sam
Lieutenant
Posts: 123
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Post by sam on Jun 24, 2023 3:57:41 GMT
Has any one invested in JPMorgan Hedged Equity I JHEQX or any of its siblings?
It has very High Minimum, are there any other funds with similar strategies?
This fund reminds me of PAAIX or PAUIX or PIMCO path finder(PTHWX - it seems like this one lost its path!) which were hot coming out 2009 recession but they never performed well as poor portfolio selection PLUS hedging cost money. Many of these PIMCO funds has lower long term return than bond funds plus investors got all the volatility.
This JHEQX seems to has good returns so far but I wants to avoid rear view mirror investing.
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Post by Fearchar on Jun 24, 2023 12:31:44 GMT
I have looked at options strategies in the past and it's great to see that the fund is now open! JPMorgan is an excellent firm and I'm confident they have competent managers running the fund at a reasonable cost. Still, it's a rather large fund and there is only so much that a large fund can do. Observe that over past 3 years, they are very much average:  Performance over the past year though has been fantastic. However, again looking backward, while their performance has been good, it will likely be only slightly better than the risk adjusted market.  Need to think some more on this. Namely, why should they outperform going forward? and how much might they out perform? Hopefully, others can weigh in! |
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Post by fred495 on Jun 24, 2023 15:06:01 GMT
Has any one invested in JPMorgan Hedged Equity I JHEQX or any of its siblings?
It has very High Minimum, are there any other funds with similar strategies?
I am invested in one of its siblings. At Fidelity, for example, JHQAX is NTF and load-waived with an initial investment of only $1,000. Newer siblings with the same low minimum requirements are JHDAX and JHTAX.
Below is an excerpt from an older M* Fund Analysis report by Erol Alitovsky about these newer siblings of JHQAX:
JHDAX (Fund 2) and JHTAX (Fund 3) "have the same objective of providing smoother returns by tempering downside and upside returns via a systematically implemented options strategy. The newer funds follow the same approach of the original Hedged Equity strategy, however, instead of purchasing options on the last business day of the quarter, Hedged Equity Fund 2 purchases three-month options on the last business day in January, April, July, and October, and Fund 3 trades its options on the last business day of February, May, August, and November.
The team purchases put options 5% below the S&P 500's value. To offset the cost of the put option, the team first sells put options 20% out-of-the-money. This structure should generally protect the fund from three-month losses in the 5-20% range; if markets fall less than 5%, the fund should fall in line with the market, and if the market falls more than 20%, the fund should incur the same incremental losses beyond negative 5%. The team also sells call options to generate enough option premium income to cover the remaining cost of the hedges. [...]
Over the short term, the return profile of Fund 2 and 3 may vary from the original Hedged Equity fund depending on the price path of the S&P 500, but over the long run all three funds should have very similar risk/reward characteristics. Investors looking to make an allocation to this strategy would be wise to pair both Hedged Equity Fund 2 and 3 as this lowers market price path dependency, or the investment's sensitivity to short periods of market volatility.
Reasonable fees coupled with JPMorgan's transparent process make these funds an interesting option."
Good luck,
Fred
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Post by anitya on Jun 24, 2023 18:34:44 GMT
sam, JHQAX and its two variants are not the same as the PIMCO products mentioned in the OP. JHQAX's 15% (>5 & <20%) loss protection structure is limited to one quarter at a time. Based on that one can lose a lot more if there is a long, grinding swoon in the market. These are not likely ideal as long term holding equity funds as one is likely to underperform SPY because of continuous hedging costs. This option strategy is different from the options overwrite strategies that continuously sell out of the money call options to generate income through option premium. When interest rates were at zero, it was easy to sell these as income substitutes. Everything depends on your time line (when you are buying and when you plan to sell) and the role you want a particular product to play in your portfolio (i.e., whether you want it to produce primarily higher total return or lower volatility over that time line, not withstanding that your overall primary goal is to maximize total return). For example, if buying today, I would favor balanced funds over JHQAX. Even when both stocks and bonds got hammered in 2022, balanced funds did not do that badly against these hedging strategies. Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2) from Jan 1, 2022 through end of 2022 (or even through today) and let me know what you find out. I applaud JPM's business acumen to keep investors hooked on to continuous hedging by introducing JHQAX, JHDAX, and JHTAX.
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Post by fred495 on Jun 24, 2023 20:02:18 GMT
For example, if buying today, I would favor balanced funds over JHQAX. Even when both stocks and bonds got hammered in 2022, balanced funds did not do that badly against these hedging strategies. Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2) from Jan 1, 2022 through end of 2022 (or even through today) and let me know what you find out.
Unfortunately, PRWCX is closed to new investors and has been for many years. Hence, not an option that is available to me.
But, I compared JHQAX, the fund I am currently invested in, to PRWCX from Jan. 1 to Dec. 31, 2022 and found that last year JHQAX "only" lost 8.3% whereas PRWCX lost 11.9%. JHQAX's standard deviation during this period was 11.5% and PRWCX's was 17.1%.
As you said, anitya, everything depends on "the role you want a particular product to play in your portfolio". As a retired and rather conservative investor, I prefer lower volatility funds that let me sleep well at night, especially in the current uncertain market environment.
However, if you want to share the ticker symbols of any other balanced funds that had a better risk/reward profile than JHQAX in 2022, I would gladly hear your specific suggestions.
Thanks,
Fred
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Post by anitya on Jun 24, 2023 23:13:32 GMT
fred495 , You can not use 1/3rd of the parameters for the test I suggested and throw the results in my face. I said "Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2) from Jan 1, 2022 through end of 2022 (or even through today)." If you are interested in doing the test, take 1/3 each of JHQAX, JHDAX, JHTAX as portfolio 1 and PRWCX as portfolio 2. If you need an explanation of why one needs to include all three JPM funds, one can read your last post. If that is not clear, then read the fund site. A
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Post by daddymisc on Jun 24, 2023 23:19:20 GMT
Can JEPI, JEPQ, XYLD etc. be considered similar options - covered call strategy with writing options?
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Post by fred495 on Jun 25, 2023 3:40:00 GMT
fred495 , You can not use 1/3rd of the parameters for the test I suggested and throw the results in my face. I said "Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2) from Jan 1, 2022 through end of 2022 (or even through today)." If you are interested in doing the test, take 1/3 each of JHQAX, JHDAX, JHTAX as portfolio 1 and PRWCX as portfolio 2. If you need an explanation of why one needs to include all three JPM funds, one can read your last post. If that is not clear, then read the fund site. A
Sorry, but I don't care what the fund site says, JHQAX has been doing well on its own over the past 9.5 years, that's long before the other two funds were started 2.3 years ago. As the M* analyst noted in his report, "over the long run all three funds should have very similar risk/reward characteristics". Hence, I don't see the need to "Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2)", especially since PRWCX has been closed to new investors for many years and the comparison would be of no practical use to me.
Since you said in your post to sam that "if buying today, I would favor balanced funds over JHQAX", I was simply curious if you had any specific examples of balanced funds in mind other than the closed PRWCX fund. If you do, I would certainly be interested in running a comparison with JHQAX for the year 2022 as you suggested.
Sorry, anitya, but I am not at all trying to throw anything in your face. Let's keep it civil and stay on topic, please.
Fred
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Post by anitya on Jun 25, 2023 6:19:09 GMT
fred495 , You can not use 1/3rd of the parameters for the test I suggested and throw the results in my face. I said "Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2) from Jan 1, 2022 through end of 2022 (or even through today)." If you are interested in doing the test, take 1/3 each of JHQAX, JHDAX, JHTAX as portfolio 1 and PRWCX as portfolio 2. If you need an explanation of why one needs to include all three JPM funds, one can read your last post. If that is not clear, then read the fund site. A Sorry, but I don't care what the fund site says, JHQAX has been doing well on its own over the past 9.5 years, that's long before the other two funds were started 2.3 years ago. As the M* analyst noted in his report, "over the long run all three funds should have very similar risk/reward characteristics". Hence, I don't see the need to "Run a comparison of JHQAX, JHDAX, plus JHTAX (portfolio 1) vs PRWCX (portfolio 2)", especially since PRWCX has been closed to new investors for many years and the comparison would be of no practical use to me.
Since you said in your post to sam that "if buying today, I would favor balanced funds over JHQAX", I was simply curious if you had any specific examples of balanced funds in mind other than the closed PRWCX fund. If you do, I would certainly be interested in running a comparison with JHQAX for the year 2022 as you suggested.
Sorry, anitya, but I am not at all trying to throw anything in your face. Let's keep it civil and stay on topic, please.
Fred
You do not care what the fund you own says but champion it. There will never be any use to you of what I have to say to anybody in this forum. I would appreciate it if you could please put me on ignore / block my posts. |
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Post by fred495 on Jun 25, 2023 10:44:47 GMT
Sorry, anitya, but I am not at all trying to throw anything in your face. Let's keep it civil and stay on topic, please.
Fred
You do not care what the fund you own says but champion it. There will never be any use to you of what I have to say to anybody in this forum. I would appreciate it if you could please put me on ignore / block my posts.
anitya, I have no reason to put you on ignore / block your posts just because we disagree on a particular point. Why would I want to deny myself of your comments in the future just
because I value the observation of the M* analyst more than what you say the fund's site recommends?
I have read a number of your other posts in the past and sometimes found them to be quite helpful and informative.
In my book, respectful disagreements are necessary for any discussion forum to thrive.
Fred
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Post by Norbert on Jun 25, 2023 16:42:18 GMT
I see that JHQAX looks good compared to open balanced funds like VWELX and FPACX. The managers are clearly doing something right. The fund handled the 2020 Covid crash very nicely and has now hit all-time highs after last year's mess. Wellington still leads in terms of total returns, but the ride has been bumpy.
The fund is achieving its goal: "to provide a majority of S&P 500 Index's returns with less volatility and less downside." It has landed about two thirds of the S&P 500's returns with far less volatility. (Still, it saw a max draw-down of 14%.) Market correlation is 88%, fairly high. The fund does not move in opposite directions of the S&P 500.
(click to enlarge)
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Post by fred495 on Jun 25, 2023 19:58:02 GMT
Thanks, Norbert, for your positive comment about JHQAX's risk/reward profile since its inception 9.5 years ago. Much appreciated.
JHQAX also did quite well in 2022 compared to the two open balanced funds you mentioned, losing "only" 8.3% with a SD of 11.5%.
So far, so good. Hope the fund continues to achieve its stated goal.
Fred
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