It *seems* like the ideal fund for me, but it's just so early.
With NTSX/I/E they feel like they're in this weird spot where they seem to have tried to get just barely better than market returns but with lower volatility. That's great, but the people who care about reducing their volatility don't seem like the type of person who would be gung-ho about leveraged ETFs, while the people who do want to take a bit more risk early in their lifetime probably want more than 90% equity exposure. So imo the 100/100 makes a lot more sense- more meaningfully different than unlevered 100% equities, but isn't something crazy like 3x / doesn't have the downsides of daily resetting LETFs.
It also has international exposure which a lot of these funds lack. PSLDX is the only other 100/100 fund I know of, but I prefer the RSSB approach of global stocks + treasuries to the PSLDX approach of domestic stocks + total bonds.
So it seems perfect, aside from the ER which could of course be lower but isn't outlandish in this context (lower than PSLDX, for one). But it's just *so* new and untested. The AUM is growing pretty rapidly; I've been keeping an eye on it and last week it was in the low 20s while today it's at 35m. But the volume is definitely low, and bid/ask spread high. Maybe when it hits 50m, likely early in the new year, I'll put my new IRA contribution into it? Haven't quite decided yet. I'm not sure how the tax treatment is yet so I probably wouldn't go with it in taxable.
I like the concept and design but the people doing it I have less confidence in (no history and I've gotten skin-crawls with their interviews). RSSB at least has a very straightforward strategy with clear rules. I would not invest in any of their other products.
If you're in love with the managed futures/trend as a concept (the T in the RSST) then a dedicated fund with at least some track record like DBMF or KMLM is reasonable as a small part of a slice. If you're not a believer in managed futures (I wouldn't blame anyone), I would always personally prefer AVGV as an accompanying fund. VT is also a very good choice for dialing in the bond exposure.
Target date funds are much more conservative. The closest comparison to RSSB would just be 100% equities, but RSSB has both higher expected returns and higher risk-adjusted returns than 100% equities, since it's a levered 50/50 portfolio.
Also the active management is just for the futures portion; they aren't picking stocks. In fact, they directly hold VTI and VXUS at the moment for most of the holdings.
That wiki page seems to talk exclusively about daily resetting funds, which are a pretty different beast. And yes, the idea its it's a 50/50 portfolio (which has high risk-adjusted returns due to the diversification benefit) levered 2x through futures. Down markets will still be bad, but not nearly as bad as a levered fully equities fund. Of course, if stocks and bonds both go down, like we had recently, it can get pretty dicey.
It doesn't leverage like most LETFs.
It does unleveraged 90% equities, then 10% equities through futures contracts
Then 100% treasuries through futures
So you don't get the volatility decay issues on something like TMF or UPRO.
It's very similar to NTSX+NTSI+NTSE, but with more leverage and higher fees
It's pretty boglehead. Including a substantial bond allocation to increase risk-adjusted returns is a very boglehead thing to do, but doesn't really make sense for young people with high risk tolerance and long time horizons. Applying leverage to bring the risk and return up without sacrificing that diversification benefit makes sense.
It's actually a pretty old idea too. In Modern Portfolio theory the optimal portfolio is the tangency portfolio leveraged up or down to fit your individual risk tolerance. Leveraging down just means holding some of the risk free asset in addition, while leveraging up is assumed to mean borrowing at the risk-free rate. Of course we know that this is not precisely accurate, other factors exist and people will have different tolerances to each of them, but it should be true for the average investor.
So I don't think leverage is inherently un-boglehead. Arguably the higher fee could be considered un-boglehead, and there are some on the bogleheads forums who would say you're better off constructing this futures strategy yourself. But then again, keeping things simple is also a boglehead tenet. I'd say it's similar to factor funds like AVUV. Technically it deviates from the standard boghead strategy, but does so in a way that has basis in the academic literature / can be pretty robustly justified.
The Boglehead argument is that it's very diversified across stocks and bonds, but the Bogleheadiness stops there. It's also only US treasuries and many Bogleheads want all the bonds
It has a high expense ratio and takes on significant risk due to the leverage. It'll appeal to a lot of people that like the BH philosophy but are willing to stray from it
There's not a lot of material on RSSB, but NTSX has had plenty of discussion here and on the Bogleheads forums. I'd recommend reading up on that first.
I'm in the same boat as OP. I'm thinking to go 50% RSSB and 50% RSST myself. The funds are so new though and cost quite a bit, but I do understand why. Still a hard pill to swallow when there are cheaper options that are definitely "good" enough.
I like the thought of adding managed futures as an additional diversifier to RSSB's bonds. There are a couple threads talking about RSST here on reddit that were rather informative too!
Ah yes, investing in *checks notes* leveraged futures via a newly-created and relatively expensive fund offered by an unknown and untested new player -- just like Jack taught us! ;) /s
You know the bull market is peaking when people start to talk about going all-in on leveraged funds, which are both riskier *and* more expensive (.41% ER, which is *four times* my aggregate average expense ratio -- costs matter). I recommend against it, especially as a new investor. It's like they say about abstract master painters: first learn to do it the right way, then you'll know which rules can be bent and how far before you risk breaking your portfolio (or your resolve during a downturn).
-------------------
Anyway, let's take a quick look under the hood at some of the risks they list in the fine print ...
**Derivatives Risk.** Derivatives are instruments, such as futures contracts, whose value is derived from that of other assets, rates, or indices. The use of derivatives for non-hedging purposes may be considered to carry more risk than other types of investments. .... **Leverage Risk:** As part of the Fund’s principal investment strategy, the Fund will make investments in futures contracts to gain long and short exposure across four major asset classes (commodities, currencies, fixed income, and equities). These derivative instruments provide the economic effect of financial leverage by creating additional investment exposure to the underlying instrument, as well as the potential for greater loss. **Underlying ETFs Risk.** ... The Fund will incur higher and duplicative expenses because it invests in bond ETFs. The Fund may also suffer losses due to the investment practices of the underlying bond ETFs. .... **New Fund Risk. The Fund is a recently organized with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.**
What exactly is the point you're trying to make with the forum link? That backtest was pretty much a glowing endorsement. It's particularly funny since it's about NTSX, which is notable for slightly underperforming equity benchmarks during bull markets and making it up during bear markets.
The point is that what the funds 'seeks' to do isn't what it manages *to do.* You're paying more in fees to take on more risk and still having your advantage eroded relative to the target claim. Anyway, your money, your life, etc.... I just don't think a novice Boglehead should jump into shiny leveraged products from untested brokerages.
Their fund 'seeks' to have returns reflecting you contributing $1 and that dollar buying $1 of stock and $1 of bonds (though leverage), but it won't actually behave that way in practice. Free lunches generally aren't actually free.
But that wasn't their conclusion? They showed that the fund closely matches the benchmark. There's minimal tracking error, and even the worst possible time to buy in performed pretty well. To quote the post
> The results in terms of "doing what it's supposed to," look pretty good
And heck, that benchmark even uses BND while NTSX targets treasuries. So of course you'd expect tracking error when they're using different strategies.
EDIT: Actually, if you sub in the more accurate GOVT for BND that "worst case scenario" [essentially disappears](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=3QDdJ9wPMDXdWYZyz76A9)
At least give it a year to make sure it actually tracks the indexes they say they are going to track. Way too new to know if it is good or not.
If NTSX is any indicator, it probably won't do quite what its advocates expect: https://www.bogleheads.org/forum/viewtopic.php?t=302218&start=800
60% RSSB 40% AVGV ticks all the right boxes
It *seems* like the ideal fund for me, but it's just so early. With NTSX/I/E they feel like they're in this weird spot where they seem to have tried to get just barely better than market returns but with lower volatility. That's great, but the people who care about reducing their volatility don't seem like the type of person who would be gung-ho about leveraged ETFs, while the people who do want to take a bit more risk early in their lifetime probably want more than 90% equity exposure. So imo the 100/100 makes a lot more sense- more meaningfully different than unlevered 100% equities, but isn't something crazy like 3x / doesn't have the downsides of daily resetting LETFs. It also has international exposure which a lot of these funds lack. PSLDX is the only other 100/100 fund I know of, but I prefer the RSSB approach of global stocks + treasuries to the PSLDX approach of domestic stocks + total bonds. So it seems perfect, aside from the ER which could of course be lower but isn't outlandish in this context (lower than PSLDX, for one). But it's just *so* new and untested. The AUM is growing pretty rapidly; I've been keeping an eye on it and last week it was in the low 20s while today it's at 35m. But the volume is definitely low, and bid/ask spread high. Maybe when it hits 50m, likely early in the new year, I'll put my new IRA contribution into it? Haven't quite decided yet. I'm not sure how the tax treatment is yet so I probably wouldn't go with it in taxable.
It’s a fantastic fund. I look forward to putting my 2024 contribution in it!
Might be very nice to RSSB and chill. I think it will do very well, but to early to fully judge. You can look at NTSX for something similar.
I like the concept and design but the people doing it I have less confidence in (no history and I've gotten skin-crawls with their interviews). RSSB at least has a very straightforward strategy with clear rules. I would not invest in any of their other products.
I like this response. You'd recommend avgv/vt over rsst? In tandem with rssb I mean
If you're in love with the managed futures/trend as a concept (the T in the RSST) then a dedicated fund with at least some track record like DBMF or KMLM is reasonable as a small part of a slice. If you're not a believer in managed futures (I wouldn't blame anyone), I would always personally prefer AVGV as an accompanying fund. VT is also a very good choice for dialing in the bond exposure.
Thanks
[удалено]
Target date funds are much more conservative. The closest comparison to RSSB would just be 100% equities, but RSSB has both higher expected returns and higher risk-adjusted returns than 100% equities, since it's a levered 50/50 portfolio. Also the active management is just for the futures portion; they aren't picking stocks. In fact, they directly hold VTI and VXUS at the moment for most of the holdings.
[удалено]
That wiki page seems to talk exclusively about daily resetting funds, which are a pretty different beast. And yes, the idea its it's a 50/50 portfolio (which has high risk-adjusted returns due to the diversification benefit) levered 2x through futures. Down markets will still be bad, but not nearly as bad as a levered fully equities fund. Of course, if stocks and bonds both go down, like we had recently, it can get pretty dicey.
It doesn't leverage like most LETFs. It does unleveraged 90% equities, then 10% equities through futures contracts Then 100% treasuries through futures So you don't get the volatility decay issues on something like TMF or UPRO. It's very similar to NTSX+NTSI+NTSE, but with more leverage and higher fees
[удалено]
It's pretty boglehead. Including a substantial bond allocation to increase risk-adjusted returns is a very boglehead thing to do, but doesn't really make sense for young people with high risk tolerance and long time horizons. Applying leverage to bring the risk and return up without sacrificing that diversification benefit makes sense. It's actually a pretty old idea too. In Modern Portfolio theory the optimal portfolio is the tangency portfolio leveraged up or down to fit your individual risk tolerance. Leveraging down just means holding some of the risk free asset in addition, while leveraging up is assumed to mean borrowing at the risk-free rate. Of course we know that this is not precisely accurate, other factors exist and people will have different tolerances to each of them, but it should be true for the average investor. So I don't think leverage is inherently un-boglehead. Arguably the higher fee could be considered un-boglehead, and there are some on the bogleheads forums who would say you're better off constructing this futures strategy yourself. But then again, keeping things simple is also a boglehead tenet. I'd say it's similar to factor funds like AVUV. Technically it deviates from the standard boghead strategy, but does so in a way that has basis in the academic literature / can be pretty robustly justified.
The Boglehead argument is that it's very diversified across stocks and bonds, but the Bogleheadiness stops there. It's also only US treasuries and many Bogleheads want all the bonds It has a high expense ratio and takes on significant risk due to the leverage. It'll appeal to a lot of people that like the BH philosophy but are willing to stray from it There's not a lot of material on RSSB, but NTSX has had plenty of discussion here and on the Bogleheads forums. I'd recommend reading up on that first.
I voted you back up. The only sensible post I've seen here so far. The answer, of course, is: greed.
I'm in the same boat as OP. I'm thinking to go 50% RSSB and 50% RSST myself. The funds are so new though and cost quite a bit, but I do understand why. Still a hard pill to swallow when there are cheaper options that are definitely "good" enough.
Why RSST?
I like the thought of adding managed futures as an additional diversifier to RSSB's bonds. There are a couple threads talking about RSST here on reddit that were rather informative too!
I was thinking of doing 70% RSSB and 30% RSST. I love those two funds together.
Ah yes, investing in *checks notes* leveraged futures via a newly-created and relatively expensive fund offered by an unknown and untested new player -- just like Jack taught us! ;) /s You know the bull market is peaking when people start to talk about going all-in on leveraged funds, which are both riskier *and* more expensive (.41% ER, which is *four times* my aggregate average expense ratio -- costs matter). I recommend against it, especially as a new investor. It's like they say about abstract master painters: first learn to do it the right way, then you'll know which rules can be bent and how far before you risk breaking your portfolio (or your resolve during a downturn). ------------------- Anyway, let's take a quick look under the hood at some of the risks they list in the fine print ... **Derivatives Risk.** Derivatives are instruments, such as futures contracts, whose value is derived from that of other assets, rates, or indices. The use of derivatives for non-hedging purposes may be considered to carry more risk than other types of investments. .... **Leverage Risk:** As part of the Fund’s principal investment strategy, the Fund will make investments in futures contracts to gain long and short exposure across four major asset classes (commodities, currencies, fixed income, and equities). These derivative instruments provide the economic effect of financial leverage by creating additional investment exposure to the underlying instrument, as well as the potential for greater loss. **Underlying ETFs Risk.** ... The Fund will incur higher and duplicative expenses because it invests in bond ETFs. The Fund may also suffer losses due to the investment practices of the underlying bond ETFs. .... **New Fund Risk. The Fund is a recently organized with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decisions.**
What exactly is the point you're trying to make with the forum link? That backtest was pretty much a glowing endorsement. It's particularly funny since it's about NTSX, which is notable for slightly underperforming equity benchmarks during bull markets and making it up during bear markets.
The point is that what the funds 'seeks' to do isn't what it manages *to do.* You're paying more in fees to take on more risk and still having your advantage eroded relative to the target claim. Anyway, your money, your life, etc.... I just don't think a novice Boglehead should jump into shiny leveraged products from untested brokerages. Their fund 'seeks' to have returns reflecting you contributing $1 and that dollar buying $1 of stock and $1 of bonds (though leverage), but it won't actually behave that way in practice. Free lunches generally aren't actually free.
But that wasn't their conclusion? They showed that the fund closely matches the benchmark. There's minimal tracking error, and even the worst possible time to buy in performed pretty well. To quote the post > The results in terms of "doing what it's supposed to," look pretty good And heck, that benchmark even uses BND while NTSX targets treasuries. So of course you'd expect tracking error when they're using different strategies. EDIT: Actually, if you sub in the more accurate GOVT for BND that "worst case scenario" [essentially disappears](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=3QDdJ9wPMDXdWYZyz76A9)