The Risk Of Go-Anywhere Bonds Funds >> Over the past five years ... I had an average annual return of better than 16.5%. This was done with mostly what Morningstar would classify a conservative allocation portfolio with [a minimum of 30% in cash/bonds and a max of 60% stocks].
Well, Skeet, you should run a fund, if this is an accurate representation. By your M* characterization is implied no HY fund (FAGIX was up 70% in '09, e.g.) --- correct?
Now, the last five years have been awesome, true, even, as you note, for 60/40 and 50/50 funds, but if what you write is so, both the math and the M* adjective, some details would be welcome. You appear to have nearly matched and sometimes outdone even Romick, Intrepid, D&C, the Jameses, Fido, Weitz, and some others. Pray tell more.
The Risk Of Go-Anywhere Bonds Funds @cman I'm not sure what index you consider an appropriate benchmark, but morningstar uses Barcley US Aggressive Bonds. LSBDX blows away this benchmark over all periods over and including 1 year. Can't remember when I bought this without looking it up. But I'm 89.9% sure, it is at least
5 years that I've held it. I reinvest all dividends and other distributions.
@Maurice, I won't be surprised if an active fund beats a suitable index. It doesn't even matter if the manager strays a bit or takes a little more risk as long as the volatility is similar in a practical sense. There are many funds that do this. All the studies which conclude otherwise are based on averaging over the entire fund universe or requiring that they beat the index every year which doesn't reflect any practical reality/requirement. So, not one of the religious cults that go out of their way to deny any such possibility.
But buying such an active fund does entail taking manager/strategy risk. That is OK with me too. I don't see much difference between that and taking more beta exposure risk in an index as long as the returns are commensurate.
My earlier comment in this thread is for a suggestion that diversifying across multiple such funds in case one of them falters may increase the performance over the index. It only helps manage the manager/strategy risk and reduces volatility if any of the funds do go through bad patches and that is a desirable benefit on its own.
But there is a cost in performance unless each of them over performs its relevant index, in which case the diversification was unnecessary or it was measured against an incorrect index to represent the combination.
The more complex/varied/numerous the funds so combined, more difficult to determine if the fund collection actually helped or hurt and easier to fool yourself that they did relative to a simple index portfolio with similar beta exposure.
This is a problem with all kitchen sink portfolios.
BDCs Fall After S&P Gives Boot----Now Watch Russell Russell joins S&P in booting BDCs from indexes; sector slips
Seeking Alpha Mar 4 2014, 1
5:30 ET
It's no little deal as an estimated 8% of all BDC shares are owned by funds benchmarked to the Russell 2000 index.
In a big green down for the markets, most of the BDC sector is in the red. Prospect (PSEC -0.
5%), Fifth Street (FSC -1.
5%), Ares(ARCC -0.9%), BlackRock Kelso (BKCC -1.6%), Medley (MCC -0.9%) THL (TCPC -1.6%), NGP (NGPC -2.9%), New Mountain (NMFC -1.6%), PennantPark (PNNT -0.
5%), Triangle (TCAP -0.7%).
http://seekingalpha.com/news/1606533-russell-joins-s-and-p-in-booting-bdcs-from-indexes-sector-slips
