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RPHYX: any point nowadays?

Hi Guys,

I loved the RPHYX pick a few years ago as it was a very low risk to get upper 2% yield in a zero interest world.
However, took the position down 90% about 2 yrs ago as interest rates have steadily risen. NAV has been low mids 9.7s forever (since oct 15)

We saw that Cohanzick is an average junk bond manager when junk fell a couple of yrs ago (RSIVX which was supposedly to be slightly more risk was shown to actually be really an average junk bond fund).

When 1 yr Treasury is over 2% and a 2 yr CD is 2.8......this fund should be doing 4-5% to have a raison detre...........they "promised" 250-300 over treasuries which they aint doing.

I understood their biz model when they were doing purchases of shortterm junk that was about to be refinanced........but that time is ovah.

Do you guys think there is any point to having any money in RPHYX now?

Comments

  • Thanks Lewis. I get it and saw that as I went from balls to the wall long this fund to have a small position. The issue is 2 yr treasury is 2.6% with zero risk and I would think they should be able to make 4% given small risk of capital loss here (certainly compared w/ treasury or cd)
  • what is the correct fund to buy "2year treasuries" at Vanguard? I do own RPHYX but would like to park cash across the "risk spectrum" of "short term".

    I have a chunk in Vanguard Prime Money Market, maybe I can kick it up a notch.
  • If what one wants is two year treasuries, why not just buy them directly? Virtually zero credit risk, zero cost to buy, zero cost to own.

    Just missed this month's auction:
    https://www.treasurydirect.gov/instit/annceresult/press/press_secannpr.htm
  • edited May 2018
    Love the board and the discussions.

    Never owned a T-bond direct. Intriguing thought. Is it as easy as it sounds? Just go to the U.S. Treasury site and pay via checking account withdrawal? Minimums appear low. Would $1,000 work? How about using your Visa card for convenience? (Suspect your card issuer might not allow it).

    The board does a good job reflecting investor sentiment - often right on the mark. The transition to fixed income types over past 10 years is interesting. As rates fell following the ‘07 - ‘09 market turmoil and Fed easing folks gravitated to longer term bonds which rose in value. As that play subsided they transitioned to high yield bonds which had some great years. Now, with rates on the rise, they’re looking at 2-year Treasuries.

    I’m not as tuned in to the trends or willing to move money around as others. However, I have backed off from DODIX slightly over the past year, but still own (and like) it. Smart people there. And after the money market “reforms” a few years back (which torpedoed yields) I moved to Price’s ultra-short. Slightly better return than mm funds with very little duration risk.

    Where next? I wouldn’t be surprised to see money market or ultra-shorts become hot items in a year or so if rates continue higher. Who knows? Re RPHYX - never owned it. I’m sure it has a place in some portfolios. The thing with me is I look at the overall risk and volatility in my mix. So adding a little more risk in one area might mean cutting back in another risky area. As long as the overall risk level is appropriate for the individual, any number of combinations might work.
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  • hank said:

    Love the board and the discussions.

    Never owned a T-bond direct. Intriguing thought. Is it as easy as it sounds? Just go to the U.S. Treasury site and pay via checking account withdrawal? Minimums appear low. Would $1,000 work? How about using your Visa card for convenience? (Suspect your card issuer might not allow it).

    New issues are purchased when there are auctions. The big guys make bids; us little minnows make "noncompetitive bids" and get the highest rate (lowest price) sold at the auction.
    https://www.treasurydirect.gov/instit/auctfund/work/work.htm

    You place your order during a bidding window before the auction. You can do this through Treasury Direct (which I've only used for savings bonds), or through your broker (which I've used for T-bills). Many brokers, but not all, will process your orders with no commission. So the choice of agent (broker or Treasury Direct) depends on what's easier for you.

    If you want a Treasury Direct account, you'll need to set that up in advance. After some period of months if you don't have any holdings there, the empty account will be closed out and you'll have to start all over.
  • Thanks @msf. I never cease to learn here.:)
  • The user and all related content has been deleted.
  • msf said:

    If what one wants is two year treasuries, why not just buy them directly? Virtually zero credit risk, zero cost to buy, zero cost to own.

    Just missed this month's auction:
    https://www.treasurydirect.gov/instit/annceresult/press/press_secannpr.htm

    Only because I'm no James Bond and would think buying MF would be easier. There's a reason I don't invest in individual bonds. I really don't get them. Even bond funds I don't beyond "money market". RPHYX and RSIVX are my only bond funds.


  • Not pushing Treasuries here (I rarely use them), but they're about as easy to deal with as CDs through a brokerage. Unlike any other type of bond, Treasuries are also just as simple as CDs. Buy a 2 year CD, you get the promised yield for two years, and then you can cash out or let it roll over.

    With Fidelity at least (where I've bought T-bills), you've got the same choice - set it up to renew (at then current rates) automatically, or take the cash and run.

    CDs and Treasuries - both guaranteed by the federal government (though Treasuries have the more solid guarantee, since they're backed by the full faith and credit of the US).
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