Why not 100% PSLDX?

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thenextguy
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Re: Why not 100% PSLDX?

Post by thenextguy »

ljford7 wrote: Mon Apr 12, 2021 8:21 pm
RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
My main question is why? PSLDX provides a similar package, but is a lot better in back testing.
Not everyone has access to PSLDX.
corp_sharecropper
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Re: Why not 100% PSLDX?

Post by corp_sharecropper »

euphonious wrote: Mon Apr 12, 2021 9:05 pm
garlandwhizzer wrote: Sun Apr 11, 2021 1:53 pm First, there is no strategy for investing outperformance that does not have capacity restraints. If sufficient investor money, swayed by excellent backtesting results flows into PSLDX, its alpha will be diluted and revert toward zero. No strategy is immune from asset bloat.
At what point do you think asset bloat becomes an issue? It looks like PSLDX currently has $818.2M under management, which seems pretty low compared to other popular funds.
PSLDX is not some fancy delicate strategy that will run out of "capacity". It's literally S&P500 + long bonds. So when those two assets run out of "capacity" I guess all bogleheads are up a creek without a paddle. We're talking a massive S&P 500 futures market and a long duration bond market that is absolutely enormous. The reason it's so easy to replicate PSLDX "manually" is because the assets are so widely available, liquid, and with minimal bid/ask spread to an entire globe of investors. PSLDX is nothing more than a convenience of someone else managing the rebalancing and leverage risk along with faith that the S&P500 and long duration bonds are a good place to allocate capital. I'm a huge believer in those two assets, if I were limited to only two assets those would be it, but happily I can have more than that in the current day & age.
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

corp_sharecropper wrote: Mon Apr 12, 2021 9:31 pm
euphonious wrote: Mon Apr 12, 2021 9:05 pm
garlandwhizzer wrote: Sun Apr 11, 2021 1:53 pm First, there is no strategy for investing outperformance that does not have capacity restraints. If sufficient investor money, swayed by excellent backtesting results flows into PSLDX, its alpha will be diluted and revert toward zero. No strategy is immune from asset bloat.
At what point do you think asset bloat becomes an issue? It looks like PSLDX currently has $818.2M under management, which seems pretty low compared to other popular funds.
PSLDX is not some fancy delicate strategy that will run out of "capacity". It's literally S&P500 + long bonds. So when those two assets run out of "capacity" I guess all bogleheads are up a creek without a paddle. We're talking a massive S&P 500 futures market and a long duration bond market that is absolutely enormous. The reason it's so easy to replicate PSLDX "manually" is because the assets are so widely available, liquid, and with minimal bid/ask spread to an entire globe of investors. PSLDX is nothing more than a convenience of someone else managing the rebalancing and leverage risk along with faith that the S&P500 and long duration bonds are a good place to allocate capital. I'm a huge believer in those two assets, if I were limited to only two assets those would be it, but happily I can have more than that in the current day & age.
PSLDX + IJS + IXUS and chill
jarjarM
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Re: Why not 100% PSLDX?

Post by jarjarM »

corp_sharecropper wrote: Mon Apr 12, 2021 9:31 pm
euphonious wrote: Mon Apr 12, 2021 9:05 pm
garlandwhizzer wrote: Sun Apr 11, 2021 1:53 pm First, there is no strategy for investing outperformance that does not have capacity restraints. If sufficient investor money, swayed by excellent backtesting results flows into PSLDX, its alpha will be diluted and revert toward zero. No strategy is immune from asset bloat.
At what point do you think asset bloat becomes an issue? It looks like PSLDX currently has $818.2M under management, which seems pretty low compared to other popular funds.
PSLDX is not some fancy delicate strategy that will run out of "capacity". It's literally S&P500 + long bonds. So when those two assets run out of "capacity" I guess all bogleheads are up a creek without a paddle. We're talking a massive S&P 500 futures market and a long duration bond market that is absolutely enormous. The reason it's so easy to replicate PSLDX "manually" is because the assets are so widely available, liquid, and with minimal bid/ask spread to an entire globe of investors. PSLDX is nothing more than a convenience of someone else managing the rebalancing and leverage risk along with faith that the S&P500 and long duration bonds are a good place to allocate capital. I'm a huge believer in those two assets, if I were limited to only two assets those would be it, but happily I can have more than that in the current day & age.
To be fair, Pimco does active manage the bond side so there's a bit of risk associated with that. But I too don't think there's a "capacity" issue with PSLDX but the high dividend/cap gain distribution makes nearly impossible to hold outside of tax-advantaged account.
comeinvest
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Re: Why not 100% PSLDX?

Post by comeinvest »

cos wrote: Fri Feb 19, 2021 1:20 am
manlymatt83 wrote: Thu Feb 18, 2021 10:43 pm Thanks! Does 50/50 UPRO/TMF resemble more of the mmas up of PSLDX with just a 3x leverage?
Eh, looks like PSLDX is best tracked by 122/67 S&P500/LTT using daily leveraged ETFs. Check out this backtest.

That translates to 65/35 UPRO/TMF if you're chasing the "3x version" of PSLDX. Don't forget to rebalance.
But it doesn't make sense, does it? Your max drawdown is much higher than PSLDX's, as you have a much higher equities allocation. I am questioning how meaningful minimizing tracking error is as an optimization goal, possibly because "tracking error" is defined on a microscopic (daily) scale, while the longer-term tracking error would be meaningful for the investor? Compare to e.g. 33% UPRO 67% EDV which makes sense theoretically and also seems like a better approximation:https://www.portfoliovisualizer.com/bac ... tion5_3=67
Last edited by comeinvest on Sun Apr 18, 2021 2:05 am, edited 2 times in total.
comeinvest
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Re: Why not 100% PSLDX?

Post by comeinvest »

RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
Did it: https://www.portfoliovisualizer.com/bac ... tion6_3=67

33% UPRO / 67% EDV doesn't look good, although it should have gotten a boost from EDV (long term treasuries). The nature of the LETF is probably the problem.

By contrast, I can approximate PSLDX very closely with 100% VFINX, 100% VWESX, -100% CASHX: https://www.portfoliovisualizer.com/bac ... tion6_3=67
... except this cannot be implemented as I cannot leverage any of these products using CASHX rates.
... but why even bother, as luckily I CAN implement either 100% VFINX / 100% VUSTX / -100% CASHX or 100% VFINX / 67% EDV / -67% CASHX (with treasury futures instead of VUSTX or EDV), which both produced almost identical CAGRs to PSLDX, except with much lower max drawdowns: https://www.portfoliovisualizer.com/bac ... tion5_3=67

Conclusions:
1. The PIMCO management fee effectively eats all the alpha from their active management of the bond portfolio in comparison to an index fund like VWESX. In other words, PIMCO only lines their own pockets with their "active management".
2. Firing PIMCO and going the DIY route with treasury futures outperforms PIMCO on a risk/return basis.

Granted, I think PIMCO managers are fine guys, but they face an uphill battle trying to beat the DIY method, as they not only have to recoup the management fee, but also the higher cost of leverage of the equity index replication (ca. 0.4% above LIBOR since about 2015?) in comparison to the cost of leverage of treasuries which is almost identical to the fed funds rate.

Not to mention, with the DIY approach I can replace VFINX with factor tilted ETFs or other sources of returns, if I'm so inclined.
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cos
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Re: Why not 100% PSLDX?

Post by cos »

comeinvest wrote: Sun Apr 18, 2021 1:44 am
cos wrote: Fri Feb 19, 2021 1:20 am
manlymatt83 wrote: Thu Feb 18, 2021 10:43 pm Thanks! Does 50/50 UPRO/TMF resemble more of the mmas up of PSLDX with just a 3x leverage?
Eh, looks like PSLDX is best tracked by 122/67 S&P500/LTT using daily leveraged ETFs. Check out this backtest.

That translates to 65/35 UPRO/TMF if you're chasing the "3x version" of PSLDX. Don't forget to rebalance.
But it doesn't make sense, does it? Your max drawdown is much higher than PSLDX's, as you have a much higher equities allocation. I am questioning how meaningful minimizing tracking error is as an optimization goal. Compare to e.g. 33% UPRO 67% EDV which makes sense theoretically and also seems like a better approximation: https://www.portfoliovisualizer.com/bac ... tion6_3=67
What doesn't make sense in what context? I agree with you that, in general, minimizing tracking error relative to random funds doesn't offer much in the way of utility, but as far as manlymatt83's stated optimization goal goes, 65/35 UPRO/TMF closely mimics "PSLDX with just a 3x leverage" as described. Yes, this entails deeper drawdowns, but manlymatt83's optimization criteria specifically call for taking on greater risk, likely with hopes for greater returns.

Note that the additional allocation to equities reflects the additional credit risk taken by PSLDX in its use of corporate bonds rather than treasuries. As such, 1x PSLDX is better approximated by 45/55 UPRO/EDV than what you suggested. Also note that EDV's average duration is quite a bit longer than that of PSLDX's bond allocation, and you'll find that 1x PSLDX is even better approximated by 40/60 UPRO/TLT than by 45/55 UPRO/EDV.

See: https://www.portfoliovisualizer.com/bac ... ion5_2=-50

Now, as far as optimizing for meaningful goals goes, utility is maximized when we achieve maximum returns relative to some maximally tolerable level of risk. The following thread is an excellent exploration of this approach: viewtopic.php?f=10&t=322366
comeinvest
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Re: Why not 100% PSLDX?

Post by comeinvest »

cos wrote: Wed Jan 06, 2021 5:40 pm
furlin wrote: Sun Jan 03, 2021 1:48 pm PSLDX is like a less efficient way to implement the 2x version of HFEA. Look how close the monthly rebalanced 55 SSO/45 UBT portfolio is to 100% PSLDX. SSO is 2x SPY and UBT is 2x TLT.

https://www.portfoliovisualizer.com/bac ... tion3_2=45
firebirdparts wrote: Sun Jan 03, 2021 3:02 pm That's right. You'll find some posts in this thread about simulating it more accurately, if anybody cares. It's not long term treasuries.

If you wanted to simulate it, though, you'd have to ask yourself what you're trying to do. Just how thoroughly do you agree with what they're doing.
Indeed, it looks like PSLDX is better simulated using 120/70 S&P500/LTT rather than 100/100 or even 110/90 as seen here: https://www.portfoliovisualizer.com/opt ... ints=false

This is probably because PSLDX prefers corporate bonds over government bonds and targets a materially shorter duration than TMF, UBT, or TLT. Credit risk is highly correlated with market risk while term risk is almost entirely uncorrelated.

HFEA comes out ahead of PSLDX because long-term treasuries are significantly more effective in diversifying an equity position relative to less-long-term corporates. As firebirdparts said, however, what's best for you depends on what you're trying to do, and PSLDX has many pros in addition to its cons.
I agree, but then again in an inflationary scenario, PSLDX with its shorter term corporate bonds might come out ahead, and the fortunes may turn.
comeinvest
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Re: Why not 100% PSLDX?

Post by comeinvest »

cos wrote: Sun Apr 18, 2021 2:51 am
comeinvest wrote: Sun Apr 18, 2021 1:44 am
cos wrote: Fri Feb 19, 2021 1:20 am
manlymatt83 wrote: Thu Feb 18, 2021 10:43 pm Thanks! Does 50/50 UPRO/TMF resemble more of the mmas up of PSLDX with just a 3x leverage?
Eh, looks like PSLDX is best tracked by 122/67 S&P500/LTT using daily leveraged ETFs. Check out this backtest.

That translates to 65/35 UPRO/TMF if you're chasing the "3x version" of PSLDX. Don't forget to rebalance.
But it doesn't make sense, does it? Your max drawdown is much higher than PSLDX's, as you have a much higher equities allocation. I am questioning how meaningful minimizing tracking error is as an optimization goal. Compare to e.g. 33% UPRO 67% EDV which makes sense theoretically and also seems like a better approximation: https://www.portfoliovisualizer.com/bac ... tion6_3=67
What doesn't make sense in what context? I agree with you that, in general, minimizing tracking error relative to random funds doesn't offer much in the way of utility, but as far as manlymatt83's stated optimization goal goes, 65/35 UPRO/TMF closely mimics "PSLDX with just a 3x leverage" as described. Yes, this entails deeper drawdowns, but manlymatt83's optimization criteria specifically call for taking on greater risk, likely with hopes for greater returns.

Note that the additional allocation to equities reflects the additional credit risk taken by PSLDX in its use of corporate bonds rather than treasuries. As such, 1x PSLDX is better approximated by 45/55 UPRO/EDV than what you suggested. Also note that EDV's average duration is quite a bit longer than that of PSLDX's bond allocation, and you'll find that 1x PSLDX is even better approximated by 40/60 UPRO/TLT than by 45/55 UPRO/EDV.

See: https://www.portfoliovisualizer.com/bac ... ion5_2=-50

Now, as far as optimizing for meaningful goals goes, utility is maximized when we achieve maximum returns relative to some maximally tolerable level of risk. The following thread is an excellent exploration of this approach: viewtopic.php?f=10&t=322366
I'm not sure if I understand manlymatt83 optimization goal, as you can achieve ever so high possible returns if you increase risk. Setting that aside, you are doing some optimization on the 2011+ timeframe, while most of the discussions in the HFEA and related threads consider the 1955+ timeline. Maybe we seem to agree that a DIY approach with UPRO and EDV (and even better with futures) can beat PIMCO on reasonable risk/return metrics. Your result is probably mathematically correct and I understand some of the points your are making, but the result is not immediately intuitively visible to me, as you have higher drawdowns and a higher return than PIMCO, which is a trivial result. By contrast, my counterexample (33% UPRO 67% EDV) immediately shows that it is better than PIMCO, as it has the same equity risk but lower drawdowns. (Although this, and many other things, may change e.g. in inflationary periods.) I agree that 33% UPRO 67% EDV is probably not the optimal solution. For an optimization in the UPRO/EDV space, we would have to define a risk/return utility function. Let me just say it gets complicated.

I am however, and that was my main point, questioning the utility of tracking error minimization, just like for example I am questioning the utility of "volatility" as optimization goal vs. for example "maximum drawdown", or more generally speaking, the distribution of final long-term outcomes. I think two assets can be perfectly correlated, resulting in almost zero tracking error, but have vastly different outcomes over longer time frames.
DMoogle
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Re: Why not 100% PSLDX?

Post by DMoogle »

So we've discussed before that PSLDX is a pretty bad idea for taxable accounts due to the very high dividend payout structure. I'm currently using NTSX, but I'm open to more aggressive DIY approaches.

What other options are there that would work well in a taxable account?
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

DMoogle wrote: Sun Apr 18, 2021 10:11 pm So we've discussed before that PSLDX is a pretty bad idea for taxable accounts due to the very high dividend payout structure. I'm currently using NTSX, but I'm open to more aggressive DIY approaches.

What other options are there that would work well in a taxable account?
Futures
DMoogle
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Re: Why not 100% PSLDX?

Post by DMoogle »

Tingting1013 wrote: Sun Apr 18, 2021 10:12 pm
DMoogle wrote: Sun Apr 18, 2021 10:11 pm So we've discussed before that PSLDX is a pretty bad idea for taxable accounts due to the very high dividend payout structure. I'm currently using NTSX, but I'm open to more aggressive DIY approaches.

What other options are there that would work well in a taxable account?
Futures
Figured that would be the answer. Forgive me, I'm new to futures. I understand the concept, but not what it would look like in practice. Say you have an account with $100k. What would the portfolio look like in order to optimally obtain exposure similar to PSLDX? Starting simple, let's just assume it's 100% S&P500 + 100% LTTs for now.
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Re: Why not 100% PSLDX?

Post by NS_Bane »

Expense ratio of 1.01%. Yikes.
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

DMoogle wrote: Sun Apr 18, 2021 10:21 pm
Tingting1013 wrote: Sun Apr 18, 2021 10:12 pm
DMoogle wrote: Sun Apr 18, 2021 10:11 pm So we've discussed before that PSLDX is a pretty bad idea for taxable accounts due to the very high dividend payout structure. I'm currently using NTSX, but I'm open to more aggressive DIY approaches.

What other options are there that would work well in a taxable account?
Futures
Figured that would be the answer. Forgive me, I'm new to futures. I understand the concept, but not what it would look like in practice. Say you have an account with $100k. What would the portfolio look like in order to optimally obtain exposure similar to PSLDX? Starting simple, let's just assume it's 100% S&P500 + 100% LTTs for now.
https://www.reddit.com/r/investing/comm ... ame=iossmf
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Re: Why not 100% PSLDX?

Post by cos »

comeinvest wrote: Sun Apr 18, 2021 8:07 pm
cos wrote: Sun Apr 18, 2021 2:51 am
-snip-

Now, as far as optimizing for meaningful goals goes, utility is maximized when we achieve maximum returns relative to some maximally tolerable level of risk. The following thread is an excellent exploration of this approach: viewtopic.php?f=10&t=322366
-snip-

I am however, and that was my main point, questioning the utility of tracking error minimization, just like for example I am questioning the utility of "volatility" as optimization goal vs. for example "maximum drawdown", or more generally speaking, the distribution of final long-term outcomes. I think two assets can be perfectly correlated, resulting in almost zero tracking error, but have vastly different outcomes over longer time frames.
I agree entirely! Hopefully manlymatt83 reads your posts and visits that thread I shared. It's always better to optimize for "what's right for me?" rather than "what's right for this mutual fund?" when making personal investment decisions.
ra7
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Re: Why not 100% PSLDX?

Post by ra7 »

DMoogle wrote: Thu Feb 11, 2021 1:44 pm
yellowJackets wrote: Thu Feb 11, 2021 1:30 pm so the cheapest place to buy PSLDX in IRA is E*Trade. Schwabs 49.99 seems somewhat expensive when I want to DCA as well
Interactive Brokers is lesser of 3% * trade value or $14.95. https://www1.interactivebrokers.com/en/ ... n&p=funds1
It's showing minimum 1M investment in IRA accounts @IBKR
corp_sharecropper
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Re: Why not 100% PSLDX?

Post by corp_sharecropper »

DMoogle wrote: Sun Apr 18, 2021 10:21 pm
Tingting1013 wrote: Sun Apr 18, 2021 10:12 pm
DMoogle wrote: Sun Apr 18, 2021 10:11 pm So we've discussed before that PSLDX is a pretty bad idea for taxable accounts due to the very high dividend payout structure. I'm currently using NTSX, but I'm open to more aggressive DIY approaches.

What other options are there that would work well in a taxable account?
Futures
Figured that would be the answer. Forgive me, I'm new to futures. I understand the concept, but not what it would look like in practice. Say you have an account with $100k. What would the portfolio look like in order to optimally obtain exposure similar to PSLDX? Starting simple, let's just assume it's 100% S&P500 + 100% LTTs for now.

Buy 100% of the lowest ER S&P500 ETF and roll front month T-Bond (ZB) or Ultra T-Bond (UB) futures every quarter. That simple. Without looking I'm guessing the notional value of one ZB contract is ~$155K and UB around ~$180K. Best to do this somewhere that automatically sweeps cash between securities account and commodities/futures account keeping the cash drag to a minimum (IB does this). Contrary to what you might hear, it is unlikely you will find somewhere that allows you to hold treasuries as your futures collateral (subject to change if interest rates increased significantly). I'd probably just do 100% S&P500 and let IB use securities margin from that to maintain the futures margin (so your financing cost would be the implied 3mo libor rate of the futures contract + the margin rate of your broker on the futures cash from your securities margin). I'd be willing to bet this would outperform PSLDX in all but the most unusual circumstances. In addition to a lower ER it makes far more sense to hold equities as ETFs and treasuries as futures (which of course PSLDX can't do b/c it isn't limited to treasuries on the bond side), at least in a taxable account.
almostretired1965
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Re: Why not 100% PSLDX?

Post by almostretired1965 »

So I have a question, if it is indeed as simple as some of you suggest to implement something as good or better than psldx, why hasn't anyone introduced a new fund that does just that? Set the expense ratio at .5 pts and you will make money hand over fist. What am I missing?
DMoogle
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Re: Why not 100% PSLDX?

Post by DMoogle »

almostretired1965 wrote: Wed Apr 28, 2021 8:40 pm So I have a question, if it is indeed as simple as some of you suggest to implement something as good or better than psldx, why hasn't anyone introduced a new fund that does just that? Set the expense ratio at .5 pts and you will make money hand over fist. What am I missing?
That's exactly what NTSX is, only it isn't as highly leveraged (90+60 instead of 100+100). ER is only 0.2%. Leveraged funds in general (particularly non-daily rebalanced) are still kind of a relatively new concept and not very popular (but they are quickly gaining in popularity, for good reason). If these continue to perform better on a risk-adjusted basis than their benchmarks, I expect we'll start to see more pop up. There's already speculation that WisdomTree is going to prop up more NTSX-like funds.
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Re: Why not 100% PSLDX?

Post by firebirdparts »

almostretired1965 wrote: Wed Apr 28, 2021 8:40 pm So I have a question, if it is indeed as simple as some of you suggest to implement something as good or better than psldx, why hasn't anyone introduced a new fund that does just that? Set the expense ratio at .5 pts and you will make money hand over fist. What am I missing?
Blended funds are pretty unusual apart from the ol' standby target date funds. A big reason probably is that as the user, you can simply hold two funds in any proportions you want. So a leveraged blended fund has double the rare.

Maybe they'll catch on, we'll see. I am amazed at how low the AUM is at PSLDX.
Last edited by firebirdparts on Wed Jun 02, 2021 8:43 am, edited 1 time in total.
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Re: Why not 100% PSLDX?

Post by vpiguy88 »

firebirdparts wrote: Thu Apr 29, 2021 11:15 am
almostretired1965 wrote: Wed Apr 28, 2021 8:40 pm So I have a question, if it is indeed as simple as some of you suggest to implement something as good or better than psldx, why hasn't anyone introduced a new fund that does just that? Set the expense ratio at .5 pts and you will make money hand over fist. What am I missing?
Blended funds are pretty unusual apart from the ol' standby target date funds. A big reason probably is that as the user, you can simply hold two funds in any proportions you want. So a leveraged blended fund is has double the rare.

Maybe they'll catch on, we'll see. I am amazed at how low the AUM is at PSLDX.
It's a good question. Why is PSLDX's AUM so low, but PIMCO's other StocksPLUS funds (PSTKX, PSPTX, PSCSX, PISIX, etc) literally all have higher AUMs.

Do institutionals "know" something we don't? I have a hard time believing it's just an ignored fund when its sister StocksPLUS funds are all much more heavily used.
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Re: Why not 100% PSLDX?

Post by muffins14 »

It could be that some are included in more IRAs than others, or due to the irrational fear / misunderstanding that people seem to have for long-term bonds. Also on average, I bet institutions have longer time horizons than most individual investors
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Re: Why not 100% PSLDX?

Post by Ramjet »

vpiguy88 wrote: Wed Jun 02, 2021 1:00 am
firebirdparts wrote: Thu Apr 29, 2021 11:15 am
almostretired1965 wrote: Wed Apr 28, 2021 8:40 pm So I have a question, if it is indeed as simple as some of you suggest to implement something as good or better than psldx, why hasn't anyone introduced a new fund that does just that? Set the expense ratio at .5 pts and you will make money hand over fist. What am I missing?
Blended funds are pretty unusual apart from the ol' standby target date funds. A big reason probably is that as the user, you can simply hold two funds in any proportions you want. So a leveraged blended fund is has double the rare.

Maybe they'll catch on, we'll see. I am amazed at how low the AUM is at PSLDX.
It's a good question. Why is PSLDX's AUM so low, but PIMCO's other StocksPLUS funds (PSTKX, PSPTX, PSCSX, PISIX, etc) literally all have higher AUMs.

Do institutionals "know" something we don't? I have a hard time believing it's just an ignored fund when its sister StocksPLUS funds are all much more heavily used.
The required minimum amount invested has to play a factor. I've seen the minimum for PSLDX at some brokerages up to 1M. Maybe it's recommended less by advisors due to to LTT aspect? I don't think you are missing anything
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Re: Why not 100% PSLDX?

Post by moptop »

AUM is probably low because you can't hold it in taxable as well...
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Re: Why not 100% PSLDX?

Post by Ramjet »

moptop wrote: Wed Jun 02, 2021 7:24 am AUM is probably low because you can't hold it in taxable as well...
Very true
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vpiguy88
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Re: Why not 100% PSLDX?

Post by vpiguy88 »

Ramjet wrote: Wed Jun 02, 2021 7:41 am
moptop wrote: Wed Jun 02, 2021 7:24 am AUM is probably low because you can't hold it in taxable as well...
Very true
Just realized this earlier this morning, yep. The distributions on the other ones are less insane.

Any reason why they're so much higher here, if the funds are all structured similarly but just use different bond components? I find it hard to believe that leveraged long bonds would have something like 2.5x higher distributions than PSPTX's bond portfolio too, but maybe I'm just ignorant.
ljford7
Posts: 88
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Re: Why not 100% PSLDX?

Post by ljford7 »

vpiguy88 wrote: Wed Jun 02, 2021 9:46 am Just realized this earlier this morning, yep. The distributions on the other ones are less insane.

Any reason why they're so much higher here, if the funds are all structured similarly but just use different bond components? I find it hard to believe that leveraged long bonds would have something like 2.5x higher distributions than PSPTX's bond portfolio too, but maybe I'm just ignorant.
They are entirely different funds that track different benchmarks. PSPTX is essentially a S&P fund while PSLDX is an S&P + Bond fund (both leveraged).
ljford7
Posts: 88
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Re: Why not 100% PSLDX?

Post by ljford7 »

Ramjet wrote: Wed Jun 02, 2021 7:41 am
moptop wrote: Wed Jun 02, 2021 7:24 am AUM is probably low because you can't hold it in taxable as well...
Very true
It is not quite double the AUM of NTSX. NTSX is newer, but it is also a lot easier to purchase then PSLDX.

https://ycharts.com/mutual_funds/M:PSLD ... management

https://ycharts.com/companies/NTSX/tota ... management
parval
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Re: Why not 100% PSLDX?

Post by parval »

Anyone know why PSLDX has to pay dividends at all? Why not just have it bump the NAV and not incur ridiculous tax drag?
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

parval wrote: Wed Jun 02, 2021 6:59 pm Anyone know why PSLDX has to pay dividends at all? Why not just have it bump the NAV and not incur ridiculous tax drag?
Mostly it's just that money is good and the government wants to get them some; they can't just choose to keep certain payments dictated by law. PSLDX has real bonds but fake stocks. The fake stock positions settle in cash. There's no way they can hide it.

That's the big contrast with NTSX. NTSX has real stocks and fake bonds.
A fool and your money are soon partners
NMBob
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Re: Why not 100% PSLDX?

Post by NMBob »

RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
if you believe in A) volatility decay being a possible risk that does exist that may or may not come to bite you or B) possibility of a 3x stock etf going to zero value....then taking those risks in upro just to get 100 percent stock seems like low reward, higher risk. At least in 55/45 hfea one has the high reward of 160 in stock return.

Also if worried about inflation, end of the centuries old bond run etc.....then maybe something like 60 sso (2x stock) / 40 tyd (3x mid treasuries) is a good less volatility decay, less inflation worry solution towards your goal.
BullHouse_BearMarket
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Re: Why not 100% PSLDX?

Post by BullHouse_BearMarket »

Anyone see what the dividend will be yet? Should be today or tomorrow.
grp2c
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Re: Why not 100% PSLDX?

Post by grp2c »

FYI just found out you can buy PSLDX at JP Morgan commission free.

I took advantage of a chase private client brokerage bonus last year for a taxable account. I think I'll move my roth ira's there to buy PSLDX.
Semantics
Posts: 282
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Re: Why not 100% PSLDX?

Post by Semantics »

NMBob wrote: Wed Jun 02, 2021 11:44 pm
RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
if you believe in A) volatility decay being a possible risk that does exist that may or may not come to bite you or B) possibility of a 3x stock etf going to zero value....then taking those risks in upro just to get 100 percent stock seems like low reward, higher risk. At least in 55/45 hfea one has the high reward of 160 in stock return.
If you're 33% UPRO then you have exactly the same volatility decay and risk of equity going to zero as if you were holding 100% SPY, assuming regular rebalancing.

Only advantages of PSLDX that I see are that it's set it and forget it, and maybe there's some value to the more diversified bond portion (not just LTT).
jarjarM
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Re: Why not 100% PSLDX?

Post by jarjarM »

BullHouse_BearMarket wrote: Thu Jun 10, 2021 8:35 am Anyone see what the dividend will be yet? Should be today or tomorrow.
Nothing yet from the usual source, probably have to wait until after 4pm EST.
dogstuff
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Re: Why not 100% PSLDX?

Post by dogstuff »

BullHouse_BearMarket wrote: Thu Jun 10, 2021 8:35 am Anyone see what the dividend will be yet? Should be today or tomorrow.
Just posted at https://www.pimco.com/en-us/resources/tax-center

Dividend is $0.60095.
mutedbytes
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Re: Why not 100% PSLDX?

Post by mutedbytes »

grp2c wrote: Thu Jun 10, 2021 11:54 am FYI just found out you can buy PSLDX at JP Morgan commission free.

I took advantage of a chase private client brokerage bonus last year for a taxable account. I think I'll move my roth ira's there to buy PSLDX.
Interesting. Any minimums? How is JP Morgan in general service-wise, interface etc?
BullHouse_BearMarket
Posts: 61
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Re: Why not 100% PSLDX?

Post by BullHouse_BearMarket »

Wow. Already over a dollar for the year. The last few years June was .03, .03, .01, .13, and .06. Kudos to the team.
rchmx1
Posts: 333
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Re: Why not 100% PSLDX?

Post by rchmx1 »

Ya, historically Q1 and 2 have had quite low distributions, so I wasn't expecting them to both the so large this year. I guess the team needed to be particularly active what with everything going on in the bond market this year?
jarjarM
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Re: Why not 100% PSLDX?

Post by jarjarM »

rchmx1 wrote: Thu Jun 10, 2021 5:43 pm Ya, historically Q1 and 2 have had quite low distributions, so I wasn't expecting them to both the so large this year. I guess the team needed to be particularly active what with everything going on in the bond market this year?
Yeah, I was wondering the same thing too. That's over 10% distribution in 2Q already. Pretty significant.
NMBob
Posts: 421
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Re: Why not 100% PSLDX?

Post by NMBob »

Semantics wrote: Thu Jun 10, 2021 11:56 am
NMBob wrote: Wed Jun 02, 2021 11:44 pm
RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
if you believe in A) volatility decay being a possible risk that does exist that may or may not come to bite you or B) possibility of a 3x stock etf going to zero value....then taking those risks in upro just to get 100 percent stock seems like low reward, higher risk. At least in 55/45 hfea one has the high reward of 160 in stock return.
If you're 33% UPRO then you have exactly the same volatility decay and risk of equity going to zero as if you were holding 100% SPY, assuming regular rebalancing.

Only advantages of PSLDX that I see are that it's set it and forget it, and maybe there's some value to the more diversified bond portion (not just LTT).
Technically it can probably never go to zero, but etfs have closed or reduced leverage multipliers.

Look at 3 consecutive days of 20 percent drop triggering sp500 shutdown. That means you have 51.2 percent of spy left of your beginning 3 day total, or only 6.4 percent of your upro. So your initial proposal of 33 percent upro is now 2. Now you hope the bonds save you enough you can recover. But why do this for the return of just 100 percent stock, when people think bonds may only be insurance and a loss issue with possible inflation etc. ? There must be better ways than that potential rollercoaster from hades. For me, one somewhat close option would be I would much rather just add to my ntsx 90/60 holdings than use the proposal. Not the same but a way better risk / reward ratio for me. I own upro, but do not and would not run it a 33/67 stock bond leverage configuration with upro. Gotta be better ways.

I almost question the order of priorities in the design of the plan, which seems to approach the following exaggerated proposal i use, to make my point. Is it, lets use 3x leverage on any small position of stocks just so we can max to some huge percent of portfolio my unleveraged bond portion? is that really a good idea?
Semantics
Posts: 282
Joined: Tue Mar 10, 2020 1:42 pm

Re: Why not 100% PSLDX?

Post by Semantics »

NMBob wrote: Thu Jun 10, 2021 7:39 pm
Semantics wrote: Thu Jun 10, 2021 11:56 am
NMBob wrote: Wed Jun 02, 2021 11:44 pm
RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
if you believe in A) volatility decay being a possible risk that does exist that may or may not come to bite you or B) possibility of a 3x stock etf going to zero value....then taking those risks in upro just to get 100 percent stock seems like low reward, higher risk. At least in 55/45 hfea one has the high reward of 160 in stock return.
If you're 33% UPRO then you have exactly the same volatility decay and risk of equity going to zero as if you were holding 100% SPY, assuming regular rebalancing.

Only advantages of PSLDX that I see are that it's set it and forget it, and maybe there's some value to the more diversified bond portion (not just LTT).
Technically it can probably never go to zero, but etfs have closed or reduced leverage multipliers.

Look at 3 consecutive days of 20 percent drop triggering sp500 shutdown. That means you have 51.2 percent of spy left of your beginning 3 day total, or only 6.4 percent of your upro. So your initial proposal of 33 percent upro is now 2.
If you rebalance daily this cannot happen, your exposure to stocks will be 100% of the portfolio value every day, just like with the 100% SPY version.
dafioram
Posts: 52
Joined: Sat Jan 02, 2021 8:31 pm

Re: Why not 100% PSLDX?

Post by dafioram »

Thats 5% drop on psldx in my account looks a little scary.
surfslacker
Posts: 19
Joined: Wed Mar 11, 2020 2:38 pm

Re: Why not 100% PSLDX?

Post by surfslacker »

dafioram wrote: Thu Jun 10, 2021 8:35 pm Thats 5% drop on psldx in my account looks a little scary.
I bought some PSLDX A month ago so it’s all still new to me. I’m assuming that 5% drop has to do with the dividend payout tomorrow?
armastevs
Posts: 1
Joined: Sun Oct 04, 2020 7:56 pm

Re: Why not 100% PSLDX?

Post by armastevs »

dafioram wrote: Thu Jun 10, 2021 8:35 pm Thats 5% drop on psldx in my account looks a little scary.
It's ex-dividend today, it didn't actually lose money. PSLDX actually was positive for the day. I estimate it was about +1% today. That means it had a distribution of about 6.5% dividend this quarter, this is why you don't hold PSLDX in a taxable account.
corp_sharecropper
Posts: 529
Joined: Thu Nov 07, 2013 2:36 pm

Re: Why not 100% PSLDX?

Post by corp_sharecropper »

surfslacker wrote: Thu Jun 10, 2021 9:38 pm
dafioram wrote: Thu Jun 10, 2021 8:35 pm Thats 5% drop on psldx in my account looks a little scary.
I bought some PSLDX A month ago so it’s all still new to me. I’m assuming that 5% drop has to do with the dividend payout tomorrow?
Yes
MA405
Posts: 28
Joined: Sat Mar 18, 2017 4:40 pm

Re: Why not 100% PSLDX?

Post by MA405 »

mutedbytes wrote: Thu Jun 10, 2021 4:43 pm
grp2c wrote: Thu Jun 10, 2021 11:54 am FYI just found out you can buy PSLDX at JP Morgan commission free.

I took advantage of a chase private client brokerage bonus last year for a taxable account. I think I'll move my roth ira's there to buy PSLDX.
Interesting. Any minimums? How is JP Morgan in general service-wise, interface etc?
Wouldn’t let me complete simulated order in my taxable, “This mutual fund is not available for purchase in your account”.
Don’t have IRA accounts at Chase.
NMBob
Posts: 421
Joined: Thu Apr 23, 2015 8:13 pm

Re: Why not 100% PSLDX?

Post by NMBob »

Semantics wrote: Thu Jun 10, 2021 7:53 pm
NMBob wrote: Thu Jun 10, 2021 7:39 pm
Semantics wrote: Thu Jun 10, 2021 11:56 am
NMBob wrote: Wed Jun 02, 2021 11:44 pm
RussellWilson wrote: Sun Apr 11, 2021 10:59 pm Thinking of attempting a DYI with 33% UPRO and 67% EDV. I'm wondering, is increasing duration taking the same kind of risk as leverage? The duration for PSLDX is ~16, so if EDV was ~24, is that the same kind of interest rate risk and expected performance as levering a 16 duration treasury bond by 1.5x? I know PSLDX isn't all treasuries so the risk profile is different in that regard...

I know that UPRO behaves differently than 3x margin SP 500. But say I'm aiming for 100% SP 500 and 100% LTT, is the above a decent approximation? Considering the combined ER of EDV/UPRO is .36, vs 1.02 for PSLDX, it seems like a DYI version is optimal, unless maybe UPRO's issues stemming from daily leverage are worth paying a significant amount to avoid?
if you believe in A) volatility decay being a possible risk that does exist that may or may not come to bite you or B) possibility of a 3x stock etf going to zero value....then taking those risks in upro just to get 100 percent stock seems like low reward, higher risk. At least in 55/45 hfea one has the high reward of 160 in stock return.
If you're 33% UPRO then you have exactly the same volatility decay and risk of equity going to zero as if you were holding 100% SPY, assuming regular rebalancing.

Only advantages of PSLDX that I see are that it's set it and forget it, and maybe there's some value to the more diversified bond portion (not just LTT).
Technically it can probably never go to zero, but etfs have closed or reduced leverage multipliers.

Look at 3 consecutive days of 20 percent drop triggering sp500 shutdown. That means you have 51.2 percent of spy left of your beginning 3 day total, or only 6.4 percent of your upro. So your initial proposal of 33 percent upro is now 2.
If you rebalance daily this cannot happen, your exposure to stocks will be 100% of the portfolio value every day, just like with the 100% SPY version.
daily rebalancing of upro/edv...smh..have a nice day
DMoogle
Posts: 202
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Re: Why not 100% PSLDX?

Post by DMoogle »

Is there any way to determine the yield on the bond portion of the portfolio, specifically?
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

I suppose you could tally it up from the prospectus, as of that date. There are a lot of bonds in that portfolio, though. It would take a few minutes. And a little of it would be paying in foreign currency as well.
A fool and your money are soon partners
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