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Doubleline EM Bond Fund (Luz Padilla) Webcast Today at 1:15pm PST/4:15 EST
Only a quick synopsis here - it's 45 minutes or so long, so is worth listening to, with the slides, when they make it available.
Risk and uncertainty's the theme: factors are the euromess, a possible hard landing for China (though probably not in 2012), and the risk associated with possible major realignment of political elites in several major countries, including U.S., China, France, & Russia.
The fund is all U.S. dollar, overweight Latin America, and underweight duration, all of which are responses to DBL's assessment of risk. It's overweight corporates as the best bet for safe spread & possible appreciaton.
The Latin America overweight is about a better return:risk outlook. Cen. & E. Europe may be caught up in the euromess, and in Asia, LP says, the bulk of the issuance is related to China real estate and industrial development, which doesn't represent acceptable risk.
I bought a little EDF (Stone Harbor EM Debt) the other day. Mutual fund-wise I like TGINX, but am not interested in really adding any more EM Debt than the little bit of EDF (which yields around 9.5%) at this time.
Yield is certainly part of the decision, but it can sometimes come with more risk than you will want. All things being equal, we would all like to have a 6-7% yield with a stable NAV, but that just does not exist in today's low-yield environment (unless you believe the annuity salesfolk). FNMIX is one of the better options, for sure. We have used GSDIX for quite a while and been very pleased with it. 30-day yield is 5.11%, and last year it had a total return of 6.93%. It owns almost all of its bonds in U.S. dollars. We like GIMDX for non-dollar currency bonds, but it struggled last year, as did all EM currency bond funds, losing 4.5%. So, despite its 6.15% yield (1% higher than its dollar-based sibling), there was an 11% difference. We will continue to use GIMDX, since we believe the long-term trend of the dollar is down.
Reply to @MaxBialystock: never, Max; total return is. Highest dividends are usually paid by lowest credits, so reasonable care and understanding of asset class is always due before investment is made. take care.
Reply to @BobC: The difference here, Bob is that these funds are usually a fairly small portion of your clients' diversified portfolios (2-8% of total?). For Max, it is his only bond fund.
You're correct, fundalarm. But only just for now. I'm sounding like a broken record replaying and repeating, but there is a buncha money coming to all of us nieces and nephews sooner rather than later. I surely will be putting money into a more conservative bond fund, then. But for the moment, my PREMX was included in a hypothetical "moderate" risk portfolio here: http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=132476.xml
Needless to say, among the actual fund selections, it's the percentages and proportions that makes for the "moderate" level of risk. I'm right now at 40.9% PREMX in my portfolio...but I manage to sleep night because this fund is moderate-moderate-moderate and utterly middle-middle when compared to EM bond peers. Average risk/return rating (M*.) Its performance going back one year is just a tad below the top half of EM bond funds. (53td percentile.) ...3 years back: 42nd percentile......Past 5 years 74th percentile, bad. .....TEN years back: 39th percentile.
It was originally chosen to be part of a (self-directed) 403b plan. It now sits in a rollover Trad. IRA. My other Trad. IRA = MAPIX at 34.01% of holdings. Yes, way too concentrated.
Reply to @MaxBialystock: Max, it is indeed a great distinction to be "moderate" risk among the emerging bond funds (the riskiest bond asset class) or just "moderate" risk - period. Once you get other moneys, please don't pile up in high yield, another risky bond type. You will need to de-risk your portfolio. From reading your comments here and on FA over the years, I highly suggest that before you invest additional moneys, you should consult a fee-based financial adviser. I have much respect and appreciation for this Board, but having mostly EM equities and bonds so close to retirement is not the right thing to do. I will retreat now and will never repeat this again. Best wishes.
Reply to @MaxBialystock: I'm glad you definitely know that you have to unwind some of the current positions and diversify; the idea of having 40% in anything is unnerving - as for bond funds, didn't a number of Oppenheimer funds run into severe problems in 2008 that came unexpectedly - didn't one of their funds lose like 78% or something ridiculous? (edited to add - article: http://www.cbsnews.com/8301-505123_162-37640185/oppenheimers-bond-fund-blowup-worse-than-you-think/)
Even with something that is believed to be relatively stable like a bond fund, you just never know. There's the risk of EM, but having that in so few funds becomes another layer/issue.
I believe you have chosen to deal with individual companies rather than brokerages, but I'd really recommend considering a brokerage as it would be the easiest way - I'd think - of unraveling some of the EM positions and having a very wide variety of funds to choose from to roll into.
FundAlarm and Scott: I receive your comments with appreciation and gratitude. No arguments. And about Oppenheimer:
Three years ago, my best clergy buddy had been putting money into a 403b for about 4 or 5 years already--- because I pushed and pushed him to do it. He's AFRAID of investing! Anyhow, another fellow who is ordained, just like us, but who is not engaged full-time in church work, is also a broker/dealer. He offered his services, and my friend accepted. The money was put into OAAAX, with a 5.75% front-load, and a dreadful performance record!
After looking at what OAAAX was doing over time, I urged my friend to do something else with his 403b. This man's (new) wife had come into some money, too. They trusted me to fill out the paperwork and rearrange their investments. Needless to say, they are doing better with: MAPIX DODIX PRSVX OTCFX PREMX
Since the 403b money can never be allocated ideally because 403b available options are diminishing year by year, we did our best, spreading his 403b among three TRP funds. Her share is much bigger, and I divided it between MAPIX and DODIX. My friend's proportion of the total, though, is still just 21%. Yes, I'm very skeptical of Oppenheimer, period.
Comments
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Only a quick synopsis here - it's 45 minutes or so long, so is worth listening to, with the slides, when they make it available.
Risk and uncertainty's the theme: factors are the euromess, a possible hard landing for China (though probably not in 2012), and the risk associated with possible major realignment of political elites in several major countries, including U.S., China, France, & Russia.
The fund is all U.S. dollar, overweight Latin America, and underweight duration, all of which are responses to DBL's assessment of risk. It's overweight corporates as the best bet for safe spread & possible appreciaton.
The Latin America overweight is about a better return:risk outlook. Cen. & E. Europe may be caught up in the euromess, and in Asia, LP says, the bulk of the issuance is related to China real estate and industrial development, which doesn't represent acceptable risk.
Thus endeth the Cliff notes ...
Heck, why buy any of them? Don't get stuck on the $.07/share. Total return is what you're going for, yes?
You can get 3%/month right here and now........the Greek 10 year government bond; theoretically backed
by ouzo or whatever you choose.
yield E.R. YTD 1 year
FNMIX 5.7% .88 -.11 7.6%
DLENX 5.7% 1.20 +.5 4.7%
PREMX 7% .95 +.22 3.5%
TGINX 7% 1.20 +.66 2.2%
EM funds link:
http://www.bloomberg.com/apps/data?pid=invest_mutualfunds&Fund=premx
Disclosure: We've held FNMIX for several years.
Regards,
Catch
http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=132476.xml
Needless to say, among the actual fund selections, it's the percentages and proportions that makes for the "moderate" level of risk. I'm right now at 40.9% PREMX in my portfolio...but I manage to sleep night because this fund is moderate-moderate-moderate and utterly middle-middle when compared to EM bond peers. Average risk/return rating (M*.) Its performance going back one year is just a tad below the top half of EM bond funds. (53td percentile.) ...3 years back: 42nd percentile......Past 5 years 74th percentile, bad. .....TEN years back: 39th percentile.
It was originally chosen to be part of a (self-directed) 403b plan. It now sits in a rollover Trad. IRA. My other Trad. IRA = MAPIX at 34.01% of holdings. Yes, way too concentrated.
Even with something that is believed to be relatively stable like a bond fund, you just never know. There's the risk of EM, but having that in so few funds becomes another layer/issue.
I believe you have chosen to deal with individual companies rather than brokerages, but I'd really recommend considering a brokerage as it would be the easiest way - I'd think - of unraveling some of the EM positions and having a very wide variety of funds to choose from to roll into.
Three years ago, my best clergy buddy had been putting money into a 403b for about 4 or 5 years already--- because I pushed and pushed him to do it. He's AFRAID of investing! Anyhow, another fellow who is ordained, just like us, but who is not engaged full-time in church work, is also a broker/dealer. He offered his services, and my friend accepted. The money was put into OAAAX, with a 5.75% front-load, and a dreadful performance record!
After looking at what OAAAX was doing over time, I urged my friend to do something else with his 403b. This man's (new) wife had come into some money, too. They trusted me to fill out the paperwork and rearrange their investments. Needless to say, they are doing better with:
MAPIX
DODIX
PRSVX
OTCFX
PREMX
Since the 403b money can never be allocated ideally because 403b available options are diminishing year by year, we did our best, spreading his 403b among three TRP funds. Her share is much bigger, and I divided it between MAPIX and DODIX. My friend's proportion of the total, though, is still just 21%. Yes, I'm very skeptical of Oppenheimer, period.