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RSIVX vs ICMUX (short term high yield)

IChamp
in Fund Discussions
Am looking at making some adjustments in my bond fund holdings within
my 401K and I'm considering either RSIVX or ICMUX. My basic concerns:
-There are lots of "noise" about being careful/staying away from high yield bond
funds now (but these seem to be short term high yield and conservative)
-RSIVX seems to have a consistent value and good yield ... now. I just
wonder if it can handle when things get dicey when the rates go up.
On the other hand, ICMUX has been around since the crisis in 2008
and I like the commentary on their site about the focus on "not loosing
money" and staying in cash if there are no good opportunities.

Any thoughts/helpful advice?
(P.S. My other bond fund holdings are OSTIX, MWTRX, and PLDDX)

IC

Comments

  • Vert
    I'll give you about the wish-washiest opinion that you'll ever hear. I think they're both pretty darn safe. ICMUX has been paying a yield around 2.7% so far this year and RSIVX has been paying a yield of approximately 4.3%. My guess is that this means that ICMUX is a bit safer, but they both hold large cash positions (ICMUX's is considerably larger) and that should mean that they can both hold tight if rates rise, let their bonds mature and thus suffer no capital losses. Plenty of forced selling from redemptions can be done by running down the cash.

    That leaves the possibility of defaults. Combining competent managers (and I see no reason to believe that either of these companies is less than competent in assessing the viability of companies) plus the relatively short-term nature of their holdings, I'd feel comfortable with either fund. There is no absolute safety in this world, but ICMUX and RSIVX are probably about as close to it as investments are going to get.
  • Old_JoeOld_Joe
    Well, RPHYX is probably a bit safer, but I have both RPHYX and RSIVX, and am comfortable with both. Stash a little here, a little there...
  • PRESSmUPPRESSmUP
    Before you fall too much in love, be aware that ICMUX has an initial investment requirement at Schwab of $250K. Other broker/dealers may vary.
  • Old_JoeOld_Joe
    edited June 2014
    Sounds a bit like a mid-east marriage brokerage... how about $200k, 50 cows and I'll throw in a couple of Kalishnikovs...?
  • CharlesCharles
    edited June 2014
    @IChamp.

    Before there was ICMUX, there was ICMYX. Same fund, just different share class.

    The latter was actually merged into the former this past January, even though ICMYX was the oldest share class, inception Aug 2007.

    And...

    ICMYX incurred a drawdown of -14.6% through Nov 2008.

    That metric disappeared in the merger.
  • Old_JoeOld_Joe
    This is easy folks! Just tell me which shell the pea is under...
  • heezsafe
    Considering your other holdings, and your concerns re. safety, I think the RiverPark fund might be the better way to go, for several reasons:
    1. It would give you something you don't have;
    2. Sherman probably will keep the fund's duration lower than ICMYX will, over the long-term, simply because that's the way it is designed.

    @IChamp If you have a good base in those other 3 funds, adding either of these 2 should give you a pretty sweet mix for heading in to near-term concerns (3-5 yrs out); in the event fixed income would go ugly, you should be able to sleep with minimal anxiety. Nice.
  • chrisw
    Personally I split my cash between RPHIX, RSIIX, and DFLEX. Thus far, DFLEX seems to be behaving along the same lines as RSIIX, but it hasn't even been around for 3 months. I just didn't like putting too many eggs in the one Sherman basket, despite it looking so good.
  • davfordavfor
    Here is an update about the recent performance of ICMUX. Per M*, its performance since 8/31/14 and the performance of some other funds mentioned in this thread are as follows:

    ICMUX: -4.4%
    RPHYX: +0.3%
    RSIVX: -0.8%
    DLINX: -0.6%

    M* High Yield Bond Index: -4.4%

    Per M*, ICMUX has an effective duration of only 1.19 years and has 34% allocated to cash. But, its loss since 8/31/14 is as great at M*'s high yield bond index!

    Looking at their holdings, there is a substantial allocation to the energy sector including the top two holdings. This probably explains the size of the loss.

    Perhaps this fund will rebound quickly and demonstrate the difference between volatility and risk. Allocating some of their cash at the right time could help.

    But, recent performance suggests ICMUX is a market cycle fund and not a fund for someone looking for a smooth ride and an easy exit if the need might arise to sell shares in a relatively short period of time.
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