BDMIX

QuitRevolutionary925

Why has BDMIX started doing so well in mid-2023, after years of lingering in average low single digit returns area. It doesn't seem that the management has changed. Have some of the factors started to do well?

CeedyRower

I don't think you're missing anything. I've been with it since 2 weeks after launch and delighted with the performance. IALT is meant to be the retail equivalent of BDMIX with an extra bit of secret sauce. Take a look at the BDMIX chart post quant winter. Blackrock's systematic group have a great reputation for a reason. If you take a look at the daily holdings, it's usually >3000 holdings with no real concentration, with equities and rates in there as well. I can't see any red flags that they're just capturing beta (as you pointed out about the March/April dip not registering). The main concern I have for a market neutral fund is a) if their alpha scales, b) if they will get front run as an ETF. Given the team and their experience with BDMIX, (which has 11.8B AUM vs IALT's current 263M AUM), I'm not too worried about the scaling. Given that they're claiming 1000+ signals used and the depth of the holdings, front running seems like more effort than just coming up with your own system. Personally I'm running them at 3.5% of my portfolio right now, since I am unable to access quality market neutral funds outside of the ETF wrapper. I'd feel quite comfortable going as high as 5% in this market, but I do love an alt.

981flacht6

Wealth advisors are generally better if you're older. But if you're not, the goal of all fund managers is to outperform the S&P 500 in good years and lose less than the S&P500 in bad years. It's not easy, but managing downside risk carries a lot of weight which most people never even think about. It's easy to be a bull in a bull market. But being a bull in a bear market is hard. They can by institutional grade funds that you simply cannot access as a retail investor. An example, - BDMIX which is a neutral fund that goes in/out of the US markets, long and short, stays stable to give you a good dividend. Well, it's a $2m minimum for that fund.