2018 Dogs Of The Dow FYI: Below is a check-up on the performance of the “Dogs of the Dow” strategy so far in 2018. For those unfamiliar with the strategy, it’s a simple portfolio allocation and re-balance at the start of each year into the 10 highest yielding stocks in the Dow Jones Industrial Average.
As shown in the table, the 2018 Dogs are currently up an average of 4.77% YTD on a total return basis compared to a total return of
5.11% for the 20 non-Dogs. Coming into the month, the non-Dogs were outperforming the Dogs by a much wider margin, however. With investors shifting out of cyclicals and into more defensive names, the lower-yielding non-Dogs have fallen 4.61% in October, while the Dogs are down just 0.61%. If it weren’t for IBM’s 13.91% drop this month due to another bad earnings report, the Dogs would actually be up 87 basis points MTD.
Merck (MRK) and Pfizer (PFE) have been the best performing Dogs of the Dow this year with total returns of more than 2
5%. Apple (AAPL) and Microsoft (MSFT) have been the best performing non-Dogs with gains of more than 30%.
If we were to re-balance the strategy now, Merck (MRK) would be removed and JP Morgan (JPM) would enter the Dogs. Note that IBM is now the highest yielding stock in the Dow at 4.82%!
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/2018-dogs-of-the-dow/
Big Bets Are Great, When They Are Right: (AOFAX) - (AMAGX) - (TARKX)
M*: 3 Bond Funds You May Be Tempted To Buy But Shouldn't: (THOPX) - (NHMRX) - (LSFYX) For buy-and-hold investors, I don’t see the problem with THOPX. I owned it for a while, including its swoon a few years ago, but its returns over 1, 3, 5, 10 years have been excellent. I don’t understand why M* bashes funds like THOPX but continues to tout funds like MWTRX that have had miserable returns in recent years while becoming bloated with assets. Many so-called quality bond funds have gotten killed by rising interest rates and have seemingly done little or nothing to ease the pain for investors. As long as interest rates continue to rise, investors seeking quality apparently would be better served by ultrashort bond funds, money markets or CD ladders.
Ben Carlson: A Lost Decade Of Dollar Cost Averaging "By way of comparison, simply investing that same $500/month in one-month t-bills would have given you more than $67k"...without the volatility and sleepless nights. Entering these two scenarios into Portfolio Visualizer produced slightly different, but similar results...along with a lot of other interesting data such as not a single negative yearly return for ST Treasuries.
RPSIX TRP "Spectrum" ? Good analysis by several. I like the ultra-short (TRBUX) mentioned above. Use it as a “cash equivalent” (Not all ultra-shorts are managed as well.). Yet, even over the shorter 5 year period, it lags RPSIX by about a point and a half. So, if willing to tolerate a little more volatility, investors would have been better off in RPSIX.
Another income fund I own is DODIX. i’ve long allowed a smaller portion (no greater than 50%) to count as part of my “cash equivalent” holdings. Of course it’s not really cash - but for allocation purposes I’m willing to include it. DODIX has a longer history than TRBUX. So a 10 year comparison is possible. Here RPSIX still wins with a 6.28% return while DODIX netted 5.61%. Again - you need be willing to accept more volatility to reap the additional income with RPSIX.
While I’m not “married” to TRP (borrowing Crash’s words), it’s my single largest fund manager and has 100% of my Traditiinal IRA. So, I’ll stick with the 15% allocation to RPSIX. We’ve known for 10 years that bonds would suffer when the emergency Fed easing slowed or stopped and rates normalized / rose. Nothing too startling here. Yes, the foreign securities have taken a toll on the fund. I thought PRELX a brilliant idea when introduced. Unlike most of their international / EM bond funds, Price does not hedge this one against currency fluxuations. So the strong dollar has really hurt it. I’ve owned it before but doubt I will again.
M*: 3 Bond Funds You May Be Tempted To Buy But Shouldn't: (THOPX) - (NHMRX) - (LSFYX) FYI: It’s easy to identify funds with strong records. But as my colleague Russ Kinnel noted recently, it takes more than a strong record to earn a Morningstar Analyst Rating of Gold, Silver, or Bronze. Those medals reflect our expectation that a fund will be a standout performer in the future, and that requires a deeper investigation into a fund’s fundamentals to determine whether it has a sustainable competitive advantage. If our analysts aren’t convinced that a fund can continue to deliver strong results, they’ll assign it a Morningstar Analyst Rating of Neutral or possibly Negative.
When a fund with a great record earns a Neutral rating, we get questions. In the world of bond funds, the reason our analysts take a skeptical view of past performance often comes down to risk. We ask ourselves the following questions:
Regards,
Ted
https://www.morningstar.com/articles/883540/3-bond-funds-you-may-be-tempted-to-buy-but-shouldn.html
Ben Carlson: A Lost Decade Of Dollar Cost Averaging FYI: (The Linkster has never been a fan of DCA.)
Investors who dutifully put money into the stock market on a periodic basis over the decade ended in 2009 would have felt dejected when looking at their statements.
If you started dollar cost averaging $
500/month into the S&P
500 in January of 2000, by December of 2009 you would have invested $60,000 in total. This strategy would have netted you a whopping $64k and change, not much more than the amount saved. By way of comparison, simply investing that same $
500/month in one-month t-bills would have given you more than $67k.
Regards,
Ted
https://awealthofcommonsense.com/2018/10/a-lost-decade-of-dollar-cost-averaging/
2018 Mutual Funds preliminary capital gain distribution estimates
RPSIX TRP "Spectrum" ? I’ve owned RPSIX for 15+ years because it seemed like the best option available at TRP and provides a broadly diversified income exposure. This is its worst year I can remember in comparison to comparable funds and it seems to be due to its large stakes in PRCIX (New Income) and foreign/EM bonds. As a result, it has performed poorly as interest rates have risen. So, for the first time ever, I shifted about two-thirds of my holding in RPSIX to other less interest-rate sensitive bonds funds — namely TRBUX (ultra short) and PRFRX (floating rate). When interest rates finally seem to be stabilizing, I will probably move the money back into RPSIX.
In the past, RPSIX’s primary weakness was its 10-20% stake in dividend stocks, which hurt returns in bear markets. However, this year has shown that it’s also vulnerable to rising interest rates.
Robot ETF leaves pros in dust, scoring wins on small-cap fliers
RPSIX TRP "Spectrum" ? Hi Derf. Thanks. Not sure what your numbers reference. M* breaks down the credit quality of RPSIX’s bond holdings. (If you include the fund’s 10% equity holding in the total, the following percentages would be a bit lower.)
Here’s the non-investment grade percentages from M*
BB 11.4%
B 15.76%
Below B 4.4%
Not Rated 1.4%
Total 33% (+ -)
So, in addition to the 10% equity position, it appears that close to 30% of the fund’s total holdings are in non-investment grade bonds. The puzzle remains as to why it hasn’t performed a little better.
Chuck Jaffe: Rate Hikes Hit Credit Cards; Hit Them Back Thanks@ Ted,
I'm contemplating the following. Using a credit card offer for 12 month at 0%. The CC has a flat $35 transfer fee and would allow me to pay off a 3.5% personal loan one year early. Paying that loan off 12 months early would save me $525 in interest.
Just one way of managing short term debt in a low interest rate environment.
RPSIX TRP "Spectrum" ? 35.43% 21.30%
AA 3.44% 5.17%
A 9.80% 12.78%
BBB 18.30% 20.79%
BB 11.41% 18.68%
B 15.76% 14.29%
Below B 4.43% 4.40%
Not Rated 1.42% 2.58%
Percent of Long Fixed Income Assets
RPSIX
Credit Rating
Multisector Bond
Average
Chart
35.43%
AAA
Chart
21.30%
AAA
Is this what your looking for ? RPSIX on left _ Category Ave. on right.
Derf
RPSIX TRP "Spectrum" ? I’m intrigued myself about the fund’s lackluster performance. But like I said earlier, it’s a hard one to classify. Even Lipper (where I normally look) has it scored 3 (out of 5. Over 5 years it hasn’t even beaten their ultra-short (TRBUX) by a full two points. Go figure.
Exposure to PRFDX (Equity Income Fund) seems to have helped in recent years, so rule that one out as the detractor. All I can think is it might be tilted heavier towards high quality (read “rate-sensitive”) bonds than I had assumed or might prefer.
I think a fund like that ought to be able to hold 20-30% in below investment grade debt (and EM). I’ll guess RPSIX is not that high. Another thought: They probably have a good slug of inflation protected bonds in the mix - and those might have been a drag in recent years.
Don’t have time to search for the credit quality breakdown. If anybody has that for RPSIX please share.
What Invesco Gets Out Of OpFunds FYI, OppenheimerFunds history:
OppenheimerFunds’ beginnings can be traced back to the late 1950s and the brokerage firm Oppenheimer & Co. (OpCo). Near the end of that decade, OpCo entered the mutual fund business, first offering the Oppenheimer Fund to the public on May 15, 1959. Shortly after, OpCo created a subsidiary, Oppenheimer Management Corporation, to serve as the investment advisor to the Oppenheimer Fund. In 1996, Oppenheimer Management Corporation was renamed OppenheimerFunds, Inc.
https://www.allianzlife.com/new-york/annuities/variable-investment-options/money-managers/oppenheimerfundsIn 1983, Oppenheimer sold Oppenheimer Capital (apparently including Oppenheimer Management Corporation, later called OppenheimerFunds) to Mercantile House Holdings. In 1986, the management of Oppenheimer & Co. and the management of Oppenheimer Capital bought back Oppenheimer Capital, but not OppenheimerFunds.
http://managerreview.com/su_companydetails.php?iCompanyId=2914&CompanyName=Oppenheimer Capital LLC"Mercantile had had little success in trying to create synergy between Oppenheimer and its London businesses." (
NYTimes, Aug 21, 1985). Perhaps a lesson for Invesco?
In 1990, Oppenheimer Management Corporation was acquired by Massachusetts Mutual Life Insurance Co (MassMutual).
https://www.upi.com/Archives/1990/08/01/Massachusetts-Mutual-to-purchase-Oppenheimer/6609649483200/To make matters more confusing, in 199
5, Oppenheimer Management Corp (by then owned by MassMutual) acquired a dozen of Oppenheimer Capital's Quest for Value funds. The two companies were not related (having split in 1986, see above).
https://www.thefreelibrary.com/Oppenheimer+Management+Corp.+agrees+to+acquire+the+assets+of+12+Quest...-a017195335
