I posted this information also in the IOFIX thread but thought it might merit a thread of it's own. For those who are interested:
If you would just like to see the PIMCO blog report: PIMCO's blog Insight Report
For further discussion on mortgage backed securities you might want to give this M* community discussion a look.
PIMCO says mortgage-backed securities are cheap
Also a good discussion of what has been happening in mortgage bond land lately by Lou Barnes at Premier Mortgage Group:
Mortgage Credit News March 20, 2020

I had several hundred thousand in IOFIX but I sold most of it on Feb 28 and all on March 9. That was based on the fact that stocks are crashing + bonds don't behave rationally to rate drop + even treasuries didn't act on rates properly every day + thousands global coronavirus + VIX > 50. Let's call it what it is..a black swan.
The market will turn and I will first look at the 2 funds I owned several weeks ago. NHMAX = HY Muni (includes leverage > 20%) + IOFIX. What comes down further usually goes up faster.
Several months ago I talked to the manager of EIXIX and he explicitly mentioned that his holdings have a much lower risk than IOFIX and one day IOFIX will explode.
The Pimco guys always say that MBS is the best place to be ;-)
AGC has great articles about CEFs but you get a lot of info on fixed income...see this (article)
"So what do you do at this point?
Sitting still and doing nothing can be the hardest thing in the world but is likely the best course of action. Resist selling and even buying much of anything at this point. We need to see some stabilization before really buying anything further: 1) we need volatility (VIX) to peak and start to subside. 2) Oil prices need to stabilize. 3) We need to see new cases of COVID19 trend similar to China or South Korea with the second derivative trail off.
Once these things happen, we believe that the market will bottom and start their recovery."
As usual, I follow my chart/trends and they come directly from the price which is the end result of the opinions of all traders.

If I read the letter correctly, they essentially say that some part of the equities market is substantially damaged, whereas the homes still stay and their owners are reliably paying mortgages, so their assets are fundamentally intact. Does it sound as a reasonable argument? Or maybe people were paying their mortgages while they had regular income, part of it is less guaranteed now?
Since many of us learned about IOFIX reading discussions at MFO, maybe some members of MFO would like to schedule a call with one of the portfolio managers, as they suggested, and then share with us their impressions.
Charles, you had a first hand experience with them, so maybe you better than many of us may understand what changed since the time you visited them, and what can be expected? Of course, they themselves may not have a full picture, and the situation will surely remain volatile for quite a while, but if you or someone else would be willing to make this call, I am sure that it would be really appreciated by many of us.

When I look at their website, there is a special March update but it is only available to financial professionals & interestingly not for shareholders of their funds.
Most of the above (except for the reference to Covid 19) is the same information they have in their fund "presentation" pdf which seems very reasonable & makes the fund appear quite safe. There are a lot of tables & graphs. However, I don't recall seeing the graph for the scenario where the fund drops straight down off of a cliff.
Back in November 2018 the fund did drop just slightly more than 1% (those were the good old days when 1% seemed large) but that was a one day only event.
From their August SAI:
The following table shows the dollar range of equity securities of the Fund beneficially owned by each portfolio manager as of March 31, 2019.
Name of Portfolio Manager
Dollar Range of Equity Securities in the Income Opportunities Fund
Tom Miner
Over $1,000,000
Garrett Smith
$100,001–$500,000
Brian Loo
$100,001–$500,000
So I assume they themselves are feeling some pain right now.
Fortunately I'm not, as I sold out my position in IOFIX the week before after a very bad feeling about this fund & the bond world in general.

IOFIX has a history of large one day movements in the share price...mostly to the upside but there was at least one to the downside (in Nov. 2018 if I recall correctly). @sma3 discussed the difficulty of pricing their thinly traded holdings on a daily basis. Before I made an investment, I tried to get a sense for how that is done. The closest I came was there was someone sitting behind a desk making their best estimates (as I recall I got the name of a pricing firm while searching but that didn't provide much clarity). It felt to me there might be an element of throwing darts at a dart board involved to come up with the daily prices. I am sure there are presently few buyers in this cash is king market environment. So, the lumpy downward movements are perhaps not tooooo surprising.

Alphacentric just released this letter. I'm not sure this relieves my concerns. It doesn't explain the steep drops:
March 20, 2020
Valued Investor,
We appreciate your commitment in the AlphaCentric Income Opportunities Fund IOFIX | IOFCX | IOFAX, especially
during periods of uncertainty and volatility. We believe the Fund is positioned well for this low mortgage rate
environment.
Markets have seen an enormous amount of cash being raised out of fear over COVID-19.
The recent NAV decline in our Fund is largely technically driven. On the flip side, the large draw down in the
corporate world, in both equities and bonds, can mostly be explained through deteriorating fundamentals (ex.
massive drop in airline, hotel, restaurant, retail, travel revenues).
While we are prepared for potential continued technical volatility, longer-term we are as confident as ever in the
fundamentals of our portfolio and believe the current rate environment may accelerate upside returns for our
Fund.
Here are the underlying reasons:
• Legacy mortgages originated back in 2002-2007, are 13-18 years old, why this is important:
o These borrowers made it through the worst housing crisis ever in 2008/2009.
o They have on average 43% equity in their homes today and have spent over a decade building
this equity.
o A good portion of their monthly payment today is on principal.
• YTD mortgage rates have dropped around 17% to historical lows, why this is important:
o Lower rates = increase in refinancing by homeowners and bond calls by service providers.
o Many of the legacy bonds that we paid less than par for are now likely to be paid off at or near
par.
o The increase in refinancing and foreseeable bond calls sets the table for nice price appreciation
over the next 12-18 months, in addition to the monthly income.
o Average price of the homes in the portfolio is around $260k, this segment of the housing market
continues to remain strong with low rates and a shortage of homes.
• Unlike corporate debt, our bonds are backed by hard assets - homes with real equity and in many cases,
the biggest asset a homeowner has.
o 10 out of the last 11 recessions have had minimal impact on housing.
o The Government provided many mortgage assistance programs to keep homeowners in their
house during the last recession and now, more than ever, it is of the utmost importance for
homeowners to stay put in their homes and away from others.
o In many cases, homeowner's two largest expenses, mortgage and energy, just got reduced.
o The Fund has no exposure to CLO's, CMBS, consumer credit, etc...just housing.
This will not continue forever, and as always markets will eventually stabilize. We know that being an investor
today, and during any period isn't exactly a stress-free experience, but we believe value investors should consider
adding to this portfolio.
Please let me know if you have any questions. If you would like to schedule a call with one of the portfolio
managers, we are happy to schedule it.
Thank you,
AlphaCentric Advisors
Garrison Point Capital LLC

IOFIX was only at a little over 2% of my portfolio when the storm hit, so its not a major hit for me. I feel for those who were more concentrated in it. I am a chicken little when it comes to concentrating my portfolio into any one "specialty" holding even if I have respect for the managers....which I did (and do) with IOFIX.

I saw a pretty interesting chart the other day comparing covid-19 with the Spanish flu in terms of market reaction. Nearly identical to this point. With the Spanish flu the market recovered rapidly and well before the virus subsided. If we follow the same pattern now is the time to buy. We may not follow the 2008 model, which was a financial crisis.
https://www.marketwatch.com/story/market-behavior-a-century-ago-suggests-the-worst-could-be-over-for-stocks-if-not-for-the-coronavirus-pandemic-2020-03-19

Thanks for that chart @wxman123 . I, like many, am trying to figure out when to move in a substantial way to reenter the market of stocks. This history lesson from 1917 to 1918 is helpful in that regard. It suggests that at some point living with a pandemic becomes the new normal and gets priced into the market. So far I have been nibbling enough to keep the stock % in my portfolio from dropping significantly, but nothing more. I am currently inclined to wait at least until fall to see if there is a new surge in covid-19 cases then before moving back into stocks in a more substantial way.....assuming the initial surge peaks within the next several weeks. That will also provide time to get a sense for peoples willingness to restrict their interactions over an extended period of time as a vaccine is probably not going to be available any time soon.

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.

You can't make this up. IOFAX and IOFIX are one of the funds featured in this article. It also includes MINT which I bailed out of earlier this week as it was minting capital losses daily !

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

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.

Yes, many bond categories are down, down, down.
On Feb 29 I reported the following: YTD mostly in 2 bond funds investing at a higher % in NHMAX + lower % in IOFIX. Last Thursday, I sold half of NHMAX. On Friday, I sold all of NHMAX + most of IOFIX.
On March 9 I reported: I sold my 3 funds (huge % in PINCX, smaller % in BCOIX and a small % in IOFIX...I bought PINCX+BCOIX earlier last week) and now at 99% cash.
Since 2/28 I mostly trade and back to MM.

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.)

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.

Down today 10.66%

Lots of stuff today to cover
Multi- PTIAX at 0% was fantastic. VCFAX at -0.3% and IOFIX at -0.4 was not bad when SEMMX was down -0.46. JMUTX+JMSIX -1.3% was another proof why securitized is the best. Second-tier PUCZX at -2.9% and PIMIX is still missing, I guess they are afraid to show the results. PDIIX lost -2.4%. The Pimco guys are not doing well at all.
HY Muni lost about -0.5 to -0.7 but OPTAX just at -0.37
Bank loans - fell sharply. EIFAX -3.1 and SPFLX -2.35
HY lost even more at least at -3% to -4%
"Cash sub" - DHEAX confirmed itself as a great choice for performance and stability with just -0.1
Cose plus - PINCX -0.13...BCOIX -0.4....DODIX -1%(as expected)...USIBX -0.45...BND -0.2...FIJEX -0.95
==========
Rates were down dramatically but higher rated bonds(even the index BND) didn't go up. I see it as a problem. The markets are crazy, volatile and without a direction. I did nicely YTD and will start buying when markets tell me what to do.
I sold my 3 funds (huge % in PINCX, smaller % in BCOIX and a small % in IOFIX...I bought PINCX+BCOIX earlier last week) and now at 99% cash. I lost today -0.22% which was a surprise because I thought I will make money.

With Cd's soon to be 1% or lower, we need to discuss the best cash alternative funds.
Last cycle, RPHYX and then ZEOIX were heros. RPHYX has been soso for the past 1 yr while ZEOIX has kicked butt (maybe because they had some high quality but junk type short term bonds like Lions gate).
IOFIX has been a monster; have added to the PAIAX and the Angel Oak ultrashort as well recently.
Anyone have other suggestions + maybe what ratio they'd put in each of those going forward for a 2-3% absolute return.
Thanks!

As usual, they hardly ever discuss one of the best options...Multi sector bond funds.
The following are paying over 4% SEMMX,JMSIX,IOFIX,VCFAX,
FI CEFs such as PCI pay over 8% with better performance than SPY and others + volatility=SD is better too.
MLP? no thanks.
See a (chart) of SPY,MLPA,PCI

Morning @brbrock
Just above this text area, to the right is the "search" box. Enter IOFIX and the enter key.
You'll find a list of all discussions which contain this ticker. There's going to be a long, recent list.