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What are the implications of holding this fund in a taxable account, as it holds substantial gold? It can be very good core fund. I use OAKBX and FPACX for that at present. Another possibility is to hold something like VT, AGG, GTU and SHY (or just cash) in equal amounts.
PRPFX would not be a replacement as a core fund. It's a supporting player, and would be a more conservative choice than a more aggressive inflation protection fund such as Pimco Commodity Real Return (PCRRX).
I disagree with Scott in the case that Permanent Portfolio is not a core fund. I feel it's the very best core fund available and that it's by design. If you read about Harry Browne, who developed the original concept you will see why.
Now, as to tax efficiency - they're great because of such low turnover. They're not playing the market like so many funds because their asset allocation is fixed. Sure, it requires some rebalancing, but that's minimal. As for holding 20% gold and 5% silver, that's not a problem with taxes because being a mutual fund, you're taxed as with any mutual fund. This is completely different from holding one of the bullion ETFs as a stand alone investment. The gains on these are taxed at 28% as 'collectibles'.
Lastly, for those wishing to hold gold in a taxable account, please investigate the Central Fund of Canada. They're still taxed at 15% on LTCGs although being Canadian, and a PFIC so you need to keep this in mind.
I was wondering if PFPRX was selling gold as it climbed in valuation to balance it's portfolio or purchasing others (realestate, T bills, stocks) in it's portfolio to get back to stated % in prospectes? Mr. Snowball do you have any ideas on this ?
One of the reasons I want to add PRPFX is that it uses a different approach vs. the other balanced funds I have (OAKBX and FPACX). The idea is to add some new cash I have in PRPFX. I am also helping my daughter, who is just starting investing her income from campus jobs and I was thinking of putting bulk of the money in PRPFX.
Hardly DS, but Yes, they HAVE to rebalance because their asset allocation is a fixed amount of gold at 20% and silver at 5%. Should their prices rises relative to other asset classes involved, they MUST rebalance.
Again, check the link to their website and click on the PRPFX link and it will give you a PDF that details what the fund is all about.
Comments
I disagree with Scott in the case that Permanent Portfolio is not a core fund. I feel it's the very best core fund available and that it's by design. If you read about Harry Browne, who developed the original concept you will see why.
http://www.getrichslowly.org/blog/2009/04/20/fail-safe-investing-harry-brownes-permanent-portfolio/
Compare this to PFPFX by clicking on the tab on their website:
http://www.permanentportfoliofunds.com/
Now, as to tax efficiency - they're great because of such low turnover. They're not playing the market like so many funds because their asset allocation is fixed. Sure, it requires some rebalancing, but that's minimal. As for holding 20% gold and 5% silver, that's not a problem with taxes because being a mutual fund, you're taxed as with any mutual fund. This is completely different from holding one of the bullion ETFs as a stand alone investment. The gains on these are taxed at 28% as 'collectibles'.
Lastly, for those wishing to hold gold in a taxable account, please investigate the Central Fund of Canada. They're still taxed at 15% on LTCGs although being Canadian, and a PFIC so you need to keep this in mind.
http://commoditybullmarket.blogspot.com/2010/06/gold-tax-rates-and-collectible-tax.html
Good luck,
rono
Thanks, Derf
One of the reasons I want to add PRPFX is that it uses a different approach vs. the other balanced funds I have (OAKBX and FPACX). The idea is to add some new cash I have in
PRPFX. I am also helping my daughter, who is just starting investing her income from campus jobs and I was thinking of putting bulk of the money in PRPFX.
Hardly DS, but Yes, they HAVE to rebalance because their asset allocation is a fixed amount of gold at 20% and silver at 5%. Should their prices rises relative to other asset classes involved, they MUST rebalance.
Again, check the link to their website and click on the PRPFX link and it will give you a PDF that details what the fund is all about.
peace,
rono