Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

"Outlier" Funds in Your Portfolio

Just curious if you use any odd or "outlier" funds in your porfolio, i.e., something that is different from the rest of your portfolio, like alternatives, hedge funds, multi-sector income, concentrated funds, obscure sector or just something that is off the wall. Care to share them and explain why you have them? Thanks.
«1

Comments

  • PRSNX Global Multi-sector bonds. Monthly dividends is the reason. I'm still re-investing it all. If you want highly specialized, outlier stuff, look at Gundlach's Cape-Schiller thing. It's performing quite well, anyhow, I understand..... DSENX. Which one of us has invested in this one? I've forgotten. It's a frequent and trusted poster, though.
  • edited August 2016
    I own both DSENX and small positions in CAPE and GFMRX.
  • edited August 2016
    I don't know if I'm trustworthy :) but yeah, I have half or more of my entire egg in DSEEX / DSENX. (Thank goodness thus far.)
  • edited August 2016

    Just curious if you use any odd or "outlier" funds in your porfolio, i.e., something that is different from the rest of your portfolio, like alternatives, hedge funds, multi-sector income, concentrated funds, obscure sector or just something that is off the wall. Care to share them and explain why you have them? Thanks.


    Hmm ... You just sorta described my whole approach to investing.:)

    Best analogy I can think of: It's kinda like climbing a ladder while digging a hole at the same time. You won't go up real fast, but you won't sink too far down either.


  • I have two multi-asset income funds. One has some hedging capabilities unlike the other. I also own a Global Real Estate Fund which is a area I think everyone should have a small piece in. Outlier funds should be seasoning for your meat and potatoes core holdings of index and broad market funds.
  • BenWP said:

    I own both DSENX and small positions in CAPE and GFMRX.

    What does it own? Looks like mostly swaps?
  • Incidentally, I started a position in IYLD this past week as a way of boosting yield a bit in my portfolio.
  • edited August 2016
    Currently, what I consider to be my specialty funds which make up about 30% of the growth area of my portfolio and found in the specialty/theme sleeve are as follows:

    1) Emerging Markets ... NEWFX & THDAX.

    2) Private Equity & Business Development ... LPEFX.

    3) Infrastructure ... PGUAX.

    4) Commodities ... JCRAX. "Under consideration for addition (awaiting market pullback)."

    In addition, I hold a hybird real estate fund (FRINX) in my domestic hybrid sleeve found in the growth & income area of my portfolio. This fund holds bonds, stocks, reits, convertibles and preferreds; and, it is a fund that provides a good income stream.

    And, yet another interesting fund that I hold in my hybrid income sleeve is CTFAX. It is primarily a fixed income fund that loads equities during stock market declines and then reduces its allocation to stocks as they recover. It adjusts its stock allocation based upon an equity valuation matrix set to the S&P 500 Index.

    There are some other funds held within my portfolio that also utilize some interesting strategies. One of these funds is FDSAX which holds part of its stock allocation in the "Dogs of the Dow." And, another is SPECX. It is primarily a large cap growth fund but it can hold stocks of any size and shorts what it considers to be overvalued stocks. Then there is JDCAX (a stock pickers fund of about 40 stocks) which is classified as a large cap growth fund but can hold stocks of most any size. And, there is another note worthy fund (ABSAX) that uses the sleeve system splitting its assets among four to five asset managers using different investment strategies to cover the small/mid cap space.

    There are some more interesting funds that I hold within my portfolio of forty seven funds; but, to go through all of them would truly be an excerise.
  • edited August 2016
    * FRIFX, the chicken's way of investing in financial-product real estate -- but I like the look of GFMRX if I ever want to go whole hog.

    * A small position in PGRNX as a long-term bet on energy efficiency, renewables, the energy economy transition, and environmental cleanup.

    * Have owned market neutral QMNNX, don't now, but keep an eye on it and its close long-short cousin QLENX.
  • About 5 % of my total portfolio is in Alternative type funds

    General wide ranging ideas like (MASNX), more standard Merger/Arbitrage ( MERFX) or managed futures (AMFAX ).

    I have an additional 2% in GLD and 2$ in real estate
  • edited August 2016
    I have been in and out of Soviero's FLVCX, in a slump, though he is a wizard. Not sure what is being criteria'ed as alt. For RE I long ago switched from VNQ to FREAX.

    @willmatt72, DSENX / DSEEX tracks etn CAPE w/ bond secret sauce. Algorithmically rotating LV, though you cannot tell that from the helpless M*. Snowball and msf and other smarties here (I think) have written cogently about it.
  • AndyJ said:

    * FRIFX, the chicken's way of investing in financial-product real estate -- but I like the look of GFMRX if I ever want to go whole hog.

    * A small position in PGRNX as a long-term bet on energy efficiency, renewables, the energy economy transition, and environmental cleanup.

    * Have owned market neutral QMNNX, don't now, but keep an eye on it and its close long-short cousin QLENX.

    Hi Andy - Always nice to hear from you. I haven't been able to find QLENX with a low minimum to invest.
  • Hi Andy - Always nice to hear from you. I haven't been able to find QLENX with a low minimum to invest.

    Hi Will, they're both offered for low minimums at Fidelity in IRAs. I don't know about any other brokerages. -- Cheers, Andy J.
  • QLEIX is available at Scottrade for $100 minimum.
  • Good to know. I use Fidelity and Vanguard only, though.
  • I have exposure in real estate through VNQ, VNQI, and FRIFX. Sold all precious metals recently. Still have enough cash and waiting patiently.
  • After researching many of the options listed here, I did initiate positions in DSENX and QLENX (IRA) just to mix it up a little. I do own FRIFX already so I'm good for now. Let's see what happens. I was just looking for some alternative investments that don't always correlate with equities or bonds.
  • edited August 2016
    Also initiated a position in DSENX after listening to Mr Gundlach's July Webcast. In his words,for those.. (looking to) the stock market.. ,DSENX has an emphasis on risk management and risk adjusted returns. Recap here in Q and A.Two and 1/2 pages of quick hit commentary.
    http://www.doublelinefunds.com/wp-content/uploads/7-12-16_AssetAllocationWebcast_Recap.pdf
    Also opened small position in DRRAX today.Managed out of London.World view?
    Trimmed Gold/Precious Metal positions over past 60 days.Now just under 5 % of investment total,mostly in TGLDX. Proceeds into PTIAX,now my largest bond holding.
  • jeeeeeeezus, how can I have so much money in a fund where the co-manager thinks DT is going to win the election? Politics aside, what does that say about his intellect and thought processes and observational and analytical skills ? Mother.
  • So much for this thread. It usually takes one to make it political and insult half the voter base at the same time.
  • edited August 2016
    I allocate part of my portfolio to "alternative" strategies. Results to date have been generally terrible. Hopefully I will learn some lessons along the way, albeit painfully.

    I think it is very important to define at the outset exactly what you expect this part of your portfolio to do for you. Whatever fund you pick, you should expect that it will eventually feel like it is underperforming. When that happens, going back to your original investment plan is the only way to determine whether your fund is "working" or not.

    Some of my funds that are doing poorly this year include:

    - Catalyst Macro Strategy MCXIX: Down over 20% this year. Terrible. I know others on this board had it, but maybe some (all?) of them have bailed by now.

    - Wasatch Frontier WAFMX: Down over 2% year to date, and 10% for the past year. Not as terrible compared to MCXIX, but pretty bad compared to equity markets in general.

    But I put it in context. Stocks and bonds are having a great year. Even Vanguard Wellesley, which is about as boring of a fund as it gets, is up over 9%. Alternative funds, I believe, should provide some diversification. That is, I hold them in the hopes that they will give some pleasant surprises when stocks and bonds are middling. Conversely, I try not to be too critical of them when the rest of the portfolio is doing well.

    In that sense, I wouldn't classify DSENX / DSEEX as an alternative fund. It may use unusual methods, but it is basically a U.S. large cap value fund. That doesn't mean it isn't a good fund, but you should only add it if you're looking to add more U.S. large cap value to your portfolio (or if you're looking to replace your existing U.S. large cap fund).
  • good point, with outlier defined more strictly as in the OP
  • We use several, depending on the risk profile of the portfolio. They include QMNIX (Schwab), MASNX (Fidelity), there is no acceptable market neutral option at Fidelity, but the Litman fund is an ok alternative. LASYX for potential higher interest rates, in the meantime, it has been an ok, low-risk option. We will use some real estate, either CSRSX or ICF. Not really alternatives, but we will also use SPHD, SPLV, EEMV, EFAV, and ACWV. No commodities, no precious metals unless instructed by clients, then GLD. Some preferred stock with KIFYX. We tend to be pretty boring most of the time.
  • BobC said:

    We use several, depending on the risk profile of the portfolio. They include QMNIX (Schwab), MASNX (Fidelity), there is no acceptable market neutral option at Fidelity, but the Litman fund is an ok alternative. LASYX for potential higher interest rates, in the meantime, it has been an ok, low-risk option. We will use some real estate, either CSRSX or ICF. Not really alternatives, but we will also use SPHD, SPLV, EEMV, EFAV, and ACWV. No commodities, no precious metals unless instructed by clients, then GLD. Some preferred stock with KIFYX. We tend to be pretty boring most of the time.

    MASNX popped up on a few of my screens, Bob. Interesting fund. As always, thanks for your input.
  • good point, with outlier defined more strictly as in the OP


    For me, DSENX qualifies as an odd duck in my portfolio simply because I don't own any other fund so heavily invested in swaps and derivatives.
  • I bought DSENX earlier this year, and I and remember nothing about swaps and derivatives. Maybe I misunderstood objectives but basically the fund is a value fund investing in sector indexes that are at the time the 5 cheapest s&p500 sectors to invest in. It throws out the sector with the poorest momentum.

    Fom the double Line website:

    Strategy

    The Shiller Enhanced CAPE® strategy offers exposure to the “cheapest sectors” of the large cap equity markets using an “Index Overlay” technique while the remaining assets are invested in a fixed income portfolio. Both segments of the portfolio offer a value play in their respective markets. The Barclays Shiller CAPE® US Sector Index strives to outperform the S&P 500 Index, while the fixed income side strives to outperform cash, thus offering one diversified value product with two unique source of possible value.

    Philosophy

    The Barclays Shiller CAPE® US Sector Index shifts the exposure to the “cheapest” sectors of the large cap equity market by using Dr. Robert Shiller’s CAPE® Ratio which seeks to assess longer term equity valuations by using an inflation adjusted earnings horizon that is 10 times longer than the traditional Price Earnings or P/E measure. The Relative CAPE® Ratio subdivides the S&P 500 into 10 sectors, eliminating the 5 with the highest relative CAPE® ratios, leaving what we believe are the 5 better value proposition sectors. Index methodology eliminates the one sector with the worst one-year momentum, to try and avoid the value trap.

    Index Overlay Process

    Using a total return index swap to gain the exposure to the Barclays Shiller CAPE® US Sector Index, the remaining assets are then invested into, what we believe to be, a lower-risk bond portfolio with the goal of trying to outperform cash. This provides a double-value proposition, where we believe we can add value to both sides of the portfolio.
  • So it really invests in 4 sectors, not 5.
  • \\ Using a total return index swap to gain the exposure to [CAPE]

    a swap is a derivative, it says here

    and yes, 4
  • Yes, the fund clearly utilizes derivatives to achieve its goals. It's spelled out on the Doubleline website:

    http://www.doublelinefunds.com/wp-content/uploads/Shiller_Enhanced_CAPE_Sum_Pro.pdf
  • Right about now @Roy may be wondering why no one (except Junkster) responded to his thread on Synthetic Investments like MetWest AlphaTrak 500 MWATX.
    http://mutualfundobserver.com/discuss/discussion/28903/synthetic-investments

    Enhanced funds where the "enhancement" comes from bond investments (as opposed, say, to quant tinkering with the baseline index) tend to use the same technique - gain exposure to the specified index via derivatives and invest in bonds with the remaining cash. So you can see where the "alpha" in AlphaTrak 500 comes from, and you can pretty well guess which index it's "trak"ing.

    AlphaTrak is characterized as a large cap blend fund even though it holds no stocks, just bonds and derivatives (that track the S&P 500). DSENX fund in contrast does hold some stocks, but it's still mostly bonds and derivatives using the same basic technique to enhance its baseline index. It's the index, not the fund, doing the sector rotation.

    From the prospectus:
    The Fund will seek to use derivatives, or a combination of derivatives and direct investments to provide a return that tracks closely the performance of the Index. The Fund will also invest in a portfolio of debt securities to seek to provide additional long-term total return. The Fund uses investment leverage...

    Emphasis in prospectus. I'm curious that the web page quoted mentions only swaps. The prospectus in commenting on the derivatives used, says "the Fund might enter into swap transactions or futures transactions" to track the index.
Sign In or Register to comment.