, unless one happens to be unlucky with timing.
CBYYX -2% EMPIX 1% (between yesterday and today, EMPIX is ahead of CBYYX) SHRIX -2.9% (another 3% down day - having a larger AUM and thus a better scope for diversification did not seem to help.)
junkster wrote: "Regarding CBYYX where a few are invested including me. I re entered this fund in July after Hurricane Beryl had no impact whatsoever. Hurricane Beryl was a cat 5 and broke all sorts of meteorological records. Yet none of the cat bonds got hit. Since Beryl the cat bonds have been the best performers in Bondville even outperforming the S@P. Oddly enough almost all the gains have come on Fridays."
regarding Friday gains, i found this today on the artemis website that perhaps explains why that day is special:
"Investment managers are working to incorporate their projections and estimations of potential losses from major hurricane Milton into their catastrophe bond and ILS portfolios. Managers of 40’s Act registered US mutual fund structures need to mark their portfolios with a fund price daily, based on net asset value. This is a challenge given the catastrophe bond market only marks its positions on a Friday ...."
that being the case, it'll be interesting to see what this friday brings ...
junkster wrote: "Regarding CBYYX where a few are invested including me. I re entered this fund in July after Hurricane Beryl had no impact whatsoever. Hurricane Beryl was a cat 5 and broke all sorts of meteorological records. Yet none of the cat bonds got hit. Since Beryl the cat bonds have been the best performers in Bondville even outperforming the S@P. Oddly enough almost all the gains have come on Fridays."
regarding Friday gains, i found this today on the artemis website that perhaps explains why that day is special:
"Investment managers are working to incorporate their projections and estimations of potential losses from major hurricane Milton into their catastrophe bond and ILS portfolios. Managers of 40’s Act registered US mutual fund structures need to mark their portfolios with a fund price daily, based on net asset value. This is a challenge given the catastrophe bond market only marks its positions on a Friday ...."
that being the case, it'll be interesting to see what this friday brings ...
You conveniently didn’t mention the rest of my post where I said I was exiting CBYYX and why.
I suspect when @bee posted this thread August 16 there was widespread assumption rates would decline across the curve. While short term rates - notably the Fed overnight discount rate - have fallen, since @bee posted, that has not been the case with longer term rates. August 16, when this thread was started, the 10-year treasure rate stood at about 3.8%. Today it sits at 4.07%. Over the last month 10-year rate has risen sharply from around 3.63% to 4.07%. Consequently, the values of most bond funds with any duration have fallen in recent weeks. ISTM bond investors are smelling more inflation ahead.
Good discussion of high yield. I recognize it’s an important investment for many. In recent years I’ve generally chosen to limit my risk to equities rather than play in the HY area. In fact, I’m getting a little freaked out by narrow spreads and rising rates. Moved all of my 4-5 year old hold in PRIHX (intermediate muni bond) into cash this week, while adding a bit of equity risk. (But I confess to having terrible timing.)
@bee? Are you becoming clairvoyant? The Fidelity article (on how to profit from falling rates) you posted August 16 bears a publication date of August 21 … ? And, it doesn’t appear to have been added later.
conveniently? you're reading into my post in an odd way. i was simply offering up an explanation for those friday gains. it had nothing to do with buying or selling.
Mortgages may need to be on the FED's buying menu for those rates to drop me thinks... keep a third eye out for that next.
Freddie Mac:
Overall, while mortgage rates declined from 6.85% in July to 6.5% in August, that may not be enough to give a boost to housing demand as homebuyers continue to wait for rates to decline further. On the supply side, housing construction remains low. Mortgage performance continues to be strong, especially for conventional borrowers.
Outlook Despite the cooling labor market, our outlook for the economy still calls for a soft landing. We expect economic growth to continue, albeit at a slower pace. Under our baseline scenario, inflation is expected to cool further. The discourse around the timing and pace of potential future rate cuts will likely drive the near-term path of interest rates rather than the actual policy decision itself. While there is likely to be some volatility around any policy statements, we expect mortgages rates to decline further, though remaining above 6% by year-end.
@Junkster, Members that follow your posts have the burden to remember what you post. You exiting CAT bonds was made clear in your original post and then again when you posted a few ago with your current holdings. I think your disclosure was more than adequate and @linter did not need to repeat it for the supplementary info he was offering.
^MOVE, the bond risk, is over 120 and indicates elevated risk.
MOVE > 110 has a nice correlation to high volatility in bonds and in most cases, typical high-rated bonds don't do well. On 3-2-2020 it was at 125 = sell everything = correct. The week before it was already over 110. End of 02/2022 it was over 130 = sell and continue to get higher with some lower volatility. Also at the end of 2007, it was over 130 and higher in 2008.
Milton losses must be lower than previously anticipated - amazing that these guys already know the severity of losses.
SHRIX is up 2.3% and EMPIX is up 1%. For this week, I am guessing EMPIX is unchanged and SHRIX is down 3-4%. But all three could print positive marks again tomorrow. and SHRIX might make up more of the lost ground.
Milton losses must be lower than previously anticipated - amazing that these guys already know the severity of losses.
But somehow I see Insurance premiums escalating.
We live in a time where community bucket brigade have been replaced with private buckets of profits.
To combat a fire, “bucket brigades” were commonly organized and consisted of two lines of people stretching from the town well or water source to the fire. They passed buckets of water to the fire, where the water was literally thrown from the bucket onto the flames. The empty buckets were passed back by an adjacent line of people to the well to be refilled. Even though this means of fighting fire was rudimentary at best, it was at least a minimal level of fire protection. A fire could quickly spread completely devastating a community, burning out homes and businesses alike. In the early days before fire companies were formed, a fire event was an all citizens emergency. In many cases, women and children filled in on the bucket brigade line helping pass the empty buckets back to the water source.
I think the article correctly alludes to the AUM game being played by the mutual fund industry vs interval fund industry as the reason for the difference in marks. Too much manager discretion in marks makes timing / luck a big factor in trading these funds, causing frustration to some retail fund traders.
Edit: The article also correctly predicted additional negative adjustments to NAV for CBYYX (-0.6%) and EMPIX (-0.10%). While SHRIX closed 2.72% higher today. EMPIX was even, CBYYX and SHRIX are -1+% related to Milton. Given the larger SHRIX is marking back up, I am guessing the worse of negative marks for Milton could be behind us.
Did anyone here put their toe back into these today?
Ended up holding on to CBLDX, it was actually up last Friday. It had positive returns in 2020 and 2022. That's the kind of bond fund I like. The five year returns are also pretty good, though I doubt we'll be in that sort of rate environment any time soon.
Sold TBUX, USTB, XONE, and WSHNX. It was too many funds anyway. I will likely consolidate into USFR and VRIG or PULS. Yes, they are boring, but I'm holding onto MNHAX, CBLDX, THOPX, and WCPNX, so there is still some excitement in bond land. Eventually I'll have to consolidate those holdings, but I don't think this is the best time. If the rate environment continues to deteriorate I won't hesitate to lock in profits.
Today I took a little less than half the proceeds from the sales above and put it into USFR. I divided the other half between VRIG and PULS. I'm watching MNHAX, CBLDX, THOPX and WCPNX like a hawk, and my finger is on the trigger. I can think of too many reasons for bonds to remain volatile into the new year.
Congrats to those here in the CLO bond ETFs. More specifically JAAA and PAAA in the investment grade hovering around 6% YTD with nary a drawdown. And JBBB and CLOZ in the below investment grade hovering around 8.5% YTD with just a blip. The blip occurred in early August on recession fears. I prefer holding an OEF equivalent which I have previously referenced. Also I have a quirk when it comes to OEF bond funds. I prefer the ones that pay daily vs. the ones that pay monthly. A reason I just sold off CBLDX. Great fund but another bond category has been steadily rising recently and prefer to park money there.
Will be on a long posting sabbatical as the backcountry hiking season is just around the corner. Time to explore for new caves, rock shelters, arches, and waterfalls. At 77 I never know how many more years I will be able to handle the rigors and dangers of solo off trail explorations. As it is the rangers have a fit this elderly man is back there in the middle of nowhere. Not so much out of compassion for an injured hiker as for the logistics of a backcountry search and rescue, Also unable to respond to any private messages as I will not be signing here in much less checking in. Best of luck to all in their investing endeavors.
Do you carry an ERB? ( Emergency Response Beacon)Our daughter-in-law insisted we take one when we went on our wilderness canoe trip. It would have taken at least two days to get out and get help; even when we got to the car we were 20 miles from cell service
"Also I have a quirk when it comes to OEF bond funds. I prefer the ones that pay daily vs. the ones that pay monthly."
I share that feeling because the monthly ones give the illusion of smoother NAV than what the NAV otherwise would be. They do not allow you to see in real time if they are faltering.
"Also I have a quirk when it comes to OEF bond funds. I prefer the ones that pay daily vs. the ones that pay monthly."
I share that feeling because the monthly ones give the illusion of smoother NAV than what the NAV otherwise would be. They do not allow you to see in real time if they are faltering.
If you sell an OEF bond fund that pays monthly (I assume CBLDX is one) prior to month's end, do you get paid the interest through the day that you sold?
"Also I have a quirk when it comes to OEF bond funds. I prefer the ones that pay daily vs. the ones that pay monthly."
I share that feeling because the monthly ones give the illusion of smoother NAV than what the NAV otherwise would be. They do not allow you to see in real time if they are faltering.
If you sell an OEF bond fund that pays monthly (I assume CBLDX is one) prior to month's end, do you get paid the interest through the day that you sold?
You get paid the NAV and nothing more because until the ex-dividend date, the earnings of the fund are reflected in the NAV.
I understood what @junkster wrote. But may be "pay" is bit of a confusing word to use for what is meant is "accrue." Funds like PIMIX accrue the dividend to your account daily. So, when you sell PIMIX, you get the NAV + whatever dividend is accrued to your account. Funds like CBLDX do not accrue the dividend to your account but reflect it in the NAV. If you do not sell them, both PIMIX and CBLDX pay monthly; on ex-div date PIMIX NAV does not drop for the amount of div to be paid but the CBLDX NAV drops by the amount of div because it was previously accrued to the NAV and on ex-div date, div comes out of the NAV. (BTW, There are a few bond funds that pay dividends quarterly.) I am not the most articulate person and so anyone is free to chime in to correct.
"Also I have a quirk when it comes to OEF bond funds. I prefer the ones that pay daily vs. the ones that pay monthly."
I share that feeling because the monthly ones give the illusion of smoother NAV than what the NAV otherwise would be. They do not allow you to see in real time if they are faltering.
If you sell an OEF bond fund that pays monthly (I assume CBLDX is one) prior to month's end, do you get paid the interest through the day that you sold?
You get paid the NAV and nothing more because until the ex-dividend date, the earnings of the fund are reflected in the NAV.
Does that mean that a fund such as CBLDX should be sold after the ex-dividend date or it does not make a difference?
Several years ago, in a discussion of those two types of bond div accounting, Yogi coined "accrual" vs. "NAV flow" as handles for them, which has always seemed pretty transparent language to me.
Comments
@BaluBalu. You may have seen the above update on the pricing discrepancies. Reminds me of the fair market pricing of international funds. The cat bond managers marked down the navs of their cat bonds at their discretion due to the impending hurricane. The CBYYX managers chose not to.
EMPIX 1% (between yesterday and today, EMPIX is ahead of CBYYX)
SHRIX -2.9% (another 3% down day - having a larger AUM and thus a better scope for diversification did not seem to help.)
regarding Friday gains, i found this today on the artemis website that perhaps explains why that day is special:
"Investment managers are working to incorporate their projections and estimations of potential losses from major hurricane Milton into their catastrophe bond and ILS portfolios. Managers of 40’s Act registered US mutual fund structures need to mark their portfolios with a fund price daily, based on net asset value. This is a challenge given the catastrophe bond market only marks its positions on a Friday ...."
that being the case, it'll be interesting to see what this friday brings ...
Good discussion of high yield. I recognize it’s an important investment for many. In recent years I’ve generally chosen to limit my risk to equities rather than play in the HY area. In fact, I’m getting a little freaked out by narrow spreads and rising rates. Moved all of my 4-5 year old hold in PRIHX (intermediate muni bond) into cash this week, while adding a bit of equity risk. (But I confess to having terrible timing.)
@bee? Are you becoming clairvoyant? The Fidelity article (on how to profit from falling rates) you posted August 16 bears a publication date of August 21 … ? And, it doesn’t appear to have been added later.
VGSIX
https://morningstar.com/funds/xnas/vgsix/chart
Mortgages may need to be on the FED's buying menu for those rates to drop me thinks... keep a third eye out for that next.
Freddie Mac: https://freddiemac.com/research/forecast/20240923-us-economy-continues-expand
MOVE > 110 has a nice correlation to high volatility in bonds and in most cases, typical high-rated bonds don't do well.
On 3-2-2020 it was at 125 = sell everything = correct. The week before it was already over 110.
End of 02/2022 it was over 130 = sell and continue to get higher with some lower volatility.
Also at the end of 2007, it was over 130 and higher in 2008.
www.tradingcenter.org/index.php/trade/equities/stock-signals/354-move-index-bonds
SHRIX is up 2.3% and EMPIX is up 1%. For this week, I am guessing EMPIX is unchanged and SHRIX is down 3-4%. But all three could print positive marks again tomorrow. and SHRIX might make up more of the lost ground.
We live in a time where community bucket brigade have been replaced with private buckets of profits. https://ffam.org/2021/11/20/the-fire-bucket-a-part-of-fire-service-history/
https://www.artemis.bm/news/mutual-cat-bond-and-ils-funds-recover-ground-as-hurricane-milton-impact-clearer/
Edit: The article also correctly predicted additional negative adjustments to NAV for CBYYX (-0.6%) and EMPIX (-0.10%). While SHRIX closed 2.72% higher today. EMPIX was even, CBYYX and SHRIX are -1+% related to Milton. Given the larger SHRIX is marking back up, I am guessing the worse of negative marks for Milton could be behind us.
Did anyone here put their toe back into these today?
This article implies Milton's impact on Cat Bonds is not yet clear and that "Greater clarity may emerge next week." https://www.artemis.bm/news/hurricane-milton-estimated-principal-loss-cat-bond-market-twelve-capital/
Well. I'm back to what I originally had in mind before animal spirits took over. It's not so much a barbell as different size dumbbells.
I'm not rooting for a bumpy flight, but I'm keeping my seatbelt on anyway.
Will be on a long posting sabbatical as the backcountry hiking season is just around the corner. Time to explore for new caves, rock shelters, arches, and waterfalls. At 77 I never know how many more years I will be able to handle the rigors and dangers of solo off trail explorations. As it is the rangers have a fit this elderly man is back there in the middle of nowhere. Not so much out of compassion for an injured hiker as for the logistics of a backcountry search and rescue, Also unable to respond to any private messages as I will not be signing here in much less checking in. Best of luck to all in their investing endeavors.
Above everything, stay safe; but enjoy the unwind.
Respectfully,
Catch
Do you carry an ERB? ( Emergency Response Beacon)Our daughter-in-law insisted we take one when we went on our wilderness canoe trip. It would have taken at least two days to get out and get help; even when we got to the car we were 20 miles from cell service
I share that feeling because the monthly ones give the illusion of smoother NAV than what the NAV otherwise would be. They do not allow you to see in real time if they are faltering.
I understood what @junkster wrote. But may be "pay" is bit of a confusing word to use for what is meant is "accrue." Funds like PIMIX accrue the dividend to your account daily. So, when you sell PIMIX, you get the NAV + whatever dividend is accrued to your account. Funds like CBLDX do not accrue the dividend to your account but reflect it in the NAV. If you do not sell them, both PIMIX and CBLDX pay monthly; on ex-div date PIMIX NAV does not drop for the amount of div to be paid but the CBLDX NAV drops by the amount of div because it was previously accrued to the NAV and on ex-div date, div comes out of the NAV. (BTW, There are a few bond funds that pay dividends quarterly.) I am not the most articulate person and so anyone is free to chime in to correct.
Edit: There can be tax differences whether you sold before or on or after ex-dividends.
BTW, I edited my previous post to elaborate.