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.
Regarding my use of the term "low risk bond oefs", I was referencing typically used risk measures, as quoted on M*. M* provides a section entitled "Risk" for each mutual fund, and in that "risk" category, there are several categories of information, such as Standard Deviation, Capture Ratios, and an overall risk score of 0-23 for the "conservative" category of mutual funds. I guess each individual can offer their particular definition of risk, but I was just seeking the bond oefs that fell into the lower risk categories of M*.
My question, at this point in time, is whether "low risk" is a good choice with rate cuts on the near horizon? And with inflation around 3%, possibly going higher. I do realize that that is not the OPs question. But, wonder what various posters are thinking in this regard.
It is a very personal and debatable whether "low risk is a good choice with rate cuts on the near horizon", but it is what this 77 year old retiree prefers at this stage of my life. I am in a preservation of asset stage in my life, which may not be "a good choice" for other investors, with other goals and objectives.
FD mentioned a fund above for consideration--LCTRX. It is categorized as an Intermediate Core Plus bond oef, but it is very different than other funds in this bond oef category, in that it has a very low duration and very low standard deviation. This fund uses CLOs (Collaterized Loan Obligations) defined in Investopedia in the following way:
"Collateralized loan obligations (CLOs) are structured securities that bundle a pool of lower-rated corporate loans and sell them to investors in tranches. These investments, managed by CLO managers, offer an opportunity for investors to gain exposure to higher-than-average returns by assuming default risk."
I am curious if any other posters have opinions about LCTRX and the use of CLOs.
@dt. The definition of CLO’s you cited has some obvious red flags for me when seeking low risk. “Lower rate corporate loans” and “assuming default risk.” For some trying to squeeze out higher returns out of bonds while dancing near the exit this might be a valid strategy but as a replacement for CD’s and MM funds ,,, not for me. A bundle of anything lower rated is still lower rated. Not lower risk.
CLO -- take all the crappiest loans you can find, throw them in a bag and package them up in a pretty bow. Pay the rating agencies to label them AA and sell them to the public. What could go wrong? Weren't 2008 problems based on CLO packages of sub-prime and liar loans? They actually call them liar loans, amazing. I could be mistaken.
FD mentioned a fund above for consideration--LCTRX. It is categorized as an Intermediate Core Plus bond oef, but it is very different than other funds in this bond oef category, in that it has a very low duration and very low standard deviation. This fund uses CLOs (Collaterized Loan Obligations) defined in Investopedia in the following way:
"Collateralized loan obligations (CLOs) are structured securities that bundle a pool of lower-rated corporate loans and sell them to investors in tranches. These investments, managed by CLO managers, offer an opportunity for investors to gain exposure to higher-than-average returns by assuming default risk."
I am curious if any other posters have opinions about LCTRX and the use of CLOs.
Weren’t you a victim of the SEMMX scam that it was a cash substitute in 2020? I wouldn’t touch any fund associated with the fellow that has run LCTRX since 1997. Investigate its punk performance in 2015 and why. I would stick with the guy that runs HOSIX who at one time worked at Leader. He has done an admirable job at the helm of Holbrook.
Also I would like to retract a comment I made a while back about not touching HOBIX with a 10 ft pole. Not that I am recommending it for the purpose of this thread. Also as you alluded to, as the Fed fund rates declines so will the yields on a lot of funds mentioned in this thread. With your adversity to risk would just stick with money markets, CDs and Treasuries. I mean you already missed some big bull markets in many bond sectors over the course of the past several years. As for CLOs, they have been widely discussed here for some time now. Check the archives.
Surprised no one has mentioned a fund widely held by the populace here NRDCX. Talk about low volatility with nary a down day.
More than just substituting one word ("debt") for a seemingly synonymous one ("loan"), these are different types of instruments. Though in some significant ways (structured in tranches, built on top of lower grade debt), they are similar.
IMHO a significant distinction is in diversification across industries (not just geographic diversification as with CDOs). Ultimately, is CLO vs. CDO a distinction without a difference? You decide. I suggest looking beyond the similarity of names when deciding.
Regarding my use of the term "low risk bond oefs", I was referencing typically used risk measures, as quoted on M*. M* provides a section entitled "Risk" for each mutual fund, and in that "risk" category, there are several categories of information, such as Standard Deviation, Capture Ratios, and an overall risk score of 0-23 for the "conservative" category of mutual funds. I guess each individual can offer their particular definition of risk, but I was just seeking the bond oefs that fell into the lower risk categories of M*.
Those M* risk numbers don't include the last recession. I don't think of the covid panic as a real test.
At least I understand the asset backing up securitised car loans. What's the asset behind student loans?
And maybe everything is better with securitized debt since the last blow up. OTOH, we're talking about the industry that is trying to push everyone into private credit and equity.
It's hard to completely avoid the securitised trade. But at least with some of the older lower volatility funds like BBBMX, PYLMX, and FGUSX I can use MFO Premium to look at how they held up in 2008.
Thanks to all who have discussed LCTRX and collateralized loan obligations--very clarifying. Regarding my comments on Risk, I am just trying to establish some understandable criteria for discussing funds. It is just one step in the process of doing a due diligence review of potential funds that at least fall into the low risk criteria of M*
junkster: "Weren’t you a victim of the SEMMX scam that it was a cash substitute in 2020? I wouldn’t touch any fund associated with the fellow that has run LCTRX since 1997. Investigate its punk performance in 2015 and why. I would stick with the guy that runs HOSIX who at one time worked at Leader. He has done an admirable job at the helm of Holbrook."
No I was not a "victim" of the SEMMX scam. I did own SEMMX for several years, but fortunately I was successful of trading out of SEMMX at the very early stages of its decline in 2020, and did not experience any significant losses from SEMMX or any of the other bond oefs I owned at that period. I have not been back into bond oefs since that period. As I have stated several times over the years, retirement investing objectives is to achieve a total return of 4 to 6%, with the least amount of risk. Since I was able to do that with CDs and MMs for several years after 2020, I found no need to invest bond oefs. Now it is becoming very difficult to buy a CD that makes 4%, so I am looking at the least risky way of making at least 4%
@ PRESSmUP. You got that right. I was just telling my wife I dread going back to zero interest again and having to take risks to get 4%. Stagflation and the politicization of rates are inevitable.
And what low risk are we talking about? Interest rate risk? Sorta a function of duration. Or default risk? Sorta a function of quality of the bonds and the broader business climate. If one defined low risk as short duration and high quality that would lead to a short term treasury and or high investment grade fund no? I see suggestions of funds with higher yields and generally higher yields come with higher risk.
Yes, gotcha. So far, to me, and given where we are, it's still worth it to reach into Junk for higher yield. I've now heard from SEVERAL of the "expert" talking heads that bond defaults remain low, about 3%. I'm using MMkt to save for a dedicated goal coming up. That money is out of the Market, still earning a virtually risk-free 4+ percent.
I stand by my recommendation, WCPNX. It's not as utterly tame as some, but I found that it served as extra ballast that I don't need. Duration is 5.48 years. And as a core-plus fund, it is reaching, just a tad, in order to offer you and me a BIT more profit. Is 5.48 years not "the belly" of the curve? (Again: I'm already out of it.)
Like CLOs, these consumer ABSs take piles of loans (such as car loans or student loans), bundle them together, slice and dice, and then sell the tranches as securities. What are the securities backed by? The repayment streams of the underlying loans. Talk about making something (security) out of nothing (unsecured debt)!
Like other consumer ABSs, car loan ABSs are backed by the payments on the car loans, not by the cars themselves. At least with a car loan, its payment stream is in turn secured by an actual car. So there's security (the car) on the security (the payment stream) of the asset-backed security. Are we lost yet?
The payment streams of student loans (i.e. the security for a student loan ABS) are not in turn secured, unlike the car loans. But since student debt can no longer be discharged in bankruptcy, these loans might be considered safer (should I say more "secure"?) than other types of unsecured loans.
Securitized student loans are called SLABS (student loan asset backed securities). Federal student loans cannot be securitized; only private student loans can be included in SLABS.
Junkster: "Surprised no one has mentioned a fund widely held by the populace here NRDCX. Talk about low volatility with nary a down day"
I am not sure how many investors even know about this fund. It has only existed for about a year. I took a closer look at it and found it has over 40% of its portfolio in derivatives. It is from an excellent company but it has not really been challenged yet in a tough market. New funds from excellent companies are often great bargains.
@yogibearbull mentioned MYGAs is a prior post. MYGAs are functionally similar to CDs. You could earn a 5+% yield with very little risk (assuming AM Best ratings are accurate).
2-year MYGA, insurance company rated "A" by AM Best, yields 5.15% ($70K or $100K min. premiums).
3-year MYGA, insurance company rated "A-" by AM Best, yields 5.45% ($100K min. premium).
5-year MYGA, two insurance companies rated "B++" by AM Best, yield 5.80% and 5.81% respectively ($5K & $1K min. premiums).
Junkster: "Surprised no one has mentioned a fund widely held by the populace here NRDCX. Talk about low volatility with nary a down day"
I am not sure how many investors even know about this fund. It has only existed for about a year. I took a closer look at it and found it has over 40% of its portfolio in derivatives. It is from an excellent company but it has not really been challenged yet in a tough market. New funds from excellent companies are often great bargains.
Just about every investor here. Check the archives. It is a niche bond fund - Nordic high yield. Not doing any better than the average domestic junk fund just with less volatility. I am sure there are many happy holders here including me. Not the type of fund you are looking for though. My recommendation to you would be SCFZX or HOSIX. Doubtful though you will get 5% there next year if rates decline as projected, Then again, I wouldn’t buy any fund based on the recommendation of anyone on this board including me. You also need to be diversified by not putting it all in one bond fund as you are not a trader.
This year bonds haven’t been my thing with my focus and highest positioning shifting to emerging market equity funds.. @Sven deserves a shoutout as he was one of the first here to post about jumping into foreign and emerging market equity funds,
At least I understand the asset backing up securitised car loans. What's the asset behind student loans? Like CLOs, these consumer ABSs take piles of loans (such as car loans or student loans), bundle them together, slice and dice, and then sell the tranches as securities. What are the securities backed by? The repayment streams of the underlying loans. Talk about making something (security) out of nothing (unsecured debt)!
Oh great. Can I get some private credit with that please?
@Junkster You said from above post, "This year bonds haven’t been my thing with my focus and highest positioning shifting to emerging market equity funds." Would you mind mentioning how much leeway you're allowing these funds. They seem to bounce around more than bond funds.
Why not LCTRX? because HOSIX is better within the CLO space. HOSIX got the highest Sharpe > 3 for all funds at Fidelity. Why didn't I recommend NRDCX while I like it? Because DT is looking for funds with more history, and it fell 1.6% this year during March-April. SCFZX is another good one, but DHEAX beats it for 3 months +YTD. During March-April DHEAX was less volatile. Basically, I'm back to HOSIX,DHEAX,SEMIX for DT. If you are not comfortable with CLO, disregard. Beyond that DT should invest based on his risk/reward and goals.
HOSIX manager changed the CLO % from 64% in 12/2024 to 55% this month. CMBS=25%, RMBS=8.5. Currently HOSIX 30-day sec=6.6%
I get weekly update. The last one CLO: CLOs continue to be the largest segment of the portfolio (~55%). We continue to favor this segment of the structured credit market as they allow us to get excess spread via our deleveraging CLO profiles. The average floating rate coupon is around SOFR+350bps, which we believe is highly attractive for predominantly investment grade exposure. This segment of the portfolio carries no effective duration, which reduces our exposure to interest rate moves, especially the long end. We continue to think that the long end is at risk if the Fed cuts the front end. CMBS: CMBS continues to be we get most of the portfolio’s yield. We have had several successful CMBS exits or payoffs over the past few months. We continue to look short maturity bonds tied to high performing properties. We prefer higher coupons, but if the property is performing, a case can be made for a lower coupon, lower dollar price bond. RMBS: This is one of our liquidity buckets. Our Non-QM exposure is about half of our RMBS exposure (~4% of the entire portfolio). We will likely continue to us Non-QM as liquidity piece. These are short WAL bonds, decent coupons for the credit rating (senior bonds that we buy are AAA rated), and highly liquid. Especially with credit spreads this tight, this is one of the areas we don’t mind parking in and waiting for opportunities to come to us. We also have exposure to the HECM space. These give us a little more yield and some convexity to the overall portfolio. ABS: This is the smallest portion of the portfolio. The primary exposure we have here are to the SBA loan space. There are a few deals that will be coming to the market after Labor Day weekend, which we will be evaluating for potential inclusion.
@Junkster You said from above post, "This year bonds haven’t been my thing with my focus and highest positioning shifting to emerging market equity funds." Would you mind mentioning how much leeway you're allowing these funds. They seem to bounce around more than bond funds.
Thanks for your time, Derf
Not to derail this thread about bonds but let’s just say luck was on my side when I entered in April (see archives for which fund I entered) and allowed me to increase as it steadily rose over the ensuing months, I see in another thread where you have exposure to an Artisian emerging market fund. Good for you. I love ARTZX there and have a much smaller exposure as compared to the other emerging market fund I bought in April. As for leeway I allow 4% now. So everyone will know when I get knocked out. But again, I can’t overstate the role of luck because I sure wouldn’t have allowed that much leeway immediately after my original entries. Luck, luck ,luck, can’t overstate its role in trading and investing and for that matter life.
Very old Morningstar risk scores were within the categories and were quite confusing to use.
Morningstar has been tweaking its stats.
Its current MPRS risk scoring system is no longer relative to the categories. It's an absolute scoring system that can be used to assess different asset classes as well as multi-asset funds. Of course, each Morningstar category would have typical MPRS ranges. This is also why MPRS results are quite similar to much simpler SD based risk systems.
One feature of Morningstar MPRS (new Risk Scores in Risk tab) should be noted.
M* wanted these to be stable. And by their design, they are very stable, so they won't change (or, much) before, during or after any big market events or adverse fund-specific events (a recent example was some bond funds in 2020) - as VIX & SD will do.
But this isn't a flaw or drawback, it's how M* designed them. Be aware of this.
If you own a home in an area that is at risk for 100 year floods, it is not safe simply because you haven't had a flood in the past couple of decades that you've owned your home. Likewise, risk to your home does not increase if you're flooded out and have to rebuild.
A quiescent period leads people to underestimate risk. (So intrinsically risky funds like SEMMX come to be regarded as cash alternatives.) Likewise, an isolated instance of bad luck can lead people to overestimate risk.
Risk as represented by M*'s risk score is long term risk. If you're concerned about worst case, pretty much any metric will underestimate that. A meteor might crash into your home tomorrow and do much more damage than a flood. The odds are ridiculously low, but the amount of damage a meteor would inflict is pretty close to worst case, if that's what keeps you up at night.
OTOH, long term conditions (as opposed to recent events) might gradually change. Weather is becoming more unstable and disruptive events are becoming more severe. This sort of change affects long term risk.
I own CBLDX. And I might end up with some of the other funds on that list. But I don't know how many of them will perform in a recession since they weren't around for the last one. But there are two. FEMDEX lost -27.6 in 2008 while OSTIX lost -5.5.
So I set up a query on MFO P using the same criteria as Snowball, minus the great owl designation, but adding a minimum age of 18 years so that I could include results from 2008 in the column display.
Nor did I restrict the the results except to exclude muni's and money markets. If the fund met the previous capture and correlation criteria I figured they must have been doing some thing right somewhere in the world.
I wasn't sure how long the funds had to return 4%, so I set it to five years since that was the minimum age he was looking for.
About half of the funds in the article were multi-sector. Only two made my cut. OSTIX lost 5.5. ENIAX lost 28.1.
The only flexible income fund to make the cut was NPSRX, which lost 24.4.
There were six global high-yield funds that made the cut that lost between 16.5 and 28.9.
And the only emerging market fund was the afore mentioned FEMDEX.
Well. We can certainly hope that the next recession won't be as bad as the last recession. And I won't try to predict when it will show up.
It seems to me that focusing entirely on the last five years doesn't account for the risk of recession. I sure hope we don't see rates climb the wall the way they have recently. But if the Fed goes Arthur Burns in 2026, who knows?
Since I have the results, here are the funds that did the best in 2008 along with their maximum draw down in the last five years:
Comments
"Collateralized loan obligations (CLOs) are structured securities that bundle a pool of lower-rated corporate loans and sell them to investors in tranches. These investments, managed by CLO managers, offer an opportunity for investors to gain exposure to higher-than-average returns by assuming default risk."
I am curious if any other posters have opinions about LCTRX and the use of CLOs.
Also I would like to retract a comment I made a while back about not touching HOBIX with a 10 ft pole. Not that I am recommending it for the purpose of this thread. Also as you alluded to, as the Fed fund rates declines so will the yields on a lot of funds mentioned in this thread. With your adversity to risk would just stick with money markets, CDs and Treasuries. I mean you already missed some big bull markets in many bond sectors over the course of the past several years. As for CLOs, they have been widely discussed here for some time now. Check the archives.
Surprised no one has mentioned a fund widely held by the populace here NRDCX. Talk about low volatility with nary a down day.
2008 = Collateralized debt obligations.
More than just substituting one word ("debt") for a seemingly synonymous one ("loan"), these are different types of instruments. Though in some significant ways (structured in tranches, built on top of lower grade debt), they are similar.
IMHO a significant distinction is in diversification across industries (not just geographic diversification as with CDOs). Ultimately, is CLO vs. CDO a distinction without a difference? You decide. I suggest looking beyond the similarity of names when deciding.
https://bluerock.com/contrasting-clos-to-cdos-and-cmbs/
https://www.vaneck.com/us/en/blogs/income-investing/clos-vs-cdos-understanding-the-difference/
OJ
At least I understand the asset backing up securitised car loans. What's the asset behind student loans?
And maybe everything is better with securitized debt since the last blow up. OTOH, we're talking about the industry that is trying to push everyone into private credit and equity.
It's hard to completely avoid the securitised trade. But at least with some of the older lower volatility funds like BBBMX, PYLMX, and FGUSX I can use MFO Premium to look at how they held up in 2008.
No I was not a "victim" of the SEMMX scam. I did own SEMMX for several years, but fortunately I was successful of trading out of SEMMX at the very early stages of its decline in 2020, and did not experience any significant losses from SEMMX or any of the other bond oefs I owned at that period. I have not been back into bond oefs since that period. As I have stated several times over the years, retirement investing objectives is to achieve a total return of 4 to 6%, with the least amount of risk. Since I was able to do that with CDs and MMs for several years after 2020, I found no need to invest bond oefs. Now it is becoming very difficult to buy a CD that makes 4%, so I am looking at the least risky way of making at least 4%
The higher end of that range will be difficult with a change of rates upcoming without taking on a bit of risk.
I look for the same distribution range, but also include some risk via well considered multi-strategy bond funds and international....most via ETFs.
Such as...JPST, JPIE, ICSH, NEAR, HFSI and JPIB. Also EADOX, AWF and JAAA if you're feeling frisky.
I stand by my recommendation, WCPNX. It's not as utterly tame as some, but I found that it served as extra ballast that I don't need. Duration is 5.48 years. And as a core-plus fund, it is reaching, just a tad, in order to offer you and me a BIT more profit. Is 5.48 years not "the belly" of the curve? (Again: I'm already out of it.)
"Consumer ABS are backed by cash flows from personal financial assets, such as student loans, credit card receivables, and auto loans."
https://www.guggenheiminvestments.com/perspectives/portfolio-strategy/asset-backed-securities-abs
Like CLOs, these consumer ABSs take piles of loans (such as car loans or student loans), bundle them together, slice and dice, and then sell the tranches as securities. What are the securities backed by? The repayment streams of the underlying loans. Talk about making something (security) out of nothing (unsecured debt)!
Like other consumer ABSs, car loan ABSs are backed by the payments on the car loans, not by the cars themselves. At least with a car loan, its payment stream is in turn secured by an actual car. So there's security (the car) on the security (the payment stream) of the asset-backed security. Are we lost yet?
The payment streams of student loans (i.e. the security for a student loan ABS) are not in turn secured, unlike the car loans. But since student debt can no longer be discharged in bankruptcy, these loans might be considered safer (should I say more "secure"?) than other types of unsecured loans.
Securitized student loans are called SLABS (student loan asset backed securities).
Federal student loans cannot be securitized; only private student loans can be included in SLABS.
https://kingsburyandpartners.ae/what-are-student-loan-asset-backed-securities-slabs/
I am not sure how many investors even know about this fund. It has only existed for about a year. I took a closer look at it and found it has over 40% of its portfolio in derivatives. It is from an excellent company but it has not really been challenged yet in a tough market. New funds from excellent companies are often great bargains.
MYGAs are functionally similar to CDs.
You could earn a 5+% yield with very little risk (assuming AM Best ratings are accurate).
2-year MYGA, insurance company rated "A" by AM Best, yields 5.15% ($70K or $100K min. premiums).
3-year MYGA, insurance company rated "A-" by AM Best, yields 5.45% ($100K min. premium).
5-year MYGA, two insurance companies rated "B++" by AM Best,
yield 5.80% and 5.81% respectively ($5K & $1K min. premiums).
https://www.annuityadvantage.com/annuity-rates-quotes/multi-year-guarantee-annuities/?years=3&sort=guarantee_period_yield&limit=20
This year bonds haven’t been my thing with my focus and highest positioning shifting to emerging market equity funds.. @Sven deserves a shoutout as he was one of the first here to post about jumping into foreign and emerging market equity funds,
@PRESSmUp. Great post above on bonds!
Would you mind mentioning how much leeway you're allowing these funds. They seem to bounce around more than bond funds.
Thanks for your time, Derf
Why didn't I recommend NRDCX while I like it? Because DT is looking for funds with more history, and it fell 1.6% this year during March-April.
SCFZX is another good one, but DHEAX beats it for 3 months +YTD. During March-April DHEAX was less volatile.
Basically, I'm back to HOSIX,DHEAX,SEMIX for DT. If you are not comfortable with CLO, disregard. Beyond that DT should invest based on his risk/reward and goals.
HOSIX manager changed the CLO % from 64% in 12/2024 to 55% this month. CMBS=25%, RMBS=8.5. Currently HOSIX 30-day sec=6.6%
I get weekly update. The last one
CLO: CLOs continue to be the largest segment of the portfolio (~55%). We continue to favor this segment of the
structured credit market as they allow us to get excess spread via our deleveraging CLO profiles. The average
floating rate coupon is around SOFR+350bps, which we believe is highly attractive for predominantly investment
grade exposure. This segment of the portfolio carries no effective duration, which reduces our exposure to
interest rate moves, especially the long end. We continue to think that the long end is at risk if the Fed cuts the
front end.
CMBS: CMBS continues to be we get most of the portfolio’s yield. We have had several successful CMBS exits
or payoffs over the past few months. We continue to look short maturity bonds tied to high performing properties.
We prefer higher coupons, but if the property is performing, a case can be made for a lower coupon, lower dollar
price bond.
RMBS: This is one of our liquidity buckets. Our Non-QM exposure is about half of our RMBS exposure (~4% of
the entire portfolio). We will likely continue to us Non-QM as liquidity piece. These are short WAL bonds, decent
coupons for the credit rating (senior bonds that we buy are AAA rated), and highly liquid. Especially with credit
spreads this tight, this is one of the areas we don’t mind parking in and waiting for opportunities to come to us.
We also have exposure to the HECM space. These give us a little more yield and some convexity to the overall
portfolio.
ABS: This is the smallest portion of the portfolio. The primary exposure we have here are to the SBA loan
space. There are a few deals that will be coming to the market after Labor Day weekend, which we will be
evaluating for potential inclusion.
recent article titled "Thinking more broadly: Bonds beyond vanilla."
https://www.mutualfundobserver.com/2025/09/thinking-more-broadly-bonds-beyond-vanilla/
M* wanted these to be stable. And by their design, they are very stable, so they won't change (or, much) before, during or after any big market events or adverse fund-specific events (a recent example was some bond funds in 2020) - as VIX & SD will do.
But this isn't a flaw or drawback, it's how M* designed them. Be aware of this.
For gory details, see https://ybbpersonalfinance.proboards.com/post/2199/thread
Response received: The document is missing
If you own a home in an area that is at risk for 100 year floods, it is not safe simply because you haven't had a flood in the past couple of decades that you've owned your home. Likewise, risk to your home does not increase if you're flooded out and have to rebuild.
A quiescent period leads people to underestimate risk. (So intrinsically risky funds like SEMMX come to be regarded as cash alternatives.) Likewise, an isolated instance of bad luck can lead people to overestimate risk.
Risk as represented by M*'s risk score is long term risk. If you're concerned about worst case, pretty much any metric will underestimate that. A meteor might crash into your home tomorrow and do much more damage than a flood. The odds are ridiculously low, but the amount of damage a meteor would inflict is pretty close to worst case, if that's what keeps you up at night.
OTOH, long term conditions (as opposed to recent events) might gradually change. Weather is becoming more unstable and disruptive events are becoming more severe. This sort of change affects long term risk.
So I set up a query on MFO P using the same criteria as Snowball, minus the great owl designation, but adding a minimum age of 18 years so that I could include results from 2008 in the column display.
Nor did I restrict the the results except to exclude muni's and money markets. If the fund met the previous capture and correlation criteria I figured they must have been doing some thing right somewhere in the world.
I wasn't sure how long the funds had to return 4%, so I set it to five years since that was the minimum age he was looking for.
About half of the funds in the article were multi-sector. Only two made my cut. OSTIX lost 5.5. ENIAX lost 28.1.
The only flexible income fund to make the cut was NPSRX, which lost 24.4.
There were six global high-yield funds that made the cut that lost between 16.5 and 28.9.
And the only emerging market fund was the afore mentioned FEMDEX.
Well. We can certainly hope that the next recession won't be as bad as the last recession. And I won't try to predict when it will show up.
It seems to me that focusing entirely on the last five years doesn't account for the risk of recession. I sure hope we don't see rates climb the wall the way they have recently. But if the Fed goes Arthur Burns in 2026, who knows?
Since I have the results, here are the funds that did the best in 2008 along with their maximum draw down in the last five years:
OSTIX -5.5, -9.6
IOBZX -2.9, -8.2
LCCMX -2.5, -17.7
THOPX -2.1, -7.7
CMFIX -0.2, -4
RYSBX +7.2, -18.7
It's enough to have me contemplating ye olde mattress safety deposit.