Rising rates and what to do! FWIW, I ran a M* screen on taxable bond funds with duration greater than 4, and found 525 distinct funds (one share class per fund). Of these, over 40% (212) had three month returns greater than -2.0%. That's not to say that one would want to own many of these 212 funds, just that they're not hard to find if one looks at the whole universe of funds.
Reiterating what I wrote above, what matters is not what's in the rear view mirror, but what one expects going forward. If further changes in rates are moderate (albeit volatile), then one can get modest positive returns going forward without taking on additional credit risk.
One of those risks is linked with interest risk, because if rates do rise quickly that can be detrimental to businesses and thus trigger defaults. On the other hand rates can rise is response to an improving economy. In that case, risk of defaults goes down.
Why take on duration risk? Because the higher yield (especially now that rates have risen) can mitigate some of that risk. Following the suggestion of using short duration funds, I ran a second screen for funds yielding over 4% (TTM) having duration under 1.5%. Just 38 funds showed up, of which over half (20) were bank loan funds.
Five were junk bonds. Most of the rest were "nontraditional", meaning almost anything. There was also one multisector bond - RSIVX. I'm sure several people here can comment on that option.
Personally, my feeling is that in uncertain times don't just do something, stand there. Especially if you have built a well diversified portfolio.
How do I delete fund symbols or entire line of symbols line 1 in my risk profile ---ffrhx rphyx PRFRX whgix rsivx dlfrx DBLTX ostix gabcx WSHNX
-- Thanks Charles for your reply.
How would I delete one or more of the above symbols or the entire line from the Risk Profile tool to avoid duplication with other lines or clutter? I have several lines of fund symbols.
Thanks
Ralph
RSIVX/RSIIX: Steady increase in the NAV for the last few weeks High Yield's been on a great run. I switched RSIVX for DHSTX, which has also been doing nicely. Same for my relatively similar closed end fund, BGH.
RSIVX/RSIIX: Steady increase in the NAV for the last few weeks I helped the fund go up as well since I just unloaded it recently. I bought RSIVX in 2013 and never did break even. Really shameful performance for a bond fund.
RSIVX/RSIIX: Steady increase in the NAV for the last few weeks @MFO Members: By Thanksgiving Day, I think
RSIVX will be a well roasted turkey !
Regards,
Ted
RSIVX/RSIIX: Steady increase in the NAV for the last few weeks If YTD is what matters, RSIVX still sucks compared to other multisector funds (eighth decile) and other "Low Limited" style box/short junk funds (ASHAX and MDHAX, for example - both of which are commonly available load-waived).
For most time periods, it also trails OSTIX, the fund David Sherman said at the launch of RSIVX was the existing fund closest to what he envisioned for his fund.
Since RSIVX opened, it's done considerably worse than all three of the other funds mentioned.
RSIVX/RSIIX: Steady increase in the NAV for the last few weeks Good news? Has any one noticed a steady upward trend in the NAV of this controversial fund? I've invested a good chunk of my retirement savings in this fund. Despite the setbacks and negative ROI, I held on to the investment. It now appears that the patience of investors may be rewarded. The YTD return is 2.30%. If the trend holds, I may breakeven before the yearend.
Some really big YTD gains in bond funds of all stripes and colors Some really big YTD gains in bond funds of all stripes and colors
-- Not RSIVX = 0.67 YTD
Snowball's great commentary "In May we’re also hoping to provide new profiles of two old friends: Aston River Road Independent Value and Matthews Asian Growth & Income."
My take: no passive or actively managed fund should become an "old friend." Such attachment may result in holding on to an underperforming fund for too long. Hope is not a strategy in politics or investing. Hanging on to poor performing funds with relatively high expenses is all too common among common investors, and that is why such investors routinely underperform passive funds over long periods.
As I see it, ARIVX continues to be the poster child for indexing, and any attractive risk metric it has is largely due to its crazy-high cash position, which is currently 82%. This fund cannot objectively be compared with true SCV equity funds due to its historically high cash position. Currently, this is a MMF which is dabbling in SCV stocks, and primarily provides the diversification of MMF but not SCV equities.
And when fund managers say that cash positions have increased due to decreased investment opportunities, they are in fact engaging in market timing and nothing more sophisticated. And as we all know, market timing has never worked over long periods. I hate to be so down on this fund, but I firmly believe such funds are not in the best interest of long-term investors, and I would never own such a fund or recommend such a fund to friends or family. And as much as I respect Dr. Snowball for all of his wonderful contributions at FA and MFO, I continue to be bewildered by his support for ARIVX.
As for MACSX, this is a rock-solid fund which remains true to its investment objective, and does not try to time the market with high cash positions.
Kevin
Some really nice commentary/insights
kevindow I concur about the respect for the professor and his contributions here primarily the fact that he keeps this site running as a freebie and he doesn't rule with a heavy hand. He can chime in but he appears to have a low tolerance for risk (witness also RPHYX among others ) and a long time horizon (
RSIVX) and I can't fault him for those traits.
Bonds roaring in 2016 and no bear in U.S. equities Bonds are roaring...awesome ! Maybe I'll get back to even with RSIVX.
Question for David Snowball and others about RSIVX Yep, you're exactly right about my handle, Hank. I grew up a Buckeye's and Woody Hayes fan. I have come to the same conclusion as you about RSIVX which is why I'm now seriously thinking about selling it and moving the money to PTIAX, like MikeM did.
Question for David Snowball and others about RSIVX Always happy to weigh in on matters I know nothing about :)
"Three Yards and a cloud of dust" (Woody Hayes) is a great handle - perhaps applicable to some investment styles.
Not clear to me from the discussion is that RSIVX looks like a junk bond fund. M* puts the sub-BBB holdings at around 75% (if I'm seeing it right). Most of the remaining 20+% are BBB rated (investment grade with some speculative characteristics). Junk's been a dicey area recently depending on the sector and tier. Lower quality hasn't fared well. I suspect even the brightest of managers might have easily been tripped up in the recent environment, and so I would be slow to cast blame.
Lost in discussion, seems to me, is What do the holdings within this fund add to one's overall portfolio strength or attributes? I'm not one who believes every asset owned needs to rise all the time. The concept behind diversification, seems to me, is that in any given environment, some holdings rise and others fall. (Obviously, winners should outnumber losers over time.) I wouldn't buy this fund. I expect better, more experienced junk bond managers can be had for lower cost. In fact, I haven't felt a compelling reason to own junk bonds for some time.
Thanks guys for the lively discussion. Time to go run the snowblower.
Question for David Snowball and others about RSIVX Thanks so much David_Snowball for providing some valuable and interesting insights about RSIVX! Like MikeM, I would have loved to get into RPHYX, but since that wasn't an option, I decided to puchase RSIVX in order to get exposure to another David Sherman fund based on my research at the time.
Question for David Snowball and others about RSIVX PTIAX
Corrected per heezsafe
Total Assets Dec 31 Fact Sheet
$223.02 mil
Total Assets March 23, 2016 per M*
$ 370.3 mil
66 % increase in assets under management. Y T D
Management probably thought
Who needs These ?'12B-1 Fee'
BREAKING DOWN '12B-1 Fee'
Back in the early days of the mutual fund business, the 12b-1 fee was thought to help investors. It was believed that by marketing a mutual fund, its assets would increase and management could lower expenses because of economies of scale. This has yet to be proved. With mutual fund assets passing the $10 trillion mark and growing steadily, critics of this fee, which today is mainly used to reward intermediaries for selling a fund's shares, are seriously questioning the justification for using it. As a commission paid to salespersons, it is currently believed to do nothing to enhance the performance of a fund.
Read more: 12B-1 Fee Definition | Investopedia
http://www.investopedia.com/terms/1/12b-1fees.asp#ixzz43ljR5V55 Follow us: Investopedia on Facebook
From November Discussion
Here's my response to
RSIVX, In My Schwab I R A
PTIAX was a $5000.minimum @ Schwab now $100 (see Ted's post here;" Schwab Slashes Minimums On OneSource NTF Mutual
http://www.mutualfundobserver.com/discuss/discussion/comment/71734/#Comment_71734PTIAX is no longer a Mutual Fund OneSource® fund.
Now (Minimum: $5,000.00 Additional $500.00) with transaction fee.
@MikeM and
@BenWPIt was great @ Schwab while it lasted !
Question for David Snowball and others about RSIVX But David, your last paragraph is again saying your happy with RPHYX, insinuating that RSIVX having the same manager must mean RSIVX will be good too. It hasn't been. Your also saying that the sound strategy is being negatively influenced by the un-sound market. Heck, Hussman has been saying that for years (not to insinuate this manager is as bad as Hussman in allocating money). I just think good managers can come up with good investment theories, but it doesn't mean they'll work in real life. This fund may turn out to have great 5 year risk adjusted returns. But why not wait until proven? So far not so good.
P.S. if I could get into RPHYX I would. Proof is in the pudding.
