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Target return of RiverPark Short Term High Yield (RPHYX / RPHIX)?

I am a long time RPHYX shareholder, but have been reducing my position and am reconsidering its value. Originally its stated goals were (as David Snowball put it) 300-400 bps over money market. But as Junkster points out in this earlier thread:
This fund is not going to give you 3.5%-4.5% a year. I mean 2.20% over the past 3 years and 2.76 over the past 5 years. This year it is on track for around 2.80. Some of the Fidelity money market funds are now yielding over 1% (of course you will need a million dollars) And lesser money market funds yields are rising and will continue to rise with the increase in the fed funds rate. So no way 300-400bps over money market. Otherwise a fine fund with negligible volatility and way above money market returns (for now) This we can agree on.
Morningstar currently has this fund at 2.41% over the past year, 2.19% over the past 3 years and 2.58% over the past 5 years. Of course this is in part due to 2015, where there some investment mistakes resulted in a disastrous year (relatively speaking). However, just looking at the more recent returns, it doesn't seem like "300-400 bps over money market" has been a feasible goal for some time now.

I took a look at some of the recent manager commentaries on the RiverPark website, but they didn't seem to give much insight as to target return and whether they expect recent trends to persist. What do other folks think -- Is a return of 2.5% a more realistic expectation for this fund? Is it still worth sticking to around this level?


  • edited September 2017
    And let's not forget about the promised returns of 7% to 8% in the sister fund of RPHYX - RSIVX
  • I've been disappointed also. Parked a moderate amount in the fund while awaiting the correction that hasn't come and have lost a couple of hundred bucks (according to my TDA account) so far, while their TDA graph shows a steady slow increase as a return. I'd accept 2+% vs TDA's paltry fraction of a percent on cash in their money market, if that was what I was getting, but it looks like my RMD is coming out of RPHYX this year.
    I presume that means the correction will then occur, and RPHYX will return something better than zero; so, for those of you awaiting investment signals, I'll take my RMD in December.
  • Yep. This isn't a fund I'm angry at myself for buying a little of, it has done better than money market, but I'm wondering if it's worth taking ANY risk at all for an extra 200 bps, esp in a taxable account.
  • msf
    edited September 2017
    ISTM that enhanced cash is a poorly understood or appreciated type of investment, both generally and especially in light of poor execution and implosion in 2008. See, e.g. Schwab Yield Plus).

    As the old (2006) Northern Trust paper linked to above points out, you should have at least a one year time frame in mind, otherwise stick with cash equivalents. Enhanced cash investments do come with risks. Personally, I do feel that that risk is worthwhile, if one understands the nature and magnitude of the risk. Especially in a taxable account where one has the option of writing off a (small) loss should that occur. Though in taxable accounts there are some good ultrashort muni bond funds that can come close to RPHYX in after tax returns.

    I'm not sure how STB65 has managed to lose parked (as opposed to traded) money in RPHYX.

    Monthly 2017 return figures from M* (Jan, Feb, ..., Sept): 0.29%, 0.18%, 0.23%, 0.19%, 0.20%, 0.13%, 0.14%, 0.12%, 0.24%.

    Quarterly 2015-2016 figures (1Q2015, 2Q2015, ...): 0.64%, 0.48%, -0.36%, 0.10%, 0.92%, 0.86%, 0.91%, 0.59%.

    Annual returns since inception (starting 2011): 3.86%, 4.20%, 3.39%, 2.65%, 0.86%, 3.31% (2016). 2017YTD 1.72%.

    Repeating: you should have at least a one year time frame in mind.
  • Finally found a copy of the iMoneyNet taxonomy of enhanced cash vehicles:
    • Cash plus funds - mark to market, seek $1 NAV, up to 180 day maturities
    • Enhanced cash funds - floating NAV (like RPHYX), durations up to a year
    • Ultrashort bond funds - floating NAV, durations 1-3 years
    I'm still reading through the 10 page presentation. The list above came from graphic on p. 3.
  • I use or have used a number of funds/etfs with durations around 1.5 or below to outperform money market funds: TRBUX DLSNX BBBMX NEAR and MINT. FPNIX would also be useful if it was a ntf fund at any brokerage.
  • edited October 2017
    I searched the fund and found volumes of discussions dating way back to July, 2011.

    Hear’s one of the earliest - Riverpark Short-Term High Yield Fund Looks Like A Great Place to Park Money:

    Another early discussion - Riverpark Short-Term High Yield Fund - What Role in Your Portfolio?:

    With the proviso that I’ve never owned this fund and have only a limited understanding of the methodology employed, I’ll nonetheless venture a few thoughts:

    - Short term rates have risen since 2011 - albeit not by much. Compared to a half-percent back in 2011, the near 1%* available in money market funds today makes them appear better in comparison than in 2011. (*near 1.5% corrected to near 1%)

    - New SEC rules governing money market funds have made them safer in comparison with RPHYX than they might have appeared back in 2011.

    - Both equities and high yield bonds have appreciated greatly since than. I haven’t heard a knowledgeable observer dispute for months that spreads between investment grade debt and high yield are about as narrow today as they’ve ever been.

    Re #3 above - A manager in a distressed debt fund likely has been confronted with two choices since 2011: (1) reach for yield and compromise portfolio quality, or (2) settle for lower (relative) returns while maintaining portfolio quality. Some of the comments regarding “underperformance” of RPHYX suggest to me, anyway, that the fund’s managers have elected the second choice in order to preserve investor capital.

    While I don’t follow RPHYX closely, I periodically compare returns against TRBUX (investment grade ultra short) which I own. RPHYX has consistently outperformed my fund (though with a higher risk profile).

    Is RPHYX still a good investment? As @msf and others have noted, it all depends on your overall investment aporoach and time horizon. How much additional risk are you willing to take on in your cash / cash alternative sleeve in pursuit of incrementally higher yield on that portion of your investments? Personally, I could construct a portfolio in which RPHYX would meet a need. Presently it doesn’t fit.
  • I agree with nearly everything hank wrote. The one exception is the juxtaposition of these two bullet items:

    - Short term rates have risen since 2011, albeit not by much. But compared to a half-percent back in 2011, the near 1.5% available in money market funds today looks better than it did by comparison in 2011. And rates are expected to rise further.

    - Recent SEC mandated rules on money market funds have arguably made them safer in comparison with RPHYX than they might have appeared back in 2011.

    What the SEC did was bifurcate MMFs into safer ones (government MMFs) and ones with higher, or at least different, risks (prime MMFs). The risks are different because they may now slow redemptions or impose redemption fees in times of stress.

    I've talked with Fidelity about this, and as near as we can figure out (didn't get a clear answer), it's possible to be charged a redemption fee for merely writing a check. This can happen if you're using a prime MMF (position fund) as a backup for your core account, and that check draws from the prime MMF at a time it's imposing redemption fees.

    The safer funds (second bullet item) are government funds. These pay less than prime MMFs, and none is currently above 1% (first bullet item). Very close though (0.99%), and worth considering for their added convenience if the one you want is available NTF at your usual brokerage.

    Current top MMF rates:
  • edited October 2017
    @msf: Thanks for the fact-checking. Sloppy work on my part. I guessed at the 1.5% figure by discounting the reported 30-day SEC yield of 1.73% for TRBUX somewhat. What I overlooked was that it’s much harder nowadays for managers to play games with their consumer level money market funds (ala Dick Strong / Mercury Capital) with those new reforms in place. Have corrected my numbers in the above post.

    Something I might have added is that the SEC reforms forced money market funds to drop some higher tier corporate debt that the ultra shorts were all too happy to pick up. So, indirectly, the reforms aided the ultra shorts’ relative performance. That’s the point where I moved all my cash with TRP from money market to ultra short.
  • The 3Q commentary for RPHYX is now available here:

    Somebody else can explain this more clearly, but my quick takeaway is that the manager is concerned about the Fed's stated goal of raising interest rates, and is thus choosing to significantly shorten the duration of the portfolio at the expense of higher yield.
  • edited October 2017
    Sorry @claimui - Not qualified to answer your good question. Am sure someone will.

    Enjoyed @msf’s analysis above. Spot-on in many respects. What always strikes me are the discussions that arise during times of stress regarding risk as pertains to cash equivalents or cash alternatives. At a time when equities might be falling by 50% or more, some investors appear unnerved by the potential for much smaller losses in their cash accounts. Heck - I’m willing to take a 5% haircut in a mm or ultra-short if the alternative is a 50% or greater loss in an equity fund.

    I hadn’t thought about the possible freeze on withdrawals. That would be a problem if you’re relying on these funds for subsistence or to pay the mortgage. Might also work against equities if investors couldn’t transfer money into depressed equity funds. In imposing the new rules the SEC was attempting to take control of a monster they didn’t create (directly anyway).

    As far as T-Bills and FDIC go, these are as good as the word of the politicians who write and execute the rules. So, even those pose some risk of loss. Helps explain the appeal of alternative currencies like precious metals and Bitcoins to some.
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