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Is anyone still holding SEMPX? If so, why?


  • edited October 2019
    I am holding SEMMX. I like the combination of its 4.23% YTD return with a Standard Deviation of 0.75.

  • I am still holding SEMPX and IOFIX. Low interest rates, low unemployment, housing construction going up all around where I live...continue to hold both.
  • My bond holdings are IOFAX, SEMPX, and HOBEX, plus a small position in SWRSX. I have to admit my understanding of bonds is somewhat limited other than price goes up as interest rate goes down.
  • Good fund. I don't own it now, but will again at some point.

    One thing to note about the holdings: they're usually mostly floating rate; current as of the 6/30 fact sheet = 65%.
  • edited October 2019
    TheShadow said:

    I am still holding SEMPX and IOFIX. Low interest rates, low unemployment, housing construction going up all around where I live...continue to hold both.

    Agree as housing has been a real linchpin for the economy recently. Also believe the economy is stronger than the recession mongers would have us believe. But I sold some IOFIX today and may sell more Monday. Still like the fund and the sector but was too top heavy as well getting worried about some ebullient sentiment in the non agencies.

    I also get worried whenever I see the 10 year have weeks like this one and wonder if there are more to come. A fund manager in the non agencies (not IOFIX) put a bug in my ear once about how they worry whenever the 10 year rates begins trending upward for a sustained period. Something to do with its impact on how the outside reporting firm prices their portfolio. Not sure how accurate that is and maybe something @Charles can ask IOFIX when he gives up his update on the fund.

  • SEMPX was a big part of my portfolio in 2018 but none in 2019. YTD at 3.8% is not good when many made a lot more. Look at direct securitized rivals such as IOFIX,EIXIX and VCFAX. I know SEMPX has low duration and very low SD. SEMPX is pretty good as a cash sub for investors who understand its higher risk/volatility. T
    The lowest SD in this group is SEMPX and then VCFAX which is more diversified.
    If you want more performance with higher SD then IOFIX,EIXIX(new fund with very small AUM).
    BTW, from their last top (1-2 weeks ago) IOFIX,EIXIX held better than SEMPX,VCFAX.
  • confused. please tell me fund that has lowest risk. I thought MBS had much higher risk than another SD fund with same characteristics. Or is my judgement being clouded by the financial crisis?

    I am looking for some punch over my MM funds with minimum risk. I am not too happy with RPHYX and RSIVX.
  • Some options are TRBUX BBBMX ZEOIX and FPNIX , with the last two having transaction fees.
  • TANSTAFFL. There's going to be a tradeoff between risk and return, and among different types of risk.

    RPHYX takes on credit risk (junk bond fund), but tries to mitigate it by buying bonds with special situations (e.g. "redeemed debt" bonds - bonds that have already been called and will be redeemed shortly).

    SEMPX invests in MBSs, which all else being equal tend to yield a bit more in exchange for negative convexity risk. Even though their effective durations appear short (based on expected time until borrowers repay their loans), as interest rates drop this expected time expands (they won't be refinancing or prepaying). That's negative convexity - duration extends, prices may drop as vanilla bond prices are rising. I'm beginning to rethink this risk in a low interest rate environment, because borrowers don't refinance for small drops in rates and there's no room left for big drops.

    FPNIX remains one of my favorite funds that I have never invested in. It uses a variety of derivatives in a defensive manner to reduce risk based on market conditions. It has never had a down year in its over 30 years. It's unconventional in the breadth of its investments and the techniques it uses, keeping in mind that these are used to mitigate risk, not to boost returns while keeping risk constant.

    Traditional ultrashort bond funds generally trade off volatility for yield. No magic - they eek out a little more yield than MMAs (banks) with a little more volatility, or up the yield a tad more with a bit more volatility.

    There's nothing inherently good or bad about any of these approaches. Pick your poison, or diversify among them so that you'll have some (but not all) cash available at any time depending on which approach to risk mitigation is working at the moment. Also consider muni funds if you're in the 22% or higher bracket as another form of diversification.
  • edited October 2019

    I am looking for some punch over my MM funds with minimum risk. I am not too happy with RPHYX and RSIVX.

    You might look at the other fund in the Semper stable too: SEMRX/SEMIX. Mostly mortgages, very short duration (0.4), mostly investment grade, current distribution yield ~ 3%, avg. price a shade over par, 5* in M*'s ultrashort bond category.

    NAV risk is pretty well contained in the current environment: NAV's varied in a very narrow range (9.88-9.90) since April 15, per Yahoo historic price tables.

    Again, it's mostly floating rate, 74% per the current fact sheet.

    Good luck out there -- AJ

    P.S. I've been thinking of dumping one of the rate-sensitive funds I own now and partially replacing it with SEMRX next time there's a dip in T rates. I don't think holding a slug of intermediate and long duration is going to be the winner it was for a while there, and if another big rate dive does materialize, it's easy enough to rent exposure thru TLT or IEF.
  • Thank you to all for responding. I am going to consider EIXIX.
  • edited October 2019
    Bobpa said:

    Thank you to all for responding. I am going to consider EIXIX.

    Please note most of its outsized YTD returns in EIXIX occurred the first four months of its existence. The past 6 months it has been mediocre at best compared to IOFIX among others. You seem to like the non agencies. You might want to check out DPFNX. It gets no mention but a real steady eddy in the non agency sector. As detailed in the past, I paired it with IOFIX in 2017 and part of 2018. Haven’t been in it this year but that may change soon.
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