For many years Durig Capital has published its Fixed Income 2 (FX2) high-yield bond ideas on Seeking Alpha as they were added to our FX2 client portfolios. In this article we review the performance of Durig's Fixed Income 2 (FX2) Portfolio to explore the relationship between portfolio composition and overall performance, and a glance at some of the risk & reward characteristics of the portfolio as of the 1st quarter-end, 2018.
The relatively standard benchmarks shown below are compared to the Year-to-Date (YTD) and Trailing 1 year, Trailing 3 year and Trailing 5 year returns, provided by the High-Yield Bond Mutual Fund database provided by Morningstar. We estimate that Morningstar tracks the performance of and benchmarks close to 800 High-Yielding Bond Mutual Funds, and on April 5th, 2018, this is how our clients aggregated FX2 portfolios compared to Morningstar's high-yield bond fund database:
Year-to-Date, FX2 aggregated returns are up 4.10%.
Highland Opportunistic Credit Z (HNRZX), 3.91% YTD
Highland Opportunistic Credit A (HNRAX), 3.55% YTD
Highland Opportunistic Credit C (HNRCX), 3.41% YTD
The average YTD return among the high-yield bond mutual funds listed was - 0.76%
FX2 aggregated year to date returns were 639% above the average YTD return of the high-yield bond mutual funds listed
For a Trailing 1 Year period, FX2 aggregated returns were up 11.93%.
DDJ Opportunistic High Yield I (DDJCX), 9.28%
DDJ Opportunistic High Yield Institutional (DDJIX), 9.27%
Deer Park Total Return Credit I (DPFNX), 9.18%
The average Trailing 1 Year return among the high-yield bond mutual funds listed was 3.25%
FX2 aggregated Trailing 1 Year returns were 267% above the average Trailing 1 Year return of the high-yield bond mutual funds listed
For a Trailing 3 Year period, FX2 aggregated returns were up 13.02%.
Artisan High Income Advisor (APDFX), 7.10%
Artisan High Income Investor (ARTFX), 6.91%
Credit Suisse Strategic Income I (CSOIX), 6.58%
The average Trailing 3 Year return among the high-yield bond mutual funds listed was 3.89%
FX2 aggregated Trailing 3 Year returns were 234% above the average Trailing 3 Year return of the high-yield bond mutual funds listed
For a Trailing 5 Year period, FX2 aggregated returns were up 9.11%.
Fairholme Focused Income (FOCIX), 7.75%
Fidelity Capital & Income (FAGIX), 6.54%
Fidelity Advisor High Income Advantage I (FAHCX), 6.26%
The average Trailing 5 Year return among the high-yield bond mutual funds listed was 3.82%
FX2 aggregated Trailing 5 Year returns were 138% above the average Trailing 5 Year return of the high-yield bond mutual funds listed
When compared to our closest benchmark, Bloomberg Barclays US Aggregate Bond Index TR USD, the FX2 Portfolio provides an excess return of over 11%, and a beta of 0.33.
We believe we have an outstanding upside capture ratio, which is displayed below.
Disclosure: Past performance is no guarantee of future results. FX2 is a composite of individual (segregated) bond accounts comprised of individual bond positions, with return averages both higher and lower than the FX2 composite returns. Individual (segregated) accounts are a different investment vehicle than bond funds, offering more easily customized asset allocation and tax accountability compared to having all the investments held in one single large pool.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.