Aston/DL Core Plus Bond Fund hits 3-yr mark, with a M* 5-star.
http://astonfunds.com/news?newsID=1431Aston has released lengthy, interesting (yes,
IMFO) interview with Gundlach, previously only available to advisors. Part I covers bond investing in the near-term, and challenges upcoming; Part II covers broader economic issues, as well as reflections on the operation of the DoubleLine investment management firm. Both parts can be read online by going to Aston home page, click "News" then click "Manager Insights" (as of today, Parts I-II top of list). Alternatively, there is a pdf which fuses both into a nice single doc, which I'll try here:
http://astonfunds.com/includes/modules/assets/controllers/Files/download.php?file=1406838212_AstonInterviewSinglefinal.pdf&r=/news/manager-insight
Comments
A bigger question might be how stock funds will react in the same environment? Will the comeback be different? The thread about the Callan tables seems to answer these questions.
Am I looking at this wrong?
@Crash I wish I could answer your question re. meaning of "core plus" of ADBLX easily. Because of The Aston Way (which, as Charles correctly notes, is more than a tad annoying), I'd almost have to give you a pile of links to info on the fund, from which you'd have to pull relevant passages, then collate and synthesize to draw a fairly reliable inference (which, for most data-driven MFOers, just won't cut it, ya know?). This is not a trial balloon for them; they ran this strategy at TCW Galileo, but only for separate accounts. And that is the reason I'm comfortable in it--- I knew someone with a separate account there that included this strategy, who confirmed my hunches. ADBLX has more risk than DLFNX, but you have to look rather closely at both portfolios and their asset allocations and trust your instincts to see it.
It's not an exact science; seems like it's more of a continuum from core to core plus to multi-sector. It's the holdings that matter, not the name - for one example, Crash's DLFNX is called Dbl Core, but if you look at the holdings (nearly 30% non-IG, a chunk of EM bonds, a slug of non-agency mortgages), it'd be pretty easy to call it core-plus. (I'm not familiar with ADBLX, and M* doesn't show its credit breakdown.)
Cheers, AJ
P.S. Thanks for the PDF link, heezsafe. I like to see what JG's thinking at different times, and don't spend as much time as I used to listening to his web chats.
I also opened a positioned in ASDVX which a brand new fund at AC. Short Duration Strategic Income. Duration is supposed to be three years and under. It's one of those Unconstrained do everything go anywhere bond funds that are popping up all over. There is another fund with the same game plan but longer duration. I have it on my watch list but am not sure if it fits a need at this time. I'm still riding this bull until she croaks. Hopefully I will know when that is.
His investing thesis, the culture of his workplace, as well as his take(s) on demographics, housing, music and art are thought provoking.
Yes, I've been invested in DLTNX, DLFNX, and DLENX since close to their inception. On the "outside," I'm in ADBLX and RNDLX. Nothing huge, or hugely overweighted in any of them (except for RNDLX, which has come to hold more than the others, for some reason). Most of these are "paired" with hotter/cooler versions of funds at other fund families, invested in similar strategies. Maybe too many eggs in the basket, I dunno, but not too many of the same eggs. This has worked well for me so far. About the only consequence I have to guard against/be vigilant is asset allocation drift. For example, I recently did the math and found out my eyeball assessment of total EM bond in all funds in my collection had increased quite of bit higher than I'd thought.
A lot of websites I sign up for have separate versions and separate access.....the "financial advisors" get one level of access, and we 'regular people' get a lower level of access.
A bunch of crock.
He thinks interest rates could rise in a short period of time.
I have no idea personally. Let me play devil's advocate for the bond bear case:
Let's say interest rates rise 2% over one year. Take a bond fund with a duration of 6 and a yield of 2.5%. Rates rise 2% in one year, the NAV goes down 12%, the 2% yield has now risen but it takes a while for all the bonds in the fund to mature and be replaced with new bonds yielding 2% more can't prevent a fairly large negative total return.
Some bond funds could have double digit losses, especially intermediate to long term bond funds.
You suggested "I see the downside at the beginning of the rate rise but managers would adjust". I'm not convinced that the managers would adjust in an effective or timely manner. Also, many funds can't adjust, because their Prospectus does not allow for flexibility, e.g., many funds are based on the Barclays Aggregate Bond Index. I think many of the unconstrained bond funds will adjust, and most of the core funds may not be able to based on the fund mandate in the Prospectus.
So Treasuries may do very badly in a rising rate environment, depending on how fast the rates rise.
The catch 22: Treasuries and high quality investment grade bonds provide the most effective diversification against stock market declines. The unconstrained bond funds typically hold a lot of non-treasury and lower rated debt, which might do better in a rising rate environment, but would do much worse in a stock bear market or if the economy falters and does not recover well.
So JohnChisum and MFOers, how shall we invest in fixed income at the present time?
I don't have the answer.
Perhaps this is worth a separate thread, but anyone have any thoughs on DFLEX? It's Gundlach's unconstrained bond fund, which he opened this April.
I just want to give my fixed income money to a fixed income expert like Gundlach and I'm saying to him, "you're the bond expert, invest the money wisely in the bond market and that's why I've chosen you as my manager; I'm not going to tell you where or how to invest it".
Then I'll do the same thing with stock market money and 'hire' and expert manager to invest stock market money for me.
To the extent that you can't do this, to that very extent active management fails. And I think it fails a LOT.
When Gundlach speaks I do listen. He comes across as a brilliant investor. Why he has multiple styles of funds? Marketing.
His Unconstrained funds should be his bread and butter.