FYI: As investors sift through the rubble from last week’s equity rout, a blemish has appeared on what had been one of the hottest trades among quantitative investors -- low volatility.
The approach ostensibly offered protection from equity gyrations by betting on stocks that have historically swung less than the overall market. But when the S&P 500 Index registered its worst week in two years, exchange-traded funds geared to low volatility sold off nearly as forcefully.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-02-14/favored-quant-trade-blemished-in-last-bout-of-market-volatility?srnd=etfcenter

Sorta sounds like what I’ve gravitated to over the years. Except I don’t use index funds. Core = a diversified balanced portfolio (about a dozen funds) that rarely gets traded. Pretty much a sleep-well mix. Flexible portion = cash / cash-like holdings plus riskier investments. The Flex part I can vary at will.
As I’ve aged, I’ve slowly increased the Core portion from around 50% two decades ago to 75% today. By the time I’m too old to remember who I am, I hope to have moved to 100% Core. Than I’ll keep my hands off everything and just let it ride.
Not a recommendation for others. Not going to beat the market either. A good sleep well approach that keeps ya from mucking things up too badly.

FYI: U.S. insurer MetLife Inc on Tuesday said internal failures that resulted in its not making payments to thousands of pensioners stretched back a quarter of a century and it would take a major effort this year to fix the problems.
Regards,
Ted
https://www.fa-mag.com/news/metlife-says-pension-failures-go-back-25-years-37158.html?print
Its All Because They Dumped Snoopy And The Peanuts Gang:
http://money.cnn.com/2016/10/20/investing/metlife-snoopy-peanuts-blimp/index.html

Outflows amounted to 8 percent of the fund’s total assets at the start of the week, a rate of withdrawals not seen since August 2010.
The five-session stampede for the exits erased the previous nine weeks of inflows into the fund, which is issued by State Street. The combination of price declines and withdrawals erased $38.6 billion in SPY’s assets. That’s nearly double the second-worst showing of $19.4 billion in asset shrinkage during the week ending Aug. 21, 2015.

This outflow amounts to program selling. VIX spiked up widely in last two weeks.

FYI: How about this, party people – Listerine was originally invented 135 years ago to cure gonorrhea. And then forty years later it became a mouthwash. True story.
Regards,
Ted
http://thereformedbroker.com/2018/02/12/passive-my-a/

It appears that interest rates are going to rise, when and or how much is the question. Assuming this is true, what bond funds do you think will be able to adjust to this new scenario, when it does occur? I personally am in my early seventies and my portfolio stays around 50% cash and bonds and 50% stock index funds with no need to take excessive risk. For whatever reason, I can handle stock volatility better than bond fund price decreases. If you are retired, what are you doing with the bond side of your portfolio?

It turns out that was mere lip service. The administration proposes spending a measly $20 billion a year -- or $200 billion of the $1.5 trillion total -- for a decade.

How true! More details on its impact on the local government and muni bond market from Brookings Institute.
https://brookings.edu/blog/up-front/2017/12/26/how-the-new-tax-bill-will-cut-infrastructure-investment/

M* reports a drawdown for SGENX of 36.3% (5/19/08 - 3/6/09), or if you want to keep it within 2008, a drawdown of 34.9% (5/19/08 - 11/20/08).
Here's the cumulative return chart for the wider range (you can mouse over to get returns for shorter periods).
FWIW, Yahoo Finance closing and adjusted closing prices for these dates are:
05/19/08: $46.50 ($32.31 adjusted)
11/20/08: $30.21 ($21.03 adjusted)
03/06/09: $27.59 ($20.61 adjusted, after div of $2.453 on 12/17/08)
Give or take rounding error of 0.1%, the Yahoo and M* figures match.
MFO may have different (smaller) drawdown figures because of differences in defining "drawdown". I just sort of eyeballed it, looking for the highest (not last) peak before a general downward trend. Likewise, I looked for the lowest (not earliest) trough before a general upward trend. Shorten the period by using a later peak and earlier trough and the drawdown will be less.
Regardless, SGENX dropped about 35% between May and November 2008 - whether you want to consider that one drawdown or a sequence of drawdowns. And it lost even more over the stretch from May 2008 to March of 2009.
P.S. I assumed that a 30% calendar year loss was intended as a proxy for a higher maximum acceptable loss (e.g. 3/8 or 37.5%) over the full decline (from Spring 2008 to Spring 2009). I'm not aware of "real" funds (e.g. excluding MMFs, Treasuries, and such) that declined less than 30% overall.

Hassan Elmasry, Michael Allison, Jayson Vowles, Paras Dodhia (left IFP in 2015)

MSFBX lost 29.05% in 2008 and is load-waived at Fidelity.

This group was previously led by the folks that now run Independent Franchise Partners.

Hardly surprising is that active funds generally have a fair amount of cash , Index funds do not.There is an argument that active fund should be benchmarked/compared to 90 or 95% index and 5 or 10% cash.THat will at least show whether there is good stock picking.

FYI: Did a bear-market signal ring on Friday when the S&P 500 Index dipped below its 200-day moving average?
Yes, according to a decades-long tenet of technical analysis.
As for me, I’m not so sure. The 200-day moving average’s historical track record isn’t as good as its devotees claim. In recent decades, its performance has taken a big turn for the worse.
Regards,
Ted
https://www.marketwatch.com/story/you-can-no-longer-trust-the-200-day-moving-average-as-a-stock-market-indicator-2018-02-13/print

MSFBX lost 29.05% in 2008 and is load-waived at Fidelity.

Re HSIEX. I’m missing something here. Lipper scores it lowest (1) on: Total Return, Consistent Return and Expenses. (But rates it highest (5) for Preservation). Shows a negative return for 3 years. What’s to like here?

I guess what I'm saying is that maybe your criterion is not realistic.

There ya go. I was wondering the same thing. T. Rowe’s Spectrum International (PSILX) lost over 40% in ‘08 or I would have nominated it. Not exactly what you’d call an aggressive fund. International funds generally got hit harder than domestic in ‘08.

FYI: The S&P 500’s swift 10% fall fall from its all time high qualifies as a full blown correction. History shows odds are good that equities will be higher the next six to 12 months.
Regards,
Ted
https://www.morganstanleyfa.com/public/projectfiles/gicweekly.pdf

So, at 2.06% fee, Centaur is making 309K per year in fees to hold on to 55% of the fund that is cash. Then they are making money with the 15 million. That is a sweet deal!

Hi @hank
You mentioned IG corp. bonds.......22% of our portfolio remains in FCBFX. Tis doing a bit better than the IG bond etf LQD , but in in the middle of the pack in this area. Although I am sure some of the other funds are doing some of the "strange brew" stuff.
---FCBFX = -2.2% YTD
The title for this thread is relative to the "funny" action of investment grade bonds, in particular; in reaction to the recent melt.
SO........as Marvin Gaye once sang, "What's Go'in On?"
1. The leverage stuff blew a gasket, which may have done nothing more than trip the 'bots into sell mode, which allowed for a cascade??? I have to believe there were humans in the room waiting to hit the kill switch.....?????????????
2. Safe haven bonds didn't get a hug, cause the equity burn is/was just a blip for the leverage and time will cure this problem in short term.....??????????
3. Perhaps the big houses have not dumped any holdings, thinking this is just a blip and let some of the fools crash and burn........NAH, the big houses are not buy and hold, are they?????????????
4. The markets would be at 1985 levels if based on the quality of government.Must be some other reasons, and not politics, eh???????
5. OF EQUITY, large growth in the tech. and health areas got a positive bump Friday (other areas I likely am not aware of and..... Most small and value oriented not as happy.
I agree that I find nothing fundamental likely attached to the sell down or to what ever may be a positive path forward with or without more sell down first.
A bunch of overbought, big money forces that will likely push the string again.
I have more questions and no good answers. :)
Take care,
Catch

Hi Guys,
As Lord Kelvin observed: "Large increases in cost with questionable increases in performance can be tolerated only for race horses and fancy women". Perhaps there might be a few other exceptions.
Good investing advice can be nicely summarized on a postcard. Invest in low cost Index funds and stay the course. This doesn't guarantee success but it greatly improves the odds. Expensive active mutual funds outdistance Index products less than 10% of the time over respectable time horizons like 10 or 15 years. Picking a winner against those odds is unlikely. Many of us persist in that game: lots of luck needed. The professor is on target in this instance.
Best Wishes

Come on Mike, how can you begrudge a man half a million dollars a year for sitting on 55% cash. You're just jealous. He turns the portfolio over 1.25X a year. What more do you want?
I am curious to know how a fund with a 10 year record has only managed to gather $25 million in assets. It's probably explained in David's profile which I've unremembered.