FAGIX or PIMIX

[chang]

Current stats are interesting:

Duration: PIMIX 3.26y - FAGIX 3.37y
SEC yield: PIMIX 5.45% - FAGIX 6.64%

FAGIX is actually near a historic low in its equity position - 10.27%
fundresearch.fidelity.com/mutual-funds/composition/316062108

For that reason, I don’t think it’s a bad comparison.

Would you view FAGIX as a "spiced up" PIMIX? Any strong arguments favoring one over the other?

[steadyeddy]

FAGIX has twice the SD of PIMIX over the last 15+ years, and it is a HY bond fund while PIMIX uses all kinds of black (box) magic to manage duration in a multisector environment.

I personally do not think it is a fair comparison.

Having said that, FAGIX can be an additional holding to add to PIMIX to get higher beta with perhaps similar performance.

I am personally sticking with PIMIX.

[chang]

steadyeddy  Fair points. I'm just wondering if PIMIX itself doesn't have a lot of volatility for a fund yielding 5.45%, when Vanguard's MM yields 5.05%.

Moreover, while I normally keep all bonds in taxable (to provide disposable income), I was thinking of using FAGIX in an IRA, where more volatile and growthy assets are easier to bottle up.

[chang]

I see Vanguard’s MS fund (VMSAX) is doing better than PIMIX over the last year. ER is a low 0.3%, current yield 5.86%, duration 4.6 years.

Perhaps more to the point, VWEAX is beating PIMIX. It's a simple, proven, cheap, conservative HY fund. Contrasted with a gargantuan black box with a plethora of moving parts and secret sauces. And a management team that seems to be starting up new CEFs every month. Hmm...

VWEAX yield 7.00%, ER 0.13%, duration 3.8 years ..... how bad is that?

Here's a chart of FAGIX, PIMIX, VWEAX over a year. (Click to expand.)

[steadyeddy]

Jul 5, 2023 7:01:55 GMT chang said:

steadyeddy  Fair points. I'm just wondering if PIMIX itself doesn't have a lot of volatility for a fund yielding 5.45%, when Vanguard's MM yields 5.05%.

Moreover, while I normally keep all bonds in taxable (to provide disposable income), I was thinking of using FAGIX in an IRA, where more volatile and growthy assets are easier to bottle up.

PIMIX's volatility has been consistently low. Again, MM rates can drop off real fast (as you know) and PIMIX provides steady stream of income. 

At the moment, no fixed income alternative really beats MM or T-bills - but for how long is the question.

[steadyeddy]

Jul 5, 2023 10:29:59 GMT chang said:

I see Vanguard’s MS fund (VMSAX) is doing better than PIMIX over the last year. ER is a low 0.3%, current yield 5.86%, duration 4.6 years.

Perhaps more to the point, VWEAX is beating PIMIX. It's a simple, proven, cheap, conservative HY fund. Contrasted with a gargantuan black box with a plethora of moving parts and secret sauces. And a management team that seems to be starting up new CEFs every month. Hmm...

VWEAX yield 7.00%, ER 0.13%, duration 3.8 years ..... how bad is that?

Here's a chart of FAGIX, PIMIX, VWEAX over a year. (Click to expand.)

View Attachment

Any of the options you mention could prove to be effective..

One year may not be sufficient duration for comparison?

VMSAX AUM is too tiny to matter but if gets larger it is maybe a worthy alternative to PIMIX as they both are MS funds.  In a year-and-half VMSAX only garnered $94M ?

VWEAX is just a higher-quality Junk bond (no doubt delivers on its objective)... 

So many options to choose from and so little time 😁

[Norbert]

Going back to 2009, PIMIX and VWEAX are neck-and-neck.  Surprisingly, VWINX (Wellesley) lags them both.

(Click to enlarge)

[steadyeddy]

I am sticking with PIMIX primarily for their bag of tricks in dealing with the bond universe.

[chang]

As an aside, I see that VG has added an in-house (Vanguard) manager to VWEAX, in addition to Wellington:
investor.vanguard.com/investment-products/mutual-funds/profile/vweax#fund-management

Per M*, the change occurred last year (2022). www.morningstar.com/funds/xnas/vweax/people

[Chahta]

Jul 5, 2023 11:32:19 GMT steadyeddy said:

I am sticking with PIMIX primarily for their bag of tricks in dealing with the bond universe.

Just be aware they currently have 11% derivatives per M*, part of their bag of tricks. 

[steadyeddy]

Jul 5, 2023 12:44:09 GMT Chahta said:

Jul 5, 2023 11:32:19 GMT steadyeddy said:

I am sticking with PIMIX primarily for their bag of tricks in dealing with the bond universe.

Just be aware they currently have 11% derivatives per M*, part of their bag of tricks. 

Yes...they use them for managing duration and shorting certain segments of bonds

[chang]

Just for fun, I ran MFO Premium on FAGIX, PIMIX, VWEAX, FADMX, LSBDX. The only "Great Owl" among them is FAGIX. 

Here's the 3-year picture. (Click to enlarge.)



Here's the 5-year picture. (Click to enlarge.)



MFO recognizes that FAGIX has more risk, but their "MFO Rating" is risk adjusted. So it's hard to conclude that FAGIX doesn't have something going for it.

[Chahta]

FAGIX shows 12% US equities. Looks like an allocation fund even though M* says HY.

[chang]

Jul 5, 2023 15:41:58 GMT Chahta said:

FAGIX shows 12% US equities. Looks like an allocation fund even though M* says HY.

10.27% as mentioned in the OP. This is actually a near lifetime low; when I owned it some years ago it was over 20% equities.

[Chahta]

I don’t consider it a fair comparison. M* categorizes by their own methods and do not consider the funds goals or methods. It only appears to be HY because of the junk bonds it holds. FAGIX does look to be unique in that respect. I don’t consider HY vs MS funds as fair comparisons either.

[steadyeddy]

Yeah, FAGIX can certainly be used as a diversifier in the yield-producing space of bonds.

[anitya]

Jul 5, 2023 10:29:59 GMT chang said:

I see Vanguard’s MS fund (VMSAX) is doing better than PIMIX over the last year. ER is a low 0.3%, current yield 5.86%, duration 4.6 years.

Perhaps more to the point, VWEAX is beating PIMIX. It's a simple, proven, cheap, conservative HY fund. Contrasted with a gargantuan black box with a plethora of moving parts and secret sauces. And a management team that seems to be starting up new CEFs every month. Hmm...

VWEAX yield 7.00%, ER 0.13%, duration 3.8 years ..... how bad is that?

Here's a chart of FAGIX, PIMIX, VWEAX over a year. (Click to expand.)

View Attachment

Was highlighting (clickable) VMSAX intentional?  When I clicked on it, I was taken to the most recent posts view.

[chang]

anitya That's very weird. I put in the link investor.vanguard.com/investment-products/mutual-funds/profile/vmsax.

[anitya]

chang ,

I remember FAGIX being compared to VWINX. They compare well over long time horizons but FAGIX used to lag way more during stock market drawdowns but that was not the case in 2022. Did something about FAGIX structure change recently? They added a new manager right before Covid. Any other changes?

BTW, when and why did you become a MFO member?  Let us know your review of their service, including their premium membership.  (Did you miss FD?! I see he posts there.)  Good comments from you there about GP.

Edit: this just showed up in my inbox and thought you might be interested in it -

www.morganstanley.com/ideas/corporate-bond-outlook-2023?subscribed=true&dis=em_202375_wm_5ideasarticle&et_mid=477693&et_mkid=&sfmc_id=167438225

[chang]

anitya I’m a member of MFO and FIC, but I very rarely post there. I look in once or twice a year and sometimes make a posting, to avoid my account being deactivated due to inactivity.

[anitya]

/photo/1

Though I am not a big fan of PIMIX for a few years now, PIMIX may have less credit risk than FAGIX and would prefer PIMIX over FAGIX at this moment.

A bit off topic for the thread -

At Vanguard, 20% of investors 85 or older have nearly all their money in stocks, up from 16% in 2012 - WSJ. uncleharley is the only Octogenarian in this forum I am aware of and he certainly has higher equity like risk tolerance than most in this forum. So, it is possible the WSJ info is legit. May be the rest of us need to reflect on it.

[chang]

Aren't wide spreads (between IG and HY bond yields) a good thing for HY funds? Then you're being paid for the credit risk.

Or are you saying that the credit risk is increasing?

[steadyeddy]

Jul 6, 2023 5:33:04 GMT chang said:

Aren't wide spreads (between IG and HY bond yields) a good thing for HY funds? Then you're being paid for the credit risk.

Or are you saying that the credit risk is increasing?

The chart indicates the beginning of widening spreads - which could indicate further widening before they stabilize (further NAV loss) for HY funds. 

One of the complaints of bond aficionados is that the HY spreads are NOT wide enough yet to indicate onset of a recession, and the ensuing recovery of HY space afterward.

[anitya]

Jul 6, 2023 5:33:04 GMT chang said:

Aren't wide spreads (between IG and HY bond yields) a good thing for HY funds? Then you're being paid for the credit risk.

Or are you saying that the credit risk is increasing?

chang , Current HY spreads are too narrow (compressed) - that chart may not make it obvious but 400 bps spread is very low (Fearchar can chime in).  There is no guarantee that they will widen in the near future but we are all playing the probabilities game.  I can also envision a scenario where risk free interest rates drop without the YTM on HY changing which does not result in capital / price losses, though the spread increases.  So, widening spreads do not have to be bad if price does not drop.  So, I am not saying HY are bad for sure at this time, but look at alternatives and assign probabilities and play the game. 

P.S.:  I recall you had previously invested in RCTRX.  Is that no longer good?  

[Fearchar]

anitya ,

Yes; the ICE High Yield spread is about 4 right now.
The higher the better.

5 is my minimum for serious buying and I get excited when it's over 7.
It can go lower.  3 seems to be rock bottom.
So, it's not the worst possible time to buy junk, but it's not a wonderful bargain either.




If the FED cuts rates, we could have a soft landing.
The sooner the better!
However, the longer they go without cutting then the higher the risk of a crash (IMO).
Junk will go down real fast (spreads flying up).

[steadyeddy]

FED will change their tune in a New York minute... rest assured.

[yogibearbull]

FAGIX has enough equity to qualify for allocation fund. Fido's pure HY is SPHIX. The HY spreads are still low. fred.stlouisfed.org/graph/?g=16RH9

PIMIX is multisector bond fund that includes sovereigns, corporates, HYs, EMs, but NO equity.

[steadyeddy]

Jul 8, 2023 13:04:15 GMT yogibearbull said:

FAGIX has enough equity to qualify for allocation fund. Fido's pure HY is SPHIX. The HY spreads are still low. fred.stlouisfed.org/graph/?g=16RH9

PIMIX is multisector bond fund that includes sovereigns, corporates, HYs, EMs, but NO equity.

As of 5/31, PIMIX is not much into HY and they are focusing elsewhere. Only 0.06 years of duration in 3.26 duration is from HY.

I think everyone is waiting for that anticipated recession before getting into HY.

[retiredat48]

I am waiting for some high-visibility CORPORATE BANKRUPTCIES...DEFAULTS... that will affect entire higher yielding market. Then will buy some. I am surprised that more zombie companies have not already folded. Many companies will be rolling over into much higher rates in next two years.  It is what is meant by the fed rate hikes needing a longer time period to have full affects. 

Standby...patience.

R48

[retiredat48]

Jul 5, 2023 11:27:34 GMT Norbert said:

Going back to 2009, PIMIX and VWEAX are neck-and-neck.  Surprisingly, VWINX (Wellesley) lags them both.

Norbert,...Not a surprise, as I posted on M*  several years ago, about that time,  that in my assessment, Wellesley would lag many bond and allocation funds going forward.  Took a lot of forum heat over this VWINX .  But like you Norbert, would rather be right, than lucky.  Disclosure: Norbert once thought he had made a mistake a few years ago, but upon re-checking, he had not!

R48