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IOFIX - I guess it works until it doesn't

Down today 10.66%


  • Down 19.4% from its high three weeks ago.
  • Mark said:

    Down today 10.66%

    You almost want to say that you felt it coming. If it seems to good to true...

  • Really painful.
  • You can say to a lesser extent the same thing about ultra-short oef's and etf's. NEAR MINT GSY JPST TRBUX BBBMX FCONX FCRDX have all lost money. VUBFX ESAAX among the few with positive returns ytd.
  • holy crap! Just goes to show that cash is the only sure thing. All the numbers on IOFAX and its consistency looked so strong. Also true for funds like SEMMX, DHEIX, which were identified in the conservative bond fund thread over the last couple of months. They've all been shot. @Charles a good time to revisit your article on how bad it can get. Surreal and painful.
  • Until today, it had actually been tracking to core bond funds, like DODIX, down about 9% from peak. And, it continued to do a bit better than PIMIX, down 13% ... it dropped 2.5% today as did ZEOIX (double ouch). I saw a dislocation in REITs earlier in day, so had a feeling it might be bad for IOFIX. Biggest concern is liquidity with all things right now. Fear-driven markets don't behave normally. When everybody runs for cash, watch out. It certainly not interest rate or duration risk, which in my mind leaves credit and liquidity. The former since people's ability to pay mortgages depends on them being employed. I've reached out to the firm to try and get insight on liquidity. No response yet. Junkster would have sold after the fund dropped 1%, I'm sure. But he was very disciplined that way! Other than cash, all seems very shaky right now.
  • edited March 20
    Note: I was writing this when Charles posted his comment and didn't read his comment until mine was posted.

    Ouch! It looks like IOFIX may have just moved ahead of PONAX to claim the lead in the race for worst YTD performance in my Bond Pot. Remembering back to 2008, I owned a Pimco floating rate bond fund that tanked by maybe 25% in the later part of that year (it too was thought to be a steady Eddy). But, if my memory serves me correctly, it recouped most all of that loss by mid 2009. My Bond Pot holdings are primarily for income. So I will do nothing unless I become convinced that the party is truly over for IOFIX. Does anyone own a good crystal ball or have some useful knowledge about that topic....other than what Charles just noted above? (My gut tells me the pricing of holdings has probably tanked in this cash is king market environment.....but those lower prices are just paper losses on thinly traded bonds.)
  • Hopefully no one uses that misleading term, "cash equivalent" again!
  • There's a lot going on here that I think is largely related to mREIT's, indiscriminate selling, margin calls, and the implosion of certain of certain UBS ETN's e.g. MORL. I'm not sure by any means but it could be a factor.
  • Looking at MFO almost every day, I've been feeling really stupid ever since going to 95% cash about a year ago. I felt that at 80, with a very decent pension & SS income, we didn't need the market exposure. I'm not feeling so stupid now, at least about finances.

    For you younger folks, hang in there- everything will be just fine in five or ten years, just like after 2008.
  • good on you, dude
  • @Old_Joe Even if the coronavirus hadn't come, you wouldn't have been stupid. There's a great value in not being greedy and taking stress out of your life, if you can afford it. Good on you.

    I hope that you're keeping safe in SF!
  • edited March 20
    In a meltdown + selling pressure, many bonds fund would collapse. Even MINT was down -1.35% yesterday. YTD, MUNI (not HY Munis) which are usually "safe" are down too much, only treasuries survived.

    2018 Deja Vu.

    But, coming out of this mess we will have plenty of opportunities and IOFIX could be one of them.
  • edited March 20
    @Old_Joe I don't think going into cash is an idea only for old people. There is no reason younger people should not be smart, is there?

    I feel good I protected my retirement accounts by "panicking" right about the time I received the first unsolicited email in my inbox that said "don't panic". Every time after that I received another "don't panic" email I wanted to reply "but I already panicked the first time you told me not too", but replies bounced. Then I got some "its too late to sell now" and I only hoped others getting that email didn't read it, but what do I know?

    I'm happy to report I got out of the market mostly with a loss of 7-10% in my 401k accounts. In my IRA, I'm hedging my conservative portfolio with some 2x short funds and depending on the day am sitting on a 7 - 10% loss. Above all, I decided I will make my own mistakes rather than some Harvard or Columbia MBA tell me what to do when, and I'm glad that I did.

    In my taxable portfolio, I was 33% invested because a wise person once told me, NEVER invest more than 33% of your cash. I know other people called that person stupid, I know different. I am very gradually going to start adding to funds I like in my taxable portfolio and use this opportunity to cull my funds until I keep getting back to 33% invested. Nothing like a reality check to see whether the funds you own are those you really want to hold for the long (sic) term.

    All the best to you.
  • edited March 20
    Thanks, all!
  • edited March 20
    Down another 17% today.

    So, clearly, everybody running for door (including me) and no willing buyers.

    Extraordinary 5 years, until it wasn't, like Mark and Mona posted.

    Really, really hard couple days.
  • wow. glad i got out with what i did yesterday.
  • I think it is very very hard to know what IOFIX bonds are really worth. These prices that make up the NAV are at wide discounts. Even AGG was trading at a huge discount.

    When they can get a price it is frequently just one "put out there" by the specialists hoping someone will bite. If they do it is now marked to market

    The folks at ZEOIX had a nice discussion this week on a webinar, showing how several of their bonds were from firms with significant cash balances and due in short period of time ie could hardly go bankrupt.

    Still if nobody wants to buy them you get these prices
  • Ow, Ow, Ow!
  • Charles said:

    Down another 17% today.

    So, clearly, everybody running for door (including me) and no willing buyers.

    Extraordinary 5 years, until it wasn't, like Mona posted.

    Really, really hard couple days.

    Oh, boy! Am I glad I didn't invest! I was going to in my IRA, but I bought ANGLX instead. Pray for me.
  • I'm praying!
  • @linter. Good job. The signs were there last week based on their past performance ... the fund never goes down! So, when down 7, it signaled something was wrong since less liquid assets are hard to price. But, I figured in comparison to core bonds and PIMIX, still AOK. Still processing, but I think I'd grown complacent because of how consistently good the fund performed and how impressed I was with the Garrison Point team. The rapid AUM growth certainly helped contribute this week's loss. Under normal circumstances I believe they could have handled it. But then CV-19 came. And the lack of liquidity Ed warned us about hit this shop like a tsunami. For the record, I'm still speculating since they've not returned my latest inquiry, which is first time that's happened ... they are probably all-hands-on-deck trying to right the ship. I feel for them and their investors.
  • On the bright side, the loss in IOFIX brought the portfolio % in my Bond Pot down to its goal % without me needing to do any rebalancing. That is very unusual in a bear market situation. So, there is always a silver lining! I agree with Charles about taking my eye off the ball. The other big moves in my portfolio distracted me from paying attention to this OEF. Ah well. I will probably just ride it out and see what happens. image
  • i would have done it sooner but i didn't want to pay the $50 fee at td ameritrade. penny wise and many thousands of greenbacks poorer. sigh.
  • Of course, next week markets could close if the nation does indeed lock-down. They should probably have closed this week, like they did after 9/11.

    I just don't know how far down it will go.

    20-Mar 17.2
    19-Mar 10.7
    18-Mar 2.7
    17-Mar 1.9
    16-Mar 2.3
    13-Mar 0.4
    12-Mar 1.7
    11-Mar 0.4
    10-Mar 0.3
    9-Mar 0.4

    I personally should have gotten out last Friday 13 Mar, after Thursday's 1.7% drop.

    Would have been down 2% now versus 38%.

    Seems like proverbial black swan.

  • best of all, you could post about it here, like those who got out end Feb (or whatever) and went to cash etc etc etc,

    unlike those down a half-mil in retirement
  • best of all, you could post about it here, like those who got out end Feb (or whatever) and went to cash etc etc etc,

    unlike those down a half-mil in retirement

    The idea of "going to cash" is pretty silly for anyone with real money outside of a tax sheltered account, and very dangerous for those even in a tax sheltered account. The getting out part is relatively easy except for the taxes involved. It didn't take a genius to know we are entering a down period towards the beginning of this month. It's the getting back in part that is so hard. I have used all kinds of charts and techniques over the years in many sectors (especially playing commodities) and have learned that "get back in" signals can be very false. You think the worst is over and get in...only to drop another 60% from there. Just look at natural gas, for example. Then you're afraid to get back in...only to see a massive (often unexplained) rip to the upside while sitting in your cash. Yes, some will win big with their great calls and will post here. The losers not so much. Every transaction in the history of every market had a buyer and a seller. I'd wager a lot that those who stand still will come out ahead over the long term...I suspect that those staying pat with things like vwenx, vwiax, btbfx, pimix will do fine with their likely "mere" 6-7% returns over the next decade or so after this mess clears. Of course this time may be different (highly doubt it) but I can't live on MM returns. My personal strategy is to always be 30%-50% in cash and to nibble in down periods (especially killer down days) and to stand pat most other times. Down 13% YTD and consider myself "lucky." Good luck all, and stay safe!
  • @wxman123; Thanks for your comments , always nice to hear what others are thinking.
    What if say you're 50% cash,MM, or like: would a nibble be a 5 or 10 % buy on a 5 to 10 % down day ?
    Thanks for any replies, Derf
  • A nibble is definitely not 10% in one shot, way WAY less. I like to look at individual positions and the opportunities presented. My largest holding is VWALX at around 18%. Getting blasted but I doubt the muni bond market will collapse but it could go lower, I'd be a buyer slowly and the lower the price the fewer shares you need to bring your cost basis down. I always try and buy below my cost basis and now is the first time in years that I can. That said, at some point you also need to stop and wait for stability. Don't always need to catch the bottom...and if you do you're probably just lucky. If you're happy with your potions review them one by one and do some buying when your down and the market is down, just go slow and keep your required reserves in cash. For me that's 50% right now but mainly because my other allocations have shrunk do to price declines!
  • wxman123 said:

    just go slow and keep your required reserves in cash. For me that's 50% right now but mainly because my other allocations have shrunk do to price declines!

    Yup. I've found the cash % of my portfolio rising significantly over the past month... since everything else has fallen!

    I'm still too nervous to pull the trigger with my modest dry powder. I'm guessing we get a quick bump when stimulus passes, then another longer leg down. At least that's what happened in 2008.

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