Has anyone looked at PSYPX or SEMRX? Looking at PSYPX, it looks like they take an extremely aggressive approach in working spreads (the difference between yields of differently rated but otherwise similar bonds), while trying to eliminate interest rate risk.
They do this largely with floaters, and also by hedging fixed rate bonds (e.g. with offsetting shorts - which affects costs and I suspect turnover rate). Junkster has written several posts talking about credit risk with junk bonds and how he watches this. PSYPX seems to focus on that same credit risk, though over a much wider variety of credit ratings and using lots of different devices to manage it.
It's an interesting idea and IMHO somewhat different. Eliminating interest rate risk to focus solely on credit risk might be analogized to foreign investing while hedging currency.
Though ISTM that unlike foreign currency hedging where currency markets may be decoupled from nations' stock markets, credit and interest risk may be more intertwined. I understand that from a mathematical perspective, the two pricing factors may be treated independently. What I am less comfortable with is the idea that some event, some factor, could affect one dimension of the yield curve (say, spread) without also affecting another dimension (interest rates). Are they boxing themselves in by not considering both effects?
I'm also not enthralled by their explanation for their large 201
5-2016 dip, even though the fund ultimately made up the loss and much more. "The market sold off for technical reasons" is leaving me wondering what other factors could sidetrack the fund.
ICI: Fund Flows Show Investors' Reticence On U.S. Stocks U.S. corporate investment grade bond issuance is about $950 billion so far this year. The expectation is that this issue class will top $1 trillion for the 3rd year running; especially in light that Amazon is going to issue bonds for the Whole Foods purchase.
As to the bond money flows noted in the article, IMO; folks remain very twitchy with machinations in D.C.-land.
'Course the edgy side of this is a boat load of cheap debt piled upon company balance sheets. Company stock buy backs will help the executives with their "performance" bonuses, eh?
All information believed to be accurate.
Regards,
Catch
Fees Exacerbated A Lost Decade For Active Managers Hi Guys,
For a long time now, I've been fascinated by the research summarized in the biannual SPIVA reports. That fascination helps me in making asset allocation and active/passive investment decisions. You too just might find the SPIVA studies a useful addition to your data when making your portfolio decisions.
The references provided in this thread have been superseded by a more recent SPIVA release that includes all 2016 data. Here is a Link to that report:
https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdfThe numbers change, but the basic conclusion remains unchallenged. Active fund management is a difficult chore when it's success is measured against a realistic benchmark.
This end of 2016 SPIVA report now includes 1
5 year data summaries. These extended timeframe data sets reinforce the conclusion of just how daunting beating a benchmark really is.
In very general terms, in all fund categories, less than 20% of active fund managers outdistanced their benchmarks. That's depressing unless an investor was prescient enough to anticipate that successful cohort early in any cycle.
The SPIVA document also has category charts for 3-year periods. Over that shorter timeframe, a higher fraction of fund managers do deliver outsized outcomes but the percentages change dramatically over various .3-year periods. Investing is never easy and certainly never a certainty.
Please access this SPIVA research report. It will contribute to your investment toolkit and decision making in a positive way.
Best Regards
