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.
A few things stand out to me. One concerns investments in asset-backed securities (ABS).
The current (August 2019) prospectus (see Lewis' link) says that "The Fund seeks to achieve its investment objective by primarily investing in asset-backed fixed income securities ... and non-agency residential and commercial mortgages". Yet in both late 2018 and early 2020 the fund had less than ½% in ABS. For that matter, no commercial mortgages at all.
But there was a change in how the fact sheet described the fund's investments.
4Q2018: overlooked segments of RMBS, ABS, and securitized markets 1Q2020: primarily non-agency RBMS and other residential housing debt (ABS is omitted)
Risk/reward changes also stood out.
4Q2018: Sharpe ratio 2.22, std dev 3.81% 1Q2020: Sharpe ratio: 0.03, std dev 17.86% current (M*): Sharpe ratio: , std dev 23.38%
To the section on liquidity risk, it added two sentences, saying that the coronavirus affected liquidity in fixed income markets "including many of the securities the Fund holds." It went on to say that "it is more likely" (than before, I guess) that the fund will conduct fire sales to meet redemptions.
To the market risk section, it added two paragraphs of boilerplate about war, terrorism, public health, depressions, etc. This addition, unlike the first, applied to all AlphaCentric funds.
Just: "Turn in Q1 2020 Marks The Sharpest Reversal in History"
Once the Fed stepped-in and the redemptions stopped (aka once it survived a run on the fund), the fund has rebounded nicely, if still a long way to go.
I still like the strategy, but as an MBS value trade, not for no-drawdown, steady-eddy behavior the fund displayed for nearly 5 years.
At the end of the day, it's still a high-yield, non-investment grade bond fund ... concentrated in one sector.
Allocate accordingly unless you are willing to treat it as a trade and exit at first sign of trouble.
The basics are still the same: Know what you own, expect the worse(which is what I do) and past performance and volatility are not guaranteed. When a black swan shows up most categories don't work except treasuries and the only way to avoid the meltdown is to sell. It happened in 2008-9 and 2020. This is pretty good break if you think about it.
Reminder: VCIT (Vanguard investment-grade corp bond) lost over 13% and a proof that even higher-rated, simpler bonds from conservative Vanguard were affected by market extreme.
The basics are still the same: Know what you own, expect the worse(which is what I do) and past performance and volatility are not guaranteed.
I call BS on that advice FD. None of what you said is usable. This was a fund with good consistent returns and a very low STD to boot. It would have been easier to interpret the risk if the funds literature would have been more accurate, especially on liquidity and possible fire-sale risk. The fund collapsed 45% before the dust could settle. 40% within 2 days. Trading limits on mutual funds that only allow trades after the market closes gives an investor 2 days as the quickest reaction time to unload. Most here aren't day traders so your advice on this fund is worthless.
Sorry, but your infallible preaching is a bit nauseating.
Somehow received (Lipper’s) “Multi-sector income” classification
1.50% ER / Inception: May 2015
The chart : Steady climb upward following inception, gaining over 50% for investors in fewer than 5 years - during an era of 2% (or lower) interest rates on investment grade paper. Leverage and / or derivatives had at work to achieve that stunning record. Dropped completely “off the radar” in mid-March and plunged to the ground with breathtaking speed. Without really having the data, obviously there was a rapid exodus of investors heading for the gate when things started to come unglued. Harkens back to the liquidity issue addressed by many here, including Lewis Braham most recently.
I’ve never observed a chart like that nor seen a fund fall so precipitously so fast. I can empathize with those who were taken to the cleaners. (There but for the grace of God ... ) On the other hand, if it seems too good to be true, it probably is. The only thing remotely similar in my memory would be Oppenheimer’s “Core Bond” and their “Champion Income” funds - both of which imploded in 2008 and resulted in numerous (successful) lawsuits. The difference: Oppenheimer was a large long established full-feature fund house and the travesty involved a couple funds that had been in existence many years. For some reason they decided to reach for yield and ended up wrecking the funds ... likely contributing to their own future demise.
The basics are still the same: Know what you own, expect the worse(which is what I do) and past performance and volatility are not guaranteed.
I call BS on that advice FD. None of what you said is usable. This was a fund with good consistent returns and a very low STD to boot. It would have been easier to interpret the risk if the funds literature would have been more accurate, especially on liquidity and possible fire-sale risk. The fund collapsed 45% before the dust could settle. 40% within 2 days. Trading limits on mutual funds that only allow trades after the market closes gives an investor 2 days as the quickest reaction time to unload. Most here aren't day traders so your advice on this fund is worthless.
Sorry, but your infallible preaching is a bit nauseating.
Well, several quotes from the past 1) 2-28-2020-According to MFO databased when you search for Multi sector funds for 3 years + best martin ratio you get the following funds Fund performance ANFIX 5.3 IOFIX 10.6 SEMMX 5.1 BDKNX 5.7 ANGLX 4.2 2) 2-29-2020-I'm taking my profit and watching. There is no way to be sure how IOFIX will do if markets go wild 3) 3-3/2020-There is no guarantee of what will happen in the future. I think the worse was in 11/2018 when IOFIX lost more than 1% in one day.
Over the years: I have watched IOFIX jumping 2-3 times annually 2-3% within days while others didn't. In 2008 MBS got crushed. ORNAX(HY Muni) fell over 40% and more than others. I can't remember the fund name but it was a bond fund in 2010-11 that I owned, sold before it crashed and you couldn't sell it for years. Look at the above, item 3, how can a fund make 10% annually which is double than most in its category. IOFIX is an exotic fund with illiquid bonds and its daily pricing is just a guesstimation. When something looks too good to be true, it usually is
So, with the above in mind, I always watched IOFIX very carefully and was in/out over the years. Did I know it will crash over 40%? of course not, but I thought 20% was a possibility. As a trader, I also have specific guidelines. Prior to retirement, I would sell any bond fund that lost 3%, after retirement, it's just 1%. I also learned years ago while trading stocks that when markets get wild and you try to sell a stock with low volume, it can go down 30% in seconds while QQQ,SPY go down just several %. BTW, I also sold my other riskier fund which was NHMAX(HY MUNI), prior to the crash and it lost over 22%.
Every post you make FD is all about you. "I saw this. I did that. Every one else is dumb for missing it." The point is the likelihood of anyone 'investing" in this fund, not trading, would not have seen a 40% drop in 2 days on the horizon.
Every post you make FD is all about you. "I saw this. I did that. Every one else is dumb for missing it." The point is the likelihood of anyone 'investing" in this fund, not trading, would not have seen a 40% drop in 2 days on the horizon.
Yes, totally BS. And what is the smiley face for?
You are correct, I didn't know in advance how bad it could be but I expected it to be bad. Your reaction is typical, I see anger and disbelief when I tell you my thoughts and how I operate. The smiley is to let you know it's all expected. In this thread(link), I documented many trades that I have done since 2-28-2020. I made several similar posts on MFO too, see (here). Why no admit I made a great call. I'm pretty sure you will come back and request me to post every trade I make
My trading style has been established for years which helped me in the last 3 years since retirement in 2018. I will sell any bond fund that loses more than 1%, actually, I even sell earlier if other funds in the same category behave differently or I can find a better fund according to my goals.
Here is the bottom line: while you claim it's all BS the facts show I sold all my portfolio to cash prior to the meltdown.
Every post you make FD is all about you. "I saw this. I did that. Every one else is dumb for missing it." The point is the likelihood of anyone 'investing" in this fund, not trading, would not have seen a 40% drop in 2 days on the horizon.
Yes, totally BS. And what is the smiley face for?
You are correct, I didn't know in advance how bad it could be but I expected it to be bad. Your reaction is typical, I see anger and disbelief when I tell you my thoughts and how I operate. The smiley is to let you know it's all expected. In this thread(link), I documented many trades that I have done since 2-28-2020. I made several similar posts on MFO too, see (here). Why no admit I made a great call. I'm pretty sure you will come back and request me to post every trade I make
My trading style has been established for years which helped me in the last 3 years since retirement in 2018. I will sell any bond fund that loses more than 1%, actually, I even sell earlier if other funds in the same category behave differently or I can find a better fund according to my goals.
Here is the bottom line: while you claim it's all BS the facts show I sold all my portfolio to cash prior to the meltdown.
You sound a little cocky, but I wouldn't worry too much. There's some sour grapes goin around lately. I got some crap for commenting on a post on someone bummed on staying in cash, not buying the dip, and furthermore, anticipating a second covid wave to justify in another thread. These things happen. We've all f-ed up. No big deal.
Hi @FD1000: I too in the past have been addressed in ways that were rather brash by some that are still present (and posting) on the board.
Years back, I was called out to start posting my spiffs, as I made them, since I was reporting good profits. With this, I am now happy to report that I am up better than 23% on my last block of buys and only have one position buy that is not yet to green light from the recent market swoon.
There are some on the board that have recently lost a good sum of money in their fund selections (one fund especially) and, with this, I have detected their testy expressions within their post. Rather than letting this run me off I decided to get tough skin and remain. Hopefully, you will as well.
Thanks again for your updates on fixed income funds. It is much appreciated.
Good morning@Old_Skeet: Nice going on your profits , when you take them. I'm guessing most of that took place with buys on the final dip day , so to speak. I purchased some on the way down , but was a day or two late on that final down day. As they say, if you can't stand the heat get out of the kitchen ! So I did.
Hi @Derf, As you may recall I averaged in and bought during both the downdraft and then the updraft up until S&P 2700 range. After that, I decided to just sit with with my average buy being at 2500 range and enjoy the ride back up.
I'm not good at picking tops or bottoms. This is why I roll with my base asset allocation of 20% cash, 40% income and 40% equity and adjust from there based upon stock market movement. I studied CTFAX for years as to how it positioned during downdrafts and decided to build this concept into my own portfolio through using special equity buys and reducing cash.
I'm somewhat disappointed that it has now shifted from a risk off / risk on type fund to more of a tactical positioning one. Before, it's low asset allocation before adjusting to the movement of the S&P 500 Index was 10% equity, now it is 50%. I'm thinking, that the managers are believing that equities will now perform better than fixed income. We will see if this adjustment they made was a wise one. I had planned to buy more of it when it was a risk off / risk on type fund. Now that the baseline asset allocation has changed (from 10% equity to 50% equity) I going to just keep present position and see how things go. My first thought was to trim the position; but, for now I'll wait.
Agree completely @Old_Skeet The CTFAX reallocation has completely eliminated my reason for buying and holding this fund. I'd be better off in JABAX PRWCX VWELX or FBALX .I guess it's too much to hope that some other fund family would introduce a fund like CTFAX into their lineup.
In fairness to anyone invested in IOFIX, no one could ever predict a bond fund losing 40%, and a nontransparent, at least from what I read, fact sheet, to boot. It's a fuck me situation.
Comments
https://www.garpc.com/
Oops. You wanted pre-market meltdown. Sorry.
@TheShadow I'll pass this along, too!
https://www.sec.gov/cgi-bin/browse-edgar?CIK=C000153407&action=getcompany&scd=filings
http://www.garpc.com/iofix/
http://web.archive.org/web/20190411093154/http://alphacentricfunds.com/funds/IncomeOpp/FactSheet.pdf (4Q2018)
http://alphacentricfunds.com/funds/IncomeOpp/FactSheet.pdf (1Q2020)
A few things stand out to me. One concerns investments in asset-backed securities (ABS).
The current (August 2019) prospectus (see Lewis' link) says that "The Fund seeks to achieve its investment objective by primarily investing in asset-backed fixed income securities ... and non-agency residential and commercial mortgages". Yet in both late 2018 and early 2020 the fund had less than ½% in ABS. For that matter, no commercial mortgages at all.
But there was a change in how the fact sheet described the fund's investments.
4Q2018: overlooked segments of RMBS, ABS, and securitized markets
1Q2020: primarily non-agency RBMS and other residential housing debt (ABS is omitted)
Risk/reward changes also stood out.
4Q2018: Sharpe ratio 2.22, std dev 3.81%
1Q2020: Sharpe ratio: 0.03, std dev 17.86%
current (M*): Sharpe ratio: , std dev 23.38%
Finally, here's the main supplement, dated March 23, to the current prospectus. (There are two others; one is for change of address, the other is for load waivers.)
https://www.sec.gov/Archives/edgar/data/1355064/000158064220001282/alphacentric497s.htm
To the section on liquidity risk, it added two sentences, saying that the coronavirus affected liquidity in fixed income markets "including many of the securities the Fund holds." It went on to say that "it is more likely" (than before, I guess) that the fund will conduct fire sales to meet redemptions.
To the market risk section, it added two paragraphs of boilerplate about war, terrorism, public health, depressions, etc. This addition, unlike the first, applied to all AlphaCentric funds.
And thanks for asking first.
http://alphacentricfunds.com/funds/IncomeOpp/presentation.pdf
No mention of liquidity crisis.
Just: "Turn in Q1 2020 Marks The Sharpest Reversal in History"
Once the Fed stepped-in and the redemptions stopped (aka once it survived a run on the fund), the fund has rebounded nicely, if still a long way to go.
I still like the strategy, but as an MBS value trade, not for no-drawdown, steady-eddy behavior the fund displayed for nearly 5 years.
At the end of the day, it's still a high-yield, non-investment grade bond fund ... concentrated in one sector.
Allocate accordingly unless you are willing to treat it as a trade and exit at first sign of trouble.
Eyes wide open and fearful everyday you own it.
When a black swan shows up most categories don't work except treasuries and the only way to avoid the meltdown is to sell. It happened in 2008-9 and 2020. This is pretty good break if you think about it.
Reminder: VCIT (Vanguard investment-grade corp bond) lost over 13% and a proof that even higher-rated, simpler bonds from conservative Vanguard were affected by market extreme.
Sorry, but your infallible preaching is a bit nauseating.
Somehow received (Lipper’s) “Multi-sector income” classification
1.50% ER / Inception: May 2015
The chart : Steady climb upward following inception, gaining over 50% for investors in fewer than 5 years - during an era of 2% (or lower) interest rates on investment grade paper. Leverage and / or derivatives had at work to achieve that stunning record. Dropped completely “off the radar” in mid-March and plunged to the ground with breathtaking speed. Without really having the data, obviously there was a rapid exodus of investors heading for the gate when things started to come unglued. Harkens back to the liquidity issue addressed by many here, including Lewis Braham most recently.
I’ve never observed a chart like that nor seen a fund fall so precipitously so fast. I can empathize with those who were taken to the cleaners. (There but for the grace of God ... ) On the other hand, if it seems too good to be true, it probably is. The only thing remotely similar in my memory would be Oppenheimer’s “Core Bond” and their “Champion Income” funds - both of which imploded in 2008 and resulted in numerous (successful) lawsuits. The difference: Oppenheimer was a large long established full-feature fund house and the travesty involved a couple funds that had been in existence many years. For some reason they decided to reach for yield and ended up wrecking the funds ... likely contributing to their own future demise.
1) 2-28-2020-According to MFO databased when you search for Multi sector funds for 3 years + best martin ratio you get the following funds
Fund performance ANFIX 5.3 IOFIX 10.6 SEMMX 5.1 BDKNX 5.7 ANGLX 4.2
2) 2-29-2020-I'm taking my profit and watching. There is no way to be sure how IOFIX will do if markets go wild
3) 3-3/2020-There is no guarantee of what will happen in the future. I think the worse was in 11/2018 when IOFIX lost more than 1% in one day.
Over the years:
I have watched IOFIX jumping 2-3 times annually 2-3% within days while others didn't.
In 2008 MBS got crushed. ORNAX(HY Muni) fell over 40% and more than others.
I can't remember the fund name but it was a bond fund in 2010-11 that I owned, sold before it crashed and you couldn't sell it for years.
Look at the above, item 3, how can a fund make 10% annually which is double than most in its category. IOFIX is an exotic fund with illiquid bonds and its daily pricing is just a guesstimation. When something looks too good to be true, it usually is
So, with the above in mind, I always watched IOFIX very carefully and was in/out over the years.
Did I know it will crash over 40%? of course not, but I thought 20% was a possibility.
As a trader, I also have specific guidelines. Prior to retirement, I would sell any bond fund that lost 3%, after retirement, it's just 1%.
I also learned years ago while trading stocks that when markets get wild and you try to sell a stock with low volume, it can go down 30% in seconds while QQQ,SPY go down just several %.
BTW, I also sold my other riskier fund which was NHMAX(HY MUNI), prior to the crash and it lost over 22%.
If you still think the above is BS, then be it
Stay Safe. Derf
Yes, totally BS. And what is the smiley face for?
Your reaction is typical, I see anger and disbelief when I tell you my thoughts and how I operate. The smiley is to let you know it's all expected.
In this thread(link), I documented many trades that I have done since 2-28-2020. I made several similar posts on MFO too, see (here). Why no admit I made a great call.
I'm pretty sure you will come back and request me to post every trade I make
My trading style has been established for years which helped me in the last 3 years since retirement in 2018. I will sell any bond fund that loses more than 1%, actually, I even sell earlier if other funds in the same category behave differently or I can find a better fund according to my goals.
Here is the bottom line: while you claim it's all BS the facts show I sold all my portfolio to cash prior to the meltdown.
Years back, I was called out to start posting my spiffs, as I made them, since I was reporting good profits. With this, I am now happy to report that I am up better than 23% on my last block of buys and only have one position buy that is not yet to green light from the recent market swoon.
There are some on the board that have recently lost a good sum of money in their fund selections (one fund especially) and, with this, I have detected their testy expressions within their post. Rather than letting this run me off I decided to get tough skin and remain. Hopefully, you will as well.
Thanks again for your updates on fixed income funds. It is much appreciated.
My best to you.
Old_Skeet
Stay Safe, Derf
I'm not good at picking tops or bottoms. This is why I roll with my base asset allocation of 20% cash, 40% income and 40% equity and adjust from there based upon stock market movement. I studied CTFAX for years as to how it positioned during downdrafts and decided to build this concept into my own portfolio through using special equity buys and reducing cash.
I'm somewhat disappointed that it has now shifted from a risk off / risk on type fund to more of a tactical positioning one. Before, it's low asset allocation before adjusting to the movement of the S&P 500 Index was 10% equity, now it is 50%. I'm thinking, that the managers are believing that equities will now perform better than fixed income. We will see if this adjustment they made was a wise one. I had planned to buy more of it when it was a risk off / risk on type fund. Now that the baseline asset allocation has changed (from 10% equity to 50% equity) I going to just keep present position and see how things go. My first thought was to trim the position; but, for now I'll wait.
Thanks for making comment.
Old_Skeet