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Post by oldskeet on Sept 26, 2021 13:47:42 GMT
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Post by yogibearbull on Sept 26, 2021 17:23:43 GMT
Several allocation/balanced funds have convertibles that are included under Other or Not Classified. Franklin Income is an example.
Convertible funds can have income or growth orientation and the latter have high correlation with stocks.
Lot of convertibles may have lower credit ratings. Typically, a newer company or a company that may have to pay high bond yields take the convertible path. Right now, Tesla convertibles dominate this market.
Edit/Add: PRWCX has only 1.2% Other/Not Classified, so mot much in convertibles.
FMSDX has 21.30% in Other/Not Classified but Fido shows only 5.53% in convertibles.
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Post by cactusjack on Sept 26, 2021 20:17:37 GMT
Like oldskeet, I like my convertible closed end fund (CHI). Bought close to the peak in December 2020, Schwab shows me up 11.6% and collecting a 7.3% monthly dividend.
Though it is admittedly farther out on the risk curve, I do like the dividend additions to income.
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Post by chang on Sept 26, 2021 21:45:23 GMT
At the risk of sounding stupid — my view has been that converts are something in-between stocks and bonds. And therefore, in a large and already well diversified portfolio, they aren’t a necessity. Or even really advantageous. Just one more thing to study, understand, evaluate, analyze, purchase, monitor…… and if I can do without them…?
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Post by yogibearbull on Sept 26, 2021 22:29:10 GMT
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Post by rhythmmethod on Sept 27, 2021 1:41:41 GMT
I have no interest holding these except in a multi-asset fund like FMSDX. That way a manager decides how much to allocate. If he chooses wrong and the fund under-performs, I'll trade it for another similar fund. I think they can have a place in a port, I just don't want to research them myself. |
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Post by FD1000 on Sept 27, 2021 3:33:58 GMT
I was never interested in convertible, I did own an HY bond fund as a short trade, both are hybrid funds. Stocks+bonds funds are mainly what I like. If the fund I select happens to have some of these I'm OK with that, but I don't hold them directly. BTW, FAGIX isn't an HY fund, it's more like a moderate allocation fund, FAGIX vs VWIAX vs VWELX ( link). Convertible have done well since the bottom of 2020, but they picked in 02/2021 and since then are flat. I used CICVX=conver. As expected, FAGIX performance is better than VBINX(60/40) and close to PRWCX. Attachments:
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Post by racqueteer on Sept 27, 2021 11:02:13 GMT
I was never interested in convertible, I did own an HY bond fund as a short trade, both are hybrid funds. Stocks+bonds funds are mainly what I like. If the fund I select happens to have some of these I'm OK with that, but I don't hold them directly. BTW, FAGIX isn't an HY fund, it's more like a moderate allocation fund, FAGIX vs VWIAX vs VWELX ( link). Convertible have done well since the bottom of 2020, but they picked in 02/2021 and since then are flat. I used CICVX=conver. As expected, FAGIX performance is better than VBINX(60/40) and close to PRWCX. For me, the interesting part of the chart is that CICVX has exhibited quite different behaviors during three periods:
1) For the first seven months, it gained about 45% at a rather steady pace; this period ending in November of 2020.
2) Over the next 3.5 months it adds on another 40%! This period ends mid February 2021. Something dramatic occurred during this period!
3) Another seven month period with a -4% change! Whatever happened in 2) seems to have sapped the strength of this convertible fund.
Beating the S&P over the first 10.5 months is impressive. CRUSHING it over that period's final 3.5 months; even MORE impressive! Then, basically sideways. How do we account for those differences in behavior? For me, that's more important than anything else! Thoughts on this?
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Post by oldskeet on Sept 27, 2021 11:56:56 GMT
Hi racqueteer, CICVX made a large capital gain disbursement during December of 2020. Perhaps, this had an effect on the graph you are viewing? Skeet |
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Post by racqueteer on Sept 27, 2021 12:24:29 GMT
Hi racqueteer , CICVX made a large capital gain disbursement during December of 2020. Perhaps, this had an effect on the graph you are viewing? Skeet Could be; especially if it was accrued rather than immediately added into the price. I wouldn't expect such a persistent and large change, however? More of a short-term spike? |
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Post by yogibearbull on Sept 27, 2021 12:46:23 GMT
Stockcharts and PV charts INCLUDE distributions.
Explanation for very sharp rise and flattening of CCVIX/CICVX (and convertibles in general), IMO, is that many are issued by speculative, low-rated companies (see Holdings, from SNAP, MCHP, TSLA, FOUR, UBER, RNG, etc) that ran up dramatically triggering the equity-conversion features and those funds were then redeployed to other convertibles. The expected performance of convertibles should be more like VBINX but there is huge distortion in the convertibles market in this speculative market. My caution is that what is going on is very unexpected, once in a generation phenomenon, and convertible holders should be happy but cautious. New investors looking into convertibles now should beware that the past performance may not be repeated anytime soon.
Decades ago, I got severely burned by a mainstream convertibles fund when it crashed MORE than Nasdaq Comp and the explanation was that the fund manager got caught up in Nasdaq mania but would be more careful in future. I decided that convertibles didn't fit my style but have watched them for old times sake.
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Post by johntaylor on Sept 27, 2021 17:13:39 GMT
TR's Cap Apprec has long had small amounts in converts, but down to very little in recent years.
As of June 30, 1 percent in converts.
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Post by oldskeet on Sept 27, 2021 22:59:05 GMT
Hi guys,
There have been some comments from some that favor convertible security funds and those that simply don't. For me, I have owned FISCX for better than fifteen years and have found it to a good performer both from an income generator perspective and also for its total return. Over the past fifteen years of my ownership in it, it has averaged, for me, a total return of around 15% annualized plus it is the top niche fund producer in my hybrid income sleeve. So, for me, it is a keeper. I have three other niche funds at are good income generators as well and combined these four funds make up about 20% of my hybrid income sleeve.
I find it interesting to read the many post on the board of how posters are finding success in thier investing endeavors. It's for sure there are many ways to find success and what is right for one might not be for others.
And, so it goes.
Old_Skeet
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