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Michael Fabian

 
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  • Closed-End Fund Discounts Widen: So What Are You Buying? [View article]
    7of9,

    I would categorize the NAV pricing as very accurate. Going from memory, I recall PDI holding approximately 10% in Level 3 assets stated in their latest annual report issued in March. Naturally holding illiquid MBS isn't an issue for a CEF, since they will not be "forced" to sell at an inopportune time.

    I believe PIMCO likely marks these assets as close to on the money as is institutionally possible. Undercutting their market value could be considered tax evasion, and over pricing them would have the board of directors of the fund all over them. I believe they take their reputation and fiduciary responsibility very seriously in this regard.

    The real magic within this fund is Dan Ivascyn and his team's hedging strategies using pay-fixed swaps. He has done an amazing job balancing the credit, currency, and interest rate risk.

    Looks like some bottom feeders are already jumping on PDI's opening swoon.
    Jun 11 11:49 AM | 2 Likes Like |Link to Comment
  • 3 Lessons I've Learned From Investing In Closed-End Funds [View article]
    http://seekingalpha.co...
    May 30 09:24 AM | Likes Like |Link to Comment
  • An Alternative Hedge Against Inflation [View article]
    7of9,

    It appears to me ILB only has roughly 23% in EM debt exposure, so I wouldn't classify it as an emerging market bond ETF. It also wasn't my intention to directly compare ILB and TIP side by side, but merely just to point out a different option for Inflation Linked Bonds.

    Like I mentioned in the article, I agree the lack of consistent dividends isn't something I'm attracted to, but I suppose it all works into total return in the end. Thanks for your comment!

    Michael
    May 3 09:30 AM | Likes Like |Link to Comment
  • Sell Domestic And Go International For Higher Dividends [View article]
    You can take a look at the indicated yield I based my figures on at ishares.com, the ETF provider. The 12 month trailing yield can be somewhat misleading because dividends from foreign companies can be lumpy, hence the reason I always use SEC yields since it makes for a more equal comparison.

    http://bit.ly/10EidXI
    Apr 25 11:11 PM | 1 Like Like |Link to Comment
  • Keeping Your Portfolio Afloat In Senior Loans [View article]
    7of9,

    10% was exactly the number I was thinking as a typical allocation, especially if it works to fill in part of your high yield bond bucket. I think you could go as high as 20% to replace core fixed income funds in either a rapidly expanding economic or interest rate environment.

    Loans can be a relatively safe asset class, even more so in light of the Fed's QE program. However, They do have a tendency to sell off extremely fast in an unfavorable market, usually when credit spreads really start to blow out and/or liquidity dries up. Since the asset class has seen a lot more issuance and is more broadly owned amongst institutional and retail investors than in 2008, they are much better off, but its still something to be cognizant of. If an event like what I'm describing were to occur it usually makes for a fantastic buying opportunity!
    Apr 18 09:57 AM | 1 Like Like |Link to Comment
  • Keeping Your Portfolio Afloat In Senior Loans [View article]
    Verrip1,

    I agree, thank you for the contribution. Two of my favorite Floating rate CEF's are (JRO) and (VVR). (PFN) is a great one as well, but it isn't exclusively floating rate. However those that arent apt to monitor premium/discount spreads, leverage, etc. should stick to an OEF.

    Although the loan market has changed a lot since 2008, they can still go through periods of volatility due to liquidity squeezes during times of stress in the markets.
    Apr 17 03:03 PM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Interesting perspective, timely opinion too:

    http://seekingalpha.co...
    Apr 12 01:12 PM | Likes Like |Link to Comment
  • More from Gundlach: Bond indexing has been a wonderful strategy for many years, but now the well-followed indexes (BND, AGG) have too short of a duration and are overloaded with Treasurys. The value is in non-traditional sectors like emerging markets (EMB), non-agency MBS, bank loans (BKLN), and global high yield (GHYG). [View news story]
    I agree whole heartedly with Mr. Gundlach, I just wrote an article on this very subject yesterday. Please visit:

    http://seekingalpha.co...
    Apr 12 01:10 PM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Brad,

    To my point, they have a much more open investment mandate which is why I prefer these three funds. In the interest of transparency, there are a few other additional holdings you actually left out that AGG or BND cannot own, they include interest rate swaps, convertible bonds, senior loans (floating rate notes), TIPS, STRIPS, Warrants, Tax exempt Munis, and preferred stocks.

    I still think there is no better way to compare a fund than to its benchmark. All three of these funds use the Barclays Agg Index as their benchmark. I can see why you might disagree, but when I evaluate investments, that is where I start.

    all the best,
    Michael
    Apr 12 11:34 AM | 1 Like Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Chippguy,

    You can take a take a look at the symbols in comparison on Yahoo finance or any other publicly available data provider. Or you can view the fund company's website at:

    http://bit.ly/170043k
    http://bit.ly/z0rVpO
    http://bit.ly/170043n
    Apr 12 10:55 AM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Dave,
    The two primary points I make in the article are:

    A)The Barclays Aggregate index has gotten way overweight two areas of the market, and in turn these two ETFs have done the same. Let me put it in a different context, I am actually a big proponent of index investing for equities. If the S&P 500 were to become so bloated that Technology and Energy made up over 50% of the index and muscled out other value stocks in the Healthcare, Consumer Staples, and Utillities sectors, I would be saying the same thing about the S&P! I know I've probably upset the Bogglers, that blindly agree with index methodology no matter what the construction, but in the bond market its simply not that easy. My point is that the index is broken, not that style of investing.

    Probably half the people that own AGG and BND despise the governments irresponsible issuance of debt, and are telling their friends at cocktail parties how much they hate the current situation, however much to their chagrin, by indexing they are buying more and more treasuries each quarter.

    B) Active management has done far better for far longer in the case of the three funds I've mentioned. If your an investor, you want good investment outcomes that will yield you the best return possible considering your goals and risk tolerance. Otherwise whats the point, or at least in the case of my clients that hold us accountable for the returns on their accounts. There should be sound reasoning behind every investment selection made, and my point was that I just dont see any in the case of (AGG) and (BND).
    Apr 12 10:06 AM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    7of9,

    I had been planning to write an article on floating rate notes within the next couple of weeks, I'll go ahead and speed it up and work on it over the weekend. I'll hopefully have it posed early next week. I definitely have some favorites in that space. Stay tuned. Thanks again.

    Michael
    Apr 11 09:02 PM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Thanks for the kind remarks 70f9,

    I will also add PIMIX to that pile, another fund that has really benefited from active management.
    Apr 11 07:17 PM | Likes Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Jeezuz30,

    Im fairly familiar with TCW's strategy since its very similar in nature to DoubleLine's, however there have been some changes over there since Jeffrey Gundlach left in 2009. There is a much higher percentage of ABS and Treasury Securities within their portfolio when compared to DBLTX. I still prefer Doubleline as a firm as I believe their "house Views" are more aligned with my own and that of my clients.

    I believe your investment in TGMNX will continue to perform well in the current climate, however be aware of the changes they make to counter the effects of interest rate volatility.
    Apr 11 05:48 PM | 1 Like Like |Link to Comment
  • 2 Popular Fixed Income ETFs I Would Never Own [View article]
    Brad,

    The actively managed trio are "forced" to own investment grade bonds as well, they have prospectus limits that they cannot surpass in junk securities. During certain times, these securities have hurt more than they have helped, 2008 is a prime example.

    The amusing thing is that the Barclays Agg. index used to hold Non-Agency MBS securities within their portfolio just like DoubleLine and PIMCO, however they were removed from the index at the depths of the credit crisis, in other words, the worst possible time. It wasn't all the index's fault since the rating agencies got it all wrong as well. At the time Jeffrey Gundlach had very little if any Non-Agency MBS exposure in the TCW Total return Fund, and began to add when dislocations began to present themselves.

    I believe the active management from each firm has benefited investors significantly. When you are retail investor shopping for a bond fund, in my opinion this is as apples-to-apples as it gets.
    Apr 11 04:48 PM | Likes Like |Link to Comment
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