Thanks Ramjet
Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]
Re: Why not 100% PSLDX?
I think I finally understand this fund....
Its sort of like taking out a loan and investing half in equities and half in long term bonds.
Am I right?
Its sort of like taking out a loan and investing half in equities and half in long term bonds.
Am I right?
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Re: Why not 100% PSLDX?
Sort of....but instead of taking a loan out they are using futures contracts, which give you access to cheap leverage without taking out a loan. I'd do a little research on how futures contracts work, but essentially what PIMCO is doing is controlling futures contracts to get the exposure to the S&P 500, and then using the collateral account to buy and control bonds. Futures contracts have built in financing costs which should be around the 3 month LIBOR rate. Your expected return from the fund would be the returns of the S&P 500 + (Bond yield - 3 month LIBOR) - fund costs. As long as the bond portion of the portfolio is yielding more than the 3 month LIBOR rate and the fund costs it should be a good strategy.
But to answer your original question, the asset allocation ends up being roughly 100% S&P 500, 100% Long term Bonds, and -100% cash.
Re: Why not 100% PSLDX?
Yeah, so this fund will underperform the S&P 500 when long term bonds plummet.M1garand30064 wrote: ↑Sat Aug 28, 2021 3:21 pm But to answer your original question, the asset allocation ends up being roughly 100% S&P 500, 100% Long term Bonds, and -100% cash.
Re: Why not 100% PSLDX?
It will outperform during that period due selling/holding bonds that are more valuable than those being issued. It will underperform in a rising rate environment for the duration of its average holding duration (14-18 years) as new bonds are more valuable instead, and then the fund holders will benefit from the increase in bond rates after that period is over.Booogle wrote: ↑Sat Aug 28, 2021 3:25 pmYeah, so this fund will underperform the S&P 500 when long term bonds plummet.M1garand30064 wrote: ↑Sat Aug 28, 2021 3:21 pm But to answer your original question, the asset allocation ends up being roughly 100% S&P 500, 100% Long term Bonds, and -100% cash.
Per the prospectus:
PIMCO actively manages the Fixed Income Instruments held by the Fund with a view toward enhancing the Fund’s total return, subject to an overall portfolio duration which normally varies within two years (plus or minus) of the portfolio duration of the securities comprising the Bloomberg Barclays Long-Term Government/Credit Index, as calculated by PIMCO, which as of May 31, 2021 was 16.00 years. Duration is a measure used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates.
It is possible to lose money on an investment in the Fund. Under certain conditions, generally in a market where the value of both S&P 500 Index derivatives and Fixed Income Instruments are declining or in periods of heightened market volatility, the Fund may experience greater losses or lesser gains than would be the case if it invested directly in a portfolio of S&P 500 Index stocks. The principal risks of investing in the Fund, which could adversely affect its net asset value, yield and total return, are:
Interest Rate Risk: the risk that fixed income securities will decline in value because of an increase in interest rates; a fund with a longer average portfolio duration will be more sensitive to changes in interest rates than a fund with a shorter average portfolio duration
Call Risk: the risk that an issuer may exercise its right to redeem a fixed income security earlier than expected (a call). Issuers may call outstanding securities prior to their maturity for a number of reasons (e.g., declining interest rates, changes in credit spreads and improvements in the issuer’s credit quality). If an issuer calls a security that the Fund has invested in, the Fund may not recoup the full amount of its initial investment and may be forced to reinvest in lower-yielding securities, securities with greater credit risks or securities with other, less favorable features
Credit Risk: the risk that the Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivative contract, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling, to meet its financial obligations
High Yield Risk: the risk that high yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”) are subject to greater levels of credit, call and liquidity risks. High yield securities are considered primarily speculative with respect to the issuer’s continuing ability to make principal and interest payments, and may be more volatile than higher-rated securities of similar maturity
Market Risk: the risk that the value of securities owned by the Fund may go up or down, sometimes rapidly or unpredictably, due to factors affecting securities markets generally or particular industries
Re: Why not 100% PSLDX?
How would PSLDX behave in a flat equity market?
Re: Why not 100% PSLDX?
Performance will be based on how the bond portion does, then. If bonds are flat too, then on average you'll lose the expense ratio (just like basically every other fund on the planet).
PSLDX is fundamentally different from LETFs in that it isn't daily rebalanced, so flat markets aren't necessarily detrimental.
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Re: Why not 100% PSLDX?
hhhhh
Last edited by hdas on Tue Oct 26, 2021 6:32 pm, edited 1 time in total.
....
Re: Why not 100% PSLDX?
I do wish there was a tax efficient version of PSLDX. My risk appetite allows for more than just NTSX.
- UpsetRaptor
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Re: Why not 100% PSLDX?
Dividend week! Any guesses? Bets on Over/Under .50?
Re: Why not 100% PSLDX?
Newbie here for quarterly dividends. Aren't the accumulated gains already reflected in the rising share price NAV, so that when the dividends are released the NAV drops and the total investment amount remains the same? I thought that this was the case and the reason many people are confused by the stock charts that don't show much gain in PSLDX over the years (unless you can find a platform that displays gains with reinvested dividends). Or are there other dividends that are not reflected in the NAV and we can hope for a quarterly bonus?BullHouse_BearMarket wrote: ↑Tue Sep 07, 2021 8:55 am Dividend week! Any guesses? Bets on Over/Under .50?
Re: Why not 100% PSLDX?
With PSLDX, it's definitely not the case where you can simply predict the next quarterly distribution by how much the NAV has risen since the previous distribution. For instance, in Q1 and Q2 of this year, the NAV was pretty flat, but the first two distributions were massive, much higher than PSLDX Q1 and Q2 distributions typically are. My assumption is that it's significantly impacted by what is happening with the active bond management, but I haven't read anyone give a definitive answer.RosieQ wrote: ↑Tue Sep 07, 2021 1:02 pmNewbie here for quarterly dividends. Aren't the accumulated gains already reflected in the rising share price NAV, so that when the dividends are released the NAV drops and the total investment amount remains the same? I thought that this was the case and the reason many people are confused by the stock charts that don't show much gain in PSLDX over the years (unless you can find a platform that displays gains with reinvested dividends). Or are there other dividends that are not reflected in the NAV and we can hope for a quarterly bonus?BullHouse_BearMarket wrote: ↑Tue Sep 07, 2021 8:55 am Dividend week! Any guesses? Bets on Over/Under .50?
- firebirdparts
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Re: Why not 100% PSLDX?
You bet it will. And as it drops 5 to 10% or so, we'll certainly get some questions. We do every time. I have it at Fido, and fido doesn't play nice with Pimco, so in my case the money (quite a lot of it) just disappears for 24 hours.RosieQ wrote: ↑Tue Sep 07, 2021 1:02 pmNewbie here for quarterly dividends. Aren't the accumulated gains already reflected in the rising share price NAV, so that when the dividends are released the NAV drops and the total investment amount remains the same?BullHouse_BearMarket wrote: ↑Tue Sep 07, 2021 8:55 am Dividend week! Any guesses? Bets on Over/Under .50?
I've posted several times what they are distributing. They hold the S&P500 in the form of futures and total return swaps. If stocks go up during the term of these contracts, that gives them a big chunk of cash money that they have to distribute. The NAV has been bouncing around $9 ever since the fund was created.
This time is the same
Re: Why not 100% PSLDX?
I called Fido yesterday and they said not only could I not make an initial purchase of PSLDX, but also they can’t guarantee I could even purchase more after transferring in PSLDX from another broker. They said it was likely I could only place sell orders. Is that your experience too?firebirdparts wrote: ↑Tue Sep 07, 2021 11:15 pm. I have it at Fido, and fido doesn't play nice with Pimco,
I’d like to start investing in my Roth but not excited about transferring assets out and opening a new account elsewhere
Crom laughs at your Four Winds
Re: Why not 100% PSLDX?
I'm placing my best at overBullHouse_BearMarket wrote: ↑Tue Sep 07, 2021 8:55 am Dividend week! Any guesses? Bets on Over/Under .50?
Re: Why not 100% PSLDX?
Q1 and Q2 of this year have spoiled us. I too would feel disappointed with anything under .5. lol
Re: Why not 100% PSLDX?
Does PLRIX reflect the bond side of PSLDX?
It has the same managers and same Barclay's benchmark.
https://www.pimco.com/en-us/investments ... -fund/inst
It has the same managers and same Barclay's benchmark.
https://www.pimco.com/en-us/investments ... -fund/inst
Re: Why not 100% PSLDX?
Looks like the divvy is .8539 almost 9% of the NAV. (Sure glad this is not in a taxable account)
Last edited by pshonore on Thu Sep 09, 2021 5:40 pm, edited 1 time in total.
Re: Why not 100% PSLDX?
wooooooow! Down 8.55% on a day when bonds shooting up should have left it with a bit of green even considering the S&P500 was down .46%. At the least, blew .5 out of the water! Closer to a 10% distribution this quarter!!!
Re: Why not 100% PSLDX?
I knew it, over $0.5 per share
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Re: Why not 100% PSLDX?
In the process of consolidating to Fidelity and this is what I've been told by Fidelity -muffins14 wrote: ↑Wed Sep 08, 2021 7:45 amI called Fido yesterday and they said not only could I not make an initial purchase of PSLDX, but also they can’t guarantee I could even purchase more after transferring in PSLDX from another broker. They said it was likely I could only place sell orders. Is that your experience too?firebirdparts wrote: ↑Tue Sep 07, 2021 11:15 pm. I have it at Fido, and fido doesn't play nice with Pimco,
I’d like to start investing in my Roth but not excited about transferring assets out and opening a new account elsewhere
Can transfer and hold PSLDX, DRIP will work, and can sell. But no buying more unless/until PIMCO decides to give Fidelity that status. Apparently it's a PIMCO decision rather than a Fido one.
Re: Why not 100% PSLDX?
Apparently PSLDX dropped yet another giant dividend! Whoo!
And Yahoo! Finance didn't get the memo. It still lists PSLDX with the correct closing price of $8.66 and a gain of .51% for the day. In a nutshell, it sums up the black magic PSLDX is doing lately, to where even Yahoo! Finance is confused.
And Yahoo! Finance didn't get the memo. It still lists PSLDX with the correct closing price of $8.66 and a gain of .51% for the day. In a nutshell, it sums up the black magic PSLDX is doing lately, to where even Yahoo! Finance is confused.
- firebirdparts
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Re: Why not 100% PSLDX?
I haven’t ever had a problem buying more in brokeragelink in my 401k. I don’t do it often, though. I don’t know if I can still do it.muffins14 wrote: ↑Wed Sep 08, 2021 7:45 amI called Fido yesterday and they said not only could I not make an initial purchase of PSLDX, but also they can’t guarantee I could even purchase more after transferring in PSLDX from another broker. They said it was likely I could only place sell orders. Is that your experience too?firebirdparts wrote: ↑Tue Sep 07, 2021 11:15 pm. I have it at Fido, and fido doesn't play nice with Pimco,
I’d like to start investing in my Roth but not excited about transferring assets out and opening a new account elsewhere
EDIT - I can still reinvest dividends as of 9/10/2021
EDIT 2 - I can put in a buy order without generating any pop-up screen telling me I can't buy it. I didn't actually do it because it costs me $50 to find out.
Last edited by firebirdparts on Wed Sep 15, 2021 12:06 pm, edited 3 times in total.
This time is the same
Re: Why not 100% PSLDX?
Thanks
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Re: Why not 100% PSLDX?
Cool observation, that may very well be the case!Booogle wrote: ↑Thu Sep 09, 2021 5:47 am Does PLRIX reflect the bond side of PSLDX?
It has the same managers and same Barclay's benchmark.
https://www.pimco.com/en-us/investments ... -fund/inst
Backtesting PLRIX and VFIAX minus fees tracks better with PSLDX than anything else I've seen thus far.
Re: Why not 100% PSLDX?
How are folks handling regular inflows to PSLDX in brokerages that charge for each buy ($50 at Schwab)? I tried to see if they would waive the transaction fee but it didn't go through.
Now my plan is to park the funds in VTI and buy once a quarter when it dips on dividend days. That makes the $50 charge easier to swallow. Any other ideas?
Now my plan is to park the funds in VTI and buy once a quarter when it dips on dividend days. That makes the $50 charge easier to swallow. Any other ideas?
Last edited by JSandler on Fri Sep 10, 2021 1:25 am, edited 1 time in total.
Re: Why not 100% PSLDX?
Not really. I'm also at Schwab, have PSLDX in both my ROTH and solo 401k. I focus my more frequent contributions on other things, and then several times a month will leave sub-$100 free to direct to PSLDX (there is no fee with sub-$100 purchases). Works fine for me since I have other things I want to do with my retirement contributions, but definitely is not ideal for people with large chunks of change they want to put in this fund in one go.JSandler wrote: ↑Fri Sep 10, 2021 12:52 am How are folks handling regular inflows to PSLDX in brokerages that charge for each buy ($50 at Schwab). I tried to see if they would waive the transaction fee but it didn't go through.
Now my plan is to park the funds in VTI and buy once a quarter when it dips on dividend days. That makes the $50 charge easier to swallow. Any other ideas?
Re: Why not 100% PSLDX?
Wonder how many $99 free transactions you could get away with before Schwab sends a nasty letter? One per week? One per day? Several in a row per day? I've only done it one time but haven't tried to abuse.
Re: Why not 100% PSLDX?
I got the impression that the first person who updated us on how fees work for PSLDX at Schwab earlier in this thread set up multiple sub-$100 purchases for a single day, and it went fine, but I could have misinterpreted. What I've been doing is putting whatever change that's left over from other trades into PSLDX, $40, $80, $20, could be as little as a couple bucks. Haven't tried multiple transactions in one day (that seems like pushing the envelope), but I have done several small transactions in a single week. But this is somewhat infrequent, definitely not something that would appear to someone looking at my account as an attempt to exploit the system.
Re: Why not 100% PSLDX?
This is probably a silly question, but cheering on the dividend size is just for fun right? It doesn't actually matter what amount or percent they distribute other than to those in taxable, and there shouldn't be any/many of those, right?
Re: Why not 100% PSLDX?
Yes, the same way everyone reacts to daily volatility over in the soaring thread, got to keep it interesting some way
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Re: Why not 100% PSLDX?
I usually don't pay attention to this as I've noticed VG fund distributions are typically reinvested next day around lunch, but does VG usually delay dividend reinvestment for this/non VG funds? It was payable yesterday, VG reflects the share price decline but no mention of dividends in my account yet.
Edit: VG is just slower to update. Div payable on 9/9, VG transacted the div on 9/10, but didn't show up in the account until the overnight account run on 9/10 so it's there this morning.
Edit: VG is just slower to update. Div payable on 9/9, VG transacted the div on 9/10, but didn't show up in the account until the overnight account run on 9/10 so it's there this morning.
Last edited by runninginvestor on Sat Sep 11, 2021 6:59 am, edited 1 time in total.
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Re: Why not 100% PSLDX?
Well that's a little different, since when the market goes up you've actually made money, which could matter to a decumulator.
Dividends are just giving your own money back to you. But I guess it's confirmation of the money you already made.
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Re: Why not 100% PSLDX?
Not quite true. UPRO is .9% for 3x leverage in stocks. This is 1x in sock and 1.5x in bonds. Let's create that through UPRO and TMF.
If I have 100k I could either..
1) Buy 100k of PSLDX and pay .6% to achive 1x stock and 1.5x bonds
2) Buy 25k of UPRO, 50k of TMF, and 25k of VTI. I'd pay .9% on 75k and .05% on 25k, which would be a .69% fee overall for the same stock and bond exposure.
So UPRO + TMF are a hair more expensive. But UPRO and TMF are expensive, and this is in the same category. Futures can of course eliminate nearly all these fees, for the same or even more leverage.
Re: Why not 100% PSLDX?
I would argue that the fact that this is NOT a daily rebalanced fund makes it fundamentally a different category than UPRO/TMF, and also more attractive. I wish there were more balanced leveraged funds like this and the NTSX family.skierincolorado wrote: ↑Fri Sep 10, 2021 8:53 pmSo UPRO + TMF are a hair more expensive. But UPRO and TMF are expensive, and this is in the same category. Futures can of course eliminate nearly all these fees, for the same or even more leverage.
There's also the fact that the bond portion is actively managed - whether there's value in that is up for debate.
Re: Why not 100% PSLDX?
Do you think that's true? My understanding is that there is a meaningful difference with PSLDX, but I'll admit to not knowing what I don't know. My understanding is that a portion of the distributions comes from the active bond management. For instance:
From Jan 4 through Mar 10, PSLDX was down 3%, but we got a distribution of 6%.
From Mar 11 through June 9, PSLDX was up 10.9%, and we got a distribution of 6.6%.
From June 10 through Sept 8, PSLDX was up 10.5%, and we got a distribution of 9%.
The only explanation I can think of for this variability of NAV performance vs distribution is that the active bond management can juice returns. Therefore, it's not simply equivalent to traditional funds like VOO et al when thinking of distribution days. Distribution days let us now how well PIMCO did on the active bond management side over the last three months, and their performance there represents a meaningful portion of this fund's out performance of its benchmark.
Re: Why not 100% PSLDX?
"Distribution days let us now how well PIMCO did on the active bond management side over the last three months, and their performance there represents a meaningful portion of this fund's out performance of its benchmark."
I think you're spot on. The benchmark for the bond portion is the 'Barclays Long Government Credit Index minus 3 month LIBOR'. I'm admittedly having a hard time finding this index and its make-up, as it appears to be managed by Bloomberg now.
The prospectus continues: 'The fund takes a diversified approach to enhancing long term bond returns by expanding beyond government and corporate bonds'. This appears to be born out in what I can find on its sister fund (PSLDX has a lot of equity total return swaps which make their holdings harder to discern, but PLRIX appears to be the bond portion alone). Some highlights on content and their rough limits to instrument classes:
- 65% is in fixed income instruments. It appears 35% is in cash; presumably for ballast or collateral/haircuts.
-10% or more may be invested in junk bonds
-30% may be instruments dominated by foreign currencies
-15% may be linked to emerging markets, but they caveat that sovereign short term debt is not included in that number.
- No limit set on derivatives (e.g. futures, swaps, mortgage or asset backed securities)
- The fund primarily seeks to bet long, as the name implies: 'The “total return” sought by the Fund consists of income earned on the Fund’s investments, plus capital appreciation, if any, which generally arises
from decreases in interest rates, foreign currency appreciation, or improving credit fundamentals for a particular sector or security. '
- This Yahoo link would imply they're levering primarily in Treasuries. However, the lack of limits on derivatives can certainly skew the risks/returns relative to the % of holdings.
That's all to say, it's a bit opaque, but it definitely isn't as simple as using one or two bond indexes (levered or otherwise) to model true yields for the distributions (or the underlying risks). There's a lot of active management across instruments going on, which is what we should expect.
Full disclosure-- I own some PSLDX.
I think you're spot on. The benchmark for the bond portion is the 'Barclays Long Government Credit Index minus 3 month LIBOR'. I'm admittedly having a hard time finding this index and its make-up, as it appears to be managed by Bloomberg now.
The prospectus continues: 'The fund takes a diversified approach to enhancing long term bond returns by expanding beyond government and corporate bonds'. This appears to be born out in what I can find on its sister fund (PSLDX has a lot of equity total return swaps which make their holdings harder to discern, but PLRIX appears to be the bond portion alone). Some highlights on content and their rough limits to instrument classes:
- 65% is in fixed income instruments. It appears 35% is in cash; presumably for ballast or collateral/haircuts.
-10% or more may be invested in junk bonds
-30% may be instruments dominated by foreign currencies
-15% may be linked to emerging markets, but they caveat that sovereign short term debt is not included in that number.
- No limit set on derivatives (e.g. futures, swaps, mortgage or asset backed securities)
- The fund primarily seeks to bet long, as the name implies: 'The “total return” sought by the Fund consists of income earned on the Fund’s investments, plus capital appreciation, if any, which generally arises
from decreases in interest rates, foreign currency appreciation, or improving credit fundamentals for a particular sector or security. '
- This Yahoo link would imply they're levering primarily in Treasuries. However, the lack of limits on derivatives can certainly skew the risks/returns relative to the % of holdings.
That's all to say, it's a bit opaque, but it definitely isn't as simple as using one or two bond indexes (levered or otherwise) to model true yields for the distributions (or the underlying risks). There's a lot of active management across instruments going on, which is what we should expect.
Full disclosure-- I own some PSLDX.
Re: Why not 100% PSLDX?
delete
Last edited by stipeman on Sat Sep 11, 2021 11:12 am, edited 1 time in total.
Re: Why not 100% PSLDX?
Here is the backtest. Note that the correlation to the synthetic portfolio is 1.00. Also interesting to look at the "drag" over time. 1.4% over the full time range but only about 0.4% in the last 3 years. That is about what it should be given the fund is about 0.1% more expensive than PLRIX and the futures/swap financing is typically higher than treasuries by about 0.3%. This fund is not expensive in my opinion and is superior to HFEA for efficiency. Much less "drag".mutedbytes wrote: ↑Fri Sep 10, 2021 12:17 amCool observation, that may very well be the case!Booogle wrote: ↑Thu Sep 09, 2021 5:47 am Does PLRIX reflect the bond side of PSLDX?
It has the same managers and same Barclay's benchmark.
https://www.pimco.com/en-us/investments ... -fund/inst
Backtesting PLRIX and VFIAX minus fees tracks better with PSLDX than anything else I've seen thus far.
https://www.portfoliovisualizer.com/bac ... on4_2=-100