WisdomTree 90/60 US Efficient Core Fund [NTSX] (formerly US Balanced Fund)
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Ya, great to know. This is just an initial filing, looks like? How long should we expect it will take before they're available on the market, or before we have more details like ER?
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Thanks for the updated sec listings! The Intl one may be worth looking into more for me. If they added an extended market one I would be set haha! Please update when anyone hears of the launch dates or more info.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
One thing I noticed is that the yield is 0.85%. On VOO the yield is 1.56%.
Is this a function of the stocks they choose for their 500? Or is it caused by some other aspect of the fund?
Everyone has assumed the equity portion is S&P 500, but I don't know if they ever say that is.
Is this a function of the stocks they choose for their 500? Or is it caused by some other aspect of the fund?
Everyone has assumed the equity portion is S&P 500, but I don't know if they ever say that is.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Just noticed something:
It looks like bonds are 60% and equities are 40%. Isn't it supposed to be the other way around, or am I misinterpreting this?
It looks like bonds are 60% and equities are 40%. Isn't it supposed to be the other way around, or am I misinterpreting this?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
The fund is benchmarked against the S&P500 but I don't believe the equity portion tracks it. Probably to avoid the S&P license fee.thenextguy wrote: ↑Wed Feb 24, 2021 9:46 am One thing I noticed is that the yield is 0.85%. On VOO the yield is 1.56%.
Is this a function of the stocks they choose for their 500? Or is it caused by some other aspect of the fund?
Everyone has assumed the equity portion is S&P 500, but I don't know if they ever say that is.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Not seeing your image but from what I'm reading 90% is equities, 10% is collateral for treasury derivatives.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
The yield on NTSX vs. VOO is probably lower because NTSX holds treasury futures, which do not have any interest payment.thenextguy wrote: ↑Wed Feb 24, 2021 9:46 am One thing I noticed is that the yield is 0.85%. On VOO the yield is 1.56%.
Is this a function of the stocks they choose for their 500? Or is it caused by some other aspect of the fund?
Everyone has assumed the equity portion is S&P 500, but I don't know if they ever say that is.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Bleh, image here in link: https://imgur.com/a/sSRqvefcorp_sharecropper wrote: ↑Wed Feb 24, 2021 1:59 pmNot seeing your image but from what I'm reading 90% is equities, 10% is collateral for treasury derivatives.
The holdings appear to tell a different story?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
From the fund's prospectus
The fund doesn't actually hold 60% in bonds.
The Fund invests in a representative basket of U.S. equity securities of large-capitalization companies generally weighted by market capitalization. Under normal circumstances, the Fund will invest approximately 90% of its net assets in U.S. equity securities. The remainder of the net assets, which WisdomTree Asset Management, Inc., the Fund’s investment adviser (“WisdomTree Asset Management” or the “Adviser”), expects to be in cash and cash equivalents, will serve as collateral for U.S. Treasury futures contracts’ positions of varying maturities ranging from 2 to 30 years, which are selected to achieve a target duration of 3 to 8 years. Duration is a measure used to determine the sensitivity of a portfolio to changes in interest rates with a longer duration portfolio being more sensitive to changes in interest rates. Under normal circumstances, the notional exposure to the aggregate U.S. Treasury futures contracts’ positions will represent approximately 60% of the Fund’s net assets.
The fund doesn't actually hold 60% in bonds.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I think that's part of it. But the fund is also 90% equities. So I'm guessing another part of it is the stocks they hold.anon_investor wrote: ↑Wed Feb 24, 2021 2:18 pmThe yield on NTSX vs. VOO is probably lower because NTSX holds treasury futures, which do not have any interest payment.thenextguy wrote: ↑Wed Feb 24, 2021 9:46 am One thing I noticed is that the yield is 0.85%. On VOO the yield is 1.56%.
Is this a function of the stocks they choose for their 500? Or is it caused by some other aspect of the fund?
Everyone has assumed the equity portion is S&P 500, but I don't know if they ever say that is.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I understand the core concept, it's just that the holdings chart makes it look like it's 40% equities, 60% bonds, which doesn't make sense to me.case_of_ennui wrote: ↑Wed Feb 24, 2021 3:48 pm From the fund's prospectus
The Fund invests in a representative basket of U.S. equity securities of large-capitalization companies generally weighted by market capitalization. Under normal circumstances, the Fund will invest approximately 90% of its net assets in U.S. equity securities. The remainder of the net assets, which WisdomTree Asset Management, Inc., the Fund’s investment adviser (“WisdomTree Asset Management” or the “Adviser”), expects to be in cash and cash equivalents, will serve as collateral for U.S. Treasury futures contracts’ positions of varying maturities ranging from 2 to 30 years, which are selected to achieve a target duration of 3 to 8 years. Duration is a measure used to determine the sensitivity of a portfolio to changes in interest rates with a longer duration portfolio being more sensitive to changes in interest rates. Under normal circumstances, the notional exposure to the aggregate U.S. Treasury futures contracts’ positions will represent approximately 60% of the Fund’s net assets.
The fund doesn't actually hold 60% in bonds.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
It adds up to more than 100% due to the derivatives. I think the pie chart is just wrong, since they probably have one set of code that makes these and it doesn’t handle derivatives correctly in the pie
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Could you share more about that?crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I can't speak to Wisdomtree's track record but there are tons of ETF filings that have never materialized into an ETF. I think many are simply a way to reserve a ticker symbol, I've heard Meb Faber brag about having some particular ticker symbol, and sure enough, if you look, his company Cambria Investments, has filed for numerous ETFs that don't exist still (filings from years ago). Pretty lame/childish practice if you ask me, certainly doesn't endear me to buying into any Cambria funds, reeks of buying internet domains to squat on. Hopefully Wisdomtree takes things more seriously.crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I would be excited if options were available for NTSX.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Just curious as to what happened to NTSX on February 25th, 2021? The trading volume erupted to 249,800 shares. Looking at historical data, NTSX sometimes erupts in share volume for a single day. Is it because a whale is selling/buying shares on that day?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Is there a whale BH?
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I hope the volume goes up and then the spread will narrow on it! Too many of us buy and hold-ers i guess. Seems like about once a month the volume shoots over 100k.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
RE: "Just curious as to what happened to NTSX on February 25th, 2021?..." by Raraculus » Sat Feb 27, 2021 1:54 pm
Perhaps - don't know - that day may reflect what some have called a 'heartbeat' trade - i.e., trades used to manage ETFs' 'tax position'. See below for links to general discussion.
https://insight.factset.com/the-heartbe ... efficiency
https://www.etf.com/sections/features-a ... odge-taxes
https://www.etf.com/sections/features-a ... efficiency
Perhaps - don't know - that day may reflect what some have called a 'heartbeat' trade - i.e., trades used to manage ETFs' 'tax position'. See below for links to general discussion.
https://insight.factset.com/the-heartbe ... efficiency
https://www.etf.com/sections/features-a ... odge-taxes
https://www.etf.com/sections/features-a ... efficiency
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
It looks like NTSX has slightly underperformed VOO YTD on PortfolioVisualizer, but not by a whole lot. So the increase in interest rates has not really had a major effect?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Just like the upside isn't that drastic over the S&P 500, the downside was never expected to be too severe either.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Anyone can explain more about what NTSX’s holding?
90% spy
10% bonds future
However SPY is now -0.19%
BND is now +0.08%
How come NTSX is -0.62% at the moment? I don’t get it. Anyone can explain more about this? Thanks.
90% spy
10% bonds future
However SPY is now -0.19%
BND is now +0.08%
How come NTSX is -0.62% at the moment? I don’t get it. Anyone can explain more about this? Thanks.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I have been thinking about this as well. It makes sense that their next step would be adding a developed international 90/60 fund. But I find it interesting that they would add an emerging market 90/60 fund and not add a Russel 2000 90/60 fund.crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Do these new 90/60 funds also rely on treasuries? Does the relationship of US stocks to US treasuries hold up between intl stocks and US treasuries? Trying to understand the value proposition of these new funds.EfficientInvestor wrote: ↑Fri Mar 19, 2021 5:07 pmI have been thinking about this as well. It makes sense that their next step would be adding a developed international 90/60 fund. But I find it interesting that they would add an emerging market 90/60 fund and not add a Russel 2000 90/60 fund.crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
If you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
You can view the holdings, which are a mix of short to 20-year treasuries, online. It does not hold BND or any corporate bonds for that matter, so shouldn’t be compared to BND
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
This is the correct explanation. If you're expecting perfect tracking on an hourly/daily basis you'll be disappointed but it is faithful to exactly what it says on the tin (prospectus). It's easily verified by running simulations of the holdings vs NTSXrchmx1 wrote: ↑Fri Mar 19, 2021 7:47 pmIf you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Does this mean you can manipulate when you should buy (or sell) it based on the discrepancies, or is it just noise?rchmx1 wrote: ↑Fri Mar 19, 2021 7:47 pmIf you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I am still not understand this. What causes this correction?rchmx1 wrote: ↑Fri Mar 19, 2021 7:47 pmIf you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Thanks for the information. If I want to cross compare with ETFs, which bond etf should I use for?
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
There isn't one.HolyGrill wrote: ↑Fri Mar 19, 2021 9:41 pmThanks for the information. If I want to cross compare with ETFs, which bond etf should I use for?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Any 7-10 year duration Treasury Fund will do. IEF is probably a good equivalent to track just the bond part of NTSX.HolyGrill wrote: ↑Fri Mar 19, 2021 9:41 pmThanks for the information. If I want to cross compare with ETFs, which bond etf should I use for?
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I'm guessing it's harder for them to track a bigger index like Russell 2000 with their tiny AUM? I read the prospectus recently and they no longer say they aim to track only 500 large cap US. They're free to track a much more broader segment but so far chosen not to.EfficientInvestor wrote: ↑Fri Mar 19, 2021 5:07 pmI have been thinking about this as well. It makes sense that their next step would be adding a developed international 90/60 fund. But I find it interesting that they would add an emerging market 90/60 fund and not add a Russel 2000 90/60 fund.crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Noo it's just noise. It's no different than the luck of the draw with the timing of any fund or individual stock purchase. Say NTSX seems to be down a little bit from what you'd expect so you think, "Great time to make a purchase!" Then the market tanks next day, and what seemed like good timing turns out to be ill timed. Granted, this is from a buy and hold perspective, but I don't see how there's any greater advantage for day trading here than with any other roll of the dice.tj wrote: ↑Fri Mar 19, 2021 9:33 pmDoes this mean you can manipulate when you should buy (or sell) it based on the discrepancies, or is it just noise?rchmx1 wrote: ↑Fri Mar 19, 2021 7:47 pm
If you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Granted, I am far from the most knowledgeable person here about these things, but my assumption is that it has to do with the relatively low trading volume of this fund. The greater the trading volume of an ETF, the closer it hones to what you'd expect based upon that day's behavior of the underlying. So a more modest trading volume can let in this kind of "lag." Since I view this from a buy and hold perspective, I'm no more concerned by the day to day movement of this fund than I am with any other fund in my portfolio. One important consideration, discussed earlier in this thread, is that even with a lower trading volume, the occasional very large order doesn't rock the boat much, since the market maker can create shares as needed.
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Yes, from what I recall in reading the filing, I believe they will rely on US treasuries. As for the second question...I don’t really focus on that. I think the approach with these funds, and with any risk parity-type approach is that you should first determine what amount of exposure you want in each asset class and then determine the products that will help you hit those exposures. Let’s say you want 90% stock and 60% bonds but you want your stock split 2/3 US and 1/3 international. Well, right now, you can’t really do that without using margin, leveraged ETFs, options, or futures. You could either just do 100% NTSX and forego international exposure or you could do 2/3 NTSX and 1/3 VXUS, but then you’re only getting 40% bonds. With the new funds, you would be able to use them instead of VXUS and be able to attain your target stock and bond exposure.Tipro wrote: ↑Fri Mar 19, 2021 5:46 pmDo these new 90/60 funds also rely on treasuries? Does the relationship of US stocks to US treasuries hold up between intl stocks and US treasuries? Trying to understand the value proposition of these new funds.EfficientInvestor wrote: ↑Fri Mar 19, 2021 5:07 pmI have been thinking about this as well. It makes sense that their next step would be adding a developed international 90/60 fund. But I find it interesting that they would add an emerging market 90/60 fund and not add a Russel 2000 90/60 fund.crystalbank wrote: ↑Wed Feb 24, 2021 8:46 pm Now that WisdomTree is developing two more ETFs like NTSX, one with Int'l developed and another with EM - Perhaps they should consider changing NTSX investment objective so that it tracks US Extended Market as well.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Folks, I'm considering putting $1M into NTSX, alongside about $1M in ASX:VAS (Aus stocks index fund) and $1M in ASX:VGS (Intl developed index fund). I am an Australian investor.
1. Any advice for how to navigate the spread on NTSX? Should I just set up a few orders to buy into the ask, or? I'm using interactive brokers.
With a smaller purchase, I've tried to buy into the mid-price, with zero fills until I bit the bullet and bought into the ask. Jane Street (the market maker) really doesn't like to bite...
2. NTSX seems too good to be true; are there any hidden risks such as issuer risk, custodian risk, etc? I understand that treasury futures are highly liquid, and that there will be far bigger problems to worry about if its 10% posted collateral is not sufficient for 50% of notional treasury futures.
3. If you were investing with a multi-decade time horizon, would you consider investing more into NTSX than VGS?
1. Any advice for how to navigate the spread on NTSX? Should I just set up a few orders to buy into the ask, or? I'm using interactive brokers.
With a smaller purchase, I've tried to buy into the mid-price, with zero fills until I bit the bullet and bought into the ask. Jane Street (the market maker) really doesn't like to bite...
2. NTSX seems too good to be true; are there any hidden risks such as issuer risk, custodian risk, etc? I understand that treasury futures are highly liquid, and that there will be far bigger problems to worry about if its 10% posted collateral is not sufficient for 50% of notional treasury futures.
3. If you were investing with a multi-decade time horizon, would you consider investing more into NTSX than VGS?
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I have the same question. However, I am more worried and want to know if the 10% BOND FUTURE will lose more than it's part for some reason.coingaroo wrote: ↑Sat Mar 20, 2021 3:37 am Folks, I'm considering putting $1M into NTSX, alongside about $1M in ASX:VAS (Aus stocks index fund) and $1M in ASX:VGS (Intl developed index fund). I am an Australian investor.
1. Any advice for how to navigate the spread on NTSX? Should I just set up a few orders to buy into the ask, or? I'm using interactive brokers.
With a smaller purchase, I've tried to buy into the mid-price, with zero fills until I bit the bullet and bought into the ask. Jane Street (the market maker) really doesn't like to bite...
2. NTSX seems too good to be true; are there any hidden risks such as issuer risk, custodian risk, etc? I understand that treasury futures are highly liquid, and that there will be far bigger problems to worry about if its 10% posted collateral is not sufficient for 50% of notional treasury futures.
3. If you were investing with a multi-decade time horizon, would you consider investing more into NTSX than VGS?
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Could the discrepancies be due to the time since the last rebalance of the fund?rchmx1 wrote: ↑Fri Mar 19, 2021 10:59 pmNoo it's just noise. It's no different than the luck of the draw with the timing of any fund or individual stock purchase. Say NTSX seems to be down a little bit from what you'd expect so you think, "Great time to make a purchase!" Then the market tanks next day, and what seemed like good timing turns out to be ill timed. Granted, this is from a buy and hold perspective, but I don't see how there's any greater advantage for day trading here than with any other roll of the dice.tj wrote: ↑Fri Mar 19, 2021 9:33 pmDoes this mean you can manipulate when you should buy (or sell) it based on the discrepancies, or is it just noise?rchmx1 wrote: ↑Fri Mar 19, 2021 7:47 pm
If you watch NTSX day to day you'll see "discrepancies" like this. It's something like corrections from the previous day's closing price. So maybe it was up a little more yesterday than it should have been, so today you saw a correction. This has happened on the positive end as well. Over time, it all seems to even out and behave as it should.
Granted, I am far from the most knowledgeable person here about these things, but my assumption is that it has to do with the relatively low trading volume of this fund. The greater the trading volume of an ETF, the closer it hones to what you'd expect based upon that day's behavior of the underlying. So a more modest trading volume can let in this kind of "lag." Since I view this from a buy and hold perspective, I'm no more concerned by the day to day movement of this fund than I am with any other fund in my portfolio. One important consideration, discussed earlier in this thread, is that even with a lower trading volume, the occasional very large order doesn't rock the boat much, since the market maker can create shares as needed.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I've thought a long time on this. I think it's important to consider three things:
1. The bond component here is a ladder with exposure to all durations, 2, 5, 10, 30. It borrows a T-Bill rates. This duration diversification works just the same as diversifying by investing in multiple stocks; as for example we've seen 10yr and 30yr moves, but 2yr and 5yr has been less impacted.
2. Borrowing a T-Bill rates mean that you benefit from the carry trade: pay low interest and get paid higher interest. It's a good trade to take.
3. Interest rates will go up and down, but they tend to go down during recessions. This is a nice counterbalance to stocks going down during recessions. This is not guaranteed to always be the case (e.g. inflationary recessions), but it should help more often times than not.
4. You'd hope a market would somewhat reasonably price bonds and securities together, and that bond prices reflect future risk-reward expectations, equity risk premium, etc etc. If bonds are a super bad idea, enough people would sell them to push the price down and yields higher until they're in balance. This is what we're seeing now, and I'm not worried about my TMF, as I know the higher interest rates are, the better it is for my bonds in the long run.
I'm more of a 100% stocks guy, but these three reasons make me like the bond component of NTSX. With treasuries at record low rates middle of last year, I was worried about bonds. At these rates, I do see bonds regaining their power to go down in rates and hence be able to protect against crashes in your stocks.
Note: I re-iterate that this fund must be seen similarly to a 100% stocks fund in terms of risk profile. It is not a 'balanced' risk fund, it is not a 75/25 fund... the equity risk exposure you're taking is still 90% stocks.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
And to pile on, in some markets this fund will be riskier than 90% stocks. If you think rock-bottom rates have nowhere to go but up and that rising rates will hurt overbought growth stocks, this fund wont do well. This seems to be happening now of course, but as someone actively buying NTSX in taxable, I think (hope) it's a short-term trend. But definitely something to keep an eye on.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
With #2, there was mention of the inverted yield curve in the past where the short term rate was above long term rate. That would probably be the the time it's not a good trade. Seems unlikely that would happen for a long period of time, but I suppose it's possible.coingaroo wrote: ↑Sat Mar 20, 2021 10:32 amI've thought a long time on this. I think it's important to consider three things:
1. The bond component here is a ladder with exposure to all durations, 2, 5, 10, 30. It borrows a T-Bill rates. This duration diversification works just the same as diversifying by investing in multiple stocks; as for example we've seen 10yr and 30yr moves, but 2yr and 5yr has been less impacted.
2. Borrowing a T-Bill rates mean that you benefit from the carry trade: pay low interest and get paid higher interest. It's a good trade to take.
3. Interest rates will go up and down, but they tend to go down during recessions. This is a nice counterbalance to stocks going down during recessions. This is not guaranteed to always be the case (e.g. inflationary recessions), but it should help more often times than not.
4. You'd hope a market would somewhat reasonably price bonds and securities together, and that bond prices reflect future risk-reward expectations, equity risk premium, etc etc. If bonds are a super bad idea, enough people would sell them to push the price down and yields higher until they're in balance. This is what we're seeing now, and I'm not worried about my TMF, as I know the higher interest rates are, the better it is for my bonds in the long run.
I'm more of a 100% stocks guy, but these three reasons make me like the bond component of NTSX. With treasuries at record low rates middle of last year, I was worried about bonds. At these rates, I do see bonds regaining their power to go down in rates and hence be able to protect against crashes in your stocks.
Note: I re-iterate that this fund must be seen similarly to a 100% stocks fund in terms of risk profile. It is not a 'balanced' risk fund, it is not a 75/25 fund... the equity risk exposure you're taking is still 90% stocks.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
This has been extremely rare, and only happens for brief periods of time. There is no reason to expect it to continue for substantial periods of time, even in the future, even in different monetary environments.tj wrote: ↑Sat Mar 20, 2021 11:53 am With #2, there was mention of the inverted yield curve in the past where the short term rate was above long term rate. That would probably be the the time it's not a good trade. Seems unlikely that would happen for a long period of time, but I suppose it's possible.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Excellent point, I am having a similar portfolio with 10% TMF and 90% Global equities (with heavy small-value tilts) in order to maximize the volatility and duration of bond component to counteract equity volatility.coingaroo wrote: ↑Sat Mar 20, 2021 10:32 amI've thought a long time on this. I think it's important to consider three things:
1. The bond component here is a ladder with exposure to all durations, 2, 5, 10, 30. It borrows a T-Bill rates. This duration diversification works just the same as diversifying by investing in multiple stocks; as for example we've seen 10yr and 30yr moves, but 2yr and 5yr has been less impacted.
2. Borrowing a T-Bill rates mean that you benefit from the carry trade: pay low interest and get paid higher interest. It's a good trade to take.
3. Interest rates will go up and down, but they tend to go down during recessions. This is a nice counterbalance to stocks going down during recessions. This is not guaranteed to always be the case (e.g. inflationary recessions), but it should help more often times than not.
4. You'd hope a market would somewhat reasonably price bonds and securities together, and that bond prices reflect future risk-reward expectations, equity risk premium, etc etc. If bonds are a super bad idea, enough people would sell them to push the price down and yields higher until they're in balance. This is what we're seeing now, and I'm not worried about my TMF, as I know the higher interest rates are, the better it is for my bonds in the long run.
I'm more of a 100% stocks guy, but these three reasons make me like the bond component of NTSX. With treasuries at record low rates middle of last year, I was worried about bonds. At these rates, I do see bonds regaining their power to go down in rates and hence be able to protect against crashes in your stocks.
Note: I re-iterate that this fund must be seen similarly to a 100% stocks fund in terms of risk profile. It is not a 'balanced' risk fund, it is not a 75/25 fund... the equity risk exposure you're taking is still 90% stocks.
The farthest duration of treasuries (~57 years for TMF) do have more frequent crashes than 2year or 5year terms, but at the same time it provides multiple opportunities to "value-average" into higher interest rates (backing up the truck when rates are rising, in order to benefit later during equity crashes).
This counter-cyclical nature of treasuries (or yield curve in general) helps value-averaging into equities as well during a recession.
- crystalbank
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Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
There's someone in this thread a few pages before who placed a market order for around $400k and it seemed to fill at a decent price, right between bid & ask. I think a market order is a good bet especially for bigger amounts (think >$25k). For smaller amounts, market orders did burn me where it filled above the asking price.coingaroo wrote: ↑Sat Mar 20, 2021 3:37 am Folks, I'm considering putting $1M into NTSX, alongside about $1M in ASX:VAS (Aus stocks index fund) and $1M in ASX:VGS (Intl developed index fund). I am an Australian investor.
1. Any advice for how to navigate the spread on NTSX? Should I just set up a few orders to buy into the ask, or? I'm using interactive brokers.
With a smaller purchase, I've tried to buy into the mid-price, with zero fills until I bit the bullet and bought into the ask. Jane Street (the market maker) really doesn't like to bite...
2. NTSX seems too good to be true; are there any hidden risks such as issuer risk, custodian risk, etc? I understand that treasury futures are highly liquid, and that there will be far bigger problems to worry about if its 10% posted collateral is not sufficient for 50% of notional treasury futures.
3. If you were investing with a multi-decade time horizon, would you consider investing more into NTSX than VGS?
If you're thinking about putting $1M, I'd atleast split it into 4 orders of $250k or even better 10 orders spread out over multiple days.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I placed a couple Market Orders this morning. Just under $115k. There are various lots that were filled between $37.05 and $37.07. They were definitely filled closer to the ask than the bid, my guess is if I had placed limit orders closer to the bid, they would have gone unfilled. In the long run do the pennies even matter?crystalbank wrote: ↑Sat Mar 20, 2021 12:11 pmThere's someone in this thread a few pages before who placed a market order for around $400k and it seemed to fill at a decent price, right between bid & ask. I think a market order is a good bet especially for bigger amounts (think >$25k). For smaller amounts, market orders did burn me where it filled above the asking price.coingaroo wrote: ↑Sat Mar 20, 2021 3:37 am Folks, I'm considering putting $1M into NTSX, alongside about $1M in ASX:VAS (Aus stocks index fund) and $1M in ASX:VGS (Intl developed index fund). I am an Australian investor.
1. Any advice for how to navigate the spread on NTSX? Should I just set up a few orders to buy into the ask, or? I'm using interactive brokers.
With a smaller purchase, I've tried to buy into the mid-price, with zero fills until I bit the bullet and bought into the ask. Jane Street (the market maker) really doesn't like to bite...
2. NTSX seems too good to be true; are there any hidden risks such as issuer risk, custodian risk, etc? I understand that treasury futures are highly liquid, and that there will be far bigger problems to worry about if its 10% posted collateral is not sufficient for 50% of notional treasury futures.
3. If you were investing with a multi-decade time horizon, would you consider investing more into NTSX than VGS?
If you're thinking about putting $1M, I'd atleast split it into 4 orders of $250k or even better 10 orders spread out over multiple days.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
If you assume that the spread is essentially a premium and should be relatively stable, then you can easily calculate how much it matters.tj wrote: ↑Mon Mar 22, 2021 10:12 amI placed a couple Market Orders this morning. Just under $115k. There are various lots that were filled between $37.05 and $37.07. They were definitely filled closer to the ask than the bid, my guess is if I had placed limit orders closer to the bid, they would have gone unfilled. In the long run do the pennies even matter?
Right now Yahoo Finance says the bid is $37.00 and the ask is $37.05. Let's assume you always buy at ask and sell at bid, and that $0.05 spread is stable relative to its price. Also imagine that you sold immediately after buying. You'd essentially pay a 0.05/37.05 = 0.13% "fee" for the full transaction. For $115k (again, assuming the spread was constant and you bought at the ask price), you paid about $150 for the purchase.
If you're trading often, it'll add up quickly. If you're buying and holding for years... 0.13% (0.065% each way) isn't horrible.
EDIT: Fixed math above - originally implied that it's 0.13% each way. It's actually half that.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
I don't have any immediate plans to trade. This is intended to be a very long term hold.DMoogle wrote: ↑Mon Mar 22, 2021 10:40 amIf you assume that the spread is essentially a premium and should be relatively stable, then you can easily calculate how much it matters.tj wrote: ↑Mon Mar 22, 2021 10:12 amI placed a couple Market Orders this morning. Just under $115k. There are various lots that were filled between $37.05 and $37.07. They were definitely filled closer to the ask than the bid, my guess is if I had placed limit orders closer to the bid, they would have gone unfilled. In the long run do the pennies even matter?
Right now Yahoo Finance says the bid is $37.00 and the ask is $37.05. Let's assume you always buy at ask and sell at bid, and that $0.05 spread is stable relative to its price. Also imagine that you sold immediately after buying. You'd essentially pay a 0.05/37.05 = 0.13% "fee" for the full transaction. For $115k (again, assuming the spread was constant and you bought at the ask price), you paid about $150 for the purchase.
If you're trading often, it'll add up quickly. If you're buying and holding for years... 0.13% (0.065% each way) isn't horrible.
EDIT: Fixed math above - originally implied that it's 0.13% each way. It's actually half that.
Re: WisdomTree 90/60 U.S. Balanced Fund [NTSX]
Even still, the concept applies. Assuming the spread (relative to price) stays constant and you're trading based the market bid/ask prices, you're in effect paying 0.065% to buy in, then 0.065% to exit.
Last edited by DMoogle on Mon Mar 22, 2021 3:14 pm, edited 1 time in total.