Some random thoughts on bond funds which in many cases are beating stocks YTD. The big winner so far has been emerging market debt. Some funds there are already coming off two consecutive years of double digit gains. Yet we seldom read much on that category. That is a good thing. Many of the better bond traders are heavy there. The greatest bond bull run I ever witnessed was the emerging market bull run from late 98 through the early 2000s.
While everyone is enamored with the CrossingBridge bond funds - RSIVX, CBLDX, and NRCDX - and rightfully so, how about some love for CBRDX. Its November performance caught my eye and it has continued to outperform. My fear is they fold this small and concentrated fund into one of their larger ones.
As much as I abhor junk bonds they have been more than resilient. Like MNHYX there and learned long ago not to let my opinions impact my positioning.
The MBS funds continue to sparkle especially my favorite SEMMX/PX as well as BDKNX/AX. Interesting though that some of the bond funds tied to the lowest of low in MBS, the legacy non agencies from yesteryear such as EIXIX, IOFIX and a few others aren’t shining at all.
The CLO funds are hanging in there but underperforming. Would not expect a repeat of the past two years performance in funds such as HOSIX or SCFZX nor the CLO ETFs. It was a good run for the bank loan funds but they too are underperforming. The cat bonds while also hanging in there, at least for CBYYX and EMPIX, doubtful they will see anything close to their double digit returns of 2023 and 2024,
The Treasury secretary has on numerous occasions mentioned his desire to focus on the 10 year Treasury bond. Almost so much you would think he would welcome a brief recession to get it even lower. But you would think junk bonds would have to break before that. The administration also seems intent on lowering oil. So a lot going well for bonds YTD. The action in treasuries and emerging markets explains much of the renaissance in PIMIX YTD, Will the recent run in bonds continue or will inflation be the big bugadoo. Your guess is as good as mine. Just go with the flow.
Comments
I was in a CLO for about a week before realizing I didn't like looking at all those asset names that looked like something cooked up for a detective novel about grifters.
I'll skip the mortgages too.
I'm still thinking about trimming two of VRIG, PULS, and FLOT and adding FLTR.
As for the flow, I'll still be mostly short or floating after (if) I bump up MNHYX, FFRHX, and add THOPX.
In the meantime, I'm watching the latest episode of tariff theater, among other blivits landing on the front page of the business section.
CBRDX is very close to RSIIX.
One month CBRDX=0.97% vs 0.91%
2 months: CBRDX+1.92 vs 1.96
CSFZX lost its mojo. One month only at 0.35%. HOSIX=0.8.
I have been watching SEMMX BDKNX for months. SEMMX had great performance, but in the last 4 months, it lost 0.6 + 0.4 from peak to trough. Too volatile for me
PIMIX has done nicley YTD, but in early Jan lost close to 1%.
I'm just looking for the hanging fruit at 7-9% per year with low SD.
EGRIX has done well lately, the problem is LT sudden SD.
I posted recently on the MFOP update thread, hoping you'd see ... will repost here.
I should have named the title: "Junkster Tight Channel Funds."
Hope all remains well.
c
Sweet 10 months for these MultiSector Income funds: Holbrook Structured Income I (HOSIX), SEI Opportunistic Income A (ENIAX), RBC BlueBay Strategic Income I (RBSIX), and Credit Suisse Strategic Income I (CSOIX).
No (month ending) drawdown. Healthy return.
A fund not often mentioned here is RPIDX-TRP Dynamic Credit Fund. Listed as a non-traditional bond fund. +2.69% YTD, 0.64% adjusted ER. Available NTF at Fidelity. Also available I-shares RPELX at TRP (0.57 ER).
Good luck everyone.
”As much as I abhor junk bonds” - Maybe change your handle? How about “Triple A”? / Triple A 1000?
We oldsters all know how successful you have been over many decades plying the junk market, even authoring a book on the subject. So it is obvious your comment is directed towards current valuations.
I can’t get too exited about bonds. They have a role for me as used by competent management inside more broadly diversified funds. But as far as dedicated bond funds go, I’ll stick to the short end and largely forego the interest rate risk. There are enough other markets to take risk in.
If someone wants to “play” the bond market, there are many CEFs that do so successfully. With leverage some rival the performance of equity based ETFs & OEFs. But the risks are higher than for plain vanilla bond funds
(- 20-25% in 2022 for most). Not for the timid. But not as dicey as some of the precious metals miners many are now piling into.
Re: Treasury welcoming a recession…. I think to assume the current administration even knows wtf they’re doing is a big leap. That said - There’s a time honored axiom that a new administration should attempt to have the worst economic events (ie recession) occur early in the first term so that things are looking up by election time. The fact Trump isn’t constitutionally allowed to run again muddles this concept …
Don’t get me going on the crooks, charlatans, and con men that infest the trading vendoring industry. Their one commonality is they refuse using 1001 excuses why they can never validate their ridiculous claims of trading success via actual monthly real money trading statements. Long ago for a few years I did market a trading manual. But to validate my claims I sent along with the manual 120 months of trading statements from my brokerage firm.
If one is not trying to publish to make a living, why does one care about not having access to publishing? An honest question.
Edit: I guess it could be a form of entertainment as @linter mentioned. I am too lazy to put in that much work for entertainment. I am glad some people put in the effort to publish because I do enjoy (reading) good writing ( no matter the topic) like a good piece of art. @linter is a great writer.
But wait! They report every item as income based on its normal retail price to the IRS. So, if you received a “free” $1,000 TV set, in my tax bracket you would owe 22% to the Feds and around 4.25% to my state. - $260 + in income taxes alone for a single item. (That doesn’t even take into account the 6% state sales tax you’d pay.) Stories are legion online of unfortunate participants who either did not know the rules or thought they could skate by without reporting. One reported receiving a $20,000 + tax bill from the IRS 3 years after becoming a participant. For me, it’s a no brainer. Not interested. I have some other beefs about how I’ve been treated by Amazon in the past which I won’t get into here. But the coward at the WP practices the same editorial discretion in placement of reviews.
Came across this commentary from Guggenheim recently. Appears to dismiss the tight spreads. Just ”talking their book”?
Reframing Tight Spreads in Leveraged Credit
In the last several days NRDCX (Nordic bonds) held better than RSIIX and CBRDX.