I looked at the holdings PDF and the fund owns a lot of different currencies. There are a lot of non-deliverable forwards from many countries including Tunisia, the Ukraine and Peru along with many other less exotic countries. The yields, generally, are not crazy high. Because of the vast diversity I think the only thing being captured is a drop in the dollar, as opposed to capturing just one region or one type of economy, like commodity based. Of course the dollar could rise and you'd capture the loss.
Both Schwab and Ameritrade allow clients to buy the fund (assumes I was given correct information). The fund is new, it looks like it listed in August. There has been one dividend declared so far, earlier this month, that was $0.028. I guess it will not be yield play as an investment?
I am a believer (recurring theme) of owning something that helps if the dollar drops. My first impression of this is positive but don't take that as me pounding the table as buy. I may come to that but for now it is just interesting to me.
This chart compares PLMDX to the unleveraged rising and falling dollar funds from ProFunds. Since PLMDX listed in August, the dollar is up so it makes sense that it had lagged the rising dollar fund. I am impressed that it has done so much better than the falling dollar fund but it may be too early for this to be valid.
Also being inverse dollar is not the exact mandate of PLMDX. I will keep tabs on it and I would encourage anyone that knows anything about this fund to please leave what they know as a comment.
2 comments:
Roger,
Would you comment on PIPDX(Pimco International Stock Plus). It tracks EFA yet has lower volatility(higher reward vs risk). In a way it can be considered as a blended investment(stock futures backsed by bonds). It has 28% yearly return and it appears to be relatively unkown!
Roger,
I originally asked about this fund. Let me give you my thoughts and you can poke holes if you'd like. This strategy is foremost a dollar hedge and I am thinking it falls under part of a fixed income allocation. Furthermore, one gains exposure to a broad basket of emerging market currencies. Historically, these countries had to pay large yields to account for the perceived weakness in their currency (you have to pay up to get a local investor to buy the real vs. going out and buying pounds or dollars). Here's where I get shakey...but today I am thinking that yields are falling based on the stablization of emerging markets as whole. Investors prior would bet on losing money on the currency...but the yield cushion was more than adequate to provide decent risk adjusted returns. Today (and I hate to think I'm just making a currency bet) I think one would gain on the currency side. At least the fundamentals would point to such a case for a dollar investor. My other thought is that the correlation amongst emerging markets is in decline. I have no data that points to this specifically but its just based on conversation and general reading. Anyway - in a nutshell - dollar hedge, exposure to currencies of fast growing countries, and diversity in a less than compelling fixed income environment. Any resources you know of that could help me in any of this would be appreciated!
MF
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