A weekly thread to discuss financial matters - from personal all the way up to global.
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Notes -
What are your opinions on covered call funds, like JEPI, vs traditional income investments like bonds or dividend stocks? If you have a shorter time horizon than would be appropriate for something like a whole market fund, they seem to sit at a nice risk/return point. On the other hand, their returns seem to come in the form of ordinary income, which isn't ideal for taxation.
No. You still have downside and weird exposures to volatility. A better move is to change your equity allocation to a lower amount. Retail quant investment strategies just work worse than holding a cheap index fund. It’s more trading in those vehicles and the funds themselves don’t have any alpha.
Now if you personally have a correct view on volatility they would outperform holding spy I guess, but if you have alpha in predicting volatility then you should be running a volatility fund and be quite wealthy. And you would generally be running your own trading execution at a smaller fund size then the retail products and avoid some slippage. There is nothing wrong with being a trader and many people make money doing the job but the retail products in general are going to be worse performing than a simpler asset allocation with lower fees and less slippage.
What would you recommend for a situation like mine? I'm making a fairly large purchase at some unknown future point. The fuzzy timeline means I can handle some volatility, but not "I can ignore it for a decade until things pick up again" volatility. I've been using ultra short term treasuries and other bonds to beat HYSA yields at the cost of some risk, but not so much as equities. This money is very explicitly in its own sleeve - my emergency fund, retirement, and general investments iny taxable account are all set up differently.
Probably fine with current plan. But depends on more specific time horizon. Personally I like owning long term US rates here so maybe you could go 20-30% there. If it’s a couple years you might be able to do something like 30% equity, 30% mbs/tlt, 30% t-bill type things, maybe 10% REIT/listed private credit.
PC maybe a small amount here because of the high yields and discounts to NAV. Small equity + Fixed income I much prefer to try to get some returns instead of doing a listed covered call etf
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