Gyroscopic Investing

Does anyone know much about the Permanent Portfolio Family of Funds short term treasury fund PRTBX?  

From what I can tell, it's basically a slightly overpriced short term treasury fund that should behave similarly to SHV (b/c they hold treasury bonds of similar maturity).  

However, if you chart it on googlefinance, SHV is up.42% over the past 5 years whereas PRTBX is down over 6%.

Is this correct?  If so, what's causing it?

What a weird fund. A graph of its price looks like the Sydney Opera House:



I'd be very interested in knowing what's going on under the hood that produces such strangely linear price movements.

Pointedstick wrote: I'd be very interested in knowing what's going on under the hood that produces such strangely linear price movements.

I'm pretty sure that's the dividends...maybe that's why the fund appears to lose money (?).

This fund has only 32 mln in assets and a relatively high ER. I think expenses are one of the negative factors, but the chart is really weird. I don't know why would someone pay 0.69% to invest in short-term Treasuries. Strangely, neither Yahoo, nor M* has any information about the holdings, I guess the prospectus or the fund family website would be the place to look. 

Here's the growth chart from M* (with dividends accounted for), what a big difference compared to "normal" funds like FSBIX and SHY:

foglifter wrote: This fund has only 32 mln in assets and a relatively high ER. I think expenses are one of the negative factors, but the chart is really weird. I don't know why would someone pay 0.69% to invest in short-term Treasuries. 

Here's the growth chart from M* (with dividends accounted for), what a big difference compared to "normal" funds like FSBIX and SHY:

Right, but I think PRTBX has an average maturity of like 90 days for most of the bonds.  The other funds have longer average maturities, right?

Here it is vs. SHV, which I think is a similar fund.

That's right, AdamA. I didn't pay attention to the maturity details, just wanted to show how weird the fund is. It's actually losing money over the last 5 years!

foglifter wrote: That's right, AdamA. I didn't pay attention to the maturity details, just wanted to show how weird the fund is. It's actually losing money over the last 5 years!

It has to be because google finance is counting reinvested dividends in shv and not prtbx, right?  Just doesn't make sense...

Those charts are plotting both PRTBX and SHV without reinvested dividends. You can confirm that by going to Yahoo Finance, downloading the PRTBX historical prices and SHV historical prices in a spreadsheet, and manually plotting both the close price (does not include dividends) and the adjusted close price (includes dividends).

So in the plots above, PRTBX has a big "stair-step" once a year because that's when it pays one big dividend. By contrast, SHV has a small "stair-step" every month because it pays a small dividend every month. The weird thing is that it looks like PRTBX is paying a lot more total yearly dividends than SHV, even though they supposedly have very similar average maturities.

According to the adjusted close prices, since 1/11/2007 PRTBX has returned 2.9% (~0.5% annualized) compared to SHV's 6.4% (~1.0% annualized). That's probably the ~0.5% difference in ER right there.

Although it seems that most of the PPers seem to prefer SHY I think SHV is an excellent choice for the cash portion. You aren't going to get anything worth talking about in yield but the avg maturity keeps the risk extremely low. And it's indexed and cheap unlike unlike PRTBX. If you wanted to go even shorter on the curve you could look at BIL.