I've been looking at this fund for some time but haven't bought yet because I have concerns that it has 56% in treasury notes (per Schwab) and problems likely are ahead for this area. I own PRPFX, OAKBX and GRSPX and plan to hold them indefinitely. What are your thoughts about my concern and, in general, the fund?
In his recent weekly Hussman wrote: "Strategic Total Return presently has a duration of just under 3 years (a 100 basis point move in yields would be expected to impact Fund value by about 3% on the basis of bond price fluctuations), having slightly boosted that duration in response to recent price weakness in Treasuries. The Fund also has about 15% of assets in precious metals shares, and just under 5% of assets in utility shares. "
HSTRX used to have shorter duration than short term gov. bonds (eg VSGDX), but not anymore. So it became less attractive. In the past year the fund did not grow at all.
i bought 1254 shares of HSTRX in December 2010 at $12.30 and still own it. I paid in 2011 as follows:
ST Cap Gain $113
LT Cap Gain $170
TOTAL $388 is a modest cash return of 2.52%. Market value fluctuates very little at a low beta. Dr Hussman manages the bonds well so I have no issues in his holdings. It is a secure cash return which is what I want. So far in 2012; it is on track for a similiar return. i rate it a BUY if you want a modest reliable cash return...hope this helps....
Hussy is very risk averse. I dont think you are going to lose money in this fund if you hold it a decent length of time. You might not make much either if the bond market moves to much against him...but no bond fund will do well in that environment.
I own several Bal Funds ( FPACX,OAKBX, PRWCX & HSTRX) and each has it's own purpose ...
I use HSTRX as a Conservative Balanced Fund and more of a Bond Fund with Low Yields.. and i Reduce it For Recovery -09' and Bull Markets and Add to it For Bears..
Thus Is a SAFE HARBOR FUND ( SHF) to go to in times of Doubt and Bear markets..Along with Always Going into Treasuries in Bear Markets..
It is also Used as a source to Buy Commodities..He has been very good at that as well..
If you are Still in your Accum. Phase of your life, I would use this Fund in replacement for your Bonds..
AND TO MAINATAIN A 50/50 BAL. PORTFOLIO..
include Global and EMD Bond Funds..
And I Do NOT Recommend planning on Keeping Any AMBF ( Active Mge. Bal. Fund) other than the Index one's of VWELX and VWINX, Forever.. They Will Loose Mgr, Do a Hard Close to Get too BIG ( Look at Fido's Magellon , DODBX & LCORX for Examples)... and always Keep A New AMBF with either the Min. $ Req'd or 5% in it for your Back up AMBF.. ie; Happiness is a Back Up..
BTW? just owning VWELX, VWINX, TEGBX and FNMIX has done just as well vs FPACX, PRPFX and many other AMBF's on a Per $10k Invessted Basis an have a better LT , B&H basis potential But, Ck that out for yourself..
Only Reason Vanguard Indexer's don't mention this is VG doesn't have a Global , nor a EMD Bond Fund.
Hope that helps
Everyone here seems pretty knowledgeable about long term conservative investing, so I thought I'd ask you folks how would you allocate your portfolio? I'm in a variety of investment vehicles that covers (for the most part) most of the sectors. However, I'm recently focusing on more of my core fund holdings, which consists of PRNEX, OAKBX, and AVALX. I've always heard good things about PRPFX and GRSPX, and today discovered HSTRX. I'm 32 so I have a while before I need to get thoroughly conservative, but that's why I want to build up my core (conservative) funds in order to take advantage of these lower prices. Any thoughts??
I agree with ConstanceH.
I'm concerned about inflation (I'd rather be early than late), so the hstrx allocation is very attractive to me and I prefer having a manager with more flexibility than a TIPs-only fund. Hussman seems to be very good at gauging interest rate risk and modifying duration as needed.
Also, note this final paragraph from last week's commentary:
"For now, the Strategic Total Return Fund continues to carry a duration of about 2 years, mostly in TIPS. I should note that TIPS are not particularly sensitive to interest rate fluctuations generally, since the strongest component of interest rate fluctuations is variation in the inflation component, not the real component. So we are comfortable with that TIPS position here. The Fund also holds about 25% of assets in foreign currencies, precious metals shares, and utility shares."
I don't know where you got you're information but this fund holding 25% of PM shares and foreign currencies. It holds only 1% each in precious metals shares and foreign currencies which seems a waste of time to me. I've been in this fund for over a year and it's been acting strangely lately. It's supposed to be tightly hedged but has either been dropping or unchanged the last couple weeks.
I have 9400 hundred shares of this fund and am thinking of bailing. Interest rates have nowhere to go but up and the future of the dollar is dubious. John Hussaman I think is to steeped in conventional aproaches at a time when things are no longer conventional. He reduced his allocation to precious metals at a time I believe they should have been increased or ar least remained the same. The upside for this fund seems very limited with down movement likely given the funds large holdings of US government debt.
The funds fluctuations are caused by a small investment in gold stocks. Currently, the fund holds less than 1% in these stocks. The gold stocks are declining now with the general market.
The Hussman fund will probably buy these stocks again when the selling subsides. In the past, it has held up to 15% of these shares.
In my opinion, now is the time to buy these shares.
The Treasury Notes are all TIPS, Treasury Inflation-Protected Securities. TIPS are up for the year. If bond yields rise, the TIPS are better protected against inflation than regular treasuries. TIPS would eventually go down like regular treasuries; it would just take longer for TIPS to go negative. TIPS would not lose as much as regular treasuries, because of their "inflation protection".
HSTRX also owns precious metals. When gold goes up, HSTRX will usually go up unless TIPS have a bad day.
I've owned the fund since early Nov. Many weeks when the major market indices are down, HSTRX is up. It's been a good hedge for me. Also own OAKBX & GRSPX. HSTRX is one of the few funds that stayed positive at the 3-Yr benchmark, by far. I trust the manager is smart enough to get out of TIPS, before TIPS would significantly harm the fund's performance.