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What ever happened to the "Make more, lose less" fund portfolio??
I will dig around for a post I placed before the holidays of Fundmentals original write from Nov/Dec 2009. I have not followed the mix.
Okay, I'm back........here is a link related to the MMLL and a comment about performance as set up per MARK. If you scroll further up, you will find the two part portfolio.
Hello DAK- Like Catch, I haven't followed the portfolio, but here is Fundmental's entire post. I "archived the archive" shortly before FA went away, "just in case". Because it's length exceeds the allowed maximum here, I've divided it into two parts for you.
Regards- Old Joe
"Make More, Lose Less" Portfolio Posted by Fundmentals on December 09, 2009
I am sure many of you have come across the situation of a friend or a family member clueless about investing ask you to help them with a stash of money.
The real-life requirements are usually "simple": 1. "Want your help to make some money. I can lose money all by myself" 2. "I can put it in the market for 5 years. Can leave it there longer if it is making money but not if it is losing money" 3. "Don't ask me to do anything more than once a year"
The following portfolio is designed specifically for people that are not: (a) expecting to beat the market (b) don't want the portfolio to go down much (likely to panic and sell at the bottom if they went down 10% or more) (c) would like some decent gains - more than what they can get with money market funds, CDs or even just bond funds without which they will not take the risk of investing at all and (d) don't want to fiddle with it more than once a year.
The Portfolio-
Domestic Equity: 5% Forester Value (FVALX) - Large Value 5% Amana Trust Growth (AMAGX) - Large Growth 5% Queens Road Small Cap Value (QRSVX) - Small Value
International/Global equity: 10% Forester Discovery (INTLX) - World Allocation 10% Matthews Asia Dividend (MAPIX) - Diversified Asia/Pacific
US equities: Large cap 27.4%; Mid cap 22.8%; Small Cap 49.8% Value 36.9%; Blend 53.0%; Growth 10.1%
International equities: Europe 24.1%; Pacific 38.5%; Canada 18.9%; Emerging Markets 18.5%
Bonds Taxable 78.70%; Uncategorized 21.30% Credit quality High 78.7%; Uncategorized 21.30% Duration: Medium 20.2% Low 58.5% Uncategorized 21.3%
Costs Portfolio average 1.72%
Portfolio construction notes: The portfolio is constructed to solve a basic flaw in traditional portfolio construction. Diversification using high volatility equity funds (even index funds with market volatility) results in deep losses during bear markets as most such equities become correlated and go down together.
Just depending on bond allocation to reduce losses requires primarily allocation to Treasuries as it is the only type of asset that can be depended on to show negative correlation with equities in bear markets. But unlike in the past, Treasuries starting with the current situation of low interest rates cannot be expected to provide much gains going forward so the portfolio may turn out to be too conservative or too aggressive based on what happens in the market regardless of how much is allocated to Treasuries.
As a solution, portfolio picks only funds designed with a strategy to reduce/minimize losses during long bear markets and has some capital protection goals in place. The overall volatility is reduced by depending on each fund to reduce its own volatility rather than depend on lack of correlation to reduce the volatility.
Note that this is not the same thing as picking funds with the highest returns in either bear or bull markets or both. Nor are the returns attributable to some fantastic market timing in picking which stocks to buy and when to sell.
In fact, most of these funds will likely not consistently appear in the top 10% of their class except occasionally. But all of them will have shown the ability to limit losses by reacting to long-drawn down market conditions and make decent gains in long-drawn up market conditions.
In other words, the only market timing they will show will be in recognizing long bear markets as in recognizing the difference between 2008 and 2009, not what happens month to month. None of them try to time tops and bottoms.
Methodology: Portfolio Requirements: 1. Capital protection and lack of volatility extremely important. No long periods of losses. No "wait for 10-20 years or more" excuse for losses. 2. Asymmetric behavior - as much of the upside as possible, as little of the downside as possible 3. Simple portfolio with high quality no-load funds widely available in the main brokerages 4. Only annual tune-ups 5. Total return more important than income 6. No assumption of bull/bear markets for the portfolio as a whole, no forecasted assumptions of economy or any other indicators, doom/gloom predictions, etc.
Concrete requirements: 1. Not more than 12 funds. 2. No single fund with less than 5% allocation or more than 15% allocation 3. Portfolio must be diversified but not necessary to cover all asset/fund classes. Only asset classes that have shown consistent returns without long loss periods and small drawdowns. Riskier assets only within risk-managed funds. 4. No assumptions of correlation or lack of correlation between asset classes going forward but no gross overlaps between funds. Some overlap is fine.
Screening criterion for funds: 1. No-load, ER less than or equal to category average, been in existence for at least 5 years. 2. No losses in 3, 5 or 10 yr (if available) rolling periods (amazing how many asset classes or funds drop out here) 3. Manager has been around for at least the category average 4. Minimum initial purchase not more than $3000 (i.e., minimum not more than $60k portfolio) 5. Best 3 month performance must be better than worst 3 month performance over its lifetime (amazing how many funds you lose with this criterion) 6. Best volatility-adjusted performance (3-yr and 5-yr) in class, not necessarily the best returns. 7. Volatility of each fund on its own must not exceed 10% of total stock market index, total bond index or balanced index as appropriate. 8. Lowest volatility to break a tie all else remaining the same. 9. No bias towards active or passive funds as long as the above criterion are satisfied 10. Allocation percentages based entirely on relative volatility-adjusted returns (3-yr and 5-yr), no ad hoc allocation decisions.
Individual fund notes: FVALX, INTLX: These Forester funds have demonstrated the ability to limit losses by going to cash when conditions so indicate and they do so without worrying about whether they will fully participate in the recovery. Hence they fit the goals of this portfolio well.
Forester was so successful with this simple strategy that FVALX became the only equity fund to have positive (albeit close to zero) returns in 2008.
Unfortunately, this brings in people who look at the rankings, see this fund at the top in 2008 and invest and get disappointed when the fund lags in a bull market.
This fund is chosen for the very strategy (that was incidentally vindicated in 2008) with the full knowledge that it will not necessarily be anywhere near the top in bull markets or even beat the index.
Alternative to FVALX is Amana Income AMANX which does not provide as much downside protection but has done well using a very conservative approach in value investing and keeping the volatility low but it will be slightly more volatile than FVALX. Another slightly higher volatile alternative is Yacktman fund (YACKX)
Alternative to INTLX is Sextant International SSIFX (coincidentally managed by the manager of AMANX) for similar reasons.
AMAGX: A very well managed Large Cap growth fund with a long history of good performance. The downside protection is also reasonable within its class even though there does not appear to be any capital protection strategies in place.
QRSVX: Not a well known fund but is one of the very few funds that is widely available without a transaction fee, has at least a 5 year history and has managed to limit downside in the bear market in the small cap category. The volatility is also kept low.
A better known substitute is Royce Special Equity (RYSEX) if available without a transaction fee. Newer Intrepid Small Cap (ICMAX) has done very well although its short history may be a concern as well as Pinnacle Value (PVFIX) if available without a transaction fee. Both ICMAX and PVFIX are low volatility funds and have capital protection as a goal of the fund to fit the goals of this portfolio well.
MAPIX: The only selection without a 5 year history but comes with a very strong pedigree from Matthews Asia that specializes in Asian funds. This fund has extremely low volatility, even lower than most domestic equities and has managed to deliver very good total returns with a combination of stocks, convertibles and preferred shares.
Alternatives would be either Matthews Asia Pacific (MPACX) at higher volatility with good downside protection or Matthews Asian Growth and Income (MACSX) at lower volatility but can potentially lose more money in bear markets.
BPLEX: An alternative investment fund that tries to get good returns in both bull and bear markets. A long-short fund that can be mistaken for another performance chasing choice because of its recent performance. But this would be a good choice even if its performance in 2009 was just average or even below average.
Looking under the hood shows this fund to be quite different from other long-short funds that try to use both long and short depending on the stock valuations. This fund seems to switch between a primarily long fund (but with short positions to hedge) with good stock selection or a primarily short fund (with long positions to hedge) depending on the macro market conditions thus minimizing individual stock market timing risks.
This is not different in strategy from Forester's philosophy except that its uses shorting rather than just go to cash and uses small caps rather than large caps.
So it does very well in longer bear or bull market years and lags during transitions but without losing much money.
Unfortunately, none of the alternatives for this fund come anywhere close to it in performance as they primarily seem to depend on picking the right stocks to go long or short across all conditions rather than acting like a good long fund or a good hedged fund depending on macro conditions. It is a unique standout.
ARBFX: Another alternative investment fund which depends on arbitraging mergers and acquisitions by buying a company that is being acquired and often shorting the company acquiring. The risks for such funds come only if the M&A does not go through. The earlier you get on as soon as an M&A is announced, the riskier. This fund takes very little risks by waiting to get on and arbitraging just the last few months before an M&A. This keeps the volatility very low and the gains low as well.
An alternative is the similar Merger fund (MERFX) which has a disadvantage because of its size and so may not be able to move quickly in and out.
HSTRX: Hussman's conservative allocation fund is managed in a risk-managed fashion where the portfolio is continually and pro-actively positioned to address the current risk evaluation of the market. Unlike his strategic growth fund, this fund does not take any significant bets on equities and so any incorrect decisions in his strategy does not have as much of a downside impact unlike the other fund. This has allowed HSTRX to show very consistent and impressive performance over a long period of time with very little volatility.
MGIDX: Intermediate duration mortgage securities fund that manages to keep volatility low with good performance and uses shorting/options to achieve this. The ability to short or use options will make this fund able to provide downside protection and manage credit and interest risks, a good idea when mortgage rates are likely to rise in the future.
Alternative is PTMDX - PIMCO Mortgage-Backed Securities D which shorts even more aggressively.
PGNDX: A GNMA fund that manages risk via shorting while preserving the upside of a GNMA fund. Good due to the same reasons as MGIDX above.
Alternatives are non-shorting GNMA funds such as USGNX from USAA, VFIIX from Vanguard or BGNMX from American Century which may have more losses if the mortgage rates were to rise rapidly.
PTTDX: An intermediate investment grade fund that also manages risk via shorting and useful in an expected interest rate rising environment in the future. Low volatility.
Alternatives are non-shorting funds with low volatility THOPX Thompson Plumb Bond or CPTNX American Century Government Bond Inv
WEFIX: A fund with the ability to move between short and intermediate durations based on market conditions and hence able to take advantage of the conditions better than a strictly short term fund. Does not use shorting.
Alternatives are USSBX from USAA, WEFIX Weitz Short-Intermediate Income, VFISX Vanguard Short-Term Treasury, PLDDX PIMCO Low Duration D. The last one from PIMCO does use shorting.
Unless I'm missing something...too much international and too much small cap. Besides, why not simply buy a 3 or 4 Global Allocation funds and be done with it. Keep adding to the worst performer every year.
Sorry, the portfolio seems too much trouble than its worth.
Reply to @VintageFreak: small caps seem just @5% (could be a typo in the write up); US 25%, INternational 20% -- just a bit more than standard. A total of just 12 funds. From portfolio construction point of view -- extremely compelling and quite professional and I bet this portfolio, with the annual rebalancing and review, can be on par with, or beat, professionally managed asset allocation funds.
Although my/catch22 post has an earlier time stamp. I did edit to add the link. This would have not been seen by OJ; and by the time I posted the link, OJ's MMLL text was in place. I suspect our posts were at the server about this same time.
Just in case anyone was wondering why there appears to a double hit with the same info from both of us.
I agree that some of the expenses are higher than I'd use (category averages tend to be notoriously high, so besting them is a low bar to meet). But except for Robeco Long/Short, they all beat (or virtually meet, in the case of Forrester Int'l) their category averages.
msf, 1.72% was the average ER posted by Fundmentals, who designed the portfolio. Don't know if is correct or not. I just stated what he had already mentioned.
Reply to @Old_Joe: hello there, OJ. Have been quite busy recently. Also, trimming the number of my personal investments, so not looking much to add new funds/info. Hope all is well with you and yours.
Maybe add one more. Add to the worse performer every year. And I like it so much, I just might do it next time I lose / change job and have 401k money to transfer over.
It's true that 2009 expenses were generally higher (because some ERs are based on AUM, which obviously dropped at the end of 2008), but after seeing that Forester Discovery had been waiving all of its 1.35% expenses in 2009, I figured that any small differences in the other funds' expense ratios would be subsumed by this one low figure.
Only Arbitrage (ARBFX) had a sizeable jump, and even that jump (43 basis points) was less than the difference between the reported 1.72% ER in 2009 and the computed 1.18% ER for 2011.
Reply to @VintageFreak: One of the beautiful things about investing is that no one portfolio is right for everyone. If you can rationalize your selections to your stated criteria and to your satisfaction as Fundmental did in setting up the MMLL portfolio then your chance of being a winner is the same.
Has anyone tracked the performance of this portfolio since it was set up? I was trying to set it up in M*, but it was not easy to just plug in percentage numbers from say 2009 onwards and get an idea of the returns in 2009, 2010 and 2011.
"I set up a hypothetical $100K portfolio of the MMLL Conservative and MMLL Agressive offerings on January 4, 2010. To date the Conservative portfolio had gained 7.39% although it was down in 2011 by (1.48)%. The Aggressive portfolio has gained 6.85% overall and was up in 2011 by 1.52%."
I built the 2 portfolios in M* when Fundmentals 1st came up with them. With out changes or adjustments, this is the result. I added the T.Rowe Price Target date funds (the Retirement fund and the 2010 fund) that have the closest mix of equity/bonds under each of Fundmentals conservative and agressive portfolos:
year 08 09 10 11 cons 5 25 11 2 TRP -18 22 10 1
agrs -19 38 14 -2 TRP -27 28 13 1
I can't remember, but I think he built these in early 2010, so he had the benifit of hind-site taking the best funds from 08 and 09 - Hence the strong results in those years. Still, pretty good comparible results in 2010 and 2011 versus the Target Date funds.
Reply to @DAK: CVLOX is available with no load (and NTF) at Schwab and likely elsewhere.
MALOX (love the ticker) is likely not available at the retail level anywhere. At least I've never found it. Nor have I ever found MDLOX load-waived at the retail level either. (But M* reports that it is available NTF via TIAA-CREF's brokerage, which appears to use Pershing.)
It's darned hard to judge any strategy over a short time period. That's why we give the managers we hire a pretty long leash. Three years minimum, unless there are really unusual circumstances. The funds in the MMLL strategy have pretty good 5-year rankings in their categories, but not-so-great over the last three. That would be expected in a Lose Less grouping. And, as we have noted in other posts, category comparison can be problematic at best.
Reply to @MikeM: Mike. if I recall correctly the portfolio was developed NOT by choosing those with the best poerfromance but rather choosing those that lost LESS in bad (down) years while still performing admirably in good (up) years. Any correlation was merely incidental or accidental if you prefer.
Reply to @Mark: Hi Mark. Yes, I agree. That is my recollection too. But I thought he used '08 and '09 as his guide to down and up years. Maybe not exclusively, but those 2 years were major inputs on his view of manager reaction and performance... to my recollection. So hence, looking at any performance data, 3 year, 5 year or even 10 would have been vastly skewed to '08/'09 results in 2010. So I guess to me performance was the same thing.
That said, I miss Fundmentals posts. Can't say I always agreed with him, but he always made me think. I'd say he may have had the biggest impact on how I swayed my portfolio towards managers whose main criteria is to preserve capital - loose less. Funds like YAFFX, ARIVX, FPACX, MACSX, HSRTX.
And to paraphrase Jimmy Durante; THANKS FUNDMENTALS, WHERE EVER YOU ARE.
Comments
I will dig around for a post I placed before the holidays of Fundmentals original write from Nov/Dec 2009.
I have not followed the mix.
Okay, I'm back........here is a link related to the MMLL and a comment about performance as set up per MARK. If you scroll further up, you will find the two part portfolio.
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/comment/7098#Comment_7098
Regards,
Catch
Because it's length exceeds the allowed maximum here, I've divided it into two parts for you.
Regards- Old Joe
"Make More, Lose Less" Portfolio
Posted by Fundmentals on December 09, 2009
I am sure many of you have come across the situation of a friend or a family member clueless about investing ask you to help them with a stash of money.
The real-life requirements are usually "simple":
1. "Want your help to make some money. I can lose money all by myself"
2. "I can put it in the market for 5 years. Can leave it there longer if it is making money but not if it is losing money"
3. "Don't ask me to do anything more than once a year"
The following portfolio is designed specifically for people that are not:
(a) expecting to beat the market
(b) don't want the portfolio to go down much (likely to panic and sell at the bottom if they went down 10% or more)
(c) would like some decent gains - more than what they can get with money market funds, CDs or even just bond funds without which they will not take the risk of investing at all and
(d) don't want to fiddle with it more than once a year.
The Portfolio-
Domestic Equity:
5% Forester Value (FVALX) - Large Value
5% Amana Trust Growth (AMAGX) - Large Growth
5% Queens Road Small Cap Value (QRSVX) - Small Value
International/Global equity:
10% Forester Discovery (INTLX) - World Allocation
10% Matthews Asia Dividend (MAPIX) - Diversified Asia/Pacific
Alternate investments:
10% Robeco Long/Short Eq Inv (BPLEX) - Long/short equity
10% Arbitrage Fund (ARBFX) - Merger/arbitrage
15% Hussman Total Return (HSTRX) - Conservative allocation
Bonds
7.5% Managers Intermediate Govt (MGIDX) - Mortgage securities/Govt
7.5% PIMCO Total Return D (PTTDX) - Intermediate Investment Grade Bond
7.5% Weitz Short-Interm Income (WEFIX) - Short-Intermediate Term Investment Grade Bond
7.5% PIMCO GNMA D (PGNDX) - GNMA
Backtested performance:
If portfolio invested on 1/1/2008, results as of 11/13/2009:
Total return: +15.05%;
2008 Performance: -4.79%
2009 YTD: 20.84%
Portfolio X-Ray:
Stocks 52.3%; Bonds 38.1%; Cash 9.6%
Stocks: US 56.00%; International 44.00%
US equities:
Large cap 27.4%;
Mid cap 22.8%; Small Cap 49.8%
Value 36.9%;
Blend 53.0%;
Growth 10.1%
International equities:
Europe 24.1%;
Pacific 38.5%;
Canada 18.9%;
Emerging Markets 18.5%
Bonds
Taxable 78.70%;
Uncategorized 21.30%
Credit quality High 78.7%;
Uncategorized 21.30%
Duration: Medium 20.2%
Low 58.5%
Uncategorized 21.3%
Costs
Portfolio average 1.72%
Portfolio construction notes:
The portfolio is constructed to solve a basic flaw in traditional portfolio construction. Diversification using high volatility equity funds (even index funds with market volatility) results in deep losses during bear markets as most such equities become correlated and go down together.
Just depending on bond allocation to reduce losses requires primarily allocation to Treasuries as it is the only type of asset that can be depended on to show negative correlation with equities in bear markets. But unlike in the past, Treasuries starting with the current situation of low interest rates cannot be expected to provide much gains going forward so the portfolio may turn out to be too conservative or too aggressive based on what happens in the market regardless of how much is allocated to Treasuries.
As a solution, portfolio picks only funds designed with a strategy to reduce/minimize losses during long bear markets and has some capital protection goals in place. The overall volatility is reduced by depending on each fund to reduce its own volatility rather than depend on lack of correlation to reduce the volatility.
Note that this is not the same thing as picking funds with the highest returns in either bear or bull markets or both. Nor are the returns attributable to some fantastic market timing in picking which stocks to buy and when to sell.
In fact, most of these funds will likely not consistently appear in the top 10% of their class except occasionally. But all of them will have shown the ability to limit losses by reacting to long-drawn down market conditions and make decent gains in long-drawn up market conditions.
In other words, the only market timing they will show will be in recognizing long bear markets as in recognizing the difference between 2008 and 2009, not what happens month to month. None of them try to time tops and bottoms.
Methodology:
Portfolio Requirements:
1. Capital protection and lack of volatility extremely important. No long periods of losses. No "wait for 10-20 years or more" excuse for losses.
2. Asymmetric behavior - as much of the upside as possible, as little of the downside as possible
3. Simple portfolio with high quality no-load funds widely available in the main brokerages
4. Only annual tune-ups
5. Total return more important than income
6. No assumption of bull/bear markets for the portfolio as a whole, no forecasted assumptions of economy or any other indicators, doom/gloom predictions, etc.
Concrete requirements:
1. Not more than 12 funds.
2. No single fund with less than 5% allocation or more than 15% allocation
3. Portfolio must be diversified but not necessary to cover all asset/fund classes. Only asset classes that have shown consistent returns without long loss periods and small drawdowns. Riskier assets only within risk-managed funds.
4. No assumptions of correlation or lack of correlation between asset classes going forward but no gross overlaps between funds. Some overlap is fine.
Screening criterion for funds:
1. No-load, ER less than or equal to category average, been in existence for at least 5 years.
2. No losses in 3, 5 or 10 yr (if available) rolling periods (amazing how many asset classes or funds drop out here)
3. Manager has been around for at least the category average
4. Minimum initial purchase not more than $3000 (i.e., minimum not more than $60k portfolio)
5. Best 3 month performance must be better than worst 3 month performance over its lifetime (amazing how many funds you lose with this criterion)
6. Best volatility-adjusted performance (3-yr and 5-yr) in class, not necessarily the best returns.
7. Volatility of each fund on its own must not exceed 10% of total stock market index, total bond index or balanced index as appropriate.
8. Lowest volatility to break a tie all else remaining the same.
9. No bias towards active or passive funds as long as the above criterion are satisfied
10. Allocation percentages based entirely on relative volatility-adjusted returns (3-yr and 5-yr), no ad hoc allocation decisions.
Individual fund notes:
FVALX, INTLX: These Forester funds have demonstrated the ability to limit losses by going to cash when conditions so indicate and they do so without worrying about whether they will fully participate in the recovery. Hence they fit the goals of this portfolio well.
Forester was so successful with this simple strategy that FVALX became the only equity fund to have positive (albeit close to zero) returns in 2008.
Unfortunately, this brings in people who look at the rankings, see this fund at the top in 2008 and invest and get disappointed when the fund lags in a bull market.
This fund is chosen for the very strategy (that was incidentally vindicated in 2008) with the full knowledge that it will not necessarily be anywhere near the top in bull markets or even beat the index.
Alternative to FVALX is Amana Income AMANX which does not provide as much downside protection but has done well using a very conservative approach in value investing and keeping the volatility low but it will be slightly more volatile than FVALX. Another slightly higher volatile alternative is Yacktman fund (YACKX)
Alternative to INTLX is Sextant International SSIFX (coincidentally managed by the manager of AMANX) for similar reasons.
AMAGX: A very well managed Large Cap growth fund with a long history of good performance. The downside protection is also reasonable within its class even though there does not appear to be any capital protection strategies in place.
QRSVX: Not a well known fund but is one of the very few funds that is widely available without a transaction fee, has at least a 5 year history and has managed to limit downside in the bear market in the small cap category. The volatility is also kept low.
A better known substitute is Royce Special Equity (RYSEX) if available without a transaction fee. Newer Intrepid Small Cap (ICMAX) has done very well although its short history may be a concern as well as Pinnacle Value (PVFIX) if available without a transaction fee. Both ICMAX and PVFIX are low volatility funds and have capital protection as a goal of the fund to fit the goals of this portfolio well.
MAPIX: The only selection without a 5 year history but comes with a very strong pedigree from Matthews Asia that specializes in Asian funds. This fund has extremely low volatility, even lower than most domestic equities and has managed to deliver very good total returns with a combination of stocks, convertibles and preferred shares.
Alternatives would be either Matthews Asia Pacific (MPACX) at higher volatility with good downside protection or Matthews Asian Growth and Income (MACSX) at lower volatility but can potentially lose more money in bear markets.
BPLEX: An alternative investment fund that tries to get good returns in both bull and bear markets. A long-short fund that can be mistaken for another performance chasing choice because of its recent performance. But this would be a good choice even if its performance in 2009 was just average or even below average.
Looking under the hood shows this fund to be quite different from other long-short funds that try to use both long and short depending on the stock valuations. This fund seems to switch between a primarily long fund (but with short positions to hedge) with good stock selection or a primarily short fund (with long positions to hedge) depending on the macro market conditions thus minimizing individual stock market timing risks.
This is not different in strategy from Forester's philosophy except that its uses shorting rather than just go to cash and uses small caps rather than large caps.
So it does very well in longer bear or bull market years and lags during transitions but without losing much money.
Unfortunately, none of the alternatives for this fund come anywhere close to it in performance as they primarily seem to depend on picking the right stocks to go long or short across all conditions rather than acting like a good long fund or a good hedged fund depending on macro conditions. It is a unique standout.
ARBFX: Another alternative investment fund which depends on arbitraging mergers and acquisitions by buying a company that is being acquired and often shorting the company acquiring. The risks for such funds come only if the M&A does not go through. The earlier you get on as soon as an M&A is announced, the riskier. This fund takes very little risks by waiting to get on and arbitraging just the last few months before an M&A. This keeps the volatility very low and the gains low as well.
An alternative is the similar Merger fund (MERFX) which has a disadvantage because of its size and so may not be able to move quickly in and out.
HSTRX: Hussman's conservative allocation fund is managed in a risk-managed fashion where the portfolio is continually and pro-actively positioned to address the current risk evaluation of the market. Unlike his strategic growth fund, this fund does not take any significant bets on equities and so any incorrect decisions in his strategy does not have as much of a downside impact unlike the other fund. This has allowed HSTRX to show very consistent and impressive performance over a long period of time with very little volatility.
MGIDX: Intermediate duration mortgage securities fund that manages to keep volatility low with good performance and uses shorting/options to achieve this. The ability to short or use options will make this fund able to provide downside protection and manage credit and interest risks, a good idea when mortgage rates are likely to rise in the future.
Alternative is PTMDX - PIMCO Mortgage-Backed Securities D which shorts even more aggressively.
PGNDX: A GNMA fund that manages risk via shorting while preserving the upside of a GNMA fund. Good due to the same reasons as MGIDX above.
Alternatives are non-shorting GNMA funds such as USGNX from USAA, VFIIX from Vanguard or BGNMX from American Century which may have more losses if the mortgage rates were to rise rapidly.
PTTDX: An intermediate investment grade fund that also manages risk via shorting and useful in an expected interest rate rising environment in the future. Low volatility.
Alternatives are non-shorting funds with low volatility THOPX Thompson Plumb Bond or CPTNX American Century Government Bond Inv
WEFIX: A fund with the ability to move between short and intermediate durations based on market conditions and hence able to take advantage of the conditions better than a strictly short term fund. Does not use shorting.
Alternatives are USSBX from USAA, WEFIX Weitz Short-Intermediate Income, VFISX Vanguard Short-Term Treasury, PLDDX PIMCO Low Duration D. The last one from PIMCO does use shorting.
Sorry, the portfolio seems too much trouble than its worth.
OJ
Although my/catch22 post has an earlier time stamp. I did edit to add the link. This would have not been seen by OJ; and by the time I posted the link, OJ's MMLL text was in place. I suspect our posts were at the server about this same time.
Just in case anyone was wondering why there appears to a double hit with the same info from both of us.
Take care,
Catch
One of the requirements was:
1. No-load, ER less than or equal to category average, been in existence for at least 5 years.
The ER's seemed above the category average to me.
Besides the high ER, it does seem like a very solid, conservative portfolio.
MALOX
CVLOX
PQIDX (new fund with TIBIX managers)
Maybe add one more. Add to the worse performer every year. And I like it so much, I just might do it next time I lose / change job and have 401k money to transfer over.
Only Arbitrage (ARBFX) had a sizeable jump, and even that jump (43 basis points) was less than the difference between the reported 1.72% ER in 2009 and the computed 1.18% ER for 2011.
For the record:
Below is from Mark, just recently:
Mark December 2011 Reply to @catch22:
"I set up a hypothetical $100K portfolio of the MMLL Conservative and MMLL Agressive offerings on January 4, 2010. To date the Conservative portfolio had gained 7.39% although it was down in 2011 by (1.48)%. The Aggressive portfolio has gained 6.85% overall and was up in 2011 by 1.52%."
All dividends were reinvested in both cases.
year 08 09 10 11
cons 5 25 11 2
TRP -18 22 10 1
agrs -19 38 14 -2
TRP -27 28 13 1
I can't remember, but I think he built these in early 2010, so he had the benifit of hind-site taking the best funds from 08 and 09 - Hence the strong results in those years. Still, pretty good comparible results in 2010 and 2011 versus the Target Date funds.
CVLOX is available with no load (and NTF) at Schwab and likely elsewhere.
MALOX (love the ticker) is likely not available at the retail level anywhere. At least I've never found it. Nor have I ever found MDLOX load-waived at the retail level either. (But M* reports that it is available NTF via TIAA-CREF's brokerage, which appears to use Pershing.)
Hi Mark. Yes, I agree. That is my recollection too. But I thought he used '08 and '09 as his guide to down and up years. Maybe not exclusively, but those 2 years were major inputs on his view of manager reaction and performance... to my recollection. So hence, looking at any performance data, 3 year, 5 year or even 10 would have been vastly skewed to '08/'09 results in 2010. So I guess to me performance was the same thing.
That said, I miss Fundmentals posts. Can't say I always agreed with him, but he always made me think. I'd say he may have had the biggest impact on how I swayed my portfolio towards managers whose main criteria is to preserve capital - loose less. Funds like YAFFX, ARIVX, FPACX, MACSX, HSRTX.
And to paraphrase Jimmy Durante; THANKS FUNDMENTALS,
WHERE EVER YOU ARE.