There have been a lot of discussions about the Doubleline Schiller Enhanced CAPE funds, primarily DSENX, but I'd like to make sure I know how they work before doing anything with them. I would appreciate any corrections or clarifications.
In basic terms the fund is comprised of 4 out of the 5 cheapest sectors based on CAPE and the sector exposure is adjusted monthly. The funds achieves this exposure primarily through swaps. Swaps are very flexible because 2 parties can effectively agree to "bet" against each other over a period of time and they can negotiate the specific terms. By doing this they essentially replicate the index and gain the appropriate value exposure to the chosen sectors. At the least, however, the fund has to be gaining leverage through their use of swaps. It could be that neither party is actually investing or shorting the sectors but instead they just have a "paper" bet and each party only has to be concerned about the others ability to pay if they lose where the leverage comes from not actually "buying" anything. Or it could come in the form similar to futures contracts where the investment is leveraged and you only need to maintain a small portion of the value of the investment as margin.
Regardless of how they achieve the leverage the fund has therefore gained the ability to "perform" as if they had all their assets invested in those 4 sectors without investing all their cash and they use that excess cash to buy bonds, earn income and "enhance" the return that the index achieves.
To the extent that they use most or all of their excess cash to buy bonds, part of the risk is that they'd need to liquidate bonds to pay losses when the swap expires if the fund's sector exposures lose value. This might be why they have 18% of their fixed income investments in US govt. bonds, since they wouldn't be difficult to liquidate if it was necessary. They also have 8.7% in pure cash which I guess could be a margin requirement or could simply be a way of limiting the likelihood that they'd be forced to liquidate bonds if the equity investments lose money.
I guess to the extent that any of their swaps aren't readily marketable they would have to include a provision that either party could "end" the bet at any time. This would allow them to reallocate to whatever sectors are chosen each month, but my knowledge about the details of how they're effecting these swaps is basically non-existent so its just a guess.
Maybe I'm missing something but it seems like the main risks with the fund are related to the terms of the swap, which the public probably never finds out unless someone spills the beans and whether the fixed income securities they choose are sensitive to interest rates and could more than offset the income they produce due to a loss of value. Since a good majority of those bonds, according to the fact sheet, have short durations, it would at least seem like they're not being overly aggressive with their goal of "enhancing" the index.

Hey, VF.
BPRRX is large cap. BPLEX is nominally mid-cap with 18% in micro caps and 15% in small caps, both of which is rare in a L/S fund.
I sort of think of BPRRX as the equivalent of Grandeur Peak Stalwarts, the mid-cap produce from the micro-cap specialist offered as a gesture of goodwill to the advisor community.
David

Hi Guys,
In life "you don't always get what you pay for" seems to be a rule rather than an exception. That's especially true in the mutual fund business. Here is a Link to a one minute video that documents that truism from Morningstar:
http://www.morningstar.com/cover/videocenter.aspx?id=691300
Not surprisingly, the Dodge and Cox and the Vanguard organizations are impressive using this yardstick.
We've been losing the CEO pay fight for a number of years now. I don't see that changing much since most folks use their pay as a measure of their value to their companies in particular and to society in general. The rare exceptions are real treasures.
Best Wishes

@LLJB
There is an illustration of what you seek on page 11 of the report:
asyousow.org/wp-content/uploads/report/The-100-Most-Overpaid-CEOs-2017.pdf
The bar chart is called: "FIGURE 4 – MOST OVERPAID CEOS UNDER-DELIVER FOR SHAREHOLDRs"

@Mark.

I'm just trying to figure out what influences those votes or do they just not care.

Let's say you're running one of the biggest fund shops on earth, and you have the opportunity to run General Electric's 401k plan and collect millions of dollars in management fees for running it. Are you going to vote against GE CEO Jeffrey Immelt's $33 million annual compensation plan? There is an inherent conflict of interest at the biggest fund shops regarding these votes. Their answer to questions about these conflicted interests is that they have a Chinese wall up on the votes and their 401k/retirement business doesn't get in the way of their decisions on CEO pay. But here's the thing, there's a simple way around that conflict of interest wall--vote in favor of all or almost all executive compensation plans no matter how egregious. That way they can say, "See no conflict of interest with this specific company we have 401k business with. We vote terribly on everything. "

That's true now, but for its first decade, give or take, BUFSX was a very good SCG fund. 1% is a fair price for such a fund, it performed well, and it was a bit distinctive in that it employed some top-down (sector-focused) management. AFAIK the family as a whole still looks at sectors as well as individual securities in making investment decisions.
I can't tell you what happened, but in the past decade the family seems to have, if not imploded, certainly degraded. It used to have a fund - Buffalo USA Global (BUFGX) that focused on multi-nationals (a way to get international exposure without leaving the US), like Fidelity's Export and Multinational (FEXPX).
Its Science and Technology fund was also a bit distinctive in that it combined traditional technology and health care sectors. That was jettisoned as well, and the fund was converted into Discovery (BUFTX). That's a respectable growth fund that still maintains a bias toward technology and health care, but much less so than before.
It's often a warning sign when a boutique house juggles funds like this and becomes less distinctive. I stopped following Buffalo closely several years ago, but agree that now it doesn't seem to be anything special.
Side note: the four funds I mentioned, three Buffalo funds and a Fidelity fund, are all funds that M* used to cover but dropped.

Hi Guys,
Hooray for Larry Swedroe! In this current article Swedroe identifies Monte Carlo simulators as an important tool when making a retirement decision. He joins many financial advisors who also exploit this useful tool when making that life changing decision. I too have recommended application of Monte Carlo simulators since the early 1990s.
Swedroe emphasizes that a projected failure rate from these Monte Carlo estimates is not sufficient as a standalone output. He argues that the time of potential portfolio exhaustion failure during the retirement lifecycle is also critical. I completely agree.
The code that I frequently recommend, from Portfolio Visualizer, does provide that information in a graphic format. Once again, here is a Link to that excellent website tool:
https://www.portfoliovisualizer.com/monte-carlo-simulation
When I first became interested in the retirement riddle, Monte Carlo calculators were not readily available. So I built my own copy. I too recognized that the time of failure was a critical output. So on my version of a Monte Carlo code I included a user option to reduce withdrawal rate percentage by a user input if the portfolio suffered negative returns for 3 consecutive years.
An input of a 10% withdrawal rate reduction after 3 down markets lowered the portfolio failure rate substantially. These Monte Carlo studies encouraged my early retirement. Other approaches to protect against a portfolio failure exist.
I encourage you guys to visit the Portfolio Visualizer website and to consider using their Monte Carlo code. It's a terrific tool; give it a try.
Best Wishes.

This is the full report: asyousow.org/wp-content/uploads/report/The-100-Most-Overpaid-CEOs-2017.pdf
Once again at big firms DFA comes out on top as voting against these kinds of pay packages while BlackRock, Vanguard and Fidelity are at the bottom, rubber stamping egregious pay. How will they make the case voting for such packages is being a "good fiduciary" putting fund shareholders first? Meanwhile, smaller SRI fund shops--Trillium, Domini, Calvert and Pax--have good voting records here too. Parnassus has a surprisingly bad one.
In economics I've long known of the concept of marginal utility for consumers where if, say, you want a hamburger, the first one you eat has more use for you than say the second or third, each one having less value to the consumer than the last. I have to imagine that applies to CEO pay too. In fact I bet someone has done a study on this. At what point does giving someone another million or two cease really to motivate him/her, in fact could act as a disincentive as the executive is already making so much money they could retire at that instant and live comfortably without ever having to work again? I wonder if some hungrier younger executive looking to make their mark and willing to accept lower pay might actually do better than that highest-paid CEO. Or simply the executive of any age who cares so much for the company they don't need to have the fattest salary on earth.

FYI: According to the Economic Policy Institute,
“CEO pay grew an astounding 943% over the past 37 years, greatly outpacing the growth in the cost of living, the productivity of the economy, and the stock market, disproving the claim that the growth in CEO pay reflects the ‘performance’ of the company, the value of its stock, or the ability of the CEO to do anything but disproportionately raise the amount of his pay.”
For the past two years, we have highlighted the 100 most overpaid CEOs of S&P 500 companies, and the votes of large shareholders, including mutual funds and pension funds on their pay packages.
Regards,
Ted
https://corpgov.law.harvard.edu/2017/03/02/the-100-most-overpaid-ceos/

Old_Skeet, I'm familiar with the 200-day moving average and MACD (12,26,9), but what does "200R MACD" mean?

FYI: Retiring without sufficient assets to maintain a minimally acceptable lifestyle (which each person defines in their unique way) is an unthinkable outcome. That’s why, when investors are planning for retirement, the most important question is usually something like: How much can I plan on withdrawing from my portfolio without having a significant chance of outliving my savings?
The answer is generally expressed in terms of what is referred to as a safe withdrawal rate—the percentage of the portfolio you can withdraw the first year, with future withdrawals adjusted for inflation.
Regards,
Ted
http://www.etf.com/sections/index-investor-corner/swedroe-retirements-routes-failure?nopaging=1

Good morning,
Over the weekend I posted a special edition of the Markets & More thread. It is linked below for your reading enjoyment.
http://www.mutualfundobserver.com/discuss/discussion/31671/the-markets-and-more-week-ending-march-3-2017#latest
The important take away from this is that the technical strength feed spotted selling presure along with the 200R MACD (breath feed). From looking at the futures this morning in the States stocks look to be down and US govrnment bonds up.
I'm also thinking with just a few companies left to report earnings there is now little earnings fuel left to propel stocks. In fact, Old_Skeet had to revise his earnings mutiple downward by 2.1% due to S&P earnings revisions of both TTM & forward estimates. Plus, should the fed follow through with the anticipated interest rate hike that's another headwind for both stocks and bonds. One thing that has not been mentioned is how much of a rate hike might be coming? Is it more than the past quarter percent hike? Perhaps.
Yep, I thinking the next couple of weeks are going to be tough for stocks and bonds as well. And, with this I am still with my plans to trim equities (this week) thus rebalancing my portfolio by reducing stocks to a neutral position and raising cash by a like amount. March could be the month that I begin to restore my CD ladder.
I am moving away from writting a daily update under the Markets and More to doing a weekly post either over the weekend or early Monday mornings.
Thanks for stopping by and reading.
Have a great day ... and, most of all I wish all "Good Investing."
Old_Skeet

FYI: Stock futures pointed to a muted start for Wall Street on Monday, with appetite for equities slightly dented by geopolitical tensions involving North Korea and continued worries by some investors that markets have risen too far, too fast.
Regards,
Ted
U.S.:
http://www.marketwatch.com/story/us-futures-point-to-a-muted-start-for-wall-street-as-selloff-talk-grows-2017-03-06/print
Europe:
http://www.marketwatch.com/story/deutsche-banks-slide-pulls-financials-german-dax-lower-2017-03-06/print
Asia:
http://www.marketwatch.com/story/japan-south-korea-markets-muted-after-north-korean-missile-tests-2017-03-05/print
Current Futures: Negative
http://finviz.com/futures.ashx

These annuity products are offered for private sectors on their deferred pension and deferred contribution plans. Nuts! I will rollover the deferred contribution or 401(k) into a rollover IRA, but I have to take the pension portion part as annuity. It get worse if you take survivorship option.

@Puddnhead,
Sorry for drifting here (Buffalo wings & longnecks again..then @Old_Joe stopped by). Your fund is very small (51 million AUM) so could be nimble. It has a short manager record (4 yrs). It's ER is .97% (I like, not 1.01%, burp). The fund seems 'very indexy" (no strong concentrations). For a fund that has a "dividend focus" I would hope for a better yield than 1.19%.
Compared to other LC blend funds, I have GTLOX, POSKX, and OAKMX on my short list.
FundMojo likes: TRULX, BRLIX, FOHIX & VDIGX
Hope that helps.
A few funds that historically have outperformed here:

I tend to use M*'s premium screener. Familiarity and reasonable flexibility (many criteria and allows numeric values). There are more criteria/features I'd like, but I can work pretty well with it.
I've got T. Rowe Price to thank for this freebie. (Many years ago, T. Rowe Price was the only place that offered free individual 401(k) accounts that included a Roth option. That's what drew me into them.)

My biggest compliant (really a conundrum) is that almost all Buffalo funds all have a 1.01% ER. You'd think they would shave .02% off these fund's ER so that they could be marketed as below 1%. Very curious.

I actually appreciate that they don't use an ER<1% as a marketing gimmick.
That said, still don't think they're anything special.

My biggest compliant (really a conundrum) is that almost all Buffalo funds all have a 1.01% ER. You'd think they would shave .02% off these fund's ER so that they could be marketed as below 1%. Very curious.

@PRESSmUP @catch22 - The M* sector table has blanks (well, dashes actually) in the fund's column. The other columns (category and benchmark) do have values.
It always pays to go back to the source:
http://www.doublelinefunds.com/shiller-enhanced-cape/statistics/ or
http://www.doublelinefunds.com/wp-content/uploads/shiller-enhanced-cape-fact-sheet.pdf
(aside from noise, 1/4 in each of Consumer Staples, Consumer Discretionary, Industrials, and Technology, as of end of January)
Barclays (CAPE ETN) is not as forthcoming. It lists only Consumer Staples, Industrials, and Technology (as comprising 75% of the fund). It forgets to list a fourth sector.
http://www.etnplus.com/US/7/en/details.app?instrumentId=174066
(click on Index Sector Weightings Tab)
It is curious that one of the supposed advantages of index funds is transparency, yet people are having difficulty finding out what sectors, let alone what securities, the fund holds.
Some of that is likely due to the fact that Doubleline gets equity exposure with derivatives, some of that is due to the index being proprietary, some of that is due to CAPE being an ETN that doesn't even hold anything (it's just a note that promises to pay according to the index performance).

Maybe closed at Fido ... but TRowe's main fund page says "Open to new Retail investors / Open to subsequent Retail investments"
https://www3.troweprice.com/fb2/fbkweb/snapshot.do?ticker=PRHSX

Hi @rforno
At the internal Fidelity page for PRHSX, this fund is noted as "closed to new investors" in RED.
The below link is a snippet of the most current holdings info for FSPHX.
https://fundresearch.fidelity.com/mutual-funds/composition/316390301