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  1. #1

    Why stick with MWTRX?

    I've owned MWTRX for about three years, roughly corresponding with its recent period of underperformance. The fund was among the most highly rated intermediate bond funds when I added it to my portfolio, but it has been mediocre at best over the past 3 years. However, it is still among the top intermediate bond funds over longer time periods, 5, 10 and 15 years. Perhaps the managers know what they're doing and have positioned the fund well for the future. However, here are my concerns:
    - Assets under management have soared over the past few years, as it apparently attracted a lot of investors leaving PIMCO Total Return or simply responding to its excellent longterm returns.
    - The current yield is ridiculously low (1.39%), barely higher than a decent money market fund, despite a duration of nearly 5 years.
    - According to M*, its average credit quality is BBB, so why is it paying such a ridiculously low yield?
    - It has not performed well lately, since interest rates have started to rise. As far as I can tell, the managers are doing little to brace the fund for future interest rate increases.
    - About the only positive thing that I can say about it over the past 3 years is that it has provided good ballast for the stocks in my portfolio, and it often rises on days when the stock markets drop. It has gained a whopping 7.76% during the period that I've owned it.

  2. #2
    Many people jumped on the MWTRX bandwagon 2-3 years ago. But since 2014 it's about on par with PTTRX, while lagging VG Total Bond (VBTIX). See chart. In my retirement accounts, I have both of the latter funds (and don't have MWTRX available). If you reset that same chart to a 5-year period or a 10-year period, you get a different picture.
    I don't have a large position in bonds in my retirement portfolio, because I have some very good alternative "non-equities" -- namely TIAA Traditional and TIAA Real Estate. In my taxable portfolio I hold some fixed-income investments for income production, e.g., PIMIX.

  3. #3
    So far, I haven't felt the need to dump MWTRX because my other bond funds have been doing very well. It also seems to perform differently, holding up better on poor days for the stocks markets. However, the things that the concern me the most are the ridiculously low yield and and it's performance on days when interest rates rise.

  4. #4
    I interpret the "total return" part of the MWTRX and PTTRX names to mean that I ought to focus on total return and not on yield. I hold PTTRX in my retirement accounts. I'm more interested in yield in my taxable account, from which I routinely draw some income.

  5. #5
    Most of your points are a good reason to sell. IMO, in the last a few years you need more flexible funds.
    Funds in the same category such as GIBLX+BCOIX+DBLFX did a lot better in 1-3 years...(Chart)
    Change the chart to one month and you can see that MWTRX lost more than the others. In the last 1-3 years I don't see MWTRX managing risk better than the other 3 funds. MWTRX has the worse Sortino, Sharp ratio and UP/D ratio in the group for 3 years. SD is pretty close for all 4. GIBLX has the best SD,Sharp,Sortino,U/D ratio.
    In my world if performance + risk lag, it's a no-brainer.

  6. #6
    I look at the PORTFOLIO tab of all my bond OEFs to identify the USG % of its investments. With half my bond OEF investments I will take the interest rate risk with higher USG % and the other half of such investments I want lower USG %. I already have my lower USG % funds that I like, so GIBLX and BCOIX do not give me what I am looking for. MWTRX and DBLFX does give me higher USG %. For me, it's more about the portfolio construction and strategy and less about short term performance, Sharp, Sortino numbers.


 

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