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Post by Norbert on May 14, 2022 7:33:01 GMT
We've looked at several quant funds in the past and concluded that "black boxes" like these rarely have staying power. They always fail sooner or later. Here's one more: Pimco's PQTIX / PQTAX. Read about it here: www.pimco.com/en-us/investments/mutual-funds/trends-managed-futures-strategy-fund/instThis is a "managed futures" fund that plays in sandboxes like commodities, stocks, bonds, and currencies. It can go long or short. Might this fund be a reasonable substitute for IG bonds in a portfolio aiming to manage equity risks? For the past seven years it's done an excellent job of delivering positive returns while consistently zagging when equities zig. I ran a PV backtest, summarized below. Blue curve: 100% VFINX (S&P 500) Red curve: 100% PQTIX Yellow curve: 60% VFINX + 40% PQTIX A risky idea? Well, with cash losing purchasing power and bond funds getting clobbered by rising rates, there's apparently no way to avoid taking risks. I do value Sara's and Win's focus on quality stocks with a value bias, and their decision to ride out the storm. Still, if the storm is long and causes more damage than expected, a risk-mitigation tool like PQTIX might prove valuable for those of us who could start losing sleep with 85% equity exposure. IF it keeps working ...
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Post by ignatz on May 14, 2022 9:10:19 GMT
Have I gone blind?
You say red line is SP; aka Portfolio 2 in the graph?
Portfolio 2 has a market correlation of negative .19?
Re: the bar graphs; red bar shows gain of about 3 percent in 2019. The SP returned over 31 percent in 2019.
Guessing the SP is really blue portfolio 1, Pimco is red portfolio 2; 60/40 is yellow portfolio 3?
Yellow line looks fabulous of course. Why aren't all of us all in...discounting the last line in your post of course.
Like most funds, it would hardly matter unless you had a major chunk of it. I keep trying with middling success to avoid new ideas. Only tiny portfolio changes in 24 months. Please dun't esk me what I'll do if the Dow drops 10,000 in the next 6 months.
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Post by Norbert on May 14, 2022 11:46:32 GMT
Whoops! My mistake, now corrected.
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Post by fred495 on May 14, 2022 14:46:25 GMT
Why aren't all of us all in...discounting the last line in your post of course. Like most funds, it would hardly matter unless you had a major chunk of it. I keep trying with middling success to avoid new ideas. Only tiny portfolio changes in 24 months. Please dun't esk me what I'll do if the Dow drops 10,000 in the next 6 months.
As a retired and conservative investor, I have been a follower of Chang’s old saying: "I don't really need a lot more money - but I certainly don't want to lose a lot. I need to remind myself to err on the side of caution."
Until the proverbial dust settles, I have been sleeping well at night with only 10% of my portfolio in PQTIX and the rest in cash/MM.
Good luck,
Fred
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Post by FD1000 on May 17, 2022 0:12:35 GMT
Any time trend looks good, you can join. Just be more careful ft it's one of the "crazy" one and managed future is one of them. So, now that you know, just make a decision how much you want to own. On the other hand, you can use more main stream ETF/funds. In the last several weeks I mentioned HDV. If I was younger and invested, a huge % would be in HDV and/or similar funds. In times like this, when markets are risky, a good trader, use more cash, faster trading and pay attention to uptrends. I didn't invent it.
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Post by retiredat48 on May 17, 2022 2:49:59 GMT
Any time trend looks good, you can join. Just be more careful ft it's one of the "crazy" one and managed future is one of them. So, now that you know, just make a decision how much you want to own. On the other hand, you can use more main stream ETF/funds. In the last several weeks I mentioned HDV. If I was younger and invested, a huge % would be in HDV and/or similar funds. In times like this, when markets are risky, a good trader, use more cash, faster trading and pay attention to uptrends. I didn't invent it. What separates HDV from SCHD?? Per M*, HDV has 3.28% yld; 10 billion assets; 0.08% Er. SCHD has 3.21% yld; 35 billion assets; 0.06% Er. I note HDV is 19% Energy with Exxon as top holding, and 24% healthcare; SCHD is 19% financials, 5% energy 15% tech and 13% healthcare. I might prefer HDV for new purchases...I have a brother retiring and switching from growth to dividend paying stock funds, since January. TIA. R48
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Post by fred495 on May 17, 2022 14:23:49 GMT
I might prefer HDV for new purchases...I have a brother retiring and switching from growth to dividend paying stock funds, since January. TIA. R48 R48, you may also want to check out CDC, an ETF with an excellent risk/reward profile. It has exposure to high-dividend-yielding, large-cap U.S. stocks that have at least four consecutive quarters of net positive earnings. It offers a disciplined and balanced investment approach that manages risk by automatically reducing exposure to stocks during periods of significant market declines, and reinvests when market prices have further declined or rebound: YTD=2.0% 1 YR=8.5 3 YR=19.9 SEC Yield=3.1% Std Dev=15.6 Sortino=2.0 Good luck, Fred
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Post by mozart522 on May 17, 2022 15:31:52 GMT
retiredat48, "What separates HDV from SCHD??" In FD speak, Momo. SCHD -4.98 YTD HDV +6.78. that is an 11.76% difference in 5 months. Quite a separation. And like due in large part to what you pointed out about holding. Two different indexes with different criteria.
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Post by retiredat48 on May 17, 2022 16:23:03 GMT
retiredat48 , "What separates HDV from SCHD??" In FD speak, Momo. SCHD -4.98 YTD HDV +6.78. that is an 11.76% difference in 5 months. Quite a separation. And like due in large part to what you pointed out about holding. Two different indexes with different criteria. mozart522 , fred495 , FD1000 ,...Thanks fred and mozart. But I wanted to hear from FD1000, his rationale. Like, does he consider a large Energy sector component is justified going forward, now? Fd1000? We know energy contributed to the higher ytd performance. Of course, some investors may have separate holdings specifically in energy and healthcare, thus wants more diversification in something like SCHD. R48
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Post by Norbert on May 17, 2022 18:02:54 GMT
retiredat48 , "What separates HDV from SCHD??" In FD speak, Momo. SCHD -4.98 YTD HDV +6.78. that is an 11.76% difference in 5 months. Quite a separation. And like due in large part to what you pointed out about holding. Two different indexes with different criteria. mozart522 , fred495 , FD1000 ,...Thanks fred and mozart. But I wanted to hear from FD1000, his rationale. Like, does he consider a large Energy sector component is justified going forward, now? Fd1000? We know energy contributed to the higher ytd performance. Of course, some investors may have separate holdings specifically in energy and healthcare, thus wants more diversification in something like SCHD. R48 Agreed, certain "dividend funds" have outperformed recently thanks to overweights in Energy and Consumer Defensive stocks. If I really believe in momentum, I'd probably be putting all my money in those sectors. The recent outperformance of HDV could just be coincidence.
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Post by Chahta on May 17, 2022 22:22:50 GMT
mozart522 , momo from what point? Certainly not entire YTD. Certainly not April $110 down to $103 May 2 in the current market. Looks like it just started again May 4 at 3 line break. It keeps dropping below the 50 DMA. I don't see much convincing evidence to keep owning it other than the YTD performance numbers. Obviously for a B&H investor yes.
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Post by FD1000 on May 18, 2022 1:18:25 GMT
mozart522 , fred495 , FD1000 ,...Thanks fred and mozart. But I wanted to hear from FD1000, his rationale. Like, does he consider a large Energy sector component is justified going forward, now? Fd1000? We know energy contributed to the higher ytd performance. Of course, some investors may have separate holdings specifically in energy and healthcare, thus wants more diversification in something like SCHD. R48 Agreed, certain "dividend funds" have outperformed recently thanks to overweights in Energy and Consumer Defensive stocks. If I really believe in momentum, I'd probably be putting all my money in those sectors. The recent outperformance of HDV could just be coincidence. In my world, I look for the following: 1) Very limited number of funds, max 5. I only hold funds that are doing well lately + prefer longer term (1-3 years). A good investor can't have more than 5 great ideas + switching is easier. 2) Uptrend is always right = market talks. I don't care why. 3) I like mostly wider range funds than specialized funds 4) Good risk/reward is a bonus 5) Higher distr is great after performance + risk/SD met. 6) Be flexible. Nothing is ever PERFECT. Worse case, switch. HDV fits the above. HDV=The underlying index is comprised of qualified income paying securities that are screened for superior company quality and financial health as determined by Morningstar, Inc.'s proprietary index methodology. The fund is non-diversified. Superior is only correct if the fund performance is good, in the last several months it is. non-diversified is great when it matters, and in the last several months it is. Never in my investing history, I was diversified. Fred's comment is excellent AS USUAL. CDC looks like a better choice for investors who look for ST+LT risk/reward. See charts for 1,3 years. CDC shines in both. CDC ( link)biggest sectors are utilities + Financial Services. . Attachments:
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Post by Deleted on May 18, 2022 1:55:23 GMT
"The fund is non-diversified."
When I saw this highlighted in blue, I thought - hell - all this time I thought I was diversified and I'm not! My holdings look quite similar to HDV - but it is certainly outperforming my portfolio - not sure how if would stack up if I just matched it against my dividend stocks - would still be lower. I hold 8 of the top 10 - lower percentages though.
Turns out non-diversified in this context has a particular meaning (from morningstar) and doesn't mean the fund isn't diversified as in many stocks across many industries =
"Non-Diversified
This data is obtained from the prospectus language. Typically, the prospectus will say that there is non-diversification risk with the fund, which means that a large amount (5%) of assets is or might be allocated to one or more securities. This statement should be based on the Investment Advisers Act of 1940 in Section 8a-5."
So having 9% in AAPL means I also have non-diversification risk. I knew that though and now I know that non-diversified doesn't mean not diversified. If I held this etf, I would say its holdings are diversified from seeing what the holdings are, but I would know the etf could hold only a few holding if it wanted, so would be warned of the potential risk.
Long way to say that the top 10 holdings for HDV are about 55% of the total assets.The other 65 make up the rest.
Now I know why some of us disagree whether diversification should be a bedrock of any investment strategy. We see it differently.
Diversification vs Concentration - another good topic to debate.
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Post by FD1000 on May 18, 2022 3:58:06 GMT
Many topics are debatable. Some investors must own SC, international stocks, others must own CEFs. Some insist only on SPY, VTI. I never insist on MUST have. The discussion is for investors who mostly own mutual funds. Most of my stocks funds have never been in a narrow sector such as energy, the only exception is tech, but tech is so dominate and leading, I give it a pass. As usual, I have exceptions to everything as long as risk-adjusted performance is good, and why I held FAIRX for about 7 years in 2001-2008. FAIRX has been very concentrated, in those years, maybe 7-8 positions and the first 1-2 over 20%. The only thing that matters to me is risk-adjusted performance, I don't care how the managers do it. When they lag, again, don't care about the reasons, I switch. When I say I don't care, it doesn't mean I don't do lots of research and try to understand why. I treat funds like my NBA players. They must play great now, they must go to the playoff every year, the championship isn't guaranteed, but they must be at the top. Another easier example: the big tech stink YTD, if I owned stocks and HDV, I don't own any of them. No problem for me. I don't care they were great for 10+ years and will be great in the next 3 years. In the last several months, they don't. I noticed it in 12/2021. In my world, I would own only leading funds, especially when they show a big superiority. In 01/2022 it was very clear and why I posted that VALUE is better Attachments:
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Post by Norbert on May 18, 2022 4:34:08 GMT
@slooow
"My holdings look quite similar to HDV - but it is certainly outperforming my portfolio - not sure how if would stack up if I just matched it against my dividend stocks - would still be lower. I hold 8 of the top 10 - lower percentages though."
HDV is overweight Oil & Gas at 20% of portfolio. The sector is up 50% ytd, while almost everything else is negative. So, HDV has looked terrific recently; over longer periods it's been a bottom quartile performer.
A clever momentum trader would now likely want to be in XLE, not in a diversified fund like HDV.
Unfortunately the market doesn't actually tell us where to invest; it tells us where we should have invested with the benefit of hindsight. We investors have to position our portfolios for ourselves, looking forwards. The best strategies are often wrong, so many of us use multiple strategies and hedge our bets.
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Post by Deleted on May 18, 2022 10:36:51 GMT
Well I will go out on a limb here and say VALUE and DIVIDEND STOCKS will be a better investment than most other equity classes for the next 12 to 18 months. ENERGY will continue its out performance. HEALTHCARE - also heavily tilted in HDV - I don't know - but there are a lot of dividend producers in that sector, so go back to sentence 1.
That is what economics and world events have been underpinning for some time.
Anyone else have ideas for going forward? Food production related stocks? My electricity is going up some 40% to 50% here in Texas. Gasoline - paying the most I ever have. My healthcare costs are going up and I'm healthy. Will be traveling to Italy, France and the UK in 10 days and will see first hand what's going on with prices there. Financials - some good dividends there.
Growth is going in the drawer for now. Cash? As little as possible.
R48 - Again I go out on a limb - I think a large portion in energy is justified going forward. I'm at 11%. Plenty of risk there as I am reminded every time I see the OXY stock I bought in 2014 - which due to moving it from my IRA to ROTH at its depths, I am finally ahead on now. I'm not selling.
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Post by mozart522 on May 18, 2022 13:55:28 GMT
I believe SCHD and CDC would pair up well together for those wanting higher yield and a history of good returns. PV shows almost no difference between SCHD, CDC or 50% SCHD and 50% CDC over the last 10 years.
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Post by FD1000 on May 18, 2022 14:40:42 GMT
I believe SCHD and CDC would pair up well together for those wanting higher yield and a history of good returns. PV shows almost no difference between SCHD, CDC or 50% SCHD and 50% CDC over the last 10 years. This reminds me when someone holds a fund that didn't do well in the last 3-5 years (PDI) so they talk about 10 years. Others talk about 15-20 years to justify why they held value in 2010-20 and lag.🤑 A style/category can be superior for years, if you switch you can't be behind too long.
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Post by retiredat48 on May 18, 2022 16:05:28 GMT
I might prefer HDV for new purchases...I have a brother retiring and switching from growth to dividend paying stock funds, since January. TIA. R48 R48, you may also want to check out CDC, an ETF with an excellent risk/reward profile. It has exposure to high-dividend-yielding, large-cap U.S. stocks that have at least four consecutive quarters of net positive earnings. It offers a disciplined and balanced investment approach that manages risk by automatically reducing exposure to stocks during periods of significant market declines, and reinvests when market prices have further declined or rebound: YTD=2.0% 1 YR=8.5 3 YR=19.9 SEC Yield=3.1% Std Dev=15.6 Sortino=2.0 Good luck, Fred fred495,...Thanks fred. CDC seems great also, but it has a very high percent Utilities component. Personally, I have posted my concerns re utilities, and the difficulties they will have raising dividends in the future due political outcry and regulatory restraint...as they try to raise capital for the needed expansions/conversions coming. Also, utilities are classic "defensive" stocks in bear markets...when such bears end, better opportunities elsewhere. And in an unusual manner, utes are rising now even with fed rate hikes...usually the reverse. Thanks for input. R48
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Post by retiredat48 on May 18, 2022 16:17:42 GMT
Agreed, certain "dividend funds" have outperformed recently thanks to overweights in Energy and Consumer Defensive stocks. If I really believe in momentum, I'd probably be putting all my money in those sectors. The recent outperformance of HDV could just be coincidence. In my world, I look for the following: 1) Very limited number of funds, max 5. I only hold funds that are doing well lately + prefer longer term (1-3 years). A good investor can't have more than 5 great ideas + switching is easier. 2) Uptrend is always right = market talks. I don't care why. 3) I like mostly wider range funds than specialized funds 4) Good risk/reward is a bonus 5) Higher distr is great after performance + risk/SD met. 6) Be flexible. Nothing is ever PERFECT. Worse case, switch. HDV fits the above. HDV=The underlying index is comprised of qualified income paying securities that are screened for superior company quality and financial health as determined by Morningstar, Inc.'s proprietary index methodology. The fund is non-diversified. Superior is only correct if the fund performance is good, in the last several months it is. non-diversified is great when it matters, and in the last several months it is. Never in my investing history, I was diversified. Fred's comment is excellent AS USUAL. CDC looks like a better choice for investors who look for ST+LT risk/reward. See charts for 1,3 years. CDC shines in both. CDC ( link)biggest sectors are utilities + Financial Services. . FD1000,............Thanks. HDV is on my close watch to buy list. FD, you and I think the same and have very close investment styles. I, too, make no excuses for funds and their performance. A six month window at best. I hold some decades long core funds, that I know could do better with going to some other funds, but am too lazy or don't want to spend the investing time researching everything etc. They have all been "good enough" and any more gain from here just goes to beneficiaries...or charities. I'm helping a brother (and some posters/readers) transition from an all growth portfolios in IRA and 401.k, , to a dividend themed one, and VIG, SCHD and now HDV, are on the switch-to list. Fortunately we have been trimming growth stock funds since early January!! I can ride with the "nondiversified" HDV; question is: Can he? Or do I assist-for-life? It's like your FAIRX chart...once the best; then became the WORST FOR YEARS. Requires following things. R48
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Post by mozart522 on May 18, 2022 16:46:13 GMT
I believe SCHD and CDC would pair up well together for those wanting higher yield and a history of good returns. PV shows almost no difference between SCHD, CDC or 50% SCHD and 50% CDC over the last 10 years. This reminds me when someone holds a fund that didn't do well in the last 3-5 years (PDI) so they talk about 10 years. Others talk about 15-20 years to justify why they held value in 2010-20 and lag.🤑 A style/category can be superior for years, if you switch you can't be behind too long. What part of "for those wanting higher yield and a history of good returns" are you having trouble understanding?
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Post by anitya on May 18, 2022 17:23:17 GMT
Good discussion but way off from OP.
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Post by anitya on May 18, 2022 20:48:13 GMT
Unfortunately the market doesn't actually tell us where to invest; it tells us where we should have invested with the benefit of hindsight. We investors have to position our portfolios for ourselves, looking forwards. The best strategies are often wrong, so many of us use multiple strategies and hedge our bets. Norbert , What are your thoughts on going back to clean / renewable energy equities? Is the correction in the space enough or do they also need to justify valuation multiples like the rest of the equity market? Seems to me enough downside is priced in, especially given fiscal support for these world-wide. No?
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Post by fred495 on May 19, 2022 0:41:36 GMT
Until the proverbial dust settles, I have been sleeping well at night with only 10% of my portfolio in PQTIX and the rest in cash/MM.
Good luck,
Fred
Impressive performance by PQTIX today, gained 0.07%. S&P 500 lost 4.04%. Will sleep well tonight. Fred
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Post by retiredat48 on May 19, 2022 7:20:25 GMT
Until the proverbial dust settles, I have been sleeping well at night with only 10% of my portfolio in PQTIX and the rest in cash/MM.
Good luck,
Fred
Impressive performance by PQTIX today, gained 0.07%. S&P 500 lost 4.04%. Will sleep well tonight. Fred fred495,...about 90% cash--bold move! Is there a thread or discussion of PQTIX...any links to writeups or literature? TIA R48
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Post by Norbert on May 19, 2022 9:54:07 GMT
Impressive performance by PQTIX today, gained 0.07%. S&P 500 lost 4.04%. Will sleep well tonight. Fred fred495,...about 90% cash--bold move! Is there a thread or discussion of PQTIX...any links to writeups or literature? TIA R48 The first post in this thread has a link to Pimco's info.
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Post by uncleharley on May 19, 2022 14:49:19 GMT
Fwiw; the daily and weekly charts for PQTIX are considerably smoother than SH which is a short S&P 500 fund. If I were a buy & hold investor, which I am not, I would probably not buy either fund, however, for someone who wants to hedge the vagaries of the markets PTQIX looks like an intermediate term alternative.
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Post by racqueteer on May 19, 2022 15:07:44 GMT
Fwiw, in addition to PQTIX, there are also ASFYX and EQCHX. All are uncorrelated to the market; all are performing well to current conditions.
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Post by Norbert on May 20, 2022 3:58:22 GMT
PQTIX dropped over 1% yesterday. Maybe because of the big USD move down?
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Post by racqueteer on May 20, 2022 12:17:27 GMT
PQTIX dropped over 1% yesterday. Maybe because of the big USD move down? Corresponded with a buy for me; not sure if that's a good or a bad thing! Guess I'll find out...
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