In my attempts to slowly (key word "slowly") diversify away from junk I have tried to find bond funds with a hefty allocation to RMBS which have been improving with the rebounding housing markets. PONDX which is a favorite on this board fits the bill and where I have moved some of my capital. I can ramp up real quick if needed. The .70% daily move up a few days back was nice, especially for a bond fund. There was some news out Friday regarding Fannie Mae which could further help the RMBS market. One of this year's best performing bond fund (up almost 17%) and with one of the greatest portion of its portfolio invested in RMBS is Angel Oak Multi-Strategy Income Fund - ANGLX. It's available at most brokerage firms but the 5.75% load takes it off my radar screen. It has a C class without the load but a 1% exit fee but that class seems to be available only at Fidelity, or at least not available at Scottrade where my accounts are.
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Many thanks, and great memory. I abhor closed end funds because of their volatility compared to the open end universe and their propensity to dance around premiums and discounts to NAV. I have to admit, the charts of JMT and JLS are things of beauty and zero volatility over the past year. They definitely have my attention. Thanks again. What a great site this is.
I assess Mr. Gundlach to be one of the sharpest folks on the block at this time, regarding the mortgage areas. He has recently (March ?) stated being a little edgy with this area.
M*, DLNTX holdings
Regards,
Catch
An expense ratio of 2.39% (per Jan 31 annual report, including waivers) plus a load?! (The prospectus and annual report say that the fund is currently waiving expenses above 2% until May 2013, but that waiver doesn't include short sales, etc., which is why the actual ER is 2.39%.)
For people who are averse to paying sales people loads, keep in mind that C shares are just loads packaged to inflict small amounts of pain over long periods of time (amounting, in the aggregate, to more pain than the large amount of pain up front that one endures with A shares). In particular, that 0.75% extra 12b-1 fee is going into Fidelity's pocket, month after month, year after year, so long as one owns the share class through them.
Better to buy the A shares load waived, e.g. through Schwab or TDAmeritrade.
A quick look at the quarterly performance suggests that this fund does very well when the bond market appreciates, but otherwise underperforms (did well in 3Q11 and 1Q12, but not as well in the weaker quarters of 4Q11 and 2Q12). Not enough data to draw conclusions, but suggests that further inquiry is in order, especially if one does not expect much more appreciation in the bond market.
I'm not clear on how a fund with an average credit rating of B represents a diversification away from junk. I'm inclined to go a long with Catch - Gundlach is someone who immediately comes to mind.
I simply believe that RMBS have more juice going forward than junk bonds where every Tom, Dick, and Harry has run seeking yield. Where were they in December 2008 or 2009, still hiding in the bunkers with their cash. Ask Tom, Dick, and Harry about RMBS and you will get a quizzical look, either that or they will think you are talking about Rambus stock. Still, until junk prices begin moving down I will remain there as my largest bet. As for Gundlach, maybe we should not allow personalities to rule our investment decisions, but I wouldn't give him a plug nickel. I have never seen in over 45 years in this game a more arrogant you know what. Arrogance is a killer in trading and investing. And I recall more than a few times over the past few years where he kept saying it wasn't the right time for junk bonds - all this during one of the greatest bull runs junk has ever witnessed.
Mr. Gundlach does have an edge about his confidence; and I understand your feeling regarding this.
Hopefully, you and others may have 12 minutes for this most interesting video interview of Mr. G, with Tom Keene at Bloomberg.
Mr. G, with Tom Keene
As to Mr. G and his "demeanor"; and not being right all of the time; I will slightly compare his attitude with Gen. Geo. Patton of WWII. In either case, I am glad they are/were on our side.
Regards,
Catch
Thanks for pointing this out. Fidelity does not allow A shares to be purhase with load waived.
In addition, can one purchase institutional shares at lower than the stated $ minimum by paying the transaction fee?
Thanks
You have to check with each broker individually. Unfortunately, the trend seems to be away from allowing "mere mortals" to purchase I class shares at reduced minimums (albeit with transaction fees). Brokers that still seem somewhat friendly toward that include Fidelity (but only in IRAs) and Firstrade. But it varies, fund by fund, broker by broker.
I recently bought a fund, load waived, at one brokerage, while Fidelity showed the cheaper I shares as available for a low min in an IRA. I asked Fidelity about it, and they were kind enough to check with the fund company directly; they confirmed that Fidelity was not able to reduce the institutional class min for the fund I wanted even in an IRA.
andrei, its mangement team is one of the best in the business and the brains behind the Metropolitan West Total Return Bond Fund (MWTRX) MWCRX is a relatively new fund with a smallish asset base and they are big into non agency mortgages.
You can use Schwab's site to research fund availability and costs without having an account there- here is a link to their page which can be used for a quick fund or etf lookup. It is set to MWCRX as an example, but you should be able to plug in any fund or ETF of interest:
⇒ Schwab Link
I am the laundry management staffer at this house and always check the pockets to remove the coins.
As to the holds, the Patriot Act/Homeland Security have attempted to add lots of checks to money flows. 'Course, this only applies to the wee folk, mind you. If you were a big bank you could, as some have and do, wash all the money you choose. Worse case in the end is a big fine; for the cost of doing business. The fine is probably a tax deduction, too.
Back to the painting.
Catch
>>>Bank of America Merrill Lynch says the Fed’s “remarkably dovish statement is exceptionally bullish for securitized products across the board,”, with the Fed’s open-ended statement and focus on mortgage purchases likely to benefit economic fundamentals and real estate in particular. From BAML MBS/ABS strategist Chris Flanagan:
The Fed announced an additional $40 billion per month in MBS buying, implying an additional $480 billion in annual demand relative to supply. The pressure on asset values to richen further could be significant.
The obvious direct beneficiary of the policy will be agency MBS. However, given the relative yield advantage in non-agency MBS and CMBS over agencies, we prefer these sectors and re-affirm our overweight recommendations for these sectors. We think significant spread tightening potential remains as a result of the announced Fed policy. We also maintain overweight recommendations for CLOs and higher yielding ABS such as private credit student loans ABS. We move to an overweight view of agency MBS, even after the postannouncement rally. Spreads are expected to grind steadily tighter and re-visit the OAS tights observed in 2010.<<<<<<