FYI: Alternative funds, which mimic hedge-fund techniques to increase returns or reduce risk, soared in popularity in 2015 and 2016. How have they done this year?
Regards,
Ted
http://www.investmentnews.com/gallery/20171120/FREE/112009998/PH1. AlphaClone International ETF (ALFI)
2. GMO Special Opportunities Fund Class VI (GSOFX)
3. RiverPark Long/Short Opportunity Fund (RLSIX)
4. Superfund Managed Futures Strategy Fund (SUPIX)
5. Boston Partners Emerging Markets Long/Short Fund (BELSX)
6. Longboard Alternative Growth Fund (LONGX)
7. Balter European L/S Small Cap Fund (BESMX)
8. Natixis ASG Tactical U.S. Market Fund (USMYX)
9. Swan Defined Risk Emerging Markets Fund (SDFAX)
10.AlphaClone Alternative Alpha ETF (ALFA)
Comments
As for judging mutual funds, YTD is a bit arbitrary and too short IMO, although I understand why John would use the metric in an article this time of year.
Personally, I like to take a weighted average:
5/9 * the 5 year return
3/9 * the 3 year return
1/9 * the 1 year return
Because all three have the 1 year return, it actually gets the most weight, but not ridiculously so:
Last year = 33%
2nd Year = 22%
3rd Year = 22%
4th year = 11%
5th Year = 11%
Regards,
Ted
I don't track a 60/40 but the 50/50 Index mix that I do track has had the following returns. They follow: 2012/9.96% ... 2013/17.31% ... 2014/5.60% ... 2015/0.54% ... 2016/7.04% ... 2017(ytd)/10.87%. The cumulative return for this period is 53.85% with the average being 8.98%.
The reason I use the 50/50 mix is that now in retirement I only move my equity allocation +/- 5% from its neutral position of 50% unless market conditions warrant otherwise. Years back I'd go +/-10% from the neutral position thus a 60/40 mix might be a better allocation for this adjustment range.
My cumulative return on my own portfolio for the above period has been 57.47% with the average being 9.58%. Some will ask ... Has it been worth it to be active? For me, it has been as it has put a good bit of extra cash in my pocket vs. running with a static 50/50 mix. Plus being a student of the market has been rewarding in of that itself.
In addition, I use American Funds' Capital Income Builder (CAIBX), my third largest holding, as my global hybrid fund bogey because of its global allocation and yield. Its cumulative return is 49.55% for the period with the average being 8.26%. My return over the 50/50 mix is about 6% and over CAIBX about 16%. Generally, I have found, higher yielding hybrid funds offer lower returns. And, my portfolio does kick off a good yield and has a global orientation. I also, use the Lipper Balanced Index as another standard.
In looking at a sampling of some of the funds listed in the article the two I looked at GSOFX & USMYX did not have the history necessary for a compairson. However, I did do one against KCMTX listed by Morningstar as a multialternative fund. I found it's cumulative return for the period to be 67.01% with the average being 11.17%. KCMTX is co-run; and, one of its managers Parker Binion has started posting on our board. Parker's handle is @PBKCM in case you did not, and would like to, know. Interestingly, I was asked (in another thread) by another poster as to why I'd be a buyer of this fund? It is pretty simple ... in spite of its expense ratio ... it is putting up some good numbers for a multialternative fund plus it is currently carrying 5 stars by Morningstar. Folks, it cost money to actively engage the markets. It also reminds me of two other funds I invested in early on (but, no longer own) one being Ivy Asset Strategy and the other being Marketfield. They got to the size where they could no longer effectively position in a timely manner with the ever changing market conditions. So, I let them go as their performance waned.
Below is a link to the Morningstar report on Parker's fund.
http://www.morningstar.com/funds/XNAS/KCMTX/quote.html
Notice it is ranked in the top 1% on the rolling 1 year return period ... top 2% on year-to-date returns ... top 2% on the 3 year period ... and, top 1% for the 5 year period.
For me, the big question is ... How did a good skilled seasoned writer such as John Waggoner miss by not including Parker's fund? Perhaps, Mr. Waggoner reads the board? And, will kindly make comment.
And, so it goes.
I wish all ... "Good Investing."
The list above is simply compiled from YTD numbers from the following M* categories:
Multialternative
Long Short Equity
Long Short Credit
Market Neutral
Managed Future
Options Based
Many of the funds listed above do not have 3-year track records. One of the few that do has a $750M minimum investment (Grantham's Special Opportunity fund)!
We're keeping our nose to the grindstone. Focusing on process and letting results take care of themselves.
I generally won’t buy a fund without looking at ‘08 in its prospectus. Such a telling bit of information. Too bad it will not show up in prospectuses after another year or two. I wish the SEC would require they go back at least 15 years in reporting a fund’s yearly performance.