RCTIX River Canyon Total Return Bond Fund

[Fearchar]

This thread is dedicated to due diligence and thoughtful review of the River Canyon Total Return Bond Fund.  

Current price $10.13
Net Expense Ratio 0.68%
Gross Expense Ratio 0.83%
Total Net Assets $470M
30 Day SEC yield 6.65%
Fund Inception 12/30/2014
Goal: The investment seeks to maximize total return. The fund seeks to achieve its objective by investing, under normal conditions, at least 80% of its assets (net assets plus borrowings for investment purposes) in bonds. The Adviser defines bonds to include mortgage-backed securities, debt securities, exchange-traded funds investing principally in bonds, and other fixed income instruments issued by governmental or private-sector entities.

Current Managers  www.canyonpartners.com/our-team/
Todd Lemkin  3/25/2022
Sam Reid   3/25/2022
Adam Rizkalla  1/28/2023


No fees or loads at Etrade.
The fund is currently trading in a range ($9.96-10.12) consistent with 2016.

Below average Risk according to Morningstar
Out of 278 Multisector funds, the most similar funds by Sharpe ratio according to Etrade are:
JMUTX
PONAX
PLSTX
RPSIX

of these similar funds, only PONAX is also below average risk by Morningstar.  However, it's 3 year return is 2.60% vs 4.78% for RCTIX.  RCTIX's current 3 year Sharpe ratio is 0.86 by Morningstar.

Portfolio (3/31/2023)
Gov't 0%
Muni 5.61%
Corp 27.13%
Secur 57.77%
Cash 9.49%  (NITXX)

AAA 7%
AA   2%
A    10%
BBB 18%
BB    3%
B    10%
<B 14%
NR  36%


What stands out to me is the 36% NR; that's exceptional. 
Perhaps with such a small fund, the managers are able to find small nuggets of value

Speaking of Sharpe ratios; RCTIX does not make the top 20% list of income funds when I used an advanced screener:
CIVVX  0.81
CHDVX  0.82
DODFX  0.75
FFRHX  1.31
MLPFX 1.20 
JVLIX  0.89
PADZX 1.02
FRFZX 1.20
PRPZX 1.12
PRFRX 1.11

[chang]

You might want to review an earlier thread on RCTIX:

big-bang-investors.proboards.com/thread/1258/rctix

[FD1000]

This is from Fidelity 3 year Sharp(link) + performance(link).
The above is part of my LT analysis.  Look for funds with good Sharp LT 3-5 years + good performance lately + consistency (good performance of 3-6 months + 1-3 years)
The lists above shows that RCTIX is one of the top funds.  In has the best performance YTD in the top 10 funds
There are other interesting funds. I follow many

PIMIX/PIPNX? at number 50.

In the last several years I play more momentum. You can look at other funds/categories: look at FAFRX. 

Attachments:

[habsui]

JMUTX, 4.75% YTD.

[FD1000]

While RCTIX fell 0.4%, PIMIX fell 1.2% lately.
schrts.co/NVBvyKDv

[Chahta]

And CBLDX was up 0.3%

[FD1000]

May 19, 2023 2:05:37 GMT Chahta said:

And CBLDX was up 0.3%

Yep, look at RPHIX,CBLDX,RSIVX(RSIIX) managed by the same guy, very low SD, higher SD and higher than that...and select the one you like.
So, in time of stress RPHIX is the best, in recovery RSIIX/RSIVX will be the best, CBLDX in the middle. 
The 3 have % in corp bonds according to their risk, RPHIX the lowest, RSIVX the highest.  RCTIX has a lot more in Securitized=58% + Corp=27%
Distributions according to their risk...RPHIX about 4%...CBLDX around 7%...RSIVX about 8%...RCTIX about 7%.

Just play the game correctly and enjoy the ride. Yes, it's all about trading, we are not in a "normal" bond market. All the funds, except RSIIX, are available to trade at Schwab.

[Fearchar]

It appears that in normal times, the correlation between RCTIX and PIMIX is only about 50%.

It's only when the *hit hits the fan that they behave similarly!

[FD1000]

May 19, 2023 9:43:25 GMT Fearchar said:

View Attachment

It appears that in normal times, the correlation between RCTIX and PIMIX is only about 50%.

It's only when the *hit hits the fan that they behave similarly!

My numbers show only 37% since 01/01/2018, select the shortest period available(AKA days), see(link). 

Attachments:

[Fearchar]

May 19, 2023 12:29:04 GMT FD1000 said:

May 19, 2023 9:43:25 GMT Fearchar said:

View Attachment

It appears that in normal times, the correlation between RCTIX and PIMIX is only about 50%.

It's only when the *hit hits the fan that they behave similarly!

My numbers show only 37% since 01/01/2018, select the shortest period available(AKA days), see(link). 

Interesting...
20 days correlation paints a very different picture.

Over the longest period (since 2014), the correlation averages even lower: 32%.
And the COVID shock period doesn't really stand out all that much although the correlation did rise.

However, over the last year, correlation has elevated and is now nearer to 70%.
I am still thinking the correlation will eventually break down and revert towards 50% over longer periods.
Over 20 day periods, it can go very negative!

[FD1000]

May 19, 2023 13:36:46 GMT Fearchar said:

May 19, 2023 12:29:04 GMT FD1000 said:

My numbers show only 37% since 01/01/2018, select the shortest period available(AKA days), see(link). 

Interesting...
20 days correlation paints a very different picture.

Over the longest period (since 2014), the correlation averages even lower: 32%.
And the COVID shock period doesn't really stand out all that much although the correlation did rise.

However, over the last year, correlation has elevated and is now nearer to 70%.
I am still thinking the correlation will eventually break down and revert towards 50% over longer periods.
Over 20 day periods, it can go very negative!

Even 20 days isn't enough and why I don't use that tool.
Just look at simple chart and see how PIMIX is about 5 times more volatile for YTD, PIMIX was down 4%, while RCTIX only -0.8%. Since 11/2022, risk is much lower than 1-11/2022

Attachments:

[davidsherman]

RSIIX and RSIVX are available on Schwab

[anitya]

May 20, 2023 19:10:29 GMT davidsherman said:

RSIIX and RSIVX are available on Schwab

Why are not you making RPHIX available on TD Ameritrade while it is available on Schwab, which owns TD?   I called TD about it and they deflected the question to the fund.

[Chahta]

"All the funds, except RSIIX, are available to trade at Schwab."

I own RSIIX at Schwab.

[FD1000]

May 20, 2023 19:10:29 GMT davidsherman said:

RSIIX and RSIVX are available on Schwab

My mistake, RSIIX is available. I didn't have enough cash for the trade because the min is $50K.  I entered a trade to sell over $50K and was able to enter the $50K buy for RSIIX.
For RSIVX, the min is only $100

[Fearchar]

Thought I'd take a look backwards while comparing RCTIX versus PIMIX and FAFRX (Franklin Floating Rate Fund).
Each of these funds yield about the same.
RCTIX: 7.00%
PIMIX: 6.91%
FAFRX: 6.64%

Since starting this thread on May 12, PIMIX, which is the largest fund also has the greatest volatility.
Likely by coincidence, these funds total return over the last 3 weeks are nearly identical and slightly negative.



In comparison the 7 days SEC yield of risk free VMFXX is 5.04% while 3 month T-Bills are yielding 5.50%.