When you graph PSTKX ($1M minimum; PSPAX is the investor class) vs IVV over periods shorter than the last 8-9y, the added value from the bond sauce sure looks tiny, sometime nonexistent, and also sometimes worsening rather than buffering dips and volatility.
I wonder what its appeal is, really, when one would probably do better holding IVV and PONAX.
Rather than getting deep in the weeds of the magic mechanisms and contents of these funds, I find it easier just to be empirical and look at performance: consistent tracking of SP500, plus sauce. Same as seeing Fido means a share swap is not a buy. Fascinating explanation from Parsec, @msf, thanks --- technically true, but essentially something else. Love it. Editing financial and other lawyers, and their legalese and lay translations of same, has always been among the funner parts of my career work.

@Mona - not sure if this will help you or not but the security type breakdown as a % of net assets according to the annual report of March 31, 2019 says:
Non-Agency Commercial Mortgage Backed Obligations - 12.9%
Collateralized Loan Obligations - 12.3
Non-Agency Residential Collateralized Mortgage Obligations - 12.0
Short Term Investments - 11.2
US Government and Agency Obligations - 9.1
Foreign Corporate Bonds - 9.0
Bank Loans - 7.9
US Government and Agency Mortgage Backed Obligations - 7.0
Asset Backed Obligations - 6.5
US Corporate Bonds - 4.8
Affiliated Mutual Funds - 3.4
Foreign Government Bonds, Foreign Agencies and Foreign Government Sponsored Corporations - 0.5
Exchange Traded Funds and Common Stocks - 0.0
Other Assets and Liabilities - 3.4

The affiliated mutual fund is a DoubleLine bond fund. On this balance sheet, there are no equities. I believe the other assets and liabilities include the net value of the swap contracts.
Just as PIMCO StocksPlus PSTKX has no equities but does its "magic" with derivatives, so does this fund. DSEEX works similarly to the way M* describes the PIMCO fund. Key differences of the PIMCO fund are: different index tracked, done with futures rather than swaps, and differently manged bond portfolio (DSEEX seems more aggressive, but that should be checked):

It seeks to track the S&P 500 using futures and generate excess returns of 75-125 basis points over a market cycle from an actively managed short-term bond strategy. As the derivatives require only a small cash outlay, the fund can provide 100% notional exposure to the performance of both the S&P 500 and the bond portfolio.

... managers ... look at 11 US stock sectors and select 5 undervalued sectors, then take 4 sectors out of 5 with the best momentum.

A couple of clarifications:
The five candidate sectors are the most undervalued not relative to the market, but to themselves. This allows for the inclusion of traditionally overvalued sectors that may still be overvalued relative to the market, albeit somewhat less so than historically. People seem to think that the methodology is designed to select sectors that are undervalued relative to the market. That is not the case.
Edit: @LLJB - I composed this before seeing your better post on relative valuations. One sometimes sees 20 year lookback periods (as you described for the CAPE values used) and sometimes 10 year periods. Each of the CAPE values itself is computed with a 10 year lookback, so the raw data that feeds into this index could extend as far back as 30 years!
Here's a paper that shows for the 11 sectors, in which months during 2018 they were included in the Shiller Barclays CAPE® US Sector RC 10% USD TR Index. That index picks the same four sectors as the Shiller Barclays CAPE® US Core Sector Index. The only difference is that the former adjusts its market exposure up or down to temper volatility.
https://indices.barclays/IM/33/en/efsdocument.app?documentId=374&filename=Shiller10PerformancAnalysis.pdf
Two sectors were included in all twelve months: technology and healthcare. IMHO, a fund that maintains a steady 50% exposure to technology and healthcare (combined) is no value fund. The sectors may have had low valuations relative to their historical norms, but they were not low relative to the market. See, e.g. US News, The Most Overvalued and Undervalued Stock Market Sectors of 2019, Jan 11, 2019.
Based on forward looking P/Es (I believe Shiller uses retrospective figures), technology and healthcare were smack in the middle of the pack. Compared to their historical P/Es, they're undervalued (as are several sectors according to the article).
Regarding momentum, that's based on a one year look back, as opposed to the ten year look back for Relative CAPE® Indicator (historical valuation).

>> That's as clear as mud. It says that there's a fee to "buy into" DSEEX, but doesn't say whether converting shares counts as "buying into" the fund.
I find it clear, but that may be because I have executed it so often; also, I've known for years that our reading comprehension differs.

If it was even possible that your experience influenced your read, regardless of whether it actually did, then the text was not without objective ambiguity. Either that, or you sometimes read things differently than the plain text on the page. As might I.

Sometimes the custodian will issue a trade confirmation on the swap, which makes it look like we sold one share class and bought into another. Though technically that is true, it is essentially a non-taxable swap into a different share class of the same mutual fund, albeit one with a lower expense ratio.

Emphasis added . ParsecFinancial, What is a Mutual Fund Share Class Exchange

@Mona - not sure if this will help you or not but the security type breakdown as a % of net assets according to the annual report of March 31, 2019 says:
Non-Agency Commercial Mortgage Backed Obligations - 12.9%
Collateralized Loan Obligations - 12.3
Non-Agency Residential Collateralized Mortgage Obligations - 12.0
Short Term Investments - 11.2
US Government and Agency Obligations - 9.1
Foreign Corporate Bonds - 9.0
Bank Loans - 7.9
US Government and Agency Mortgage Backed Obligations - 7.0
Asset Backed Obligations - 6.5
US Corporate Bonds - 4.8
Affiliated Mutual Funds - 3.4
Foreign Government Bonds, Foreign Agencies and Foreign Government Sponsored Corporations - 0.5
Exchange Traded Funds and Common Stocks - 0.0
Other Assets and Liabilities - 3.4

I posted the following on M* several weeks ago but it's still current...First, managers invest in global bonds then, they look at 11 US stock sectors and select 5 undervalued sectors, then take 4 sectors out of 5 with the best momentum.

What percentage of the portfolio is stocks and what percentage bonds?

Where does DSENX FUND fall in your buckets? Large Value, Allocation, or ?

Seeing as DSENX invests in those sectors that are the cheapest, I would it expect it to be less volatile than the market and that it would resist downdrafts better. Why don't the numbers play out this way? The downside capture ratios are all slightly greater than 100%.

As for buckets its not a simple answer and it can change every month. According to M*'s definition of the "buckets" the equity exposure is currently 39% large cap growth, 22% large cap blend and 30% large cap value plus 8% mid cap spread across the buckets.
The fund's definition of "value" is very different than M*'s. The fund buys 4 of the 5 "cheapest" sectors based on Shiller's CAPE ratio RELATIVE TO THAT SECTOR's 20 year history. That means Technology can have the highest current sector P/E ratio AND the highest CAPE ratio out there but if its CAPE ratio is relatively lower than other sectors compared to what its been over the last 20 years then its in the fund. This is why you can't "expect" the fund to be less volatile. It is not just a "value" fund according to M*'s definitions.
As @Carefree alluded to, the effective exposure of the fund is 50% equity and 50% bonds so suggesting its an Allocation fund with 50-70% equity makes some sense too.
When I want to "X-ray" the buckets my portfolio falls into I use the SPDR Select Sector etfs to represent the value of my holding because M* isn't able to do that. I forget about the bonds because my reason for holding DSEEX isn't for the bonds, its just an added bonus.
The derivatives, the swaps they use to get exposure to the sectors they want, have two main benefits as far as I can figure out.
The fund currently has $6.7 billion in AUM. That means if one of the sectors in the portfolio changes they would need to sell roughly $1.7 billion of one sector and invest it in the new sector at month-end. The SPDR Select Technology etf trades a little over $1 billion daily. They wouldn't be able to do that without impacting the market or spreading out their trades over a week or more, I don't think. AND, most of the calculations behind the choices are public information, so their moves could and likely would be arbitraged.
The swaps allow them to get all the exposure they want at the month-end price in a private transaction, quite frequently with Barclay's the last I checked. You'd have to assume Barclay's doesn't want to be short those sectors but they have the flexibility to hedge their "bet" with futures, options or actual share purchases over a more flexible time frame and that makes arbitraging the transactions more complicated.
The second benefit is that there's no cash outflow to "bet" using a swap. Six months from now, or whenever the swap expires, one party or the other will have to "pay" the other. In the meantime, though, they can use all that cash to buy bonds, which in my view helps to pay the "cost" of the swaps, reduces the expense ratio and can also increase the return of the fund if things go well.

@CareFree,
From a year and a half ago:
https://www.marketwatch.com/story/doubleline-fund-doubles-the-returns-of-rivals-by-uncovering-a-curious-strategy-2017-11-30
The fund is not specifically defensive in nature, [Jeffrey] Sherman explained, because it is not designed to outperform during a market pullback. Instead, it seeks to outperform the S&P 500 over the long term through the sector rotation of the Shiller Barclays CAPE US Sector Index, augmented by the returns on the fixed-income portfolio. ...
... the fund’s management style mitigates the danger of chasing performance, because the index it invests in can change its sector focus each month.
It’s also interesting to note that during 2015, when large-value strategies fared poorly against the S&P 500, the fund outperformed both. And when the large-value category beat the S&P 500 in 2016, the fund again outperformed both.
@msf,
>> That's as clear as mud. It says that there's a fee to "buy into" DSEEX, but doesn't say whether converting shares counts as "buying into" the fund.
I find it clear, but that may be because I have executed it so often; also, I've known for years that our reading comprehension differs.

I posted the following on M* several weeks ago but it's still current...First, managers invest in global bonds then, they look at 11 US stock sectors and select 5 undervalued sectors, then take 4 sectors out of 5 with the best momentum. They don't invest directly in the index but in a derivative that is similar to the index.
Basically, you get 200% investments for the price of 100%. You get real bonds + derivative of stock indexes.
To make even simpler, let's assume they invest in just one sector SPY and assume the bond portion makes 3-4% annually. It means, the performance will be SPY + 3-4% - (paying for derivatives). So, let's use DSEEX vs SPY + DBLTX(I know, it's not a global fund but you don't pay for derivatives. The results show that since inception DSEEX made more than 3% annually than the SPY which is SPY + 3.4%.

USMV is the winner among all these higher div, even SPY is better. You can change one of files and enter SCHD too See results here

From David Van Knapp at SeekingAlpha:
Summary
° I bought the dividend ETF SCHD in 2015.
° My purpose was to test it out as a possible dividend-growth ETF and see how it compares to my own results with individual stocks.
° This report shows how SCHD has performed during my four years of ownership in dividends, dividend growth, and total return.
° I hope that the information here may help other investors who are considering dividend ETFs as components of their dividend-growth portfolios.
"This is a 4-year review of my ownership of Schwab's US Dividend Equity ETF (SCHD). I will compare its performance since I bought it in 2015 to the performance of my public Dividend Growth Portfolio (DGP) over the same timeframe."
Story Article

FYI: Maybe American kids will only have to live through one Christmas without Toys “R” Us.
About a year after shuttering U.S. operations, the remnant of the defunct toy chain is set to return this holiday season by opening about a half dozen U.S. stores and an e-commerce site, according to people familiar with the matter.
(Source Bloomberg)
Regards,
Ted
https://www.google.com/search?q=toys+r+us+logo&tbm=isch&source=iu&ictx=1&fir=2LE2VweD35U38M%3A%2CIlWvyOd6JxJM9M%2C_&vet=1&usg=AI4_-kT6nzd_7-O-bJA8DD-GCNqsOBKboA&sa=X&ved=2ahUKEwj5-vu0yYLjAhXSQc0KHTRmDcwQ9QEwCHoECAcQFA#imgrc=2LE2VweD35U38M:

@Mark,
fyi, just got this from Fido c/s:
... when the holdings in DSENX reach the initial investment minimum of $100,000 for DSEEX, [then] a quick call to Fidelity is all that is needed to convert the shares. Since the initial investment minimum is $100,000 for DSEEX, we would not be able to convert the shares at a lower amount.
If purchasing or converting in an IRA, though, the initial investment amount drops to $5,000.
It is also correct that DSEEX does not participate in our No Transaction Fee (NTF) program, meaning it would have a transaction fee to buy into, whereas DSENX participates in the NTF program and therefore does not have the fee to buy into.
You are able to review this information yourself via the fund prospectus, and under the Fees and Distributions tab on Fidelity.com.

@Old_Skeet,
>> I'm thinking you are taking on more risk than you realise ...
may be
>> and, for what? Inorder to beat the 500 Index.
sure
The last 5y, if I had been 50-50 (or whatever) in IVV and FTBFX instead of DSEEX and PONAX (also a bit of a derivatives black box, arguably), I would be behind >10% of where we now are, which to us is a significant difference. Would be 10% behind having been in JABAX all that time.
Seemed worth it.
>> So what! If it is beating the Index then is it not taking on more risk? Yes, for it is indeed levered up.
Perhaps, you are short of assets and need to be aggressive? Or, are you just being cavalier? What is your underline reason for owning this high risk fund? If it blows up will you still be around?
There is no little negative press about it and CAPE. This from 10/13:
https://www.etf.com/sections/blog/20177-inside-professor-shillers-cape-etn.html
and this from just last fall, CAPE, Seeking Alpha:
ETNs do not own any of the underlying assets, instead, it's merely an IOU from the bank or issuer saying "we agree to pay you the starting value of this note + any changes in the index tracked". An ETN is considered an unsecured debt obligation, meaning that if the issuer ends up bankrupt, you could lose your investment.
The issuer of the CAPE ETN is Barclays Bank PLC (BCSPRD), who have had their credit rating cut this year from Baa2 (equivalent to BBB) to Baa3 (equivalent to BBB-) by Moody's, which is the lowest investment grade rating, ...
Lipper otoh gives CAPE a 5 on everything, but no holdings info. Their info listed on DSEEX is as layman-unhelpful as M*, style G&I, category LCV, holdings 93% bonds+cash, so you would have to delve to comprehend, and read msf's excellent analyses.
@msf
>> Preferably without appealing to alternate facts, like saying that the fund owns equity.
It is not I but the non-misleading, non-confusing, non-unclear M* which indicates this alternate fact, in the AA and Details sections on the page I linked, DSENX going reportedly from 30% equity 3y ago to just under half equity today, while passing through SCV style last year.

Don't disagree with the article, but my preference for China / Asia bonds is MAINX. I only have 2 bond funds and that is one of them. Not sure where you would go for a Brazilian bond focus.

MAINX is my pick too for Asia. It's part local, part U.S. currency (~ 50% USD now), so does well when the dollar's doing a dip but doesn't get completely killed when it rallies.
To Crash's point, I like the combo of MAINX and PRSNX for overall exposure that's partly local currency, mostly dollar-hedged, half or more EM, and fairly heavy Asia.
Per Brazil: Pimco's EM holdings in their various multisectors have usually been fairly heavy in Brazil. Maybe one of the Pimco EMs would be heavy Brazil, but I can't tell by the web site entries, which are weighted by duration and currency exposure only, not market weight. The monthly fund data spread sheets prob'ly show market weight, but I'm too lazy to dig further.
Cheers, AJ
P.S. Just reading the clip Ted provided about the article: holding some negative yielding issues is not wacky if you're positioning for an equity/credit downturn or just a risk offset for that exposure. Yield is not the only potential upside in bonds - capital appreciation is another, at times much more important, consideration. The negative yielders are "safe" ex-U.S. developed nation sovereigns that are being bought for that purpose exactly - thus the negative yield. Lots of knock-on effects there, including on U.S. rates and the dollar ...
Bloomberg TV's weekly program "Real Yield" (airs Fridays, also available online afterwards) is a good source for up-to-date news and trends in fixed income - highly recommended.

Har. Someone goes to M*
http://portfolios.morningstar.com/fund/summary?t=DSENX&region=usa&culture=en_US
and is supposed to parse out at a high level (or any level) what sort of beast this is.
45% bonds, it says. Nothing listed under market cap or holdings style.

So your complaint now is that the "Cliff Notes" publisher Morningstar isn't doing enough work for this "someone"? That it is just reporting, not explaining how to interpret what the fund holds (no equities, just total return swaps and bonds)?
As someone who is heavily invested in this fund, you have surely reviewed the financials as well as the prospectus and SAI, and you understand what you have bought. No need for a "Cliff Notes" description. So perhaps you can fill the rest of us in and describe what the fund's equity style box should look like. And address dryflower's puzzlement over why the fund's volatility is so high.
Just a suggestion here: you might start by explaining to the uninformed what the difference is between notational and market value, and what you feel would be an appropriate numeric representation on a Morningstar page.
The notational value of the fund's swaps is roughly $5.8B (as of the date of the annual report). That is about the same as the net assets invested in bonds. Precisely what the prospectus says: 100% actual bond investment plus 100% notational equity exposure. 50/50. Just as M* reports.
But you say that this is misleading. Or confusing. or unclear.
Should Morningstar instead report the market value of assets? That would be $5.8B in bonds and $228M in swaps, i.e. roughly 100% in bonds. No, I suspect you'd say that my family would get confused by this. If they couldn't understand how a 50/50 fund, leveraged though it might be, could outperform the market, then they surely couldn't understand how a fund with nothing but bonds and a smattering of derivatives could do so.
So please, let me know how I should explain this fund to my family. Preferably without appealing to alternate facts, like saying that the fund owns equity.

FYI: Why is the stock market so happy and the bond market so gloomy?
Just as the S&P 500 was setting a record high Thursday, bond yields were tumbling to their lowest levels since Donald Trump was elected. The yield on the 10-year Treasury, which influences rates for mortgages and other loans, dropped below 2% at one point. It was above 3.20% in November.
Usually, stock prices rise when investors are feeling confident. Bond yields, meanwhile, often fall when investors are worried about a softening economy. How can both be happening at the same time? In large part, it's because investors are locking in bets based on expectations for what the Federal Reserve will do with interest rates. The U.S.-China trade war is also playing a role. Here's a look at how ebullience and trepidation can occur simultaneously:
Regards,
Ted
https://lmtribune.com/nation/q-a-stocks-soar-while-bonds-are-signaling-gloom-what/article_f68ddac4-296e-5ef0-adb9-bdffa9ad0dbe.html

Hi guys,
FWIW ... For those that own the subject fund.
One of the things that concerns me about this fund is the third party risk that it is no doubt carrying. Does that not concern you? Remember Bear Sterns carried a lot of third party risk paper (got margin calls they could not cover) and they are no more. A lot of the securities that it holds are of paper form, thus they have to hold a large cash position, much like a commodity strategy fund that I own does to cover its commodity paper. But, it is a very small portion of my portfolio.
I'm thinking you are taking on more risk than you realise ... and, for what? Inorder to beat the 500 Index. So what! If it is beating the Index then is it not taking on more risk? Yes, for it is indeed levered up.
Perhaps, you are short of assets and need to be aggressive? Or, are you just being cavalier? What is your underline reason for owning this high risk fund? If it blows up will you still be around?
I'm not sure even M* understands the fund due to the massive amount of paper it holds.
http://portfolios.morningstar.com/fund/holdings?t=DSEEX&region=usa&culture=en-US
I am Old_Skeet ... and, I've been around long enough to see and smell risk.

Har. Someone goes to M*
http://portfolios.morningstar.com/fund/summary?t=DSENX&region=usa&culture=en_US
and is supposed to parse out at a high level (or any level) what sort of beast this is.
45% bonds, it says. Nothing listed under market cap or holdings style. Benchmark is Russell 1000. Check those wack style boxes for 2016 (LB) and 2018 (SV!), missing other years. Equity % is always under half. (So maybe it's a balanced fund?) Equity % jumped more than 50% 2017-'17.
And you would just tell them, Well, all M* is doing is transcribing, nothing to criticize here as misleading. Or confusing. Or unclear.
All righty, then.

Coefficient of determination wrt VFINX = 97% (portfolio visualizer), beta > 1 (M*). Simple.
BTW, that's the same coefficient of determination that portfolio visualizer shows for VWELX wrt VFINX. If one were to leverage Wellington to the hilt, one might expect it to similarly outperform VFINX.
Anyone considering DSENX who has to ask how it could outperform the S&P 500 shouldn't be investing in it. Either they don't understand leverage, or they haven't read the prospectus: "the Fund’s total investment exposure ... will typically be equal to approximately 200% of the Fund’s net asset value." (There's also the fact that it tracks a different index, but we'll disregard that for the purpose of this discussion.)
That's not to say people shouldn't be improving their understanding before investing. Speaking of which, would you care to address @dryflower 's question: " I would it expect it to be less volatile than the market and that it would resist downdrafts better. Why don't the numbers play out this way? The downside capture ratios are all slightly greater than 100%. " (Another way of asking why beta > 1.)
https://mutualfundobserver.com/discuss/discussion/comment/114412/#Comment_114412
The annual report for BIVRX says that the the fund has cash adding up to about 70% of its net assets. If your concern is that people are being mislead by legal filings and accounting conventions, then suggest something better to the SEC and/or the FASB. Because all M* is doing is transcribing this data. You're shooting the messenger.
Think about market neutral funds, just a special case of long/short funds where net security assets are (close to) 0%. "anyone reading it might be, indeed would be, led to think they were buying a fund which was [100%] cash, and would perform and might be expected to perform like a fund [of pure] cash. Does that seem reasonable ...?"
It does not seem reasonable to me that people looking at market neutral funds would expect them to perform like cash. They are faced with the fact that these funds do exist. Either these funds are all shams that really are nothing but (high priced) cash, or there's something going on with shorting that goes beyond the net cash percentage.

Seriously? Because anyone reading it might be, indeed would be, led to think they were buying a fund which was 3/4 cash, and would perform and might be expected to perform like a fund 3/4 cash.
Does that seem reasonable, much less inferentially accurate, to you?
Look at the past queries here about DSE_X and whether comprehending its holdings as half bonds+cash leads to a proper understanding. Wow, your family asks you, how can a fund so composed track but outperform the SP500 all the time?