Why not 100% PSLDX?

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rchmx1
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Re: Why not 100% PSLDX?

Post by rchmx1 »

guyinlaw wrote: Sat Sep 12, 2020 11:37 pm Any idea how much is the fees to buy PSLDX at Interactive Brokers?
I'm not sure how to check that without actually having enough money available to preview a purchase, but it shows a $25k minimum initial investment, if that matters for your situation.
kim.gold
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Re: Why not 100% PSLDX?

Post by kim.gold »

guyinlaw wrote: Sat Sep 12, 2020 11:37 pm Any idea how much is the fees to buy PSLDX at Interactive Brokers?
"Lesser of 3% * Trade Value or USD 14.95, per Transaction" for US residents.
nehawk87
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Re: Why not 100% PSLDX?

Post by nehawk87 »

Anyone else think it feels odd to invest $100K into PSLDX and then realize you own .01% of the entire fund? Just surprised this fund is still <$1B assets under management.
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

nehawk87 wrote: Tue Sep 22, 2020 9:00 pm Anyone else think it feels odd to invest $100K into PSLDX and then realize you own .01% of the entire fund? Just surprised this fund is still <$1B assets under management.
If it makes you feel better you own a much smaller slice of the S&P through this fund.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

nehawk87 wrote: Tue Sep 22, 2020 9:00 pm Anyone else think it feels odd to invest $100K into PSLDX and then realize you own .01% of the entire fund? Just surprised this fund is still <$1B assets under management.
Considering the past performance I think it's odd.
A fool and your money are soon partners
aqan
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Re: Why not 100% PSLDX?

Post by aqan »

firebirdparts wrote: Tue Sep 22, 2020 9:35 pm
nehawk87 wrote: Tue Sep 22, 2020 9:00 pm Anyone else think it feels odd to invest $100K into PSLDX and then realize you own .01% of the entire fund? Just surprised this fund is still <$1B assets under management.
Considering the past performance I think it's odd.
Does it pay out dividends? Maybe that’s causing the outflow.
rchmx1
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Re: Why not 100% PSLDX?

Post by rchmx1 »

aqan wrote: Tue Sep 22, 2020 9:47 pm Does it pay out dividends? Maybe that’s causing the outflow.
Quarterly dividends, with the last one on 9/10 being 3.37%. It's subpage on Schwab lists it as having a 6.79% Distribution Yield.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

It's not as easy to buy as a lot of things, as we've seen in this thread, and that's probably the main issue. I don't have any information about why (for example) Fidelity is trying to restrict it. Why would they do that?
A fool and your money are soon partners
nehawk87
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Re: Why not 100% PSLDX?

Post by nehawk87 »

rchmx1 wrote: Tue Sep 22, 2020 9:56 pm
aqan wrote: Tue Sep 22, 2020 9:47 pm Does it pay out dividends? Maybe that’s causing the outflow.
Quarterly dividends, with the last one on 9/10 being 3.37%. It's subpage on Schwab lists it as having a 6.79% Distribution Yield.
I assume most investors reinvest the dividends which would have less of an impact on AUM. Who knows. Regardless, I like this fund and am investing about 1/3 of my investable assets into it.
gabbar
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Re: Why not 100% PSLDX?

Post by gabbar »

Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
corp_sharecropper
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Re: Why not 100% PSLDX?

Post by corp_sharecropper »

gabbar wrote: Wed Sep 23, 2020 6:26 pm Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
It's not all long term treasuries and us corporate bonds. The holdings are shown in a pdf on the fund website. I know there's non-US sovereign debt in there, among others. Also, quality active management actually can beat passive much more easily in the bond universe than in us equities (PIMCO is widely considered to be the cream of the crop in bond trading), the AGG index is really not a perfect bellwether for the investible bond universe the way S&P500 is for say US equities, there are so many bonds out there that trading is quite thin on pretty much everything other than well known corporates/us-t/a few other sovereigns that the valuation of them isn't as easy as a simple mark to market would be.

ETA: The long bond did in fact end in the green today also.
rchmx1
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Re: Why not 100% PSLDX?

Post by rchmx1 »

Also, one day is just noise. There have also been days in the last few months since I've been in the fund where PSLDX was down a bit more than I would have expected given that day's S&P500 and bond performance.
corp_sharecropper
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Re: Why not 100% PSLDX?

Post by corp_sharecropper »

rchmx1 wrote: Wed Sep 23, 2020 7:06 pm Also, one day is just noise. There have also been days in the last few months since I've been in the fund where PSLDX was down a bit more than I would have expected given that day's S&P500 and bond performance.
Wholeheartedly agree about daily evaluation being a myopic vantage point. And to add on to your second point, correlations are properly expressed with a unit of time (eg. Monthly correlation) but often times people just are a bit lazy in casual talk and don't mention the time interval of the "correlation" numbers being discussed. Sometimes this leads others to form an unrealistic expectation of it (eg. expecting LTT to be nearly perfectly inverse equities on an hour by hour, day to day, etc basis).
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

gabbar wrote: Wed Sep 23, 2020 6:26 pm Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
The bond portfolio is actively managed and quite complex. They are always very late in getting a price out. I'm sure even at 8 pm they probably still have some stale bond prices in there, but I am just making that up.

Even if you read the prospectus, it's not that easy to figure out the amount of leverage. They use return contracts on the S&P, and so some of the time these contracts create an obligation and have negative unrealized value.

If you look at what they're trying to track, it's much simpler, so I go by that. It tracks pretty closely.
A fool and your money are soon partners
finite_difference
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Re: Why not 100% PSLDX?

Post by finite_difference »

Bogle said leverage was OK if you have someone to bail you out. Who exactly is bailing you out with this fund?

The costs of borrowing right now are presumably very low. What happens if the cost of borrowing goes up or can’t beat the return of bonds?

Didn’t we have a liquidity crisis earlier this year on municipal bonds? Investors were using leverage to buy munis and had to dump them at discount?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
finite_difference
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Re: Why not 100% PSLDX?

Post by finite_difference »

firebirdparts wrote: Thu Sep 24, 2020 9:22 pm
gabbar wrote: Wed Sep 23, 2020 6:26 pm Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
The bond portfolio is actively managed and quite complex. They are always very late in getting a price out. I'm sure even at 8 pm they probably still have some stale bond prices in there, but I am just making that up.

Even if you read the prospectus, it's not that easy to figure out the amount of leverage. They use return contracts on the S&P, and so some of the time these contracts create an obligation and have negative unrealized value.

If you look at what they're trying to track, it's much simpler, so I go by that. It tracks pretty closely.
I thought the leverage was used to buy bonds and not stocks?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

finite_difference wrote: Thu Sep 24, 2020 10:53 pm
firebirdparts wrote: Thu Sep 24, 2020 9:22 pm
gabbar wrote: Wed Sep 23, 2020 6:26 pm Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
The bond portfolio is actively managed and quite complex. They are always very late in getting a price out. I'm sure even at 8 pm they probably still have some stale bond prices in there, but I am just making that up.

Even if you read the prospectus, it's not that easy to figure out the amount of leverage. They use return contracts on the S&P, and so some of the time these contracts create an obligation and have negative unrealized value.

If you look at what they're trying to track, it's much simpler, so I go by that. It tracks pretty closely.
I thought the leverage was used to buy bonds and not stocks?
It’s the other way around.

The fund gets its S&P exposure through Total Return Swaps - it receives the S&P total return and pays out 3-month LIBOR plus a spread.

The bonds are held on the balance sheet.
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
rchmx1
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Re: Why not 100% PSLDX?

Post by rchmx1 »

manlymatt83 wrote: Fri Sep 25, 2020 9:53 am Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
finite_difference
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Re: Why not 100% PSLDX?

Post by finite_difference »

Tingting1013 wrote: Fri Sep 25, 2020 12:27 am
finite_difference wrote: Thu Sep 24, 2020 10:53 pm
firebirdparts wrote: Thu Sep 24, 2020 9:22 pm
gabbar wrote: Wed Sep 23, 2020 6:26 pm Just trying to understand the composition of this fund. I tried reading their fact-sheet, but I couldn't find details on how much leverage this fund takes on. I am assuming the 2.55x leverage number quoted earlier in the thread is correct. Looks like the fund is down 2.26% today (Sept 23).

Given that the S&P 500 is down 2.37%, corporate bonds are down 1% and long-term treasuries are also down today, I am not sure how this fund outperformed the S&P today. This fund should have been down more than 2.8%. Either the actively managed bond portfolio significantly outperformed the respective indexes (for today) or I am missing something.
The bond portfolio is actively managed and quite complex. They are always very late in getting a price out. I'm sure even at 8 pm they probably still have some stale bond prices in there, but I am just making that up.

Even if you read the prospectus, it's not that easy to figure out the amount of leverage. They use return contracts on the S&P, and so some of the time these contracts create an obligation and have negative unrealized value.

If you look at what they're trying to track, it's much simpler, so I go by that. It tracks pretty closely.
I thought the leverage was used to buy bonds and not stocks?
It’s the other way around.

The fund gets its S&P exposure through Total Return Swaps - it receives the S&P total return and pays out 3-month LIBOR plus a spread.

The bonds are held on the balance sheet.
Thanks for the clarification. There are some misleading posts in this thread.

What did Jack Bogle think about leverage? Did he use it personally? His comment about leverage being OK if you have someone who can bail you out at the bottom implies having access to a large cash pile, which further (to me) implies you’d be better off just going 100% stocks with everything and not having a huge cash pile.

Are these types of funds essentially taking full advantage of tax-advantaged accounts to do something magical, or wouldn’t you just be better off going 100% stocks for everything?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

rchmx1 wrote: Fri Sep 25, 2020 10:31 am
manlymatt83 wrote: Fri Sep 25, 2020 9:53 am Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
In my spreadsheet I only have “TSM” and “SCV” line items. Would this be a third line item, or can I just factor PSLDX as part of my TSM allocation @ 100% (alongside VT)
snailderby
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Re: Why not 100% PSLDX?

Post by snailderby »

manlymatt83 wrote: Fri Sep 25, 2020 11:01 am
rchmx1 wrote: Fri Sep 25, 2020 10:31 am
manlymatt83 wrote: Fri Sep 25, 2020 9:53 am Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
In my spreadsheet I only have “TSM” and “SCV” line items. Would this be a third line item, or can I just factor PSLDX as part of my TSM allocation @ 100% (alongside VT)
PSLDX is very different from VT. PSLDX does not hold any international stocks. It has significant bond exposure. And it's leveraged. I would not recommend using leveraged funds unless you're fully aware of --- and have carefully considered -- the risks of leverage.
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

snailderby wrote: Fri Sep 25, 2020 11:10 am
manlymatt83 wrote: Fri Sep 25, 2020 11:01 am
rchmx1 wrote: Fri Sep 25, 2020 10:31 am
manlymatt83 wrote: Fri Sep 25, 2020 9:53 am Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
In my spreadsheet I only have “TSM” and “SCV” line items. Would this be a third line item, or can I just factor PSLDX as part of my TSM allocation @ 100% (alongside VT)
PSLDX is very different from VT. PSLDX does not hold any international stocks. It has significant bond exposure. And it's leveraged. I would not recommend using leveraged funds unless you're fully aware of --- and have carefully considered -- the risks of leverage.
I’m educated on it and have held a fixed dollar amount of it for almost a year in my IRA. But recently made a spreadsheet to track asset allocation and trying to determine where to put PSLDX — if I can loop it into something else, or make it it’s own category with a fixed %. I do plan to add to it long term.
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UpsetRaptor
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Re: Why not 100% PSLDX?

Post by UpsetRaptor »

manlymatt83 wrote: Fri Sep 25, 2020 11:12 am
I’m educated on it and have held a fixed dollar amount of it for almost a year in my IRA. But recently made a spreadsheet to track asset allocation and trying to determine where to put PSLDX — if I can loop it into something else, or make it it’s own category with a fixed %. I do plan to add to it long term.
If you're trying to work into your AA, most seem to proxy it as 100% US equities. It basically acts like that plus some extra juice from the bonds, which has been nice the past decade but will likely be a smaller amount moving forward.
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

UpsetRaptor wrote: Fri Sep 25, 2020 11:28 am
manlymatt83 wrote: Fri Sep 25, 2020 11:12 am
I’m educated on it and have held a fixed dollar amount of it for almost a year in my IRA. But recently made a spreadsheet to track asset allocation and trying to determine where to put PSLDX — if I can loop it into something else, or make it it’s own category with a fixed %. I do plan to add to it long term.
If you're trying to work into your AA, most seem to proxy it as 100% US equities. It basically acts like that plus some extra juice from the bonds, which has been nice the past decade but will likely be a smaller amount moving forward.
Awesome, thanks! So sounds like VT+PSLDX can easily be balanced with a little extra VXUS.
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Steve Reading
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Re: Why not 100% PSLDX?

Post by Steve Reading »

manlymatt83 wrote: Fri Sep 25, 2020 11:12 am
snailderby wrote: Fri Sep 25, 2020 11:10 am
manlymatt83 wrote: Fri Sep 25, 2020 11:01 am
rchmx1 wrote: Fri Sep 25, 2020 10:31 am
manlymatt83 wrote: Fri Sep 25, 2020 9:53 am Does this fund lean closer to a 90%/10% VT/BNDW portfolio, or a 55%/45% UPRO/TMF? Trying to decide if this is a happy medium between choosing to partake (or not partake) in UPRO/TMF.
For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
In my spreadsheet I only have “TSM” and “SCV” line items. Would this be a third line item, or can I just factor PSLDX as part of my TSM allocation @ 100% (alongside VT)
PSLDX is very different from VT. PSLDX does not hold any international stocks. It has significant bond exposure. And it's leveraged. I would not recommend using leveraged funds unless you're fully aware of --- and have carefully considered -- the risks of leverage.
I’m educated on it and have held a fixed dollar amount of it for almost a year in my IRA. But recently made a spreadsheet to track asset allocation and trying to determine where to put PSLDX — if I can loop it into something else, or make it it’s own category with a fixed %. I do plan to add to it long term.
I don’t know the structure of your spreadsheet but can’t you count it as what it is (100% stocks, 100% bonds, -100% cash)?

Like if you invested in, I don’t know, Wellesley, or some other balanced fund, you’d do something similar
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

Steve Reading wrote: Fri Sep 25, 2020 3:26 pm
manlymatt83 wrote: Fri Sep 25, 2020 11:12 am
snailderby wrote: Fri Sep 25, 2020 11:10 am
manlymatt83 wrote: Fri Sep 25, 2020 11:01 am
rchmx1 wrote: Fri Sep 25, 2020 10:31 am

For AA considerations most people seem to treat this as 100% S&P500, but since this fund uses leverage I feel like it makes sense to view it as a way to add some leverage to your portfolio without going quite so far as the 3x the hedgefundie strategy would entail.
In my spreadsheet I only have “TSM” and “SCV” line items. Would this be a third line item, or can I just factor PSLDX as part of my TSM allocation @ 100% (alongside VT)
PSLDX is very different from VT. PSLDX does not hold any international stocks. It has significant bond exposure. And it's leveraged. I would not recommend using leveraged funds unless you're fully aware of --- and have carefully considered -- the risks of leverage.
I’m educated on it and have held a fixed dollar amount of it for almost a year in my IRA. But recently made a spreadsheet to track asset allocation and trying to determine where to put PSLDX — if I can loop it into something else, or make it it’s own category with a fixed %. I do plan to add to it long term.
I don’t know the structure of your spreadsheet but can’t you count it as what it is (100% stocks, 100% bonds, -100% cash)?

Like if you invested in, I don’t know, Wellesley, or some other balanced fund, you’d do something similar
Oy. I guess I could. My spreadsheet isn’t that fine grained though.
M1garand30064
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Re: Why not 100% PSLDX?

Post by M1garand30064 »

nehawk87 wrote: Tue Sep 22, 2020 9:00 pm Anyone else think it feels odd to invest $100K into PSLDX and then realize you own .01% of the entire fund? Just surprised this fund is still <$1B assets under management.
The fund is incredibly tax inefficient and is really only suitable for tax advantaged accounts. I'd imagine that holds the fund back.
Rlew
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Re: Why not 100% PSLDX?

Post by Rlew »

For anyone who invests in PSLDX, why don't you just use 50% SSO / 50% UBT instead? It seems that would provide the same basic exposure (100% S&P + 100% long bonds), sans the actively managed bond position/fees? Looks like the prior performance is in line (or better) based on returns/Sharpe/Sortino, and has the benefit that it can be more easily purchased at nay brokerage firm.

Seems to be a very interesting risk-parity approach, similar to HEDGEFUNDIE's adventure but with less leverage. I don't partake... But I find it dangerously fascinating.




https://www.portfoliovisualizer.com/bac ... tion3_2=50
"When there are multiple solutions to a problem, choose the simplest one" Jack Bogle
guyinlaw
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Re: Why not 100% PSLDX?

Post by guyinlaw »

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Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

Rlew wrote: Sat Sep 26, 2020 9:00 pm For anyone who invests in PSLDX, why don't you just use 50% SSO / 50% UBT instead? It seems that would provide the same basic exposure (100% S&P + 100% long bonds), sans the actively managed bond position/fees? Looks like the prior performance is in line (or better) based on returns/Sharpe/Sortino, and has the benefit that it can be more easily purchased at nay brokerage firm.

Seems to be a very interesting risk-parity approach, similar to HEDGEFUNDIE's adventure but with less leverage. I don't partake... But I find it dangerously fascinating.




https://www.portfoliovisualizer.com/bac ... tion3_2=50
The better DIY PSLDX would look something like this:

1. Open margin account at Interactive Brokers
2. Buy 50% VOO / 50% something else (perhaps VXUS)
3. Borrow another 50% on margin and buy BLV or ILTB
4. Rebalance between the VOO and BLV regularly

This has the advantage of further diversification with the “something else”, rock bottom borrow rates with IBKR, and much lower expense ratio.

Here is a comparison of two DIY PSLDX strategies during a 7 year period when interest rates stayed low and flat:

https://www.portfoliovisualizer.com/bac ... ion5_3=100

The ILTB one had lower volatility and slightly higher return but it also has higher tax cost.
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