New Replacement for PCRIX, PCRDX!!!

[saluki9]

Is it worth pointing out that commodities have been good diversifiers/uncorrelated asset classes predominately when they were hard for the average retail investor to own? Is that still going to be true now that funds and etf's out the wazoo exist?

Funny you ask that. If I ever accumulate enough in my FIRE portfolio to live my (one of) my dream and get a PhD in Finance its something I'd like to study.

I'm actually more interested in how that relates to Real Estate and whether the mass securitization of it will impact its correlation and return characteristics.

 

[REWahoo]

With a lot of new money passively invested on the long side, we may see less backwardation than before.

In case anyone is wondering (like I was), "backwardation" is the opposite of "contango."

 

[mathjak107]

i switched from pcrdx to dbc

 

[wabmester]

I have not seen the work that Swedroe did, but I fail to see how what you indicate is possible.

I just searched for it myself, and I may have misrepresented him.   I think he just doesn't like the CRB index.   Here's a recent thread (discussing a paper that shows that only energy commodities pay any risk premium) in which Swedroe gives his take:

Thread

Anyway, lots of good words like backwardation, contango, skewness, and kurtosis. 

 

[mathjak107]

i switched to dbc from pcrdx because i felt the heavy energy weighting was more realistic to my life....i dont care for lean hogs or soy beans but i do care about oil.pcrdx while being the diversification king in commodities it ofton gets pulled in to many different directions...dbc i think is about 55% energy and heating oil..11% gold and the rest a handful of more representive commodities like wheat and aluminum

 

[preben]

A couple of points on DJP:
the total costs are NOT the same as PCRIX. It is about 0.5% cheaper as PCRIX have the cost of buying the notes(0.5% or 0.35% depending on source) so PCRIX ends up at 1.25% or so in total costs vs. 0.75% for DJP. This is confirmed by Larry Swedroe at M* boards.

PCRIX paid close to a whopping 20% in dividends in 2005 and about 7% in more "normal" years - so if one pays say 15%(like alien me!) in tax on same (nothing on capital gains) it corresponds to an additional 1-3% in tax drag (making my 2005 costs+tax for PCRIX 4.25%!).

With that difference I am willing to take some Barclays credit risk, as well as see collateral in tbills rather than tips (I simply keep my US bond exposure in TIPs only with no tbills there).

I will wait a bit to see some more volume, but it certainly looks like a no-brainer to this alien. Cheers!

Ps. in addition we evil aliens can not auto-re-invest dividends so an additional $50 is paid to throw those divies back into PCRIX. DJP does not have that problem/costs.

 

[Nords]

I will wait a bit to see some more volume, but it certainly looks like a no-brainer to this alien. Cheers!

With that puny share volume, DJP is worth the investment just to benefit from all the hot money sloshing over from PCRIX...

 

[lazyday]

I saw that there's a mechanism (can sell big blocks once a week at NAV-expenses) to prevent big discounts, but has anyone noticed what would keep it from having a big premium?

Or would there just be more offerings if Barcley sees enough demand?

Really, a discount is a much greater concern to me for exchange traded investments, as one could simlpy not buy if it's at a premium. Should a discount exist when you want to sell, tough cookies.