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They're both performing as advertised: RPHYX has been quite stable, RSIVX less so, but the yield is good and I see no reason why the principal won't recover. None of the holdings have gone bankrupt. RSIVX was advertised as a fund that would produce 6-8% yearly income and, despite fluctuations, end up with at least the same principal over a five year period.
I have my retired mother in RSIVX. It pays almost as much than an annuity despite her advanced age, and unless it goes to zero, it will end up a better long term investment.
RSIVX has had a pretty lousy last month (down about 2%) for whatever reasons (probably just that the high yield market is having problems), but for the year it's still only done about .5% worse than Vanguard's Total Bond Fund. I'd have to say that one bad month, which the manager has always insisted would be reversed because he's invested in "money good" securities, isn't enough to make me particularly worried.
Incidentally, my understanding of the fund is that the manager is confident that even in the worst-case scenario of bankruptcy he's bought securities that would be made whole in bankruptcy proceedings. Speaking as a shareholder, I hope he's right.
On RSIVX, I think it depends on whether you invest primarily for income or for total return. If the former, it still looks fairly good. One indicator: last December, in the HY selloff, it did better than its peers/near-peers of the short & junky persuasion.
If you look at total return, though, it's been bringing up the rear; it's actually negative on TR for the past year. Other short & junky funds, for example ASHDX (in that case, with higher credit quality) have done considerably better.
I'm more of a TR investor and adjust holdings relatively frequently, and I got out of RSIVX several months back. But then I'm almost completely out of HY at the moment.
On RSIVX, I think it depends on whether you invest primarily for income or for total return. If the former, it still looks fairly good. One indicator: last December, in the HY selloff, it did better than its peers/near-peers of the short & junky persuasion.
If you look at total return, though, it's been bringing up the rear; it's actually negative on TR for the past year. Other short & junky funds, for example ASHDX (in that case, with higher credit quality) have done considerably better.
I'm more of a TR investor and adjust holdings relatively frequently, and I got out of RSIVX several months back. But then I'm almost completely out of HY at the moment.
I made the mistake of owning this fund (RSIVX) for total return and saw that it couldn't maintain its NAV while distributing income. Its barely above water YTD, so I would call that disappointing given its goals. I own ZEOIX and ASHDX, which seem to be less volatile and holding up better in the current environment.
I am still in RPHYX. I noticed that the NAV has dipped over the past year (it used to be consistently above $9.95, and now it's below $9.85). Also, total return now seems around 2.5% instead of 3+%, so they are below their original goal of 300-400 basis points above money market.
However, it is still relatively stable and giving positive return in excess of other cash alternatives, so my basis for holding this fund has not changed.
I passed on RSIVX since the additional risk/reward makes it more like other corporate bond funds -- of which there are many. Their stated goal was total returns in the range of 7-8%. The latest commentary linked above reports that RSIVX has a 7.7% yield to maturity, so maybe they will yet meet that goal. Personally I'm okay with the 2.5% at RPHYX and taking my risks elsewhere.
I own both funds as a sort of '401K Stable Value Fund' replacement and a source of current income. I'm on the slightly positive side of Happy with it, with the current LT Capital Loss being offset by the Current Yield. It's not great, but it's better than a CD...
I could have sworn I posted this already somewhere:
Unfortunately, when current yield equals current cap gain loss, one comes out a loser. That's because the interest dividends are taxed at, say, 25%, while you only get tax credit for 15% of the capital loss. One winds up down 10% or so.
That's because the interest dividends are taxed at, say, 25%, while you only get tax credit for 15% of the capital loss.
I understand your point, but this is not entirely correct. If you have long term capital gains that are taxed at 15%, and your losses on RPHYX offset those long capital gains, then yes you are only getting 15% credit for those losses. But if your losses on RPHYX offset short term capital gains that are taxed at ordinary income, then you get full credit. And if you have no capital gains at all, you also get full credit against your ordinary income.
And if you have no capital gains at all, you also get full credit against your ordinary income.
I understand your point, but this is not entirely correct.
The ability to apply capital losses against ordinary income is capped at $3K. While you might not have any capital gains, you might have capital losses elsewhere bringing your total losses to over $3K. Or you might recognize losses in RPHYX itself above $3K.
That could happen if you let those losses pile up for several years before recognizing them.
@msf: "The ability to apply capital losses against ordinary income is capped at $3K" *per federal tax year* With any excess being carried over to the next tax year.
And for an individual looking for current fairly stable income, gains/losses tend to be a moot point.
The fund opened the year at $9.89, and closed yesterday at $9.79. That's a loss of "just" 10c. In the meantime, it has distributed $0.1901/share.
If your total (combined fed/state) tax bracket is under 47%, then your after tax earnings on that 19.01c is greater than a dime, so you made money even if you don't get any writeoff on the 10c capital loss.
How much ahead you come out depends on tax brackets, if/when you sell shares, and so on. But there's virtually no way you've lost money so far this year, after taxes.
I "spent" a certain amount of money investing in RPHYX. Over the years there have been lots of distributions, and unhappily, movement downward in the NAV. So how has that investment done? Do I now have more or less than what I put in, and by what percentage? (And is that more or less than keeping up with inflation?) While I do keep track of all of this on a spreadsheet, there's no way that I'm going to take the time to account for each and every distribution of each and every fund as an additional amount invested. I don't really care about that. All I need to know is do I now have more or less than I put in.
I'm grateful for the responses that I received regarding this question.
Simple answer - assuming all dividends were reinvested, M*'s pages give you the pre-tax, total return (including dividends and price depreciation) numbers I think you are looking for:3.86% in 2011, 4.20% in 2012, 3.39% in 2013, 2.65% in 2014, and a less impressive 0.91% YTD (through Sept 3, 2015).
Depending on whether this is in a taxable account, what tax rates you apply to ordinary income and capital losses, this may or may not have beaten inflation. Eyeballing the figures (see the first graph in linked paged above), it is pretty clear that even after tax everyone came out ahead except possibly in 2011, where the net gain was 3.86%, while inflation was 3.0%. If you were taxed at 25%, your after tax return was under the 3.0% inflation rate.
Hi OJ, you may know this already, but using Yahoo dividend-adjusted price data on a spreadsheet is an easy way to figure total return for any time period you want -- just beware of late posting of recent divs, and in rare cases, completely missing divs from times past. Sorry if this is old news, but your post above sounded like you might be looking for something on that order. Cheers -- AJ
Comments
They're both performing as advertised: RPHYX has been quite stable, RSIVX less so, but the yield is good and I see no reason why the principal won't recover. None of the holdings have gone bankrupt. RSIVX was advertised as a fund that would produce 6-8% yearly income and, despite fluctuations, end up with at least the same principal over a five year period.
I have my retired mother in RSIVX. It pays almost as much than an annuity despite her advanced age, and unless it goes to zero, it will end up a better long term investment.
Incidentally, my understanding of the fund is that the manager is confident that even in the worst-case scenario of bankruptcy he's bought securities that would be made whole in bankruptcy proceedings. Speaking as a shareholder, I hope he's right.
If you look at total return, though, it's been bringing up the rear; it's actually negative on TR for the past year. Other short & junky funds, for example ASHDX (in that case, with higher credit quality) have done considerably better.
I'm more of a TR investor and adjust holdings relatively frequently, and I got out of RSIVX several months back. But then I'm almost completely out of HY at the moment.
However, it is still relatively stable and giving positive return in excess of other cash alternatives, so my basis for holding this fund has not changed.
I passed on RSIVX since the additional risk/reward makes it more like other corporate bond funds -- of which there are many. Their stated goal was total returns in the range of 7-8%. The latest commentary linked above reports that RSIVX has a 7.7% yield to maturity, so maybe they will yet meet that goal. Personally I'm okay with the 2.5% at RPHYX and taking my risks elsewhere.
Unfortunately, when current yield equals current cap gain loss, one comes out a loser. That's because the interest dividends are taxed at, say, 25%, while you only get tax credit for 15% of the capital loss. One winds up down 10% or so.
Derf
The ability to apply capital losses against ordinary income is capped at $3K. While you might not have any capital gains, you might have capital losses elsewhere bringing your total losses to over $3K. Or you might recognize losses in RPHYX itself above $3K.
That could happen if you let those losses pile up for several years before recognizing them.
Point taken, though.
And for an individual looking for current fairly stable income, gains/losses tend to be a moot point.
http://www.riverparkfunds.com/downloads/Distributions/RiverPark_Short-Term-High-Yield-Retail-Distributions-history.pdf
The fund opened the year at $9.89, and closed yesterday at $9.79. That's a loss of "just" 10c. In the meantime, it has distributed $0.1901/share.
If your total (combined fed/state) tax bracket is under 47%, then your after tax earnings on that 19.01c is greater than a dime, so you made money even if you don't get any writeoff on the 10c capital loss.
How much ahead you come out depends on tax brackets, if/when you sell shares, and so on. But there's virtually no way you've lost money so far this year, after taxes.
I "spent" a certain amount of money investing in RPHYX. Over the years there have been lots of distributions, and unhappily, movement downward in the NAV. So how has that investment done? Do I now have more or less than what I put in, and by what percentage? (And is that more or less than keeping up with inflation?) While I do keep track of all of this on a spreadsheet, there's no way that I'm going to take the time to account for each and every distribution of each and every fund as an additional amount invested. I don't really care about that. All I need to know is do I now have more or less than I put in.
I'm grateful for the responses that I received regarding this question.
Depending on whether this is in a taxable account, what tax rates you apply to ordinary income and capital losses, this may or may not have beaten inflation. Eyeballing the figures (see the first graph in linked paged above), it is pretty clear that even after tax everyone came out ahead except possibly in 2011, where the net gain was 3.86%, while inflation was 3.0%. If you were taxed at 25%, your after tax return was under the 3.0% inflation rate.