HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

At one time I saw where you were a holder of RCTRX which was a good move. I had tried to purchase it awhile back but unable to do so. I wouldn’t necessarily advise buying it now though.

Funny, I just recently sold RCTRX. Decided the only way to hold bonds of any class will be via Allocation funds. I have ZERO feel for when debt will be a "good" investment again, whether that be HY, Munis, MBS, etc.

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

Lots of funds green for the year just very few in the multi sector income category as Charles was alluding to. RCTRX is a little known income fund that has held firm through the turmoil in its sister funds ala IOFIX, SEMPX, and others. At one time I saw where you were a holder of RCTRX which was a good move. I had tried to purchase it awhile back but unable to do so. I wouldn’t necessarily advise buying it now though.

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

+1 stay calm UDF website bullet-point dated 10/25/21 mentions the allegation that James Dondero siphoned millions from his former company Highland Capital Management. Certainly increases my confidence in HMEZX! Snarky comment well-deserved !

Wondering if the legal issues connected to HMEZX have been cleared up-specifically the Jim Dondero bankruptcy, etc ?

I'm guessing somebody like Dondero maximizes his litigation efforts and makes sure it all gets buried, a la 45. A decent (and highly paid) legal team can do that.

Wondering if the legal issues connected to HMEZX have been cleared up-specifically the Jim Dondero bankruptcy, etc ?

I love the concept of CTFAX and trying to time the markets. Equities are generally overvalued, at least by historical metrics.
Can CTFAX really get "ahead" of things? It shifted its allocation a while ago. The markets (thanks to the Fed) are resilient. CTFAX is a defensive play in an era when defense is RARELY rewarded.
Along with some other low-return grinders (CVSIX, HRSAX, HMEZX, ARBIX, etc), I expect annual returns close to 4% . Which means that now inflation is destroying my portfolio. What is the actual U.S. inflation rate at - 12%?
Tough to manage your portfolio when inflation rages and your fund returns are essentially capped. I think this is a major issue for a fund like CTFAX this year. If there is no Stock market crash in 2022, or at least a very strong correction, is it a failure?

Had given up on many of the funds listed in this string. But I stayed with HMEZX, despite Nexpoint having a questionable partner history (via Highland Capital - J. Dondero). It is a red flag for many.
But HMEZX has been a solid "steady eddy" performer. Returns are bond-like, and it has outperformed other merger-arb funds. If not for that 1 red flag, I would own a lot more.
Another interesting vehicle is HRSTX, which converted a few years back to an options-based fund. Very steady, with great performance during negative market periods since its 2018 conversion.

@carew, I think you have to really limit your allocation % for any 1 "alternative" fund if there is a lack of transparency or heavy derivative use (the dreaded "black box"). And also because many such funds tend to fall flat over time.
I haven't sold any of my HMEAX/HMEZX yet, though I am disturbed by the principal's past behavior. I also allocate funds to MERFX and BALPX in that space to keep exposure low for any 1 fund.
IQDAX was a reminder that even a mutual fund Mgr can dupe investors. Its a legit risk with these funds.

FYI and FWIW, below are excerpts from a somewhat confusing, at least to me, recent M* Quantitative Analysis Report.
On the one hand, M* claims that HMEZX has "a weak portfolio-management team" but, on the other hand, it also states that a "sign of strength at Highland is its management team, which boasts an average asset-weighted tenure of 15 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly." Which is it? What am I missing?
"NexPoint Merger Arbitrage Z earns a Morningstar Quantitative Rating of Negative because of negative contributors including a weak portfolio-management team and a questionable investment process. [...]
Despite the portfolio managers with industry-standard experience and its longest-tenured manager's experience, the team managing NexPoint Merger Arbitrage Fund has a considerable number of weaknesses, warranting a Low People Pillar rating. The team is led by James D. Dondero, the longest-tenured manager on the strategy, who brings 23 years of industry experience. They’re also the named manager on eight additional funds, a total of $1.30 billion in assets. The funds have an average Morningstar Rating of 2.3 stars, demonstrating disappointing risk-adjusted performance. The team is small, but adequately equipped, with only two other supporting managers. Together, the three boast an average of nine years in the industry. [...]
Highland has a way to go to become an industry-standard steward, resulting in a Low Parent Pillar rating. Highland products are costlier than similarly distributed funds at other highly-rated asset managers, on average in the second most expensive quintile of category peers. The higher expense profile contributes negatively to the firm's overall stewardship rating and creates a larger performance hurdle. The firm has not had a durable fund lineup. Specifically, its five-year risk-adjusted success ratio demonstrates that only 21% of products both survived and beat their respective category average on a risk-adjusted basis,. A low success ratio not only indicates poor performance but also raises flags about a firm’s discipline around investment strategy and product development. A sign of strength at Highland is its management team, which boasts an average asset-weighted tenure of 15 years at the firm. This accumulation of experience builds confidence that the group can navigate a variety of market environments adeptly.
Mar 22, 2021"

Way to kill my new fav fund, Fred! Wish there was more clarity on the status of that 2019 bankruptcy filing.
Regardless, there are clearly some underlying fiduciary issues when investing with Nexpoint/Highland. Cannot trust this mgmt group (led by J. Dondero), based on shady history.
Bummer. This fund (HMEZX) has been such a smooth performer.

I have been looking at Highland Capital Management with respect to their NexPoint Merger Arbitrage fund (HMEZX).
.......................
If anybody has more up to date information on the fund advisor's bankruptcy status, I would appreciate hearing from you.
But, buyer beware.
Fred

This is a great find, Fred. I was looking into this fund too, great pair with other funds when combined, tested in Portfoliovisualizer. However, now I'm hesitating to purchase this fund. Does anyone know if it is a good choice? It is on the list of GreatOwnls.

Annoying that so many of my recent Fund purchases at FIDO have had Transaction Fees (i.e. ARBIX, HMEZX, FPFIX). I would usually refuse to pay $50 a pop - feels like a corporate donation.

@JD_co I bought ARBIX through Vanguard. I buy other funds that I intend to hold such as TMSRX in large enough amounts that I don't mind the transaction fee. You are right, and the purpose of this article was to find good funds without the transaction fee!
Thanks for reading and commenting.

Annoying that so many of my recent Fund purchases at FIDO have had Transaction Fees (i.e. ARBIX, HMEZX, FPFIX). I would usually refuse to pay $50 a pop - feels like a corporate donation.

I have been looking at Highland Capital Management with respect to their NexPoint Merger Arbitrage fund (HMEZX). In the process, I came across an article in the Wall Street Journal from October 16, 2019 that indicated that the firm filed for bankruptcy.
HMEZX has a very good record, but I was curious why the fund had only attracted $68 million in assets since it opened in September 2016. The answer may be found in this article:
"Highland Capital Management LP, once a giant in high-yield debt markets, filed for bankruptcy protection Wednesday as investors and former employees seek more than $200 million from the firm for alleged improprieties.
The Dallas-based firm founded by Jim Dondero helped pioneer trading of corporate loans rated below investment-grade and managed about $39 billion in 2007, but it took heavy losses during the financial crisis and has been embroiled in lawsuits ever since. The company had been trying in recent weeks to settle some of the litigation it faces, warning its adversaries that it would seek bankruptcy protection if they didn’t compromise, people familiar with the matter said.
Highland entered chapter 11 in U.S. Bankruptcy Court in Wilmington, Del., listing as its largest debt a disputed $189 million claim from investors in Highland Crusader Fund, a hedge fund that has been in liquidation since the financial crisis. The second-largest creditor is Patrick Daugherty, a former Highland portfolio-manager who has been in personal and legal conflict with Mr. Dondero since 2012 and has an $11.7 million claim against Highland, according to its bankruptcy filing.
A group of investors in Crusader sued Highland in 2016 in Delaware Chancery Court, demanding Highland be fired as manager for delaying the fund’s liquidation and claiming that Highland wrongfully paid itself $30 million. The group subsequently won an arbitration award that Highland has yet to pay, court documents show.
In a statement, Highland said the bankruptcy filing was made “in consideration of its liquidity profile” and stems from a potential judgment in favor of a committee of Crusader Fund investors."

I don't know the current status of of the bankruptcy filing, but, needless to say, I am no longer interested in HMEZX as a potential investment opportunity.
If anybody has more up to date information on the fund advisor's bankruptcy status, I would appreciate hearing from you.
But, buyer beware.
Fred

I have been looking at Highland Capital Management with respect to their NexPoint Merger Arbitrage fund (HMEZX). In the process, I came across an article in the Wall Street Journal from October 16, 2019 that indicated that the firm filed for bankruptcy.
HMEZX has a very good record, but I was curious why the fund had only attracted $68 million in assets since it opened in September 2016. The answer may be found in this article:
"Highland Capital Management LP, once a giant in high-yield debt markets, filed for bankruptcy protection Wednesday as investors and former employees seek more than $200 million from the firm for alleged improprieties.
The Dallas-based firm founded by Jim Dondero helped pioneer trading of corporate loans rated below investment-grade and managed about $39 billion in 2007, but it took heavy losses during the financial crisis and has been embroiled in lawsuits ever since. The company had been trying in recent weeks to settle some of the litigation it faces, warning its adversaries that it would seek bankruptcy protection if they didn’t compromise, people familiar with the matter said.
Highland entered chapter 11 in U.S. Bankruptcy Court in Wilmington, Del., listing as its largest debt a disputed $189 million claim from investors in Highland Crusader Fund, a hedge fund that has been in liquidation since the financial crisis. The second-largest creditor is Patrick Daugherty, a former Highland portfolio-manager who has been in personal and legal conflict with Mr. Dondero since 2012 and has an $11.7 million claim against Highland, according to its bankruptcy filing.
A group of investors in Crusader sued Highland in 2016 in Delaware Chancery Court, demanding Highland be fired as manager for delaying the fund’s liquidation and claiming that Highland wrongfully paid itself $30 million. The group subsequently won an arbitration award that Highland has yet to pay, court documents show.
In a statement, Highland said the bankruptcy filing was made “in consideration of its liquidity profile” and stems from a potential judgment in favor of a committee of Crusader Fund investors."
I don't know the current status of of the bankruptcy filing, but, needless to say, I am no longer interested in HMEZX as a potential investment opportunity.
If anybody has more up to date information on the fund advisor's bankruptcy status, I would appreciate hearing from you.
But, buyer beware.
Fred