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BILTX. Bad idea? Roads, bridges, airports??? Young fund. Are we really going to PAVE something, at last??? I think we need a new version of the WPA. Why the hell not?
Ignoring politics for the moment, I'm having difficulty seeing the appeal of a corporate bond fund focused on infrastructure.
If this were a muni bond fund, I could see how it might make sense. It could invest in revenue bonds where the revenue came from tolls (roads, airport fees, etc.), land leases, etc. But these corporate bonds are backed by the general credit of companies broadly involved in infrastructure (or by the infrastructure assets of these companies). Does that make them more secure (in which case their yield should be lower), less secure (the reverse), or what? In short, what is it about corporations involved in infrastructure that makes their bonds more appealing?
This is different from investing in the stock of these companies. If one expects these companies to do well, then that will be reflected in their stock price and/or dividends going forward. As a disclaimer, I have a small holding in an infrastructure equity fund.
Regarding the particular fund - comanaged by two people with no prior fund management experience. DoubleLine doesn't even say they were analysts (unlike managers of some of their other funds), just that they were "members" of investment teams. New fund.
I don't see a compelling story here - I'm not sure I even see what the story is.
According to the fact sheet, 1/3 is project financing, which is more or less the taxable equivalent of what I was describing with muni revenue bonds. That is indeed different from corporate financing.
In contrast, structured products are basically debt issued by a corporation with a synthesized risk/reward profile. A simple example is a principal protected (aka equity-linked) note. ETNs are another example of structured products. They can get much more complex.
The point is, there is an issuer (usually a corporation) and these are obligations of that issuer. These are forms of corporate debt. FWIW, that's also the way M* counts them (it says 2/3 of the portfolio is corporate debt).
Some of the target allocations and similar information described in the Core-Solution doc don't appear in the prospectus. So I'm not sure they represent much more than a hope. In contrast, the target credit range of BB-BBB is somewhat represented in the prospectus, that states that the fund intends to invest over half its assets in investment grade investments.
I had serious interest in the offering from before and after inception; however, my enthusiasm has since cooled : I don't see much, if any, inflation pass-through benefit from infrastructure bonds as opposed to owning infrastructure stocks directly or a fund like GLFOX (which I don't own but which does buy infrastructure companies directly and not those which only invest) in them. See the difference?)
OTOH, I do own MIC, which itself is not an infrastructure stock but has the TR I'm seeking and is a suitable infrastructure proxy with its portfolio of assets IMO.
Comments
If this were a muni bond fund, I could see how it might make sense. It could invest in revenue bonds where the revenue came from tolls (roads, airport fees, etc.), land leases, etc. But these corporate bonds are backed by the general credit of companies broadly involved in infrastructure (or by the infrastructure assets of these companies). Does that make them more secure (in which case their yield should be lower), less secure (the reverse), or what? In short, what is it about corporations involved in infrastructure that makes their bonds more appealing?
This is different from investing in the stock of these companies. If one expects these companies to do well, then that will be reflected in their stock price and/or dividends going forward. As a disclaimer, I have a small holding in an infrastructure equity fund.
Regarding the particular fund - comanaged by two people with no prior fund management experience. DoubleLine doesn't even say they were analysts (unlike managers of some of their other funds), just that they were "members" of investment teams. New fund.
I don't see a compelling story here - I'm not sure I even see what the story is.
Regards,
Ted
http://money.usnews.com/funds/mutual-funds/rankings/infrastructure
What the(ir) story is (whether you "buy it" is up to each and his/her own circumstances):
http://doubleline.com/dl/wp-content/uploads/Infrastructure-Core-Solution.pdf
http://www.doublelinefunds.com/wp-content/uploads/BILDX-Sept3Q_2016Commentary.pdf
https://event.webcasts.com/starthere.jsp?ei=1116350
October Fact Sheet
@msf only about a third of the fund is corporate bonds; about a third of the fund is non-US
http://www.doublelinefunds.com/wp-content/uploads/infrastructure-income-fund-fact-sheet.pdf?c=1479079694
In contrast, structured products are basically debt issued by a corporation with a synthesized risk/reward profile. A simple example is a principal protected (aka equity-linked) note. ETNs are another example of structured products. They can get much more complex.
The point is, there is an issuer (usually a corporation) and these are obligations of that issuer. These are forms of corporate debt. FWIW, that's also the way M* counts them (it says 2/3 of the portfolio is corporate debt).
Some of the target allocations and similar information described in the Core-Solution doc don't appear in the prospectus. So I'm not sure they represent much more than a hope. In contrast, the target credit range of BB-BBB is somewhat represented in the prospectus, that states that the fund intends to invest over half its assets in investment grade investments.
OTOH, I do own MIC, which itself is not an infrastructure stock but has the TR I'm seeking and is a suitable infrastructure proxy with its portfolio of assets IMO.