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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.

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For Charles: IOFIX

Hey, Charles.
Still in love with this fund? Still on-board? Still own it? Thanks.


  • Not Charles, but I still own it.
  • @Crash, I own it too, but you have to realize this is not a true multisector bond fund. It's a niche fund by the fund management's own description. Junkster played the bank loan trend with this fund but I believe he knew when it's trend had stopped and when to get out. A core bond fund it probably is not IMHO.

    From their website:
    Non-Agency RMBS Focus: The Fund focuses on non-agency residential mortgage-backed securities (RMBS), although the Fund can invest where management finds value. The management team’s clearly-defined, niche focus is the core of the RMBS strategy’s success.
  • edited April 2019
    Thank you, @MikeM. I'm too lazy to go to the website, but M* shows it has apparently re-shuffled: 81% asset-backed. And 9% Agency MBS CMO. And 4% Non-agency RMBs. And 4% Commercial MBS.

    I like my core bond fund, though it's billed as "Global Multi-Asset Bond," which is PRSNX. Anyhow, it is my anchor now, at over 50% of total portfolio. I'm growing my supplemental bond fund for the purpose of monthly income, which is PTIAX. I know it is not a "core" fund, either. It shows 30% Non-agency Residential MBS and 17% Commercial MBS and 7% corporate bonds and 4% Agency MBS CMO and 4% asset-backed.

    Biggest difference between them is in the Asset-backed category. Quite a chunk of difference between them in the Agency MBS CMO category, too.

    IOFIX doesn't hold any Corporates to speak of, apparently.
    PTIAX is giving me a bit better dividend each month, but that's not etched in stone, either.

    PTIAX suits me re: risk/reward profile, in category: Low/High.

    IOFIX, so far this year, has produced a tiny bit more in share value at +2.59% vs +2.4% for PTIAX.

    Just wanting to look under the hood. Unless things go to shit, maybe IOFIX could be a tertiary source of income, down the line. Its risk/reward profile looks good, too.
  • edited April 2019
    IOFIX was near the bottom of the barrel in a robust Bondland until the past month where it has suddenly surged ahead. . Except for the new offering EIXIX which @The Shadow mentioned here, IOFIX leads all the others this year in the non agency rmbs arena. I still think IOFIX is an excellent and well managed fund. My problem with IOFIX was its one day decline late last year of 1.29%. Regardless, junk corporates from day one this year have been and remain the place to be in Bondville with gains in the 7% to 8% and more range. Even the normally staid (compared to its peers) Vanguard junk fund VWEHX is having a bang up year over 8% YTD. Four times out of the past five negative years in junk they came back the following year with double digit returns. So let’s hope this will be 5 out of 6 as last year was negative.
  • edited April 2019
    I bought back into IOFIX last week with profits I took out of riskier CEfs after the big ytd runup began to slow, and looked at the current asset allocation on the web site before I plunked the $ down. It's still 98% residential MBS, but the legacy share is down to ~ 3/4 of the port. There's 0.4% in what they refer to as ABS, "which may encompass aircraft, shipping, and transportation assets" (so sayeth the fact sheet).

    I'd suggest skipping M* entirely when researching bond fund allocation. It's easy to find almost any fund's allocation, using their info, and that info usually has the distinct advantage of being basically accurate. M* bollixed up their bond analysis several years ago, and it's really not worth the time using them for bond allocation info any longer.
  • Just so everyone knows, the vast majority of the fund is in Residential Subprime Mezzanine debt. Know what you are buying.
  • I offer no opinion about the fund or the reported majority of its holdings, but this is what is discovered about the reported debt form.

    Residential Subprime Mezzanine debt
  • Oh, my! Thanks to all of you for responding. I'm quite certain that @Junkster AND the rest of you could play IOFIX much more intelligently than myself. I'm glad I asked.:)
  • AndyJ said:

    I'd suggest skipping M* entirely when researching bond fund allocation. It's easy to find almost any fund's allocation, using their info, and that info usually has the distinct advantage of being basically accurate. M* bollixed up their bond analysis several years ago, and it's really not worth the time using them for bond allocation info any longer.

    You seem to be conflating "allocation" with "analysis". M* reports funds' allocations exactly as reported by the funds. On the other hand, M* calculates its own weighted average of credit quality. It does this because a simple average isn't meaningful.

    To understand this, think about star ratings. M* grades on a bell curve. That makes sense because fewer than 20% of funds perform at 'A' (5*) level, while lots more than 20% perform at a mediocre 'C' (3*) level.

    If you don't like this bell curve, you can always look at Lipper ratings, which rate fully 20% of the funds "A' (5). But it's not as helpful. (I think the Lipper ratings are more helpful because they rate different aspects of the fund, like consistency and returns, but in terms of the scale they use, their unweighted scale isn't as helpful.)

    Similar idea with credit ratings. According to S&P data (see figure below), virtually no AAA bonds (0.00%) default within a year, almost as few (0.17%) BBB bonds default, while a quarter (26.82%) of CCC bonds default within the span of a year. Now that default doesn't mean they go bust, more likely they just stop paying interest.

    Still, think about a portfolio containing one AAA bond and one CCC bond, vs. a portfolio containing two BBB bonds. The latter has less than a 0.34% chance of any bond defaulting. The former has better than a 1/4 chance of defaulting, though the impact is cut in half since the CCC bond represents only half the portfolio.

    Both portfolios "average" BBB in credit rating, if we take a simple average. That average doesn't tell us anything; these two portfolios have such disparate risk profiles.

    What we can do with the first portfolio is weight the bond ratings by their impact. So while we might rate AAA as "A" (giving it a numeric value of 1), we might rate CCC bonds as 'Z' (giving it a numeric value of 26, corresponding to its 26+% chance of defaulting). Now when we average the two bonds, we get somewhere around 13, which might correspond to "high quality" junk.

    That gives us a better sense of what to expect from the portfolio in terms of defaults. If getting a sense of portfolio default risk is what we want from an average credit rating, then this method of averaging is more meaningful.

    If what we want from an average credit rating is to compress the bond allocation (how many A's, how many B's, etc.) down to a single number, then a simple average is better. Personally, if I want to know what the allocation of bonds is, I just look at a bar chart or table showing the whole distribution. It's not as though there are that many grades of bonds that the picture is confusing.

  • edited April 2019
    I'm writing about categorization of the allocation within funds, which M* totally overhauled some years ago and wrecked a good system.

    By analysis, I meant a general term, in other words, drilling down to give an investor what they need to make decisions. I didn't specifically mean analyst reports or star ratings or M*'s approach to fund credit ratings. Sorry that one stray word sent you off on a wild goose chase.

    In addition, I've run across many cases where M* data is stale, and the only way to get up-to-date info in that case is thru the provider. That in some cases could be the provider's fault, but the fact remains.
  • Okay, I think what you're talking about is classification into sectors (e.g. Treasuries, convertibles, etc.)

    IMHO it's the fund industry that is bollixed up when it comes to bond sectors. M* defines a reference set of categories that can be used to compare funds apples-to-apples. In contrast, each fund may provide its own set of categories, making the comparing of fund portfolios problematic.

    For example, consider DODIX, a popular bond fund from an investor-friendly company. You've suggested that it should be easy to find this fund's allocations on I couldn't find the percentage of muni bonds in this fund on the site. Perhaps you can do better.

    Here's the fund page (sectors as of 12/31/18), the current (12/31/18) fact sheet, and the current (12/31/18) annual report.

    They all have the same footnote on the government-related bond allocation figure: "The portfolio’s Government-Related holdings include tax-exempt municipal securities". They don't break out the muni holdings as a separate figure. M*'s analysis reports that as of 12/31/18, 3.71% of the fund's assets were in munis.

    M*'s bond fund data provides value that one doesn't get on the funds' sites. It provides standardized sector classification for easy comparison, it provides a credit rating that quantifies the credit risk exposure of a fund.

    With respect to M*'s overhaul of its supersectors and sectors, that occurred in 2011. M* created its first list of supersectors and sectors in 2004. Its current list is unchanged from the one it introduced in 2011.

    To my eye, the regroupings of the supersectors makes sense. The old supersector of "credit" was a hodgepodge of munis, TIPS, asset-backed securities, convertibles, and straight corporates. Better to sort these out into appropriate supersectors and then create a clean grouping of corporate-related debt (such as prefereds and convertibles). At the sector level, the changes were largely refinements, e.g. differentiating between agency, non-agency residential, and non-agency commercial mortgages.

    Clearly you feel differently ("M* bollixed up their bond analysis"). Some of this is a matter of preference. Could you say something about why you find the current categories worse than the 2004 edition?
  • @msf You mentioned the muni's portion of your fund example. Is this composition listing at Fidelity valid relative to the other sites info you've viewed?

    Fidelity composition
    view of DODIX

    Thank you,
  • The quote below from M* is old (it refers to the 14 older bond sectors), but even then M* did its own bond fund sector analysis:
    The fixed-income sectors are calculated for all domestic taxable-bond portfolios. It is based on the securities in the most recent portfolio. This data shows the percentage of bond and cash assets invested in each of the 14 fixed-income sectors.

    The data on the Fidelity page, like the data on most third party web sites, comes from Morningstar: "Morningstar ratings and data on non-Fidelity mutual funds is provided by Morningstar, Inc."

    Morningstar's curent set of bond fund sectors divides munis into taxable and tax exempt. The Fidelity page reports these for DODIX as 3.2% and 0.51% respectively. That adds up to 3.71%, the same figure as shown on M*'s own page.

    I don't know why M* chose not to present this decomposition into taxable and tax exempt on its own pages, but the figures are consistent. They should be, they all come from the same Morningstar analysis.

    It would be interesting to compare the figures with a those provided by a source other than M* (or D&C). Since most sites use M*, I haven't explicitly gone searching for other numbers.

  • msf % of muni at dodix = 3.71 % via Schwab. Where did they get these #'s ? I just checked with Schwab & no mention of 'M'
    5:38:18 PM : David M.: S&P Global, CFRA, Reuters and Markit Digital, which are not affiliated with Charles Schwab & Co., Inc. ("Schwab") or any of Schwab's affiliates

    Have a good weekend, Derf
  • Schwab DODIX research page: "Except as noted below, all data provided by Morningstar, Inc. "
  • @msf: I didn't fine"Except as noted below, all data provided by Morningstar, Inc. " on the page you presented . Maybe the gentleman I talked to was blowing smoke up my .... ?! What was excepted as noted below ? Yes Morningstar did do a rating.
    Back to the ball games
  • See last large paragraph below (I suggest you view image in separate page and magnify). It begins: Except as noted below, all data provided by Morningstar, Inc.

    The exception is in the next (one line) paragraph: Market data for Daily Fund (NAVs) and charts provided by Markit on Demand.

  • @msf: I finally found what you were talking about. I will also C&P the whole paragraph as with the disclaimer it reminds me of the old saying. Believe nothing you hear & only half of what you see.
    Except as noted below, all data provided by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., and may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. Morningstar, Inc., shall not be responsible for investment decisions, damages, or other losses resulting from use of the information. Morningstar, Inc., has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Charles Schwab Investment Management, Inc. and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
    Thanks for your time, Derf
  • "...The information contained herein is not represented or warranted to be accurate, correct, complete, or timely." ...Pretty effing useless, then. All these outfits and people depend on us. But we don't care to actually be conscientious.
  • edited April 2019
    Yes, I too have seen the recent flattening, but no big drops fortunately.

    Like Junkster said, this past month it rebounded quite well:


    Up 2.3% YTD. Hard to complain.

    Still 5% div.

    I don't see the move away from RMBS Crash mentions.

    @ MikeM. Yes, it's lumped in with MultiSector, but it's all about RMBS.

    Tom Miner remains (a jewel). And Garrett. And Brian. And Jonathan.

    Seems like nothing has changed in their thesis ... just the opposite I'd suggest, but I've not checked-in directly in a while (obsessed with making premium site priceless).

    I remain heavy IOFIX. (FWIW, I was once heavy FAAFX!)

    Hope all is well.

  • Crash said:

    "...The information contained herein is not represented or warranted to be accurate, correct, complete, or timely." ...Pretty effing useless, then. All these outfits and people depend on us. But we don't care to actually be conscientious.

    All financial sites have legal disclaimers of one sort or another. That doesn't impute a lack of diligence.

    Pear Tree Funds says this pretty well on their site:

    Pear Tree and its affiliates intend that the information contained in this service be accurate and reliable; however, errors sometimes occur. Pear Tree does not warrant that the functions contained in the materials will be uninterrupted or error-free, that defects will be corrected, or that this site and the servers that make it available are free from viruses or other harmful components
    In essence: we strive to be accurate, but in case of error, don't sue us. Literally.
  • edited May 2019
    With junk corporates not the place to be for the time being, have returned to IOFIX. Also in a few groupthink funds (groupthink isn’t always bad). VCFAX ,PFORX, and JGIAX. Also hold HFATX and BDKAX. The later a bit of a plodder but a steady eddy plodder. I would be remiss if I didn’t mention how well RCTIX has recently performed. Dennis Baran profiled it in the May MFO commentary. Tough market when an unexpected tweet here or there can change the whole tenure of the markets.

    Edit. If this market turns around today may buy some MWHYX in junk corporates. This fund has held up well among the recent decline in junk much like it did in the fourth quarter of 2018. While it will lag on any rebound a safe play nonetheless.
  • @ Junkster: Glad to hear from you. I hope your trail chasing is going okay.
  • TGHNX and ARTFX are two other options for junk corporates.
  • edited July 2019
    Another nice day for IOFIX as it reaches yet another all time high. The ever dwindling legacy non agency rmbs market seems to still have life left in it and looking for a nice second half in 2019. Please close this fund!!
  • Junkster said:

    As long as the copycat Great Pretender doesn’t begin touting this fund we should be OK.

    Hi. You're referring to what? And whom?
  • edited July 2019
    A M* discussion board personality who parrots a lot of what @Junkster says (and others here at MFO), but takes credit that it’s his own “research.” We disagree on this poster’s usefulness (I happen to follow/enjoy many of the discussion threads he starts), but he makes many trade claims/wins after the fact, that he won’t show proof of.

    @Junkster , I went to M* shortly after I read your above post, and saw he had made a post there....about pooped myself at the “coincidence”, but saw it didn’t mention IOFIX. Thanks for sharing your portfolio/ideas from time to time, and your personal messages to me....I (and this forum) appreciate reading your thoughts!
  • An experienced trader can always tell the frauds and Pretenders from the real deals. The Pretenders have this need to always prove their brilliance by never being wrong and never admitting mistakes. One way to do this is always post your winning trades after the fact but never ever mention your losers.

    But I digress. Speaking of making mistakes, I just made one of my biggest blunders in many, many a moon. My affinity for IOFIX is well documented above in this thread. Can’t think of a better bond fund technically and even more so fundamentally - the ever shrinking legacy rmbs market. Best of all it is not a groupthink fund. IOFIX is also a pattern trader’s dream and for reasons I won’t go into here. Also look at its performance in August 2017 and 2018. I was fully expecting a day like today this August. Mentioned it to a poster here in one of our many messages. I was locked and loaded with 89% in IOFIX. Yet last week went from 89% to 55%. Dumb me! That cost me five figures in additional profits today. As for being petty and complaining about an otherwise great day, real traders are also never satisfied and always striving for perfection. Trading was my profession and how I built my nest egg and old mindsets are hard to break.

  • Hi @Junkster
    I recall the August moves you mention with IOFIX.
    Those of us who have been around long enough to know how our minds function with various situations have these moments indeed. I do my best to attempt to continue to adjust my quasi habits with investing.
    I know from portfolio adjustments (where the monies are invested) that over time I find the results indicate that I am still learning and becoming better.
    The downside is that too soon in the near future I/we will likely abandon self directed investments and place the majority of the money into a form of a balanced fund or a 50/50 split between equity and bonds to form our own balanced fund. Obviously, this is not a pure hands off; but I/we are attempting an unwind from the active role.
    Habits are hard and will be hard to break when standing on the sidelines, noting what actions could have been taken.
    I'm somewhat saddened by this thought as I write, but the clock hand of time won't slow for me.
    Take care of yourself,
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