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VintageFreak said:Why not just own PONDX?
Why not just own PONDX?
JohnChisum said:@msf, I agree. Mult sector or multi Asset funds are a great way to get exposure. @BobC, OSTIX is a good choice as it provides a monthly distribution and a decent yield to boot.
@msf, I agree. Mult sector or multi Asset funds are a great way to get exposure. @BobC, OSTIX is a good choice as it provides a monthly distribution and a decent yield to boot.
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At this point, we are not looking to add either one to portfolios, but never say never.
I like the Osterweis family so am looking at OSTRX. A few fund families seem to be recently entering this space (T Rowe Price is one). Is there anything special to distinguish this "total return" fund from similar offerings?
Everyone was making hay when RS was doing the same. What happened later? My opinion of Osterweis just went down a notch.
- tracks moderately closely (correlation coefficient r of 0.92, coefficient of determination R^2 of 85%)
- is a bit more volatile
- generally underperforms (except for a period of about a year - mid 2012 to mid 2013)
- much more expensive
See this Portfolio Visualizer analysis page for correlation, std deviation and lifetime performance comparisons, and this M* performance chart for relative performances
It's not as though I don't find funds like this interesting. I used to follow Greenspring GRSPX. (Another fund with a fixed income sleeve that is low quality, shorter duration.) At the end of the day, ISTM what matters is performance.
That's not to say that portfolio allocation doesn't matter, but there are solid multi-sector funds that one can use instead to increase one's exposure to that portion of the fixed income market. (Even, dare I say, OSTIX.)
@BobC, OSTIX is a good choice as it provides a monthly distribution and a decent yield to boot.
Maybe @Junkster could chime here, but I also see WHIYX as a reasonable HY choice as well. M8 knock this fund for recent management changes. Another choice that performs similarly to WHIYX, but may not be open to new investors is PRHYX.
Own OSTIX...diverisfy into WHIYX on dips:
My apologies for using M* charts and its limitations.
Using a different tool (Portfolio Visualizer) it looks like OSTIX under performed AGG for the two years you reference, but it has crushed AGG in many other years.
Here's a good 11 page primer by Nuveen on various factors to consider with bonds. It talks about how the starting environment matters on pp. 2-3. Factors such as yield curve steepness and the speed and number of Fed raises.
With those factors in mind, it discusses (and shows graphically) how different types of bonds are expected to react to changes and how they have reacted in fact during different periods of rising rates. pp. 4-5. "Exhibit 4 shows how asset classes with more yield and varied performance drivers generally performed better ..."
It then discusses why this time is different on pp. 6-8. Some of what it mentions: a lower starting interest rate; a domestic monetary policy that is different from that of other countries (this difference may tend to moderate the increase in long term rates); rates rising toward "normal" vs. tightening for the purpose of cooling the economy.
It puts all this together to suggest that "Focusing portfolios on sectors with more yield potential and less sensitivity to changes in interest rates can help offset price declines caused by rising rates. ... We also like broadly flexible, multi-sector bond portfolios in this environment." pp. 8-9.
That's different from what you get in "any other intermediate bond fund."
There is also the possible advantage of letting the manager/s decide what and where to go to find the better yields as well. Unconstrained funds offer this to investors. Just another option versus a set portfolio.