Why I like certain alternative investments

It was over 40 years ago but I did taxes for a few years... and they had some tax avoidance schemes that a lot of the rich clients invested in...

Well, a few years later the IRS won that they were a scam and disallowed all tax losses from them.. resulting in a huge tax bill for some of the firms clients... the bill included penalty and interest...

Not sure if the IRS is pursuing the same strategy but if so a big tax bill can come to some of these people..
 
Reading through the reporting and buried in those articles and related content, it appears that the Tax Aware Strategies are only available through Separately Managed Accounts, available only to qualified high net worth investors, at AQR. Further, it's stated that Fidelity is restricting access to these "Tax Aware Strategies". This doesn't appear to be anything related to the retail AQR funds.
 
IncomeOriented said:
Reading through the reporting and buried in those articles and related content, it appears that the Tax Aware Strategies are only available through Separately Managed Accounts, available only to qualified high net worth investors, at AQR. Further, it's stated that Fidelity is restricting access to these "Tax Aware Strategies". This doesn't appear to be anything related to the retail AQR funds.
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That’s the way I understood it as well.
 
AQR is promoting their firm thru research. Arnott did it in mid-late 80s and was far from delivering in the next 20 years. I bought PAUIX in 2009 and sold it after several months.

A Positive Stock-Bond Correlation Is a Terrible Reason to Add More Equity Risk to Your Portfolio (A Positive Stock-Bond Correlation Is a Terrible Reason to Add More Equity Risk to Your Portfolio)
The correlation between stocks and government bonds, once fairly reliably negative1 , turned positive2 a few years ago (chart below). This has clear ramifications for diversification and thus for portfolio construction. Unfortunately, many investors, armed with dubious advice, are doing the opposite of what they should be.

Actual Diversifiers Do Exist​

Long/short alternative strategies have been around a long time (their live track records extend longer than our dubious bond replacements, anyway). Despite AQR's complaining that many long/short alternatives aren't as diversifying as they maybe should be, there are a few categories that really stand out for equity risk diversification. Two are Equity Market Neutral (you'd hope so, given the name…) and Trend-Following (which we'll simply call "Trend" here).
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I agree with above as long as it works.
 
Just a status update of my alts. QLENX was sold. All my current holdings are in AQR funds. Chart shows their YTD. Very happy with my current allocation.

IMG_1305.jpeg
 
Ozz said:
@winyaz
I have used the "Momentum" logic at time to select investments. My initial introduction to it was thru a newsletter called Sound Mind Investing (not sure if it is still around). My difficulty with it now is finding readily available 6 mo. results. Care to provide a source? Thanks, Oz
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I use Portfolio Visualizer. I pay for a mid tier subscription because I use it so much, but they have a free version as well. Here is the strategy I shared earlier: https://www.portfoliovisualizer.com/tactical-asset-allocation-model?s=y&sl=5fDbzgP3O70eWkhCkiOb5K. I rebalance monthly.

Alternatively, Stockcharts.com has a good comparison chart and their data is total return including dividends. PerfCharts | StockCharts.com
 
AQR, at least the three I own, seem to have gotten their mojo back, at least recently. All three up nicely on all the recent down days.
 
Nice day for the Q’s
QMHNX up 1.22%
QNZNX up .88%
QRPNX up 1.42%

I have a little over 15% of my portfolio in these three.
I will be just a little above or slightly below a new all time high after today.
 
I had 40%+ returns in QLENX and then ………
QMHNX has been a great replacement.

IMG_1321.jpeg
 
lawman said:
I'm in the hole with QLENX..Why did you repalce it?
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Easy choice. You look at similar/ exchangeable funds, when one starts doing better, you switch.
The chart shows it started in January.
By February the difference was significant.
 
Those following this thread may know that I have been a long time fan of EGRIX. While I still believe it is an excellent fund that succeeds by going where other funds may fear to tread, it recently has seen some headwinds likely due to the war with Iran and its knock on effects particularly with inflation. See the most recent EGRIX commentary attached below for Q1. The most recent CPI and PPI reports have confirmed what we already instinctively knew that inflation has turned an ugly corner and is heading up rather than down. This means the next forecasted Fed action will be to raise rather then lower interest rates adding a headwind against all fixed income investments. See -


While it is certainly possible that these expectations will change, my opinion is if the war with Iran were over in the near term, its inflation effects will be lasting and additive to the tariff effects. I also think the war will not be over soon.

Hence as a defensive measure I am selling approximately 22% of my EGRIX position and replacing it with QMHNX, a managed futures strategy that can benefit from inflation via its commodity exposure and is somewhat less exposed to the overvalued equity market.

Of course I could be wrong, so lets see how this plays out for the next 6-12 months.
 

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Semi-Retyrd said:
Those following this thread may know that I have been a long time fan of EGRIX. While I still believe it is an excellent fund that succeeds by going where other funds may fear to tread, it recently has seen some headwinds likely due to the war with Iran and its knock on effects particularly with inflation. See the most recent EGRIX commentary attached below for Q1. The most recent CPI and PPI reports have confirmed what we already instinctively knew that inflation has turned an ugly corner and is heading up rather than down. This means the next forecasted Fed action will be to raise rather then lower interest rates adding a headwind against all fixed income investments. See -


While it is certainly possible that these expectations will change, my opinion is if the war with Iran were over in the near term, its inflation effects will be lasting and additive to the tariff effects. I also think the war will not be over soon.

Hence as a defensive measure I am selling approximately 22% of my EGRIX position and replacing it with QMHNX, a managed futures strategy that can benefit from inflation via its commodity exposure and is somewhat less exposed to the overvalued equity market.

Of course I could be wrong, so lets see how this plays out for the next 6-12 months.
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I’ve been very happy with QMHNX.
I continue to hold EGRAX/EGRIX, but at levels lower than earlier this year, less than 3% of the portfolio.
 
Semi-Retyrd said:
Those following this thread may know that I have been a long time fan of EGRIX. While I still believe it is an excellent fund that succeeds by going where other funds may fear to tread, it recently has seen some headwinds likely due to the war with Iran and its knock on effects particularly with inflation. See the most recent EGRIX commentary attached below for Q1. The most recent CPI and PPI reports have confirmed what we already instinctively knew that inflation has turned an ugly corner and is heading up rather than down. This means the next forecasted Fed action will be to raise rather then lower interest rates adding a headwind against all fixed income investments. See -


While it is certainly possible that these expectations will change, my opinion is if the war with Iran were over in the near term, its inflation effects will be lasting and additive to the tariff effects. I also think the war will not be over soon.

Hence as a defensive measure I am selling approximately 22% of my EGRIX position and replacing it with QMHNX, a managed futures strategy that can benefit from inflation via its commodity exposure and is somewhat less exposed to the overvalued equity market.

Of course I could be wrong, so lets see how this plays out for the next 6-12 months.
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I discussed it in my previous post.
See Market calls 2

In over 3 weeks EGRIX made just 0.2%.

1778693213442.png
 
Semi-Retyrd said:
Often alternative investments are looked upon as more risky, more difficult to value or just plain weird compared to ordinary stocks and bonds. People tend to think of them in the categories of precious metals or other commodities, artwork, rare books, fine wines or other more esoteric things.
In my case I focus on financial instruments that can be bought or sold through my account at Fidelity. Keeping an open mind I believe in some cases one can find alternative investments that not only outperform traditional stock and bond indexes on total return but also do it with lower risk than these indexes. This idea is treason to Bogleheads and a whole generation brought up on the belief that indexes always outperform in the long run. What it all boils down to is the question - Is the market really efficient?

My answer to this is in the case of large cap widely analyzed securities, the market is darn close to efficient or at least close enough to not make it worth trying to outthink it. If you believe this, then the corollary is that to beat the indexes one must look outside the large cap universe to securities that are not widely analyzed.

To start I will introduce EGRIX/EGRAX a free ranging bond-like sort-of fixed income fund. I asked myself if free ranging chickens can taste better shouldn't free ranging FI funds be extra tasty? Answer - only if the farmer/portfolio manager knows what he is doing. An internet search turned up the following document published in 2017 which is an excellent summary of the strategy behind this fund. While this paper shows the fund outperformed a variety of benchmarks in the previous several years it is encouraging that it still is outperforming today.

Based on this EGRIX is a core FI holding in my portfolio. In a later posting I will review why my core equity holding is QLENX, another alternative investment.

Please note I am only presenting data and opinion here and this is not meant to be financial advice. You must do your own research before making any investment.
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Thanks for responding. Now I understand what you are trying to accomplish with this fund. We probably shouldn't hijack OP's intent with his thread. I will look into other threads.
 
PaulR888 said:
Thanks for responding. Now I understand what you are trying to accomplish with this fund. We probably shouldn't hijack OP's intent with his thread. I will look into other threads.
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Ooops.. sorry for any confusion. I responded to a link of this thread in a CEF thread and didn't mean it to show up here.
 
COcheesehead said:
Periodic update on my Q’s vs the S&P. All up almost double. I continue to add when I have cash available.

View attachment 63654
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When you beat the index (or other yardstick) for performance and risk/SD it is a double knockout. These are the best funds.

EGRIX continues to excel for YTD and all the way to 2 years. Compare it to PIMIX (good multi) and to PDI (most used CEF) tells you the story. PDI with crazy SD=volatility trails EGRIX.

YTD
1779198590490.png


Two years
1779198552030.png




Geez. If I were investing in stocks and bonds, I’d primarily use AQR funds for equities and EGRIX (among others) for bonds.
 

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I ditched all my EGRAX and am hiding out in HOSAX.
HOSAX has one of the highest Sharpe’s I have ever seen. 3.42. A std dev close to 1 making it almost like a money market and a yield close to 6%
 
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SteveTX said:
I sold some SPY in my Roth today and will be adding QMHNX managed futures in it's place. After today my Roth will now be about 33% in QNZNX, QRPNX, and QMHNX, in a 2/1/1 ratio.
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I am adding to all those today as well
 
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