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I owned Permanent Portfolio PRPFX during the recession and sold most shares 2 years go when it's performance lagged. Since gold has started to recover so has PRPFX. I will be using it as part of an allocation that is conservative. Would appreciate a discussion from those who have owned PRPFX in the past and are considering adding it again to their portfolio. prinx
Linked below is the fund's January 31, 2013 Annual Report. If the things it owns (which are very nicely listed) rise in value, than the fund should also grow in value. As you mention, gold's performance has quite an impact on fund performance. I won't get into management. However, David has written extensively on the fund in the past and has expressed strong reservations (to put it mildly) about management's capabilities.
So, I have no idea what the future holds. I maintain a small hold (about 7.5%) for diversification purposes, but would never recommend this fund to anyone else - mainly because it's very much at the mercy of precious metals, Treasury bonds and natural resources. (And, the first two appear highly problematic based on their recent outperformance.) Also, because a decision to buy the fund has a lot to do with your risk profile and how much you value the diversification it offers. In addition. I think younger investors (under 50) should concentrate on owning good equity funds. But - Shucks! I don't know where it's going..... Can't seem to find my crystal ball..... Left it here somewhere....
Funds like these cannot be judged based on a year or two. If you do, then you bought it for the wrong reason.
It is a valid question as to what the role of such a fund in a portfolio is. That is a difficult question to answer.
I wouldn't make it part of a core portfolio and a small allocation in a satellite portfolio makes very little difference. The diversified assets within the fund counteract each other to mute volatility AND the performance except in global inflation periods where it shines. Just the opposite of what we have had recently.
So, at best, it could be considered an inflation hedge in a portfolio and less volatile than holding gold. In periods of low inflation and low rates, it will drag your portfolio down if you hold it in any significant proportion and make very little difference otherwise.
It has been an unbelievable money maker for the fund firm though requiring very little management.
Hank, I agree that if I was a younger investor I would not be considering PRPFX. I am 76 and consider myself conservative but willing to enter into transactions that are very well thought out and have risks that are reasonable enough that I feel a comfort with. I first purchased PRPFX in 2004. I kept it until 2012 when I sold all except for enough for me to remain a shareholder in the event of a close. I have no investments in precious metals and I think for diversification purposes PRPFX becomes a consideration again. I look at it as a stabilizer to my portfolio and not a growth opportunity. prinx
Reply to @prinx: Well prinx ..... I sure wouldn't expect the fund to repeat the phenomenal performance you enjoyed for many of those years. Not even close. Didn't realize you were older than me. I turn 70 in a few months and don't know how much longer I'll actively invest. Figure when the day comes that I can't remember the combination to the combo-lock I carry & use at the gym every day ... that's the day I sell everything and go to cash!
Reply to @Ted: And sometimes,at least where taxes are concerned,these are not certain or sure! From Seeking Alpha Jan. 2, 2014 12:23 PM ET "Mr. Buffett, a master of tax avoidance, is using some 19mm shares of PSX Berkshire currently holds to complete the acquisition. These shares have run up some 45% since Berkshire acquired them and this transaction avoids having to pay taxes on those gains." My view, When I see stories of perceived unfair tax rates,society's inequalities,tax unfairness etc.,often out of the mouths of Buffett,George Soros,Michael Moore,Nancy Pelosi, etc. I just wish they'd each write out a very large check to the U S Treasury to help with society's ills. Warren Buffett Continues To Bet On The Bakken http://seekingalpha.com/article/1925611-warren-buffett-continues-to-bet-on-the-bakken?source=email_alternative_energy_investing_oil_gas_ref_mar_0_5&ifp=0
Reply to @TSP_Transfer: >> Excellent longterm performance even with the '07-'08 down draft.
Not really; from 07 on, compare with FPACX, JABAX, GLRBX, and PRBLX, just to name four not the same. (And why the tax nonsense and quoting some Seeking Alpha idiot?)
geez, lots of lovers and haters of this fund. I'm a lover. Owned it in all accounts for over 10 years. think of it like ballast. never gonna get you rich, never going to break your back.
Comments
So, I have no idea what the future holds. I maintain a small hold (about 7.5%) for diversification purposes, but would never recommend this fund to anyone else - mainly because it's very much at the mercy of precious metals, Treasury bonds and natural resources. (And, the first two appear highly problematic based on their recent outperformance.) Also, because a decision to buy the fund has a lot to do with your risk profile and how much you value the diversification it offers. In addition. I think younger investors (under 50) should concentrate on owning good equity funds. But - Shucks! I don't know where it's going..... Can't seem to find my crystal ball..... Left it here somewhere....
Annual Report: http://www.permanentportfoliofunds.com/pdfs/AnnualRpt20130131.pdf
It is a valid question as to what the role of such a fund in a portfolio is. That is a difficult question to answer.
I wouldn't make it part of a core portfolio and a small allocation in a satellite portfolio makes very little difference. The diversified assets within the fund counteract each other to mute volatility AND the performance except in global inflation periods where it shines. Just the opposite of what we have had recently.
So, at best, it could be considered an inflation hedge in a portfolio and less volatile than holding gold. In periods of low inflation and low rates, it will drag your portfolio down if you hold it in any significant proportion and make very little difference otherwise.
It has been an unbelievable money maker for the fund firm though requiring very little management.
I agree that if I was a younger investor I would not be considering PRPFX. I am 76 and consider myself conservative but willing to enter into transactions that are very well thought out and have risks that are reasonable enough that I feel a comfort with.
I first purchased PRPFX in 2004. I kept it until 2012 when I sold all except for enough for me to remain a shareholder in the event of a close. I have no investments in precious metals and I think for diversification purposes PRPFX becomes a consideration again. I look at it as a stabilizer to my portfolio and not a growth opportunity.
prinx
Regards,
Ted
familiar.In the old days,if you called BRUFX ,you talked directly with the manager. Excellent long term performance even with the '07-'08 down draft. No brokerage or fund super market availability.
http://performance.morningstar.com/fund/performance-return.action?t=BRUFX®ion=usa&culture=en-US
Reply to @Ted: And sometimes,at least where taxes are concerned,these are not certain or sure! From Seeking Alpha Jan. 2, 2014 12:23 PM ET
"Mr. Buffett, a master of tax avoidance, is using some 19mm shares of PSX Berkshire currently holds to complete the acquisition. These shares have run up some 45% since Berkshire acquired them and this transaction avoids having to pay taxes on those gains."
My view,
When I see stories of perceived unfair tax rates,society's inequalities,tax unfairness etc.,often out of the mouths of Buffett,George Soros,Michael Moore,Nancy Pelosi, etc. I just wish they'd each write out a very large check to the U S Treasury to help with society's ills.
Warren Buffett Continues To Bet On The Bakken
http://seekingalpha.com/article/1925611-warren-buffett-continues-to-bet-on-the-bakken?source=email_alternative_energy_investing_oil_gas_ref_mar_0_5&ifp=0
>> Excellent longterm performance even with the '07-'08 down draft.
Not really; from 07 on, compare with FPACX, JABAX, GLRBX, and PRBLX, just to name four not the same.
(And why the tax nonsense and quoting some Seeking Alpha idiot?)
and so it goes,
peace,
rono