Kinda funny after all the hoopla today. For over a year I’ve tracked 3 funds daily - none of which I own - that I think roughly represent my conservative risk tolerance and modest investment goals. The 3 are equally weighted in dollar terms. Today, they came out perfectly flat. Zip / Zero / No Change . A bit of a surprise (and somewhat better than I fared).
AOK + 0.09%
ABRZX + 0.24%
PRSIX - 0.34%
Net change 0%
All 3 benefited from substantial bond holdings. ABRZX also plays around with derivatives. While I currently own none of these, I did own ABRZX and PRSIX for part of 2022. Have never owned AOK - but find it somewhat intriguing.
Footnote - As I mention below in a note to Crash, the 3 funds did not live up to my “hype” last year - losing an average 14.25% over the course od the year. Ouch!
My day? Have plenty of bond funds, all of which held up well. Equities? Pretty roughed up except for 1 large consumers staples company and one p/m mining company, both of which rose. Overall - a down day, but not as bad as expected.
Comments
Two of my smallest holdings were up: JRSH +0.83% and SCHP (TIPs) +1.43%. Among all the others--- all losers today--- the one which fared best was HYDB junk bonds - 0.08%. But I own barely a toe-hold there. And my OEF junk managed not to get murdered badly at all. It's a strange world. TUHYX and PRCPX.
Full portfolio -1.16% on the day.
My classmate Kevin would ask: "Are you bragging or complaining?"
I just checked the average 2022 performance of those 3 (tracking) funds and came up with a dismal -14.25% combined return for 2022. A lot worse than I fared. Can’t explain why they had such a horrible 2022, other than both bonds and equities fell in tandem (and I caught some lucky breaks as well).
Every single one of my equity funds was down today.
My small-cap (VTMSX, -2.49%) and mid-cap (IVOO, -2.81%) funds were hit the hardest.
DOXIX (intermediate core-plus bond ) was the only fund in my portfolio with a gain (0.89%) today.
Longer term, there are better benchmarks. One good one I watch is VWINX (+0.29% today). There was a fella here a while back who said he used PRWCX (-1.05% today). Do you have any good “benchmarks” to recommend for folks in their late 70s who don’t like to hold any cash?
BTW - I still find AOK intriguing. And will agree with both you and Morningstar that it has not lived up to promise.
I appreciate your response Larry. I’m not really in search of some performance benchmark. Just wondered how you would go about it. As one who has always eschewed holding cash what I really concern myself with is the inherent short term volatility of the riskier things I invest in. I figure if I’ve invested in what seem to me sound investments with risk offsetting characteristics, than the performance part will take care of itself. (You may assume that like most I keep yearly performance records - now dating back some 25 years.)
Those holdings contain as of now:
6 individual stocks
1 traditional 60/40 balanced fund
1 traditional 40/60 conservative allocation fund
1 non-U.S. equity index fund
1 gold miners fund
1 commodities basket (metals) fund
1 capital allocation CEF using derivatives / leverage
1 infrastructure fund
1 long-short fund
1 risk premia fund
1 global real estate fund
1 EM stock fund
1 GNMA fund
1 global bond fund
1 intermediate HY fund
1 market neutral convertible bond fund
1 inverse S&P 500 fund
- negligible % in money market funds
Friday the entire collection ended down 0.22%. I made 3 purchases throughout the day as a stock was falling, so that number is a bit exaggerated to the high end. That’s reasonable daily volatility. Of course there are occasional off-days when the portfolio falls more than 0.50%. It’s the roughly 8-10% commitment to precious metals / mining that affects volatility the most. Also, individual stocks affect volatility, especially two which represent close to 5% of portfolio each..
If you are beyond 70, and if you hold close to 0 cash reserve, then daily / monthly / year-to year volatility may concern you a great deal. The “close your eyes and invest for the long-run” approach ceases to work at some point.
I know you’ve been looking at a simplified approach. Makes sense. I’d likely recommend that to many our age. Unfortunately, it’s hard to teach an old dog new tricks. I’ve always enjoyed investing. Am reasonably informed. Lived through some horrendous inflation during the 70s & 80s period and came to distrust holding much cash. Other than for ballast, I’ve not liked bonds that much. Albeit - under Paul Volker you could pull 15% or better in money market funds. But it wasn’t always that way. There were stretches where cash didn’t keep up with rising prices. And, as we learned in 2008, some of those money market funds were riskier than we thought.
Re the 3 funds I track daily for volatility: They are all conservative allocation type funds, selected primarily for their diverse investment approaches:
ABRZX from Invesco spreads risk equally among equities, bonds and commodities. It does so largely through the derivatives markets. A stated goal of the fund is “reduced volatility”.
PRSIX is an actively managed 40/60 allocation fund run by T. Rowe Price, one of the best managers in the business - notwithstanding this fund’s recent lackluster performance. Until the bond wipe-out of 2022, it was considered one of the best conservative allocation funds in its class.
AOK is a 30/70 allocation ETF from Blackrock with an appealing 0.15% management fee. It appears to rely partially or wholly on various market index funds. I like that it includes some domestic mid-caps, some foreign equities and even a small exposure to EM stocks. As far as I can tell it’s not actively managed, so the return - for better or worse - represents how the varied assortment of global / domestic indexes perform.
As I’ve stated, I do not own any of the 3 tracking funds above. Just enjoy watching their daily behavior. I did find it unusual - and a bit funny - that they managed to break-even on one of the most volatile trading days I can remember - and with a bank failure thrown in for good measure.
Different strokes for different folks. As for myself, I'm caught in the headlights !
I've looked at the AO balanced funds, but relative performance always appears lagging.
This week has not been easy, but diversification reduced the drawdown. I am glad to see that bonds finally did not correlate to stocks as they fell:
1. All equity funds are in red, 2%
2. All balanced funds are also in red about 1%, except for VWINX +0.29%.
3. All investment grade bonds are up 1.5%. Bond loan funds loss 0.2%
4. Commodity futures funds are up 0.5%
5. Alternates are down slightly.
Will have more CDs and T bills maturing for the remaining year. Think bonds will have better chance of making decent gain yield wise. Not as confident on stocks as they face more pressure with the coming higher rates.
It’s hard for even me to prefer riskier investments to cash or short term high quality bonds at the moment. One thought is that if I had a big slug in cash yielding 5-7% and if the markets or my favorite funds bounced 15-20% over 3 months, than I’d face the prospect of moving into equities at a more expensive price. And that income from 3 months worth of cash might amount to 2 or 3% annualized. No one knows of course. Just to say that avoiding the dash to cash isn’t quite as dumb as it appears on the surface.
Glad to see you have a good % cash position so you have wait for things to settle down. Defensive positions held up in addition to consumer staples that include IG bonds, treasuries, and precious materials. Let's hope the trend holds for next few week.
https://cnn.com/business/markets/premarkets
Please let me know if there are others? Thanks
Last updated Mar 10 at 4:59 PM ET
Additional, this "futures" topic is being posed in @Catch22 posting.
https://mutualfundobserver.com/discuss/discussion/60788/only-for-the-sake-of-peeking-ahead-sunday-march-12-if-you-re-curious#latest