ten two-and-two funds As folks were debating the options for "cash alternative" funds, I thought I'd poke through the MFO Premium data to see what I could find. I wanted to see if there were funds with meaningful annual returns, at least by the standards of the "cash-like" part of a portion, that also had reassuringly limited downside.
I operationalized that desire at "annual returns over 2%" (because, really, 0.6% is close enough to zero that I'd rather put money in an insured savings account and not worry about it) and "a maximum drawdown of less than 2%" (which implies a worst-case recovery period of less than one year). I screened for the last five years worth of data, since many of the cash-alternative funds are relatively young.
I ended up with ten two-and-two funds. In each case I'll report the five-year returns and maximum drawdown over that period, then the actual time it took to recover from the max DD then, finally, the Sharpe ratio. Remember that the Sharpe isn't keyed to max DD or recovery, so those figure imperfectly reflect the Sharpe ratio.
RiverPark Short-Term High Yield (RPHIX): 3.1% annually, max DD of 0.5%, seven-month recovery, Sharpe 4.62. The fund is closed and has the highest Sharpe ratio of any fund in existence. Also one star from Morningstar.
SEI Opportunistic Income Fund (ENIAX, a great computer): 3.2% APR, max DD of 0.9%, nine-month recovery, Sharpe 2.65
Zeo Strategic Income (ZEOIX): 3.4% APR, max DD of 1.5%, five-month recovery, Sharpe 2.57
JPMorgan Limited Duration Bond (HLGFX): 2.3% APR, max DD of 0.6%, six-month recovery, Sharpe 2.42.
BlackRock Allocation Target Shares (BRASX): 2.5% APR, max DD of 1.4%, six-month recovery, Sharpe 2.20
Metropolitan West Strategic Income (MWSTX): 4.2% APR, max DD of 1.4%, six-month recovery, Sharpe 2.10
Transamerica Short-Term Bond (ITAAX): 2.5% APR, max DD of 1.0%, five-month recovery, Sharpe 2.10
SEI Enhanced Income Fund (SEEAX): 2.3% APR, max DD of 1.8%, 13-month recovery, Sharpe 1.90
Wells Fargo Short-Term High Yield Bond (SSTHX): 3.2% APR, 1.6% max DD, five-month recovery, Sharpe 1.75
Gabelli ABC (GABCX): 3.1% APR, 1.9% max DD, five-month recovery, Sharpe 1.52
For what interest that holds,
David
The More 'Active' An Active Fund Is, The Better, Researcher Says I agree, by the way. Getting active share data has been a damned iffy proposition; the only people willing to share the data are high AS managers and most of the academic stuff has been out-of-date by three years or more.
Cash Alternatives While VUBFX and VUSFX (Vanguard's version of Ultra Short bonds) are only two years old, they have been a little less volitial than TRBUX. yield is about the same but expenses a bit lower..Pretty close to cash for safety
Best-Performing Treasuries Suggest Inflation Threat Is Real My TIPs fund is not doing very well. What do recent performance look like (1-3 years
Performance for TIP is similarly nothing much (+2% fora year -2% for 6 months
Best-Performing Treasuries Suggest Inflation Threat Is Real My TIPs fund is not doing very well. What to recent performance look like (1-3 years
American Funds, Others Sound Alarm Over Hartford VA Fund Changes FYI: The Hartford left its variable annuity business behind five
years ago -- now, a group of firms are accusing the company of leaving behind its legacy customers.
Ahead of the financial crisis, Radnor, Pa.-based Hartford Financial Services Group pitched its unique Hartford Leaders product to advisors, fund managers and investors as a way to provide customized access to leading investment managers and strategies within a variable annuity.
Now, American Funds, Raymond James Financial, contract holders and others are complaining about a plan quietly submitted to the SEC that would allow Hartford to replace about 60 strategies run by various active managers within the Leaders fund lineup with a slimmed-down selection of 11 funds.
Regards,
Ted
http://www.fa-mag.com/news/american-funds--others-sound-alarm-over-hartford-va-fund-changes-31372.html?print
Concentrated Ownership of Mutual Funds...is their a list? In another thread with
@VintageFreak, I opined over a dog of a fund, VWUSX. I commented that this fund experienced a "very rough patch" in the early 2000's. It held a FundAlarm rating of "3-Alarms" for many
years after its tumble. At the time of VWUSX implosion I noticed VGSTX, Vanguard Star (a fund of funds) had taken on a large stake in VWUSX.
At present, VGSTX owns about 16% of VWUSX. I would call that a concentrated owner. M* does a good job of listing the concentrated owners of stocks and ETFs (individuals, mutual funds and institutions), but when it comes to mutual funds there is nothing mentioned as to ownership (who are the concentrated owners of the fund). If this were to be attempted I would further hope all share classes (of the fund) be collectively represented as one fund for ownership purposes.
Can a mutual fund owner find information on who the concentrated owners of a mutual fund are?
The Breakfast Briefing: S&P 500 Aims For Longest Win Streak In 3 ½ Years, But Futures Waver
MAFSX... failure to launch? @bee, why? In another few
years, that big decline on the chart will disappear out from the left.
More seriously, *this* was the moment I discovered I had finally got over "mutual fund love". That deer caught in headlight feeling I used to have when you just couldn't sell your "favorite" fund. Clearly VGSTX bought VWUSX when no one else would since VWUSX had stunk up the place. If that wasn't obvious, then it should be. It was quite obvious to me and I had said as much on fundalarm.
MAFSX... failure to launch? Coming up on four years since inception for MAFSX. AUM = $10.7M. Briefly topped $11M at one point. How patient is Matthews?
Cash Alternatives I'm inclined to suggest that a pocketful of gold coins would suit me just fine as a cash alternative. :)
Generally, we use
cash to represent the most stable and secure proxies for the U.S.
Dollar we can find. (*Edit: As
@msf mentions further down,
cash is also highly liquid.) The best examples would be: short term T-Bills, government money market funds, and government insured bank deposits. However, we all stretch that definition somewhat in pursuit of better return. Who wants to earn a half-percent on an insured bank account?
So it really depends on risk tolerance and what you're trying to achieve. Without checking their most recent literature, I'm fairly confident D&C tries to make DODIX a suitable cash alternative for folks who who have a 3-5 year time horizon (and it's telling that they don't offer a money market fund). They're telling you that you may find yourself on the short end of the stick after 1 or 2
years with this fund, but if you can hang on to the fund for 3-5
years you'll very likely recover at least 100% of your initial principal.
My own working definition of
cash is pretty conservative. Not because it's the "right" definition. But simply because that's the way I structure my investments. Cash to me extends only to the reaches of a conservative ultra-short fund like TRBUX. (Not all ultra-shorts are the same.) Since I've owned the fund (about 5
years) I can't remember the NAV deviating by more than 2 cents from it's original $5 offering price. It's been stuck st $5.01 for several months now. That's pretty darn good. And I expect it will soon be yielding above 2%, if it isn't already, as rates trend upwards.
Chuck Myers - Fidelity Small Cap Discovery Almost $6 billion in this small cap fund, which stopped me from adding to it years ago, but this is a good opportunity to see how connected the assets are to the manager. I might be willing to leave a little money in the fund and give the new guy a chance if the outflows are big enough but I'm guessing a lot of people will hope Derek Jannsen can deliver as much as Chuck Myers did but I'm not as willing to make that bet with the large asset base. I'm headed for MSCFX and TDVFX and happy they're closed or closing with much smaller AUM.
Cash Alternatives I'd consider Zeo Strategic Income (ZEOIX), which we've profiled. It's a bit more volatile that RPHYX but not hugely and a bit more rewarding. In terms of a risk-return tradeoff, I checked for funds with standard deviations at or below Zeo's and returns at or above theirs. There are only two such funds: Guggenheim Limited Duration and GMO Opportunistic Income, which has a $750 million minimum initial investment requirement.
Guggenheim fans might look at Guggenheim Enhanced Short Duration ETF (GSY). I screened for funds with the highest 5-year Sharpe ratio. RiverPark is first (that's not unusual), what appears to be a closed-end real estate income fund (BV5J) is second and Guggenheim is third. 1.3% returns but the max 5-year drawdown is 0.1% and the standard deviation is 0.3%. That puts it roughly 1.3% above cash with minimal volatility.
As to Zeo, its maximum drawdown is 1.5% with a recovery period of five months. Over the past five years it's returned 3.4% with a standard deviation of 1.3%.
David
Cash Alternatives It depends on your risk tolerance of course. I would consider any money you need within 2-3 years suitable for money market funds. For 3 years or more I would look at income funds. There is some risk but it's relatively mild. I use AMJVX in this regard for my portfolio but most if the major fund companies have these.
Cash Alternatives Hmmm...I never heard of PTIAX and it has a maturity out 7-8 years. Need to research. I do own both RPHYX and RSIVX in both taxable and tax deferred accounts.
I am really trying to avoid directly holding fund with the fund company. It is just a pain at tax time. Very few funds I own direct. PTIAX is available at brokerages so its a plus. Funny thing is its municipal bond fund has capital preservation in the goal, PTIAX doesn't, and very wierd part is that for fact sheet of PTIAX it mentioned municipal bonds are undervalued while for THAT funds fact sheet it mentions no such thing.
If anyone aware of any manager interviews or something for PTIAX, kindly link. Google didn't help me out, but then you have to know what to search for.
Interesting Trends In Yale Investor Confidence Surveys Hi Ted,
Thanks for the reference to the Yale survey.
It is indeed interesting in a fun sort of way, but offers no usable guidelines for an investment decision. What, if any, is the correlation between these sentiment signals and the equity market returns. I see none!
Looking at the last chart, it appears that both individual and professional investors have underestimated market returns for .20 years from a numbers perspective. That's the same timespan that Yale has collected these data. That's not a confidence builder if one wants to use these data, at least as a partial signal, for market exposure decisions.
Where's the beef?
Best Wishes
Cash Alternatives Hello. Does anyone have any ideas for a cash alternative fund? In this case I'm thinking in terms of money not needed for 1-3 years. Currently, I'm using the old tried and true RPHYX and PTIAX. Does anyone have any other ideas? What if the scenario is extended to 3-5 years? Thanks,
-psuche98
Time-Stamp of Speculative Euphoria If I remember correctly Mr. Hussman has been a permabear and missed the run up in stocks for years.
Time-Stamp of Speculative Euphoria What's the word which is the opposite of "uplifting"? That would describe this article.
It sure would have been nice to have seen the normal and customary 10% corrections more frequently over the past few years. The spring is wound very tightly.
Barron's Cover Story: Best Fund Families Of 2016 Couple excerpts (Page S4, Barron's print edition, February 13, 2017):
--- "This year's top-ranked fund family, Natixis Global Asset Management, rebounded from second-to-last in 2015."
--- "Unlike most investment stories in Barron's, the emphasis of this ranking is on one-year returns."
The article attributes Oakmark's OAKIX, Natixis' largest fund, having beaten 97% of its Lipper peers in 2016 with much of Natixis' success for the year. And Natixis' second largest fund, Oakmark's OAKMX, beat 99% of its peers.
(Harris Assiciates, based in Chicago, operates the Oakmark Funds. Harris is part of the much larger French based Natixis financial group.) Couple months ago I suggested in a thread that I considered Oakmark one of the most "underappreciated" fund families. That said, these rankings don't amount to a rat's rear end as another board member opines.
The article suggests that the year's results reflect, in part, increasing success of active managers compared with passive investments after their having lagged for many years. The article also provides 5 and 10 year rankings, with Pimco scoring at the top for both longer periods. T. Rowe Price is near the top in the 5 and 10 year rankings, but falls to #30 in 2016. A skeptic might interpret that to mean the equity markets are currently seriously overvalued.
