Another Win Streak for Third Avenue Focused Credit Fund

The Third Avenue Focused Credit Fund (ticker: TFCIX) is generating another long win streak. It has been up or unchanged for 30 consecutive days. The last down day was August 31. If you use Yahoo Finance for historical data, you should be aware that they are missing the last TFCIX distribution of 0.19 a share on September 21.

I first purchased TFCIX  one year ago, and it has appreciated about 17.5% since then including reinvested dividends. This slightly lags the Merrill Lynch US High Yield Master II index (H0A0) which is up about 19% over the last year, but TFCIX has lower volatility and has produced very smooth performance. When I purchased TFCIX, it had a 2% exit redemption fee for holding periods under one year, but the fund recently lowered the exit redemption fee holding period to 60 days. I think the reduction in the exit redemption fee period may be causing additional inflows into TFCIX, since some investors screen out funds with long exit redemption fee periods.

There has been a lot of talk about “bond bubbles” in the financial media, but the inflows into bond funds like TFCIX have continued. They say “the trend is your friend”, and that philosophy especially applies to asset classes that trend very strongly. I plan to keep a mental trailing stop on my TFCIX position, but have no plans to exit the position as long as the fund continues to perform well.

Full disclosure: Long TFCIX.

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