Why not 100% PSLDX? [PIMCO StocksPLUS Long Duration Fund]

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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

I have it set up to autoreinvest in an account at Fidelity, so really they do it for me. If I "rebalance" then it'll throw off their metrics. If I wanted to know how it performed and avoid taking that into account, I would just look at their "performance" numbers at Pimco. Or maybe yahoo finance. I have had periods where I looked at the price every night, but really, I don't know why I did. I am just admitting I have done it.

I look just briefly at "which way" bonds are going when I am curious about that, and I haven't worried too much about how I do that on yahoo finance. For instance, I have VCLT in my watch list and I'll look at that and I'll think "I bet that is about what is going on in the bond portfolio of PSLDX right now". I don't really find out until about 6:30 pm.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

firebirdparts wrote: Mon May 16, 2022 1:33 pm I have it set up to autoreinvest in an account at Fidelity, so really they do it for me. If I "rebalance" then it'll throw off their metrics. If I wanted to know how it performed and avoid taking that into account, I would just look at their "performance" numbers at Pimco. Or maybe yahoo finance. I have had periods where I looked at the price every night, but really, I don't know why I did. I am just admitting I have done it.

I look just briefly at "which way" bonds are going when I am curious about that, and I haven't worried too much about how I do that on yahoo finance. For instance, I have VCLT in my watch list and I'll look at that and I'll think "I bet that is about what is going on in the bond portfolio of PSLDX right now". I don't really find out until about 6:30 pm.
Can I infer the total return off the price? I figured it's a bit of a blackbox until the dividend releases.
superjames1992
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Re: Why not 100% PSLDX?

Post by superjames1992 »

hiddenpower wrote: Mon May 16, 2022 2:22 pm
firebirdparts wrote: Mon May 16, 2022 1:33 pm I have it set up to autoreinvest in an account at Fidelity, so really they do it for me. If I "rebalance" then it'll throw off their metrics. If I wanted to know how it performed and avoid taking that into account, I would just look at their "performance" numbers at Pimco. Or maybe yahoo finance. I have had periods where I looked at the price every night, but really, I don't know why I did. I am just admitting I have done it.

I look just briefly at "which way" bonds are going when I am curious about that, and I haven't worried too much about how I do that on yahoo finance. For instance, I have VCLT in my watch list and I'll look at that and I'll think "I bet that is about what is going on in the bond portfolio of PSLDX right now". I don't really find out until about 6:30 pm.
Can I infer the total return off the price? I figured it's a bit of a blackbox until the dividend releases.
I think it’s tough to do until the dividend distribution. -
After all, the NAV has a negative return since inception back 15 years ago despite the total returns being 20%/year. It is a bit annoying as it makes it hard to track, but alas. In any case, I think it’s safe to say the fund has had a negative total return so far this year. I don’t expect the next dividend payment to be much.
Harmanic
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Re: Why not 100% PSLDX?

Post by Harmanic »

Other than the fact that Pimco certainly gets lower rates for borrowing, couldn't you get the same results by taking out a margin loan and buying a standard balanced fund?
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

Sure, go to PV and look at whatever balanced fund you like. I worry that CASHX in PV is too cheap when you use it for a loan. I mean it's same returns if you hold cash or borrow cash in PV. At only 2X leverage it wouldn't be terrible, though.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

hiddenpower wrote: Mon May 16, 2022 2:22 pm
Can I infer the total return off the price? I figured it's a bit of a blackbox until the dividend releases.
My advice is to don't think that. use the price. they're required to sell it at that price every night. They're not crazy.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

firebirdparts wrote: Thu May 19, 2022 10:46 am
hiddenpower wrote: Mon May 16, 2022 2:22 pm
Can I infer the total return off the price? I figured it's a bit of a blackbox until the dividend releases.
My advice is to don't think that. use the price. they're required to sell it at that price every night. They're not crazy.
But the price has been range bound, and the dividend can be anything it seems. Just looking at price doesn't even give the full trend picture since it's been sideways for years.
international001
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Re: Why not 100% PSLDX?

Post by international001 »

rascott wrote: Sun May 15, 2022 3:44 am
international001 wrote: Tue May 10, 2022 8:07 pm Just to put things in perspective:

https://www.portfoliovisualizer.com/bac ... on4_2=-100

Some more perspective.....long-term treasury yields hit over 10% in 1987, when this backtest started. We can't expect the same "juiced" returns going forward.
That's always interesting. Many people don't think you can market time the stocks, but somehow you can time the bond market. After 35 years, now it's time the bond market will go absolutely wrong.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

international001 wrote: Fri May 20, 2022 6:54 pm
rascott wrote: Sun May 15, 2022 3:44 am
international001 wrote: Tue May 10, 2022 8:07 pm Just to put things in perspective:

https://www.portfoliovisualizer.com/bac ... on4_2=-100

Some more perspective.....long-term treasury yields hit over 10% in 1987, when this backtest started. We can't expect the same "juiced" returns going forward.
That's always interesting. Many people don't think you can market time the stocks, but somehow you can time the bond market. After 35 years, now it's time the bond market will go absolutely wrong.
The difference is low rates and inflation. It’s a storm.
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

hiddenpower wrote: Fri May 20, 2022 6:57 pm
international001 wrote: Fri May 20, 2022 6:54 pm That's always interesting. Many people don't think you can market time the stocks, but somehow you can time the bond market. After 35 years, now it's time the bond market will go absolutely wrong.
The difference is low rates and inflation. It’s a storm.
There's ALWAYS a narrative.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
JDave
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Re: Why not 100% PSLDX?

Post by JDave »

vineviz wrote: Fri May 20, 2022 7:30 pm There's ALWAYS a narrative.
[ quote fixed by admin LadyGeek]

There's always a dozen perfectly sensible reasons why an investment will go up, and a dozen perfectly sensible reasons why it will go down. Always.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

vineviz wrote: Fri May 20, 2022 7:30 pm
hiddenpower wrote: Fri May 20, 2022 6:57 pm
international001 wrote: Fri May 20, 2022 6:54 pm That's always interesting. Many people don't think you can market time the stocks, but somehow you can time the bond market. After 35 years, now it's time the bond market will go absolutely wrong.
The difference is low rates and inflation. It’s a storm.
There's ALWAYS a narrative.
Why would you hold leveraged bonds when rates are 0, the fed is saying they'll raise them, and inflation is kicking up? Honestly curious to learn for next time.
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vineviz
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Re: Why not 100% PSLDX?

Post by vineviz »

hiddenpower wrote: Fri May 20, 2022 8:44 pm Why would you hold leveraged bonds when rates are 0, the fed is saying they'll raise them, and inflation is kicking up? Honestly curious to learn for next time.
I'm not recommending PSLDX, just pointing out that the stories that people make up to justify being bullish or bearish about X in "this environment" are generally not much more than a story designed to sell newspapers or generate clicks.

For instance you could just as easily tell a story about long-term bond yields being a multi-year highs, the FOMC taking a 75bps rate hike off the table, and the latest inflation numbers showing deceleration.

Is that narrative any less accurate than the counter narrative you highlighted?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

vineviz wrote: Fri May 20, 2022 9:15 pm
hiddenpower wrote: Fri May 20, 2022 8:44 pm Why would you hold leveraged bonds when rates are 0, the fed is saying they'll raise them, and inflation is kicking up? Honestly curious to learn for next time.

For instance you could just as easily tell a story about long-term bond yields being a multi-year highs, the FOMC taking a 75bps rate hike off the table, and the latest inflation numbers showing deceleration.

Is that narrative any less accurate than the counter narrative you highlighted?
That sounds like a great timing to get INTO bonds :-). The point is sometimes there is a pretty obvious story we can act on early enough that has a high enough probability in your favor (not a coin flip). There's always a story/explanation when it's too late (like now), but this one also was plausible to react to at years end (many people did in fact).
bubbly
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Re: Why not 100% PSLDX?

Post by bubbly »

hiddenpower wrote: Fri May 20, 2022 9:20 pm
vineviz wrote: Fri May 20, 2022 9:15 pm
hiddenpower wrote: Fri May 20, 2022 8:44 pm Why would you hold leveraged bonds when rates are 0, the fed is saying they'll raise them, and inflation is kicking up? Honestly curious to learn for next time.

For instance you could just as easily tell a story about long-term bond yields being a multi-year highs, the FOMC taking a 75bps rate hike off the table, and the latest inflation numbers showing deceleration.

Is that narrative any less accurate than the counter narrative you highlighted?
That sounds like a great timing to get INTO bonds :-). The point is sometimes there is a pretty obvious story we can act on early enough that has a high enough probability in your favor (not a coin flip). There's always a story/explanation when it's too late (like now), but this one also was plausible to react to at years end (many people did in fact).
It’s always easy to say this after the fact.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

bubbly wrote: Fri May 20, 2022 9:26 pm
hiddenpower wrote: Fri May 20, 2022 9:20 pm
vineviz wrote: Fri May 20, 2022 9:15 pm
hiddenpower wrote: Fri May 20, 2022 8:44 pm Why would you hold leveraged bonds when rates are 0, the fed is saying they'll raise them, and inflation is kicking up? Honestly curious to learn for next time.

For instance you could just as easily tell a story about long-term bond yields being a multi-year highs, the FOMC taking a 75bps rate hike off the table, and the latest inflation numbers showing deceleration.

Is that narrative any less accurate than the counter narrative you highlighted?
That sounds like a great timing to get INTO bonds :-). The point is sometimes there is a pretty obvious story we can act on early enough that has a high enough probability in your favor (not a coin flip). There's always a story/explanation when it's too late (like now), but this one also was plausible to react to at years end (many people did in fact).
It’s always easy to say this after the fact.
My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live once :-).
Last edited by hiddenpower on Fri May 20, 2022 9:30 pm, edited 1 time in total.
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HomerJ
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Re: Why not 100% PSLDX?

Post by HomerJ »

hiddenpower wrote: Fri May 20, 2022 9:27 pm My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live one :-).
LOL.

"Slow and steady wins the race"
- Aesop, 2500 years ago.

"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."
- Homer J. Simpson, about 12 years ago

Your biggest takeaway should be that with leveraged, risky investments, sometimes the risk shows up.

Getting rich slow and steady, so far, works. And you end up rich. Which is the goal right?
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

HomerJ wrote: Fri May 20, 2022 9:29 pm
hiddenpower wrote: Fri May 20, 2022 9:27 pm My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live one :-).
LOL.

"Slow and steady wins the race"
- Aesop, 2500 years ago.

"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."
- Homer J. Simpson, about 12 years ago
Friday night bogleheaders LFG :sharebeer. Pick up some leveraged bonds and bogle coin and BTFD :twisted:.

"The risk not taken is more dangerous than the risk taken" - Some random internet thing when I googled "take risk quotes"
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HomerJ
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Re: Why not 100% PSLDX?

Post by HomerJ »

hiddenpower wrote: Fri May 20, 2022 9:34 pm
HomerJ wrote: Fri May 20, 2022 9:29 pm
hiddenpower wrote: Fri May 20, 2022 9:27 pm My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live one :-).
LOL.

"Slow and steady wins the race"
- Aesop, 2500 years ago.

"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."
- Homer J. Simpson, about 12 years ago
Friday night bogleheaders LFG :sharebeer. Pick up some leveraged bonds and bogle coin and BTFD :twisted:.

"The risk not taken is more dangerous than the risk taken" - Some random internet thing when I googled "take risk quotes"
Had to look up BTFD, but I've played enough MMOs to know what LFG was. :beer

or maybe you are using it differently.. just looked it up too, and there's TWO meanings :)
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

HomerJ wrote: Fri May 20, 2022 11:00 pm
hiddenpower wrote: Fri May 20, 2022 9:34 pm
HomerJ wrote: Fri May 20, 2022 9:29 pm
hiddenpower wrote: Fri May 20, 2022 9:27 pm My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live one :-).
LOL.

"Slow and steady wins the race"
- Aesop, 2500 years ago.

"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."
- Homer J. Simpson, about 12 years ago
Friday night bogleheaders LFG :sharebeer. Pick up some leveraged bonds and bogle coin and BTFD :twisted:.

"The risk not taken is more dangerous than the risk taken" - Some random internet thing when I googled "take risk quotes"
Had to look up BTFD, but I've played enough MMOs to know what LFG was. :beer

or maybe you are using it differently.. just looked it up too, and there's TWO meanings :)
Pretty sure it’s not looking for group.
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HomerJ
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Re: Why not 100% PSLDX?

Post by HomerJ »

Lee_WSP wrote: Fri May 20, 2022 11:41 pm
HomerJ wrote: Fri May 20, 2022 11:00 pm
hiddenpower wrote: Fri May 20, 2022 9:34 pm
HomerJ wrote: Fri May 20, 2022 9:29 pm
hiddenpower wrote: Fri May 20, 2022 9:27 pm My biggest takeaway from all of this is it's better to try and fail, than to not try at all. Because you really do only live one :-).
LOL.

"Slow and steady wins the race"
- Aesop, 2500 years ago.

"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."
- Homer J. Simpson, about 12 years ago
Friday night bogleheaders LFG :sharebeer. Pick up some leveraged bonds and bogle coin and BTFD :twisted:.

"The risk not taken is more dangerous than the risk taken" - Some random internet thing when I googled "take risk quotes"
Had to look up BTFD, but I've played enough MMOs to know what LFG was. :beer

or maybe you are using it differently.. just looked it up too, and there's TWO meanings :)
Pretty sure it’s not looking for group.
Yeah, I guess not :)
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
RussellWilson
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Re: Why not 100% PSLDX?

Post by RussellWilson »

It looks like throughout the fund's history its price has bounced between $5 and $10. Since the price drops an amount corresponding to distribution, I'm wondering by what mechanism the price rises over time, like how it ever went from 5 amidst the GFC to later 10...IIRC they pay out capital gains so I guess the slow accumulation from bond coupons being used to purchase assets would lift it but I'm wondering what else might (I know this doesn't affect return, just trying to understand better how it functions.). Relatedly if they didn't pay out bond coupons, how was there any distribution at all last quarter, or are cap gains not aggregated together, such that even though there was a loss overall, some individual trades worked?
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

RussellWilson wrote: Thu Jun 09, 2022 11:44 am It looks like throughout the fund's history its price has bounced between $5 and $10. Since the price drops an amount corresponding to distribution, I'm wondering by what mechanism the price rises over time, like how it ever went from 5 amidst the GFC to later 10...IIRC they pay out capital gains so I guess the slow accumulation from bond coupons being used to purchase assets would lift it but I'm wondering what else might (I know this doesn't affect return, just trying to understand better how it functions.). Relatedly if they didn't pay out bond coupons, how was there any distribution at all last quarter, or are cap gains not aggregated together, such that even though there was a loss overall, some individual trades worked?
This is pretty simple, really. The fund consists of bonds and total return swaps on the S&P500. As a result, the growth of the S&P, if there is any, keeps getting paid out in cash. Shrinkage in the S&P, if there is any, has to be paid for by selling bonds out of the bond portfolio.

They would be paying out whatever they are required to by law, I would think. Without any effort on my part, I would have happily assumed the capital gains, whatever there were, resulted from increased marked-to-market bond prices plus the lack of getting whipsawed enough by the S&P500 to offset it.

It does make sense, though, that there is absolutely no mechanism for any significant increase, doesn't it? I never really thought about it. They do own some stocks, I mean actual stocks. I could certainly be missing something.
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keith6014
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Re: Why not 100% PSLDX?

Post by keith6014 »

The NAV could go below 2008 levels today.
TXGator
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Re: Why not 100% PSLDX?

Post by TXGator »

keith6014 wrote: Mon Jun 13, 2022 11:12 am The NAV could go below 2008 levels today.
Looking at TLT and VCLT this could be a 6-8% drop today - I don't feel so bad getting out about 3 weeks ago - might be a golden time this summer to get back in though!
keith6014
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Re: Why not 100% PSLDX?

Post by keith6014 »

TXGator wrote: Mon Jun 13, 2022 3:17 pm
keith6014 wrote: Mon Jun 13, 2022 11:12 am The NAV could go below 2008 levels today.
Looking at TLT and VCLT this could be a 6-8% drop today - I don't feel so bad getting out about 3 weeks ago - might be a golden time this summer to get back in though!
Hopefully it will go to a ATH in 20 years.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

The title of this thread though. My god.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Last edited by kevinf on Mon Jun 13, 2022 5:27 pm, edited 1 time in total.
runninginvestor
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Re: Why not 100% PSLDX?

Post by runninginvestor »

TXGator wrote: Mon Jun 13, 2022 3:17 pm
keith6014 wrote: Mon Jun 13, 2022 11:12 am The NAV could go below 2008 levels today.
Looking at TLT and VCLT this could be a 6-8% drop today - I don't feel so bad getting out about 3 weeks ago - might be a golden time this summer to get back in though!
Marketwatch has it at -7.17% today, $4.66. I'm an investor so I'm not one of the posters who is here to revel in the losses.
Last edited by runninginvestor on Mon Jun 13, 2022 5:26 pm, edited 1 time in total.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

kevinf wrote: Mon Jun 13, 2022 5:25 pm
hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

hiddenpower wrote: Mon Jun 13, 2022 5:26 pm
kevinf wrote: Mon Jun 13, 2022 5:25 pm
hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.
rascott
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Re: Why not 100% PSLDX?

Post by rascott »

The party is over.... and the hangover is wicked.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

kevinf wrote: Mon Jun 13, 2022 5:29 pm
hiddenpower wrote: Mon Jun 13, 2022 5:26 pm
kevinf wrote: Mon Jun 13, 2022 5:25 pm
hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.

The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
MattB
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Re: Why not 100% PSLDX?

Post by MattB »

hiddenpower wrote: Mon Jun 13, 2022 5:26 pm
kevinf wrote: Mon Jun 13, 2022 5:25 pm
hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
I'm continuing to purchase in my Roth IRA. The plan was to invest about $115 per week, every week, from now until forever. I haven't seen a good reason to deviate from that plan.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

hiddenpower wrote: Mon Jun 13, 2022 5:38 pm
kevinf wrote: Mon Jun 13, 2022 5:29 pm
hiddenpower wrote: Mon Jun 13, 2022 5:26 pm
kevinf wrote: Mon Jun 13, 2022 5:25 pm
hiddenpower wrote: Mon Jun 13, 2022 4:57 pm The title of this thread though. My god.
Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.

The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
The future isn't necessarily going to mimic the past.
superjames1992
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Re: Why not 100% PSLDX?

Post by superjames1992 »

-7% today, ouch. I knew it was going to be nasty when I checked $BND at one point today and it was down over 1.5%. My time horizon is decades (this is in my Roth which I can’t touch for another 25-30 years), but today left a mark. Definitely didn’t enter this strategy at the optimal time, but I’ll stick with the plan. :)
Last edited by superjames1992 on Mon Jun 13, 2022 7:35 pm, edited 1 time in total.
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

kevinf wrote: Mon Jun 13, 2022 6:05 pm
hiddenpower wrote: Mon Jun 13, 2022 5:38 pm
kevinf wrote: Mon Jun 13, 2022 5:29 pm
hiddenpower wrote: Mon Jun 13, 2022 5:26 pm
kevinf wrote: Mon Jun 13, 2022 5:25 pm

Nobody who understands this fund is surprised :happy

My horizon for withdrawals is 15+ years, I'm not too concerned about right now.
Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.

The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
The future isn't necessarily going to mimic the past.
looks like it is aligned so far this year.
superjames1992
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Re: Why not 100% PSLDX?

Post by superjames1992 »

keith6014 wrote: Mon Jun 13, 2022 11:12 am The NAV could go below 2008 levels today.
Not sure this is relevant when the gains from this fund have always come from distributions in the long run.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

hiddenpower wrote: Mon Jun 13, 2022 7:35 pm
kevinf wrote: Mon Jun 13, 2022 6:05 pm
hiddenpower wrote: Mon Jun 13, 2022 5:38 pm
kevinf wrote: Mon Jun 13, 2022 5:29 pm
hiddenpower wrote: Mon Jun 13, 2022 5:26 pm

Nobody who understands bonds would have stayed in when rates were 0 and inflation was heating.
This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.

The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
The future isn't necessarily going to mimic the past.
looks like it is aligned so far this year.
Are you trying to convince people not to invest in this fund? Are you arguing that the simulated portfolios are always going to track PSLDX with a high accuracy? Are you proposing that this fund will permanently lag the market from this point forward? What is the end goal you are trying to express?
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

kevinf wrote: Mon Jun 13, 2022 7:54 pm
hiddenpower wrote: Mon Jun 13, 2022 7:35 pm
kevinf wrote: Mon Jun 13, 2022 6:05 pm
hiddenpower wrote: Mon Jun 13, 2022 5:38 pm
kevinf wrote: Mon Jun 13, 2022 5:29 pm

This isn't a treasury fund... As I recall only about 20% of the bond holdings are treasurys. Corporate bonds and bond-like instruments (mortgage backed securites, et al) are major components. There's also something to be said for actively managed bond funds here. Presumably the fund managers understand bonds.

The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
The future isn't necessarily going to mimic the past.
looks like it is aligned so far this year.
Are you trying to convince people not to invest in this fund? Are you arguing that the simulated portfolios are always going to track PSLDX with a high accuracy? Are you proposing that this fund will permanently lag the market from this point forward? What is the end goal you are trying to express?
Why not (to be) 100% PSLDX. That's it.
averagedude
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Re: Why not 100% PSLDX?

Post by averagedude »

If interest rates go up like they did in the late 70s and the stock market keeps tanking, couldn't this fund actually go to zero or very close to it like alot of other leveraged investment products? Never understood why someone would put all of their chips into this fund, unless they were performance chasing or thinking they have figured out the holy grail of investing from their backtesting analysis. I don't understand why someone who wants to be aggressive, could just be satisfied with the returns that 100% in equities will provide you. If you need higher returns than what 100% equities can give you to accomplish your goals, I would say you need to earn more, save more, or rethink your goals.
bgf
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Re: Why not 100% PSLDX?

Post by bgf »

hiddenpower wrote: Mon Jun 13, 2022 7:57 pm
kevinf wrote: Mon Jun 13, 2022 7:54 pm
hiddenpower wrote: Mon Jun 13, 2022 7:35 pm
kevinf wrote: Mon Jun 13, 2022 6:05 pm
hiddenpower wrote: Mon Jun 13, 2022 5:38 pm


The simulated PSLDX using treasury funds makes it look more or less the same reaction to rates no?
The future isn't necessarily going to mimic the past.
looks like it is aligned so far this year.
Are you trying to convince people not to invest in this fund? Are you arguing that the simulated portfolios are always going to track PSLDX with a high accuracy? Are you proposing that this fund will permanently lag the market from this point forward? What is the end goal you are trying to express?
Why not (to be) 100% PSLDX. That's it.
Lol. ‘Don’t invest in PSLDX because it can lose value when stocks and bonds lose value.’

Thanks for the heads up chief.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

bgf wrote: Mon Jun 13, 2022 9:04 pm
hiddenpower wrote: Mon Jun 13, 2022 7:57 pm
kevinf wrote: Mon Jun 13, 2022 7:54 pm
hiddenpower wrote: Mon Jun 13, 2022 7:35 pm
kevinf wrote: Mon Jun 13, 2022 6:05 pm

The future isn't necessarily going to mimic the past.
looks like it is aligned so far this year.
Are you trying to convince people not to invest in this fund? Are you arguing that the simulated portfolios are always going to track PSLDX with a high accuracy? Are you proposing that this fund will permanently lag the market from this point forward? What is the end goal you are trying to express?
Why not (to be) 100% PSLDX. That's it.
Lol. ‘Don’t invest in PSLDX because it can lose value when stocks and bonds lose value.’

Thanks for the heads up chief.
Don't invest 100% in PSLDX and diversify your risk, pal. I will certainly be a buyer of this fund. But I think we got a bit exuberant about leveraged risk parity..

A lot of people gleefully followed backtests and HEDGEFUNDIE, who was all-in on PSLDX in his 401k per another comment.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

averagedude wrote: Mon Jun 13, 2022 8:05 pm If interest rates go up like they did in the late 70s and the stock market keeps tanking, couldn't this fund actually go to zero or very close to it like alot of other leveraged investment products? Never understood why someone would put all of their chips into this fund, unless they were performance chasing or thinking they have figured out the holy grail of investing from their backtesting analysis. I don't understand why someone who wants to be aggressive, could just be satisfied with the returns that 100% in equities will provide you. If you need higher returns than what 100% equities can give you to accomplish your goals, I would say you need to earn more, save more, or rethink your goals.
Given a great depression sized crash, it's theoretically possible that the fund loses enough value that it would be discontinued. But that kind of downturn is much harder to hit with much increased regulation and access to information (circuit breakers, SEC rules, vastly better financial informatics) so I and many others are willing to accept the risk.

Many people are more leveraged than they think. For those of us no longer (or simply NOT) carrying a mortgage or other long-duration notes, PSLDX is a convenient way to reintroduce reasonable leverage to our portfolios while diversifying across both large-cap equity derivatives and various bonds/bond-like securities.

And I SERIOUSLY doubt many people have ALL of their chips in this fund. Perhaps you could more accurately state that some people have all of their IRA chips in the fund...
TXGator
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Re: Why not 100% PSLDX?

Post by TXGator »

Looks like it might break 4.5/share depending how the markets end up today. :shock:
RussellWilson
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Re: Why not 100% PSLDX?

Post by RussellWilson »

So normally with bonds I wouldn't worry because losses should be recovered by the end of the duration period, but I assume the leverage here messes with that, leading to permanent losses such that if bonds and SP500 recovered to their previous combined peak, that PSLDX wouldn't get all the way there? I know about volatility decay and the discussions surrounding leveraged ETFs but is the way PSLDX constructed somehow not as prone to that? Basically, are a good chunk of the recent losses permanent, because of the leverage?
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hiddenpower
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Re: Why not 100% PSLDX?

Post by hiddenpower »

RussellWilson wrote: Thu Jun 16, 2022 9:22 am So normally with bonds I wouldn't worry because losses should be recovered by the end of the duration period, but I assume the leverage here messes with that, leading to permanent losses such that if bonds and SP500 recovered to their previous combined peak, that PSLDX wouldn't get all the way there? I know about volatility decay and the discussions surrounding leveraged ETFs but is the way PSLDX constructed somehow not as prone to that? Basically, are a good chunk of the recent losses permanent, because of the leverage?
In some ways. You can think each time leverage is reset, you're locking in a loss or a gain. In this case using futures it's going to be quarterly.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

RussellWilson wrote: Thu Jun 16, 2022 9:22 am So normally with bonds I wouldn't worry because losses should be recovered by the end of the duration period, but I assume the leverage here messes with that, leading to permanent losses such that if bonds and SP500 recovered to their previous combined peak, that PSLDX wouldn't get all the way there? I know about volatility decay and the discussions surrounding leveraged ETFs but is the way PSLDX constructed somehow not as prone to that? Basically, are a good chunk of the recent losses permanent, because of the leverage?
If you subscribe to the theory that the market goes up more than down, you will recover you value... Just with more extreme volatility.

hiddenpower wrote: Thu Jun 16, 2022 9:27 am In some ways. You can think each time leverage is reset, you're locking in a loss or a gain. In this case using futures it's going to be quarterly.
From the prospectus:
  • "The Fund may invest in common stocks, options, futures, options on futures and swaps. The Fund normally uses S&P 500 Index derivatives instead of S&P 500 Index stocks to attempt to equal or exceed the daily performance of the Indexes. The Fund seeks to remain invested in S&P 500 Index derivatives and/or S&P 500 Index stocks even when the S&P 500 Index is declining. Though the Fund does not normally invest directly in S&P 500 Index securities, when S&P 500 Index derivatives appear to be overvalued relative to the S&P 500 Index, the Fund may invest all of its assets in a “basket” of S&P 500 Index stocks."
averagedude
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Re: Why not 100% PSLDX?

Post by averagedude »

kevinf wrote: Mon Jun 13, 2022 10:16 pm
averagedude wrote: Mon Jun 13, 2022 8:05 pm If interest rates go up like they did in the late 70s and the stock market keeps tanking, couldn't this fund actually go to zero or very close to it like alot of other leveraged investment products? Never understood why someone would put all of their chips into this fund, unless they were performance chasing or thinking they have figured out the holy grail of investing from their backtesting analysis. I don't understand why someone who wants to be aggressive, could just be satisfied with the returns that 100% in equities will provide you. If you need higher returns than what 100% equities can give you to accomplish your goals, I would say you need to earn more, save more, or rethink your goals.
Given a great depression sized crash, it's theoretically possible that the fund loses enough value that it would be discontinued. But that kind of downturn is much harder to hit with much increased regulation and access to information (circuit breakers, SEC rules, vastly better financial informatics) so I and many others are willing to accept the risk.

Many people are more leveraged than they think. For those of us no longer (or simply NOT) carrying a mortgage or other long-duration notes, PSLDX is a convenient way to reintroduce reasonable leverage to our portfolios while diversifying across both large-cap equity derivatives and various bonds/bond-like securities.

And I SERIOUSLY doubt many people have ALL of their chips in this fund. Perhaps you could more accurately state that some people have all of their IRA chips in the fund...
A depression sized crash is something that happens how often? Perhaps every 100 years? I do agree with your thoughts that putting a small portion of your portfolio in this fund is reasonable, but keep in mind that this portion of your portfolio may not perform like it did in the past. I was looking at the subject line of the OP.
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kevinf
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Re: Why not 100% PSLDX?

Post by kevinf »

Before now the fund may have benefited from selling long-duration bonds that benefitted from the decline in rates. In the future, the fund may benefit from holding bonds yielding a higher coupon due to rising rates. Along the way the fund managers have the option to either use derivatives or common stocks for the equity side. It's likely that returns will be muted in the near term, but long-term should be just fine if you are expecting the stock market to recover and bonds to do what bonds do.
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