Pairing Funds: CAMAX = Cambiar Aggressive Value Investor and FVALX = Forester Value

bee

As part of my Large Cap Value portion of my portfolio I have a small position in CAMAX and have noticed the extreme volatility of its NAV compared to other Large Cap Value funds such as FVALX or YACKX. Wondering if anyone employs a strategy where you pair an aggressive fund like (CAMAX) with a less aggressive fund like (FVALX or YACKX). This would not only help keep one "in" the market but, but also allow that part of one's portfolio (Large Cap Value) to be positioned more appropriately to market risks and conditions.

Charting these two funds together over the past year provides what I would call reallocation signals from one fund to the other. Using Yahoo finance's 1 year chart:

http://finance.yahoo.com/echarts?s=FVALX+Interactive#chart24:symbol=fvalx;range=1y;compare=camax;indicator=dividend+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

CAMAX's Sept 2010 NAV moved steadily upward while consistently exhibiting a (+/-10%) NAV price volatility. By March 2011 CAMAX was performing 60% better than FVALX. Over that same time frame FVALX price volatility was a mere (+/-2%)...very stable. For three months (Mar-Apr 2011) CAMAX's NAV moved sideways still experiencing the same +/- 10% volatility. Changing the chart to a six month time frame shows this momentum change pretty clearly. This would have been a signal to reallocate some of CAMAX's over performance back into the stable performing LC Value fund like FVALX.

By August CAMAX had lost almost all of its over performance compared to FVALX. From August 1 - August 10th FAVLX's NAV dropped (-5%) compared to CAMAX's (-30%)...one really bad week that owners of CAMAX wished they only owned FVALX but, my point here is that both funds have a purpose in one's portfolio.

By charting these two funds together an investor could have reallocated CAMAX's over performance (gains) back into the more stable FVALX in March, April or May and would now being preparing to reverse this process...moving gains back into CAMAX at a lower NAV. Since CAMAX's August 8th low it has outperformed FVALX by as much as (+20%) and as little as (+5%).

Almost makes me want to trade in and out of these two funds to capture the trading range between the two waiting for the overall market to show a clear direction up or down.

Any comments would be appreciated.

bee

scott

I certainly think it's a fine idea; I certainly have more aggressive investments - stocks or funds - paired with alternative investments.

I think with less aggressive stock funds though you have to expect off years - FVALX has been great during downturns, but there's always the chance that the fund may not perform as expected during the next one. As for trading, I've traded around the profunds and rydex funds, but those are really geared towards that. I have nothing against trading funds (in the slightest, I've moved around a fair amount between funds), but have done it less and less this year vs previous years.

BobC

Yes, we use that concept a lot, but not necessarily in the same asset class. We like FVALX for its low volatility, but some clients will find it too timid during bull markets. So we will pair it with more aggressive WMGYX, WSCYX, DEFIX, even RBCGX. On the other hand, for more conservative investors, Forrester paired with TIBIX, OAKBX, or FPACX would be an ok combination.

The same holds true for international. Using MAPIX in conjunction with more aggressive ODMAX, WAEMX, IVVYX, or TGVIX works pretty well, too. We believe MAPIX to be a "chicken" way to invest in China, since many of the comapanies in the portfolio do business there, even though they are not Chinese companies.

catch22

Hi bee,

We hold a small position in CAMAX; and it reminds one (recently) of the moves seen in some of the Fidelity sector funds over the years..."a be ready for a + or - swing of 5% on a given day".
I have not dug through or did a M* check on this fund recently; but while watching its swings, kept an eye to other sector moves; based on some of the apparent holdings.
Using your favorite charting site, you may consider comparing CAMAX to Fidelity FSENX or VENAX or an energy ETF over the past 1 year, including the past 1, 3 and 6 month time frames. Also, noting that about 18% of the holdings are reported in Europe (have not ckd which companies) may have also had some effect on this fund.
Just a few thoughts about this fund.
As to flipping between/among funds; I don't find this problematic, if one is comfortable with their own knowledge. This house used to do this often in past years with Fidelity sector funds. This would be a bit more of a problem with funds as CAMAX and the holding period for the fund...without incurring the "fee" for selling before the 180 day holding period.
One may only guess as to what "tools" are used to protect the assets of the fund; as with futures, options, etc.
This fund is definitely not for the timid and one should expect that taking this fund to a weiner roast at the beach; to anticipate having a more difficult time getting this "hotdog" cooked to perfection.

I appreciate your work and posting the related info here; helping all of us learn.

Take care,
Catch

scott

I believe CAMAX can use leverage, as well as options and equity swaps. It was short the EAFE index at last morningstar update. Like the look of the fund and holdings but don't own it.

[Deleted User]

I own CAMAX and it is what I call a divebomber fund. It can go up and down very quickly. It cannot be easily traded since Fidelity has a 180 day hold or you pay $50. During the first few months of this year it was on the list of the highest performers, but since has come back down to earth. I believe the fund company has a 60 day hold on trading this fund and I have a broker that will allow numerous switches after a 30 day hold. But what system are you going to use to enhance this fund's performance? Your idea of having a feeling is how not to trade funds. If you have a tested system both back tested and forward tested, then by all means its a great fund but so was CGM Focus and look where it is now!