I would like to think that a turtle has figured out how to minimize most risks. It calculates its moves, it's acutely aware of its surroundings, and when danger lurks it retreats into the safety of its shell. A turtle is smart enough to know when to poke it's head out, when to walk around prospecting, and when to temporarily close up shop.
With this in mind, I turn to fund investments. Having a collection of funds that act like a "turtle's shell" (minimizing downside risk) seem harder to identify then identifying funds that "walk around prospecting" (move with the market). A successful investor needs to do both, but having a "turtle shell" fund seems to me a good first objective.
If I understand (Maximum Draw Down %) on the charts Charles has so painstakenly put together I believe what I am after here are funds that exhibit a low (Max DD %) quality. Many of these low (Max DD %) funds seem to fall into the fix income category and my fear is that many may not be positioned properly as interest rates rise.
Anyway, looking for a few good "turtle shell" funds that are properly positioned for rising interest rates.
Your thoughts are always appreciated.
Comments
Art
I hope this was a recent purchase for you...up 18% over the last three months after nearly down 70%. What exactly is trading inverse debt?
Short debt verses long debt...good call over this last year. I charted your fund (short debt) compared the BTTRX (Zero Coupon Long Debt) ...the two charts are 10 yr and 1 yr...very much mirror images of one another as well as switching positions.
10 yr:
1 yr:
PDI is more like a hare than a turtle. Have you seen it's three-month chart?
Price = -14.62% vs. VBMFX = -3.35%
Not my definition of a turtle fund. It looks like a hare on the downside as well.
Mike_E
Here's how it handled recent interest-rate hikes:
Here's how it handled 2008 financial collapse:
Here are the performance/risk numbers:
And, Steven Goldberg likes it! Here's recent thread: A Great Place to Stash Your Cash
Yikes, Charles. FPNIX has a 3.5% load at Fido, plus the .57 ER and short term redemption fee. Pretty much a wash against plain old BND with its .10 ER; although with a higher losing % YTD.
Thank you for all of your time and efforts.
Catch
This is the Fido page link for FPNIX. Scroll down a bit for the expenses, below the "Details" section. 'Course, as we all discover, pricing varies among the big houses for funds outside of their own mix. I don't find another share class for this fund; nor is there an indication at Fido about a load waiver; which I have seen with other funds at this same type page.
UPDATE note: FPA home page shows no load for this fund. I did find one other site that also shows the 3.5% load. Obviously, the Fido and other site info is incorrect. I will contact Fido about this.
Your description sounds also a little bit like this artic animal:
"No other animal has the defense method of musk oxen. When danger
threatens they do not run away. Instead, a herd of twenty to forty
individuals backs into a rough circle facing outward with the calves in
the center or under their mother's bellies. This ring of horned heads
can defy such natural enemies as the arctic wolf and the grizzly bear.
From time to time a bull dashes out to do battle, then returns to the
circle. He is exceedingly nimble. A single sweep of his horns can
cripple or kill a wolf, dog or Eskimo hunter armed with a spear."
I requested to Fido, to provide to me; the correct data regarding the 3.5% load indicated at their fund summary review page for FPNIX. I am sure this is a data entry error; as Fido does not add loads to funds, and as you are aware, has been working to offer more outside vendor choices with loads waived.
You noted in a post below: " If Fido really charges a load for this fund, it will be one more example that makes me question their friendliness toward shareholders." Did you have a bad experience with Fidelity; or know someone who has?
Okay, back to work here; for me.
Catch
David's July commentary, under sub heading "Fidelity cries out: Run away!"
Here are few excerpts: And... Then there's M* stewardship rating of Fidelity:
Citing... Good luck today with chores. We're actually getting ready for camper trip up CA coast, through redwoods, then into OR, where we've rented a house on the coast. Have never been to Oregon before (Portlandia is closet we've come
People likely know that I've been touting FPNIX as a very conservative bond fund - one which I've had my eye on for years but could never figure out how to get around the load ('till now). So I completely agree with Charles in his recommendation. On the other hand, I disagree with suggestions to use bank loan funds; in part because they flunk one of Charles' metrics - look at their 2008 performance; in part because they won't float (because of floors on their interest rates - see my previous posts explaining this).
Fidelity's brokerage web site has never reported its third party fund offerings correctly. It has posted wrong min balances (it took months, if not years, for Fidelity to show lower mins for IRAs after they dropped the IRA min en masse), wrong info on whether funds were available for auto invest (i.e. whether you could add to TF funds for $5 instead of $75), wrong info on loads (the problem here), and so on. And Fidelity doesn't make corrections, even when you point it out by phone, by email, etc.
But if you have an account, you can attempt (without even submitting) a trial trade - once you enter a ticker, the system will tell you the real min that the Fidelity requires and the real load.
Shareholder friendliness is in the eye of the beholder. Number one for me is the ability to control what I buy and sell (which lots, what cost method(s), when RMDs are paid, from which funds, etc.) From what I've seen, Fidelity is unsurpassed here.
They provide access to a fair number of institutional class shares. Not as many as, say Schwab, but with the $5 fee for additions, Fidelity comes out cheaper for what they do offer. Their cost tracking on individual bonds (e.g. adjusting basis for interest that has accreted) is better than I have seen elsewhere, including full service brokerages.
On the other hand, the mutual side of the house (which is not the focus of this thead on turtle funds) is another matter. Nevertheless, I do wonder whether people would be complaining so loudly about Fidelity's "friendliness" if it had a good stable of funds. Regarding the merging of the European funds - IMHO Fidelity is just acknowledging the de facto merger five years ago when they assigned the same manager to both funds. Performance has been similar for years. The time to criticize the merger was years ago.
Do people care that Fidelity makes performance adjustments to the fees it charges (the vast majority of funds don't), or that its fees are lower than most large families aside from Vanguard and American Funds? On the plus side, they do close funds; on the minus side, they close them infrequently, late and with early warning. On the plus side, they're much easier to deal with than, say, Vanguard; on the minus side, this facilitates attracting hot money.
All in all, I'm not impressed with Fidelity's fund offerings (like David). But that's different from saying they're not a shareholder friendly fund family - lots of boutiques have nothing that interests me, but are still considered very friendly. (For the record, I'm not saying that they are unfriendly to Fidelity fund owners, but I agree that on the fund side, they don't go out of their way to be friendly, either - M*'s C grade is a fair summary.)
I own FPACX and FPPTX with FPA directly. Bought FPPTX before it closed a second time with the load many years ago when Bob Rodriguez managed it.
Here is the announcement I posted earlier:
http://www.mutualfundobserver.com/discussions-3/#/discussion/5680/fpa-funds-eliminate-front-end-sales-charges
OK on Fido. Hey, I'm disappointed that Whitebox continues to charge a load for most of its share classes. They really should rethink this arcane fee policy.
Whitebox funds (WBMRX) and (WBLRX) are no load and NTF at Fidelity and Vanguard w/low minimum amounts to open.
Art