Playing with your choices.
If you create a (70/30) with VEDTX / PRWCX your results are almost identical to VEDTX / VTSMX (70/30)...actually slightly better results.
I noticed you can only get results back to 2008.
Using WHOSX as a replacement fund for VEDTX gets you back to 2000. Using PRMTX as a substitute for QQQ creates an interesting set of results that you'll be impressed by.
Even more impressive equal weight WHOSX / PRMTX / PRWCX.
I might add PRHSX as an 4 fund portfolio...maybe even PRNHX as a 5 fund portfolio.
Thanks for the thread @zenbrew.

Skeeter,
As I sold all funds to cash in February before I retired I was in all cash when the pandemic started. Moved monies to Schwab and have been slowly adding funds. Bought EGFFX, RPHYX, CPOAX, JENSX, PTIAX, SWAGX, GGSOX for a start. Still have 65% in cash for now.
Art

Why aren't long-term treasuries utilized more (or actually at all) in actively managed multi-sector, unconstrained, or flexible income funds? I understand the volatility of such funds but it seems that they do add value. I got to thinking about this again after looking at the prospectus for TMSRX. I believe that they would characterize this under "Style Premia" strategy which includes currency bets (as of 4/20/20 they had 1.4% total in US treasuries).
Portfolio Visualizer for:
1) VEDTX & VTSMX (70/30)
2) VEDTX & QQQ (70/30)
3) PRWCX (100)
Dating back to 1985 (admittedly a period of decreasing interest rates):
Portfolio Visualizer results
Maximum drawdown 1 yr for:
1) -17.05
2) -9.25
3) -27.17
Final balance for a $10,000 investment would be:
1) $37,914
2) $48,708
3) $29,711
I've been following such a strategy for quite some time but never had the nerve to actually invest as such. PRWCX is my largest holding & have been very satisfied.

NYT: Deutsche Bank May Offer Wirecard a Lifeline
https://www.nytimes.com/2020/07/02/business/wirecard-deutsche-bank.html
Once again, Deutsche Bank puts on its not-so-white hat to cut a deal with a debt-ridden, likely fraudulent company that was headed by a questionable CEO. (Wirecard's former CEO is currently under arrest.)
"It did not provide any further details."

Hi guys: With the 4% gain the S&P 500 Index had this week moving from 3009 to 3130 Old_Skeet's stock market barometer scores the Index (near term) as extremely overbought with a reading of 125. I have the Index off it's 52 week high by 7.5% and up off it's 52 week low by 39.9%. All of my buy steps that I made during the recent stock market swoon are all now positive with the package as a whole returning about 32%.
My late father use to say when the yield gets thin it's time to trim. Currently, I'm finding that the yield on the Index (currently 1.9%) is as low as it has been since 2-21-20 (weekly close) when it was at 1.79% with a reading of 3338. For me, I have already been there and done that.
I wish all ... "Good Investing."
Enjoy your 4th of July Holiday!
Old_Skeet

@bilvihur: It May be that some mangers of funds you own did some ill-advised selling when the markets went south. Those sales could result in higher distributions come December, but I doubt that information is available now. Who knows if some funds will reduce dividend payments. I will be writing a fat check July 15 and I’m preparing for that.

@hank, I know you are a TRP guy. Have you looked at the new'ish TMSRX fund, Multi Asset Strategy? Another portfolio change I've made the past few months was to go with more conservative alternative type funds. TMSRX is one of those, along with a pretty heavy dose of MNWAX and most recently started an investment into GAVAX.

Hi Mike. Great minds don’t always think alike. The changes (albeit minor) I made a few months ago were to add more risk to the table. DODBX is arguably more risky than RPGAX. I also carved-out a new “spec” position from my 15% allocation to cash-like instruments. For example, the 15% that previously was all allocated to cash-like funds is currently allocated about 35% to a couple equity funds I think have potential with the remaining 65% invested in cash & ultra short. It’s a 2-pronged spear. At our age we should be cutting back on risk, as you seem to have done. But with the current super-low (err ... “non-existent”) interest rates, one needs more risk if he is to stay ahead of inflation.
Re TMSRX - Yep. I dove in as soon as David mentioned it here or as soon as it opened (not sure which came first). It constitutes about 45% of my 25% allocation to alternative funds, which, mathematically speaking, makes it about 11% of total portfolio. Sounds to me like David has a larger chunk, but don’t think he mentioned percentages. Good review by David. Maybe even “intriguing :)

On Wednesday July 22st, we will host a webinar discussing latest features of the MFO Premium search tool site. Topics will focus on improvements made to the main MultiSearch tool, including:

• Searchable Holdings Data (Company, Country, Industry)


• Expanded Equity Portfolio Metrics


• Multi-Year and Ferguson Ratings


• Yearly Return and Fixed Periods Ratings


• Bond Credit and Duration Breakout


• Current Month Inflow and Outflow Estimation


• Searchable Exchange Traded Notes (ETNs)


• Nine New Evaluation Period (e.g., Trump Bump, CV-19 Bear)


• Larger Watchlists with Customizable Names

There will be two sessions, one at 11 am Pacific time (2pm Eastern) and one at 2pm Pacific time (5pm Eastern). The webinar will be enabled by Zoom. Please use the following links to register for the morning session or afternoon session. Each will last nominally 1 hour, including questions.

Here are links to previous webinar charts and video recording.

Hope to you can join us again on the call. If you have any questions, happy to answer promptly via email ([email protected]) or scheduled call.

"The Predecessor was an unregistered private fund, did not qualify as a regulated investment company for federal income tax purposes and did not pay dividends or distributions." (from prospectus)
Note also that Legg Mason funds (including Brandywine) should be acquired by Franklin Templeton this quarter. Shareholders have approved this transaction.
https://ir.leggmason.com/file/Index?KeyFile=404021514

https://www.sec.gov/Archives/edgar/data/1474103/000168386320007908/f4892d1.htm
Based on the filing, it was previously an institutional class fund.
Excerpt:
This fund is the successor to an institutional account (the “Predecessor”). The performance prior to May 31, 2016, in the accompanying bar chart and table is that of the Predecessor.
The fund was formerly Legg Mason BW Global Flexible Income Fund.
https://www.sec.gov/Archives/edgar/data/1474103/000119312517331274/d473478d497.htm

LFLAX and LFLIX are two share classes of the small ($17M) that appears to exhibit a low risk high return profile (mostly US Corp debt). Anyone heard of the fund?
Also, I would like to avoid the $50 TF for the lower ER share class (LFLIX) when purchasing at TD Ameritrade...any thoughts?

Thanks for the suggestion. Certainly the CMBS portion of the portfolio is one of the most likely candidates.
Almost all the CMBS holdings are derivatives and I really didn't want to get into estimating their yields. So I started with the assumption that within CMBSs, yields would tend to be similar. Thus I looked at the more basic securities.
My source of prices was the annual report that valued the securities as of March 31, ISTM any bargain basement purchases in March were already priced in. For example, there's a non-agency CMBS, BBCMS Mort. Trust, Series 2020-C6, Class F5TB 3.69%. (In the BBCMS Mort. Trust prospectus, it's Class F5T-B.) With principal of $75K, its current value (March 31) is given as $46,675.
Fund Annual Report
BBCMS Mort. Trust Prospectus
This security represents a mortgage on a single property, F5 Tower in Seattle (built 2019, 100% occupied), with an anticipated repayment date of January 6, 2030 (final maturity in 2033).

The prospectus gives the average weighted life as 9.91 years (about 119 months). The security was issued in mid February. That's close enough to the March 31 date of the fund's annual statement not to worry about the difference in dates.
The annual statement gives the principal amount as $75K and the current value as $46,675. With this information (and the info in the SEC filing) I could approximate the yield going forward.
To figure out the monthly payments received (principal and interest) I used an amortization calculator, and 119 months. (Outstanding principal doesn't change enough in the month from Feb to the March annual report date to worry about adjusting this.)
$75K principal, 3.69% average weighted rate (per SEC filing) gives monthly payments of about $754.
Since the fund valued the holding at $46,675, the question becomes: what would the rate be on a $46,675 mortgage (119 months) to require payments of $754? The answer is about 15%.
That's in line with the fund's yield. Good, but not enough to compensate for the lower yielding securities held by the fund, let alone its large cash position. The bottom line is that I still agree that the CMBS derivatives are a good place to search for the higher yielding securities.

The IRS has indicated that the first and second quarterly estimated tax payments for 2020 may be combined into one single payment due by July 15, 2020:
https://www.irs.gov/newsroom/irs-july-15-tax-payment-deadline-approaching-plan-on-scheduling-multiple-payments-now#:~:text=Taxpayers who owe a 2019,combined into a single payment.

I'm reviving this thread to ask the community their feeling about 2020 CG & Div distribution estimates compared to 2019. Higher - Lower - Same? The July 15 deadline for 1st and 2nd quarterly estimated tax payments is approaching and I'd like to be in the ballpark. I have Vanguard, FIDO, and TRP, but no specific sector concentration. The market looks a lot different now than it did back in March.

Inflation-indexed bonds fill an important gap in the fixed income market. Regular Treasury bonds are riskier than they seem – long-term Treasuries fell 60% in inflation-adjusted terms between 1940 and 1981. Minimizing duration is not a solution since real rates for short-term Treasuries have been as low as -9%. TIPS solve these issues by offering a safe bond investment not vulnerable to inflation.

5 Part Series:
Part 1:
history-of-tips-and-how-tips-bonds-work/
Part 2: How to Hedge Inflation and Avoid the Biggest Bond Risk
how-to-hedge-inflation-and-avoid-the-biggest-bond-risk/
Part 3: The Largest Arbitrage Ever Documented – TIPS in 2008
the-largest-arbitrage-ever-documented-tips-in-2008/
Part 4: Debunking TIPS Tax Inefficiency + A Tax Deferred Alternative
/debunking-tips-tax-inefficiency-a-tax-deferred-alternative/
Part 5: When TIPS Outperform and How I Invest in Them
when-tips-outperform-and-how-i-invest-in-them/

Because of the low AUM, they own very illiquid, very high yielding bonds. The volatility of these bonds is probably much higher than what the Morningstar performance chart suggests, but due to the illiquidity, you don’t see the big price swings.

As @LewisBraham wrote, "mutual funds are restricted to a maximum private equity exposure of 15% for liquidity reasons. There have been disastrous examples despite those constraints. f I recall correctly, the Van Wagoner funds were among the worst."
A current SEC regulation prohibits funds from acquiring illiquid securities if they would put the fund over the 15% threshold. Further, should a fund drift over that limit, it is required to create a plan to get the fund back into compliance within a reasonable amount of time.
A key facet of the regulation is its definition of "illiquid": An illiquid investment is an investment that the fund reasonably expects cannot be sold in current market conditions in seven calendar days without significantly changing the market value of the investment.
https://www.sec.gov/divisions/investment/guidance/secg-liquidity.htm
The Van Wagoner funds predate this regulation by a decade or two. So it's not an example of a disaster in spite of this reg. However, Big Tom gave a different example that is more problematic:

An investor only has to look at what happened to Third Avenue Focus Credit fund to see the result.

In theory, if a fund is 15% illiquid, it could sell off all assets for at least 85% of NAV (recovering 100% of the value of its liquid securities by definition, and 0% or more on the illiquid securities).
What happened with Focus Credit was that in no small part because of withdrawals, the fund shrank about 40% in half a year. Even with this stress, the fund barely exceeded the 15% illiquidity limit. Nevertheless, at that point, the fund halted redemptions, saying that it could not sell off enough assets at "rational" prices.
It is worth noting that shareholders ultimately recovered 85% of the NAV as of the date the fund halted redemptions, Dec 9, 2015.
https://www.nytimes.com/2016/01/12/business/dealbook/a-new-focus-on-liquidity-after-a-funds-collapse.html
https://www.reuters.com/article/us-thirdavenue-settlement-idUSKBN1722N4
Funds like IOFIX must comply with this reg. In fact, the IOFIX summary prospectus says: "The Fund may hold up to 15% of its net assets in illiquid securities."
The poor performance of IOFIX and its close peers suggests there's something inherent in the nature of their portfolios beyond having 15% (or less) in illiquid securities. Such as the remaining securities being liquid most of the time, but not under exceptional conditions (as opposed to the "current market conditions" of the regulation). Which unfortunately is precisely when one demands liquidity.

would you attribute the relatively small 5.2% peak to trough loss from 3/15 to 3/25 to the illiquid nature of many of these holdings not being priced mark to market?

Funds are required to price their securities daily. That this is difficult does not relieve them of this responsibility or allow them to cheat investors by misrepresenting prices. (IMHO the poster child for that sort of cheating is Heartland Funds.) They must mark to market, albeit with fair value pricing as needed.
From the NYTimes article link above:

Regulatory experts say that if the S.E.C. does decide to crack down on Third Avenue, it will be related to this pricing issue ... The message was clear: Mutual fund boards are responsible for making sure that the investment adviser acts responsibly in pricing securities and ensuring there is enough cash on hand for investors looking to sell.
But experts worry that mutual fund boards these days do not have the expertise or the muscle to do this job effectively.

I figure that TCW/MetWest has the necessary expertise.
Regarding volatility, I believe you'll find that this fund is using some of the same techniques that Bob Rodriguez used over at FPNIX to manage a very stable, albeit low-yielding fund. Which brings us full circle back to the question of where those interest payments are coming from.

Some funds use derivatives, leverage and/or high yielding/illiquid bonds to juice returns.

I don't see leverage here, and as I just noted, the other tools can just as easily be used to reduce volatility. Can you point to securities that juiced returns to 18%? I haven't found them yet.

BigTom, I do see this fund as aggressive for a bond holding, but I think there is room for aggressive bond funds within an overall portfolio, especially when managers like Scott Minerd are saying stocks are priced for perfection but there is still value in certain sectors of fixed income.

That's correct. It depends on your style, age and goals. I use mostly bond funds and doing pretty good.
In the biggest meltdown in the last 10 years, MWFSX peak to trough was about 6%, VCIF was about 13%, BND (US bond index) all investment grade was about 6.5%. It shows that MWFSX managers did a great job. Is it a guarantee? of course not.
BTW, the Portfolio Composition(Characteristics,Sector Weight,Credit Quality,Duration Maturity) for MWFSX is as of 5/31/2020 based on real data. See (link).
Another observation, the monthly yield keeps getting smaller in the last 5 months.
So, only you can make this decision after gathering all the information.

I owned IOFIX on/off for months until I sold almost all my funds to cash on February 29. I posted at this thread earlier (link)
February 29 edited February 29 Flag
@mark
This is a very unique time for me and why I will answer your question:-)
My goals as a retiree are: I need to make only 4.5% including inflation (Based on 2019, maybe I need only 4%) average annually to sustain our standard of living. But, I still want to make 6% with the lowest volatility (SD < 3) and never lose more than 3% from any last top.
YTD mostly in 2 bond funds investing at a higher % in NHMAX + lower % in IOFIX. Last Thursday, I sold half of NHMAX. On Friday, I sold all of NHMAX + most of IOFIX. This YTD (chart) is the answer to why.
Bottom line: I never buy at bottoms because I'm a momentum investor using charts and trends. At the bottom, the trend is down. I only buy when trends are going up.

It will be interesting to see how M* rates their own funds.
All 5* funds?

I'm certainly no M* advocate, but you do know the star ratings are purely objective measures based on risk/return, right?

What I said was to be construed as a 'tongue and cheek' type of comment.
With that said, it doesn't really explain why D&C funds were always highly 'starred' funds but had under performed for a decade.

https://i.ibb.co/pwD0dNk/image-1.png
https://i.ibb.co/BfvRMPZ/image-2.png
Observations:
Last month was another good month. Several bond funds made as much or more money than stocks.
Multi- another good month, several did over 2%. MBS/Securitized are leading at 3+%.
HY Munis a great month with many funds on the list at 3-4%
Inter term – did well. Most on the list at 1-1.5%.
Uncontrain/Nontrad-most with 1-1.5%.
HY+EM – HY didn’t do much but EM did nicely.
Corp – 1.9% is pretty good.
SP500-made 2% PCI 1%
===========================
My own portfolio
I started the month with GWMEX, smaller position in TSIIX and much smaller in EIXIX and…drumroll..I finished with the same funds.
Summer is here, stocks + bonds did very well in the last 3 months, I don’t want to add more risk but I see several funds that interest me for potentially better performance without elevating SD which both are not a guarantee.
Disclaimer: The above are just observations, you must do your own due diligence, I can trade any time