Moving up to 4.9%

[mathjak107]

that return is net of fees, that is what you got as a return , on the other hand cagr tor tlt over the last 5 years minus 1.68%

i know which i would prefer as a hedge ? it also has a 5 star rating from morningstar

[dualstow]

you do understand that return is net of fees

It’s still terrible

[ppnewbie]

I’m with you on the CTA’s but there seem to be so many moving parts, rely on trader skills, and they are usually very expensive for protection. I think the ETF you mentioned is a 1 percent expense and qdsnx is 3 percent.

I have an aversion to complication and expenses. It could be foolish in the long run.

Take a look at mutiny funds. They pretty much do what you are saying. They lever some stuff up and play defense with volatility harvesting and CTA’s.

At the very least it may be an interesting read. Their cockroach portfolio cover most of their portfolio.

[mathjak107]

after fees qdsnx returns from morningstar

10.37% in 2021

14.49% in 2022

8.53 in 2023

12.97 in 2024


thats terrible to you ? that beat the pp as a whole and that is only a hedge that goes with equities

[dualstow]

I was looking at Yahoo Finance. It shows a 23% return from 2020. Share price went from $10 to $12 and change so not annualized. But after your post above I looked at Vanguard, which has returns like the ones you stated. Which is correct?

[mathjak107]

the returns i posted are correct , which is why it has a 5 star rating from morningstar

[ppnewbie]

I’m looking at a chart. I don’t see these numbers. It’s looks choppy to flat to me and it has only been around for 2 years.

[mathjak107]

the correct info is on morningstar

it started in 2020 by aqr which was founded by guru cliff asness


https://funds.aqr.com/funds/alternative ... dsnx#about

[dualstow]

Looks like it goes back to mid-2020 — ?
Edit: was still typing when m posted.

[ppnewbie]

https://mutinyfund.com/cockroach/

Part three describes how they use volatility and managed futures as defense.

[mathjak107]

yes , i posted the link to the fund family data AQR

[ppnewbie]

the correct info is on morningstar

it started in 2020 by aqr which was founded by guru cliff asness


https://funds.aqr.com/funds/alternative ... dsnx#about

You’re right I see it now.

[dualstow]

Those numbers certainly look good, I must admit. I won’t be chasing it.
Hope it serves you well, though.

[ppnewbie]

Did some backtesting and it was definitely not correlated with the market when the market was going down (which was impressive). I did see that it lagged significantly when the market was (is) on a hot streak and I wonder how the 3 percent fee eats away at the gains. Not saying it’s bad. It could be much better than taking a bath on LTT’s.

I will throw out some backtests this weekend.

Thanks Mathjak!

[mathjak107]

forget the fees , the returns are your bottom line .

these are costly processes but compared to trying to hedge with long term bonds these have a better success rate .

typically these get combined with leveraged funds so the combination of the leveraged funds and these kinds of hedges blow away something like the pp .

the sharpe ratio is way way better , the returns are way better and the consistency seems to be way better in even more varied outcomes.

rising rates is kryptonite to the PP and i have said this here for years now and those who insisted on using long term bonds now have a decade of losses and 15 years at less then cash instruments .

tlt has returned just 2.62% cagr the last 15 years

the last 10 years it lost money at minus 1.74% cagr

the last 5 years it lost 6.85% cagr

the last 3 years it lost 12.91 cagr

the last year it lost 7.49%

that’s ridiculous performance and you are worried because funds with higher fees and with good returns have these costs ?

that’s like waiting so long for the tlt ship to come in the pier collapsed

[mathjak107]

like i said in the variable portfolio thread i have really tried to de-risk my portfolio .

i have pulled back on even my index and total market funds i had which at this point are riskier than nasdaq was in 1994 .

in three decades not only has the tech weighting quadrupled but just 7 stocks have been controlling every thing .

so being retired and having passed thru my retirement red zone last year i decided to restructure things , and yes there is a lot of moving parts but they require no real attention except maybe a quarterly rebalancing on the leveraged stuff and once a year on the dogs of the dow .

only bond funds i use are NYF , the new york tax free muni etf , fidelity floating rate high income , fidelity high income and tyd the leveraged bond fund in the carolina reaper .

bonds are still only about 12% of the portfolio with cash instruments being quite larger

so my core funds for growth are

vti a total market fund , which i have been cutting back on

fidelity blue chip growth , which i own decades , it has doubled the last two years , i cut that position in half now .

Blue Chip Growth had out outperformed the Russell 1000 Growth Index (the fund's benchmark) over the past decade - a feat that is unmatched by most other Fidelity growth funds. The tradeoff, of course, is that Blue Chip Growth tends to be relatively volatile, reflecting the heightened risk that comes from a concentrated portfolio that often has half or more of its holding in technology disruptor firms.

The large-cap growth segment of the U.S. stock market is where the most compelling long-term growth stories can be found, and the Fidelity funds that operate in that corner of the stylebox tend to generate the best long-term performance figures. However, stocks in this arena often run with higher P/E ratios, which can lead to dramatic declines when earnings growth slows down or interest rates rise. The post-Y2K bust (2000-2002) illustrates this most vividly; during that 3-year period the Russell 1000 Growth Index lost 55% of its value.

fidelity equity income which isn’t heavy into tech at all , Fidelity Equity-Income Fund invests in dividend stocks and aims for an overall yield that exceeds that of the S&P 500. It's benchmarked against the Russell 3000 Value index. The fund's strategy is a time-tested approach that dates back almost six decades, and it places the fund solidly in the large-cap value corner of the stylebox.

In decades past, a strategy like this was considered a sure-fire bet for outperforming over the long run, because dividend stocks tend to hold up better during stock market downturns, especially in selloffs driven by rising interest rates and/or rising inflation. While this fund remains a solid bet for tough times in the stock market, a greater proportion of fast-growing technology disruptor firms in the S&P 500 likely means that slower-growing firms that pay dividends no longer have the long-term edge they had in the past. As such, it should not be expected to exceed the S&P 500 over long periods of time.

i cut back on this too and added the dogs of the dow which i mention below



fidelity growth discovery , Growth Discovery is a diversified domestic stock fund operating in the large-cap growth segment. It is benchmarked against the Russell 3000 Growth Index, which has significantly more mid-cap exposure than the Russell 1000 Growth Index. The fund tends to focus on the fastest quartile of earnings growers: industry leaders and companies with proven track records. Its overall volatility tends to be on the low side compared with Fidelity's other large-cap growth options.

The fund uses a "go anywhere" investment approach, analyzing the entire value chain, which enables it to invest in broad themes and across market capitalizations.

cut back on this as well and added the below

berkshire is a big position in my taxable account as it spins off nothing taxable and is virtually a mutual fund in diversification

i have my value play in the dogs of the dow ,

the top 10 highest yielding dow stocks tended to beat the dow since 1991 except for the last few years .

many think that value is ripe for a turnaround . these companies shouldn’t get hit as hard in a down turn .

then i have the star of the show so far , the carolina reaper which i now have more than a half million in so i am committed to the process

that is

20% upro 3x stock

12% tyd 3x bond

67% made up of my own mix of

dbmf , qdlenx , qdsnx and cta although one can use all dbmf or cta , so a lot of leveraged risk parity going on here


throw in some ibit , and gld and that is quite a bit of diversification for what amount to a 50% max equity portfolio.

it has the pulling power of a 60/40 with a fraction of the draw down and a much improved sharpe ratio.

no , it’s not a simple mix of funds but it represents the best of the combinations i could use to get away from being so tech and bond dependent while at the same time maintaining great tax efficiency in our taxable account now that painful rmds have started.

i guess you can call this my work around being bond heavy in retirement while de risking the equity side

[ppnewbie]

Thanks mathjak. That’s a lot to think about.

[mathjak107]

i can never say what someone else should do , i can only speak. for what i do of my opinions on various assets

[dualstow]

US 10-year notes have hit 4.8%

[mathjak107]

TLT down to 85.31

ief 91.13

iei 114.53

the fall from the rate lows has been amazing for tlt

[Pointedstick]

It feels like it should be the perfect time to back up the truck for long-duration government bond funds: share prices are in the toilet and the Fed has already told us they plan to continue cutting rates over the next few years, which we know benefits bond values. Buy low, right?

And yet... why bother? Falling interest rates also benefit stocks by giving them less competition, and signal a strong economy which is the foundation of stock growth. Whenever the US stock market crashes, it seems to bounce back within a year or two anyway. The US economy is an incredible juggernaut and has been for generations now.

Everything is dependent on the prosperity of the economy; why not lean into it? And if those times are over, we're all boned anyway — including the government bonds since tax revenues will be falling as well.

[mathjak107]

the fed cutting short term rates may not benefit bonds when investors see things differently and want more compensation for going out longer.

compared to inflation short term rates are to high . bonds are about right .

i think at best buying now , you will maybe see the coupon rate at best

[yankees60]

It feels like it should be the perfect time to back up the truck for long-duration government bond funds: share prices are in the toilet and the Fed has already told us they plan to continue cutting rates over the next few years, which we know benefits bond values. Buy low, right?

And yet... why bother? Falling interest rates also benefit stocks by giving them less competition, and signal a strong economy which is the foundation of stock growth. Whenever the US stock market crashes, it seems to bounce back within a year or two anyway. The US economy is an incredible juggernaut and has been for generations now.

Everything is dependent on the prosperity of the economy; why not lean into it? And if those times are over, we're all boned anyway — including the government bonds since tax revenues will be falling as well.

Not so certain of the rate cuts as witnessed by this:

https://macro-markets.com/f/fed-rate-cu ... -near-term
Fed Rate Cuts Are Probably On Pause For The Near Term
January 13, 2025|Macroeconomics, Markets


Also, buying government bonds depends upon if you are in the accumulation phase or decumulation phase of your investing life.

You are clearly in the former while I am in the latter.

[dualstow]

The main reason I have been so slow to buy bonds, to buy more bonds, is because my pre-pp dividend stocks keep raising their payouts every year.

Even so, I don’t have enough treasurys and I think I’m jumping in over the next several months.

[mathjak107]

if anything now i have to buy triple tax free muni funds . with these damn rmds the increase in taxes can be a deal breaker compared to treasury bonds .

while muni interest is added back in for purposes of iirma surcharges , the increased rmd income throws us in another bracket

but nothing longer than 6-7 years