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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Parnassus Core Equity Fund
    PRBLX is growthier now than its history (see the investment style on M*) and likely to stay that way, but hasn't been there long enough for M* to switch its category. Its (5.6%) ytd doesn't look great for large blend, but not so bad against large growth. (I follow SPYG, which is (8.6%) ytd.)
    And PRBLX for sure doesn't look good right now against a large value fund like GQEPX, with its big allocation to the sector of the moment - traditional energy.
  • M* -- Bond Investors Facing Worst Losses in Years
    A part of me struggling to understand the handwringing for buy-and-hold investors.
    If you have a say 50/50 allocation between stocks and bonds, why would you not just rebalance? Take-advantage of the cheapness?
    I get it with trend-following or trading strategies, which I like, but don't long-term investors need to accept that some years will be worse than others, no matter what the asset class?
    I saw DODIX mentioned.
    Let's say by end of year, it's -9%. About its worst MAXDD. Don't two +9's get remembered, as in 2019 and 2020?
    Here are calendar year returns going back to 1990:
    Year Count: 32
    Worst Year: -2.9
    Best Year: 20.2
    Average Year: 6.4
    Sigma Year: 5.5
    YTD (thru 3/24): -5.6
    2021: -0.9
    2020: 9.4
    2019: 9.7
    2018: -0.3
    2017: 4.4
    2016: 5.6
    2015: -0.6
    2014: 5.5
    2013: 0.6
    2012: 7.9
    2011: 4.8
    2010: 7.2
    2009: 16.1
    2008: -0.3
    2007: 4.7
    2006: 5.3
    2005: 2
    2004: 3.6
    2003: 6
    2002: 10.7
    2001: 10.3
    2000: 10.7
    1999: -0.8
    1998: 8.1
    1997: 10
    1996: 3.6
    1995: 20.2
    1994: -2.9
    1993: 11.4
    1992: 7.8
    1991: 18.1
    1990: 7.4
    Granted, all during secular bond bull. But there were certainly some periods in there of rising rates, if not with concurrent inflation.
    Also, if there is sufficient liquidity, and there seems to be, why is selling a bond or TBill early bad? Can't you just pick-up another with the reduced principal but higher interest for the remainder of the planned term? Don't you end up in same place, less trading fee/bid spread?
    Now if liquidity is crashing, I get it (e.g., IOFIX in March 2020, I do remember and will never forget). Is that what the concern is for investors ... that there will not be enough liquidity with everybody running for the door in bond fund land, perhaps including the Fed?
    Excellent analysis and summary. I understand the worry with bonds but most investors are not able to trade in and out to successfully chase the best returns. The B&H path I am following.
  • Parnassus Core Equity Fund
    @ron Every time I look at adding PRBLX … I can’t seem to. It’s a very fine fund. It just compares so nicely to FXAIX or an SP 500 index with a lower ER. Some have shown how it falls less when market is in correction but not enough for me and not YTD this year.
  • RCTIX - Manager Change
    I browsed the River Canyon Funds (RCF) website yesterday evening and noticed that Todd Lemkin was listed as the RCTIX manager. I didn't check the prospectus since it was late.
    I wonder what transpired? RCTIX key-man risk was a concern of mine.
    I asked RCF the following questions in September 2019:
    The prospectus states that the fund is managed using a team-based approach.
    Besides Mr. Jikovski, who else is on the team and what is their tenure with Canyon Partners?
    Is there a current succession plan for the portfolio manager?
    RCF response (slightly edited):
    There are three designated members of the RCTIX team. George, Alex Siroky and Guillermo Serrano.
    Alex has been a senior analyst on the team and we expect to add him as a Co-PM at the end of the year.
    Alex has been at Canyon for one year, but spent the prior 10 years at Athene asset management.
    During Alex’s tenure at Athene it grew from managing a few hundred million to over $100B in structured credit.
    Guillermo has worked with George at TCW and at Canyon for almost 20 years.
    He joined Canyon shortly after George did in 2004.
    He is a research analyst and builds many of our models to evaluate these securities.
    The River team leverage’s the other 49 investment professionals at Canyon.
    For example, once we hit $100mm in AUM we will begin to invest in CLO tranches.
    We have an 8 person CLO team managing over $4.5B in AUM.
    George will work closely with them to analyze the CLO structures and the underlying collateral of bank loans.
    George has been at Canyon for 15 years and is in his early 40s.
    We don’t anticipate him leaving anytime soon, but we are constantly looking to develop our talent in the event someone leaves. At this time there is no designated successor.
  • Bloomberg Wall Street Week March 25 (Video)
    A fair assembly. Saira Malik, Nuveen CIO, is somewhat at odds with Christopher Ailman, Chief Investment Officer of the California Teachers Retirement System (CALSTRS). The former is bullish on equities; the latter more cautious. Ailman also remarks that his system has the lowest allocation to fixed income in its history.

  • RCTIX - Manager Change
    FYI, the Supplement to the RCTIX Prospectus, dated 3/25/2022, states the following:
    "The following changes are being made to the Prospectus and Statement of Additional Information (“SAI”) of the
    River Canyon Total Return Bond Fund (the “Fund”).
    The information identifying the Fund’s portfolio manager on page 4 of the prospectus in the subsection entitled
    “Portfolio Management” is deleted in its entirety and replaced with the following:
    Portfolio Managers
    Todd Lemkin
    Portfolio Manager
    Length of Service: Since March 2022
    Sam Reid
    Portfolio Manager
    Length of Service: Since March 2022"

    George Jikovski, the manager since the inception of the fund in 2014, has apparently been replaced. Hopefully, yesterday's fund performance is not a sign of things to come under the new managers.
    Fred
  • M* -- Bond Investors Facing Worst Losses in Years
    For a ultra short duration with a "buy and hold" approach, SPACs purchased below trust value with the intent to always redeem on a business combination, sell above trust value, or wait until liquidation date may be worth consideration. According to SPACinformer.com around 75% of SPACs have a yield to liquidation over 3% with an weighted average maturity around 1 year. Some or all of the return may be capital gains rather than ordinary income. SPACinformer.com allows you to download the 700+ SPAC database for free to get the info needed to execute.
  • Morningstar Portf. Manager speed
    Re-test:
    Down: 134.2 Mbps
    Up: 45.4 Mbps.
    ...Just for the record. So much better than what I had to deal with at the previous apartment.
  • Edward "Ned" Johnson III Passed Away at 91
    He had the best record of Magellan (FMAGX) managers, both in absolute and relative terms, with an annualized return of 30.6% vs. 7.9% for the S&P 500.
    https://greensboro.com/magellans-best-manager-the-envelope-please/article_287cfc10-6b68-5515-a321-c7caacfbf802.html
    OTOH, it seems like a bit of a stretch to say, as CNN does, that "In 1974, he broke the mold by selling mutual funds directly to individual investors instead of through traditional brokers."
    Almost from day one, some mutual funds were sold direct:
    By the 1940s, the wholesale distribution system [selling through brokers] had become the norm, and it continued to be so through the 1960s. Yet this was not the only sales model employed by mutual funds. Two of the largest fund complexes in the 1950s and1960s, — Hamilton Management Corporation and Investors DiversifiedServices,Inc. — employed their own salespeople. These individuals only sold their respective firm’s funds, and they were the only sales representatives who did. A minority of funds distributed their shares directly to the public without a sales force of any kind.
    https://www.ebhsoc.org/journal/index.php/ebhs/article/view/208/191
    Nor was Fidelity at the vanguard (pun intended) of offering no-load funds. Unlike families like Scudder (the original no-load fund), T. Rowe Price, Dodge & Cox, Mairs & Power, Mutual Series and others, it did not offer no-load funds in the sixties. It wasn't until the early 2000s that Fidelity dropped its "low" (2-%3%) loads on its most lucrative funds, like Magellan and Contra (FCNTX).
    https://www.jstor.org/stable/4469596?seq=4
    https://www.orlandosentinel.com/news/os-xpm-1995-06-11-9506080389-story.html
    https://www.thinkadvisor.com/2003/06/24/fidelity-drops-sales-charge-on-magellan-fund/
    If one is going to give Ned Johnson credit for selling direct, then he also gets credit for charging loads that went entirely to Fidelity. He was brilliant at growing not just the company but its profits.
    A brief note on the Wikipedia entry - It says that Ned Johnson managed Fidelity from 1963 to 1977, seemingly to have forgotten Dick Habermann (1972-1977).
    http://personal.fidelity.com/myfidelity/InsideFidelity/NewsCenter/quickFacts/Magellan.html
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder

    I heard of these ETFs but not quite sure how they work. The article says at the end of the term you get back your money plus capital gains. Does this mean you are guaranteed not to lose any principal if you hold on until the end of the ETF's term, same as if you bought an individual bond? Would this hold true if you bought in the middle of the term?
  • M* -- Bond Investors Facing Worst Losses in Years
    Federal funds rates do not reflect the real interest rates changes his year. Treasury yields have gone up much more in the shorter maturities than longer.
    Last three month changes
    6 mo treasury up 0.78%
    1 year 1.2%
    2 year 1.4%
    5 year 1.1%
    30 year 0.6%
    15 year mortgage rates have risen even more:1.5% and 30 year rates about 1.6%.
    DODIX has a duration of 4.7 per M* so you would expect it to drop 4.7% for every 1 % increase, or 5.2% based on treasuries or up to 7% based on mortgages.
    It is down 5.5% YTD per M*
    These changes are also in line with short duration funds like VUSFX ( duration of 0.98) which is down 1%.
    If you use bond funds for income, you are now going to get more, although it will be a while before it makes up for the drop in NAV.
    If you use bond mutual funds for portfolio balancing and diversification, it may be a difficult time, because if interest rates continue to rise, NAVs will continue to fall, and this may occur just at the same time stocks fall too, if the war gets worse or there is a recession. This is not how "bonds as ballast" is supposed to work.
    An alternative is to look at individual bonds, where ( without a default) you are guaranteed the YTW return and to get your capital back. High rated 5 to 7 year corporates are yielding 2.5 to 3%. If inflation continues to increase, you will still loose money as the coupon rate will not increase, but you will get your principal back (of course it looses some purchasing power).
    There are also fixed term ETFs where all the bonds mature about the same time and the ETF terminates at the end of a specific year. You can set up a ladder with equal amounts in each year and roll this years redemption into an ETF on the top of the ladder. This is simpler than individual bonds, provides diversification and has a low expense ratio (0.18% for BSCM the 2022 Invesco product)
    ishares and Invesco both have lots of these available for corporate munis emerging market and high yield.
    https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder
  • Morningstar Portf. Manager speed
    @Crash- I'm just saying that your internet speed is at least ten times faster than ours, but I really don't know what the available range of speeds is, or what's considered fast or slow.
    We don't have any large screen or high definition video equipment, so we contract for the cheapest service tier provided by AT&T Uverse. All we really wanted when we signed up was reasonably fast internet browsing and email. We didn't anticipate watching streaming video at the time, but since Amazon Prime Video was available with a fair amount of "free" content we later started streaming from Amazon and PBS. Our speed (bandwidth) is enough to simultaneously watch two separate streaming video feeds, but the largest screens are only standard resolution 27", so it doesn't take all that much bandwidth to drive those.
    If we wanted to use the very large high-definition screens we would likely have to pay for greater bandwidth/speed.
    Additional info: I just took a quick look at this site, which says:
    We’ve gathered official figures from many of the most popular streaming services currently available to the public. Obviously, we do not feature every service on this list, but what we’ve seen seems to suggest a standardized range of data usage.
    Netflix: Netflix provides specific estimates for each of its streaming settings. Standard definition uses up to 0.3 GB per hour. High definition (720p) uses up to 1 GB per hour. Full HD (1080p) uses up to 3 GB per hour. UHD (4K) uses up to 7 GB per hour.
    DirectTV Stream: DirectTV recommends a minimum of 8 Mbps to deliver an “optimal viewing experience.”
    Amazon Prime Video: Prime Video recommends a minimum download speed of 1 Mbps for SD content and 5 Mbps for HD content. Prime Video says it will serve the highest quality streaming experience possible based on the bandwidth speed available.
    YouTube: YouTube recommends 1.1 Mbps for SD, 2.5 Mbps for HD 720p, 5 Mbps for Full HD 1080p, and 20 Mbps for 4K.
    Disney+: On Disney Plus, Standard definition streams use approximately 0.7 GB per hour. Full HD streams use approximately 2 GB of data per hour. UHD (4K) streams will use approximately 7.7 GB of data per hour.
    Peacock: Peacock recommends at least 2.5 Mbps of bandwidth for HD streaming.
    Hulu: Hulu looks for 3 Mbps for Hulu’s Streaming Library, 8 Mbps for live streams, 16 Mbps for 4K content.
    HBO Max: HBO Max recommends a minimum download speed of 5 Mbps to stream HD video. For the best 4K streaming experience, it calls for a download speed of 50 Mbps or higher.
    Note that we do not use smartphones, so so not have any data plan for those.
  • Silver
    Howdy folks,
    The point I was making about the artificial pricing resulting in greater premiums is highlighted by the fact the US Mint cannot buy silver blanks because the mark up is too high by law.
    https://www.numismaticnews.net/coin-market/acquiring-silver-u-s-mints-hands-are-tied?fbclid=IwAR07-nX4rth8AWhprP352XVDgR7cLcoXuY880H2UA-gZBnvdzxyhyU5zPgE
    and so it goes,
    peace,
    rono
  • M* -- Bond Investors Facing Worst Losses in Years
    A part of me struggling to understand the handwringing for buy-and-hold investors.
    If you have a say 50/50 allocation between stocks and bonds, why would you not just rebalance? Take-advantage of the cheapness?
    I get it with trend-following or trading strategies, which I like, but don't long-term investors need to accept that some years will be worse than others, no matter what the asset class?
    I saw DODIX mentioned.
    Let's say by end of year, it's -9%. About its worst MAXDD. Don't two +9's get remembered, as in 2019 and 2020?
    Here are calendar year returns going back to 1990:
    Year Count: 32
    Worst Year: -2.9
    Best Year: 20.2
    Average Year: 6.4
    Sigma Year: 5.5
    YTD (thru 3/24): -5.6
    2021: -0.9
    2020: 9.4
    2019: 9.7
    2018: -0.3
    2017: 4.4
    2016: 5.6
    2015: -0.6
    2014: 5.5
    2013: 0.6
    2012: 7.9
    2011: 4.8
    2010: 7.2
    2009: 16.1
    2008: -0.3
    2007: 4.7
    2006: 5.3
    2005: 2
    2004: 3.6
    2003: 6
    2002: 10.7
    2001: 10.3
    2000: 10.7
    1999: -0.8
    1998: 8.1
    1997: 10
    1996: 3.6
    1995: 20.2
    1994: -2.9
    1993: 11.4
    1992: 7.8
    1991: 18.1
    1990: 7.4
    Granted, all during secular bond bull. But there were certainly some periods in there of rising rates, if not with concurrent inflation.
    Also, if there is sufficient liquidity, and there seems to be, why is selling a bond or TBill early bad? Can't you just pick-up another with the reduced principal but higher interest for the remainder of the planned term? Don't you end up in same place, less trading fee/bid spread?
    Now if liquidity is crashing, I get it (e.g., IOFIX in March 2020, I do remember and will never forget). Is that what the concern is for investors ... that there will not be enough liquidity with everybody running for the door in bond fund land, perhaps including the Fed?
  • M* -- Bond Investors Facing Worst Losses in Years
    Citigroup just upped its forecast to include multiple hikes totaling 150 basis points in 2022, plus a few more individual hikes in 2023. Seems like the Fed is going to get a grip on inflation, even if it kills us.
    I'm somewhat happy just sitting on cash, thinking that it's a short term situation. I've added a bit to a few individual stock positions believing they may be a good spot to hide out... BMY, O, VZ, but am cautious.
    Frankly, I'm afraid of the next week or so in regards to Putin's next move in Ukraine. This reminds me of early 2020 when Covid was starting to reek havoc in Europe, and yet our stock market just ignored it and kept going higher. Until it didn't. I've asked myself several times since then why I didn't pay closer attention to what was going on, and the associated risks to our markets.
  • M* -- Bond Investors Facing Worst Losses in Years
    You make a good point @hank that bond funds have fallen harder and sooner than the FED's 0.25% increase would indicate. I guess that is because like the equity markets, the bond market is also forward looking. I think many pundits believe the goal is to get to 3% by year end. Not sure where they believe the sweet spot is, but I wouldn't be surprised if they "ideally" target 4-6% over a few years if it correlates to full employment and inflation back to a normal 2-4%.
    Forward looking, within a year of reaching the sweet spot goal may be good times in bond-land again. Of course throw in another financial disaster and we're back at square one.
  • M* -- Bond Investors Facing Worst Losses in Years
    My … take on bond funds is, they will continue to go down in total return as long as the FED is raising rates.
    As of today the “Fed” has raised interest rates exactly once since 2018, and that one increase was in the amount of 0.25%. The Federal funds (overnight) lending rate has “soared” to a whopping 0.50% from the previous 0.25% rate. Peanuts. So what’s really happened? The Fed “Open Mouth Committee”, including Chairman Powell and numerous other Fed bank presidents, has been clamoring in front of cameras to say how they “may” need to lift that overnight rate higher in coming meetings this year. To a large extent you’ve witnessed a market induced knee-jerk reaction to these public “musings.” And the markets are now pricing in something like 7 additional quarter-point rate hikes this year.
    The bond market is way out ahead of the Federal Reserve Board at this time. What they eventually do will depend on the data (inflation, jobs numbers, housing starts, etc.) What the FOMC might like to do and what it eventually does are two different things.
  • M* -- Bond Investors Facing Worst Losses in Years
    Crash said: “Very recently, i read a post, here or elsewhere, expressing that it makes sense to buy-back some beaten-down bond funds that you are convinced are otherwise solid, good investments. Then, in effect, the dividends are worth more than "face value." I can't find a good argument against that tactic. :)”
    Might have been mine. I recently moved some excess cash from my household budget that won’t be needed for 6 months to a year out into PRIHX where it can “cohabitate” along with existing longer term money. The fund is categorized “intermediate term” but is so conservatively managed it behaves more like a short term high yield fund. Being down more than 5% YTD I felt it was worth the risk. I can’t predict the future. But I can tell you that should short / intermediate term rates reverse direction and begin trending downward, the fund will respond very favorably and outrun cash.
    Nothing ventured, nothing gained.