Howdy,
Again, a thank you to all who post the links and also start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week.
NOTE: For those who visit MFO, this portfolio is designed for retirement, capital preservation and to stay ahead of inflation creep; if and when it returns. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around..... Too busy of a weekend with other than money watching. Briefly; peeked at any news for EU and appears a coin toss; although the early Asian markets are somewhat happy. Started our own project of OOOF, Occupy Our Own Funds. Minimal outside managerial, political or other influences to affect our policy making decisions to OOOF; aside from the normal tiny variables in the global monetary market places...:):):) A money move last week as indicated further down the page.
Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh?
Hey, I probably forgot something; and hopefully the words make some sense.
Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
SELLs/BUYs THIS PAST WEEK:
SOME CASH MOVED TO FINPX, which already had some monies invested from this house; and the percentages of holdings has been adjusted accordingly.
Portfolio Thoughts:
Our holdings had a +.67 % move this past week. And yes, we are satisfied with our risk adjusted returns YTD. If the portfolio can pull a +10 to 12% for the year; you will not hear any whining from this house. (This sentence was from an April write; and I/we suppose a +5% for the year may now look good, too !) Our portfolio is at - 3.65 % from the high point in mid-July.
The old Funds Boat may make 5% or 25% this year. I expect some rough waters, changing winds and opposing currents; causing the most serious attention being given to a firm hand upon the rudder control. (April report text)
We can hardly wait until Oct. 31 to find whether it will be the trick or the treat.
The immediate below % of holdings are only determined by a "fund" name, NO M* profile this week
CASH = 4.5%
Mixed bond funds = 87.4%
Equity funds = 8.1%
-Investment grade bond funds 26.8%
-Diversified bond funds 18.5%
-HY/HI bond funds 23.2%
-Total bond funds 14.6%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 8.1%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
APOIX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
TEGBX Templeton Global (load waived)
LSBDX Loomis Sayles
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
FRIFX Fidelity Real Estate Income (bond/equity mix)
FFGCX Fidelity Global Commodity
FDLSX Fidelity Select Leisure
FSAGX Fidelity Select Precious Metals
RNCOX RiverNorth Core Opportunity (bond/equity)
---Equity-Domestic/Foreign
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock
Comments
do you have anything on 'your radar' that you are consider buyin' at this stage
thanks for any commentary
Gonna have to wait a bit more to find how any EU fix plan is received by the big money kids of the markets.
Still piles of debt headwinds in the developed countries; regardless of any plans.
We try to watch etf's/funds for changing directions. Have and will continue to watch emerging markets areas.
So, no; nothing in particular strikes my fancy, other than to protect the base monies. Always subject to change, eh?
Regards,
Catch
Thanks to you as well for your commentary and portfolio updates.
I have a question for you that plays off of your fund boat. I am going to try and create a 5-10 year draw down portfolio for one of my mom's investment bucket. She is 88 and needs about $600/mo to compliment her SS benefits. I would like to diversify her "boat" with 80% high quality income generating funds and 20% with growth funds that might hedge inflation as well as be exposed to the risk of the markets. She will be spending down some of her portfolio shares since her last bucket is more like a pail... it is quite small ($35K). With inflation, she will draw $600/mo in year 1 but this will evolve into almost $700/mo in year 6.
My thought is to divide her portfolio into a portfolio of 4-8 funds. If you were to pared down your holdings (boat), what would be your top 8 funds? What would your top 4 funds be? Would one group(4 vs. 8) hold any advantage over the other?
I would guess FAGIX would be one of your top four holdings but I would like to hear your take on creating an ultra simplified "last bucket" draw down retirement portfolio remembering that it will be the "last bucket" before kicking the proverbial...bucket. We all will be there one day.
Thanks,
bee
Per your below questions:
"I have a question for you that plays off of your fund boat. I am going to try and create a 5-10 year draw down portfolio for one of my mom's investment bucket. She is 88 and needs about $600/mo to compliment her SS benefits. I would like to diversify her "boat" with 80% high quality income generating funds and 20% with growth funds that might hedge inflation as well as be exposed to the risk of the markets. She will be spending down some of her portfolio shares since her last bucket is more like a pail... it is quite small ($35K). With inflation, she will draw $600/mo in year 1 but this will evolve into almost $700/mo in year 6.
My thought is to divide her portfolio into a portfolio of 4-8 funds. If you were to pared down your holdings (boat), what would be your top 8 funds? What would your top 4 funds be? Would one group(4 vs. 8) hold any advantage over the other?
I would guess FAGIX would be one of your top four holdings but I would like to hear your take on creating an ultra simplified "last bucket" draw down retirement portfolio remembering that it will be the "last bucket" before kicking the proverbial...bucket. We all will be there one day."
>>>>>Ah, the $64,000 question (from the wayback tv show); which is now inflation adjusted to $480,824.37.
I will say that this house is looking to a possible similar set of conditions regarding a trim of holdings in the next year or so.
A few thoughts regarding the list below:
At this stage of our investing world; it may be best stated that... "we are looking at bond funds that behave like equity funds; and equity funds that behave like bond funds." The ultimate goal, eh; yield and growth.
Looking forward as of today, for the next 5-10 years; from this untrained economic mind, finds a likely tough road ahead for the developed nations (debt loads/ability to continue to raise funds for payoff of debt), the possibility that the so-called BRIC/EM's nations could maintain growth among themselves even with reduced export demand from the developed nations (a global have's and have not's on a country scale), stagflation may be part of this scenario. Obviously, this is part of a possible global economic slowing; but with pressures for a given amount of demand for commodities; and some countries could at the same time, have a deflationary environment that would also affect interest rate variables among many countries (this is already in place). How to capture all of these possiblities going forward may require a "boat" with about 12 sails that may be set to the proper direction of a current, prevailing wind. 'Course, I am not saying anything that most here at MFO have not already thought about. Other than all of this; investing is pretty easy, eh ???
The below funds are not in a particular order; just how I happened to note them initially on a piece of paper.
VWINX Vanguard Wellsley long track record, a dividend payer on the eq. side; as well as the bond holdings yields, has held up well this year. Yield is 3.8% with equities at US=32%, INTL=5%; bonds at US=44%, INTL=13%. Balanced/growth & income/conservative allot...or whatever one chooses to name this fund, and with a low ER of .28..
RNDLX RiverNorth/Doubleline short track record, but appears to know what they are doing for 2011. ER a bit steep at 1.5% for this fund of funds; but the prospectus indicates the fund may place monies into whatever bond area from 0-100% of holdings, for maximum flex. No current yield indicated.
LSBRX Loomis Sayles Global bond long track record, has some problems with making money in shakey market scenarios; but is perhaps suited to a possible sideways/slow growth markets going forward. ER=.94 with a current yield of 5.5%. US holdings = 47%, INTL = 25%, remainder cash/other.
FAGIX Fido Cap & Income long track record, but can take a big hit in sour equity market periods, not unlike many funds involved in the high yield bond area. But, in spite of what this fund is; its long term returns match very well with many equity/balanced funds including a fund like PRPFX. The fund also holds 10-20% in equities, based upon historical indicators; as well as 80+% being US holdings of bonds/equity. ER = .8% with a current yield of 6.9%. For more than 30 years, this particular fund has been a portion of our holdings; excluding its sale in June of 2008 and repurchase in 2009.
FNMIX, EM bonds; although Fidelity has their share of so-so funds; this one fund in this area has held it place among many similar funds. I don't like that the fund is denominated in $US; but in spite of this has provided decent returns in this sector. ER = .9% with a current yield of 5.6%.
FRIFX, Fido Real Estate; a conservative US REIT type fund with about 58% in bonds and 35% equity holdings. ER = .8% with a current yield of 5.3%.
FLPSX, Fido Low Priced stock fund; a fairly good mix of equity holdings and a fund with a decent record for 2011 in this crazy market place. US = 51%, INTL - 35%, and the fund holdings do rotate among mega through small cap with current holdings indicated: Mega=6%,very Lg=7%,Lg=5%,mid=43% and Small cap=39%. ER=.8% with a yield of .7%. Obviously, this fund is subject to equity market moves, too.
FFGCX, Fido global commodity; this fund gives one a wide mix of equity holdings that are subject to poor equity markets; but also allows for exposure to offset inflation and a rising equity market. It is the only fund of which I am aware that offers a 1/3 mix of each sector in energy, agri and metals equities all in one package with holdings of US=34%, INTL=66% with an ER of 1.1% and yield of 1.2%.
MAPIX, Matthews Asia Dividend This fund obviously gives one exposure to a broad Asia market place, of which; I feel is important going forward, The ER = 1.1% with a yield of about 4%.
SIRRX, Sierra Retirement; a fairly new fund; but it appears management understands the overall market moods for 2011 and have adjusted where they have needed to place the money. I have not dug deep into the prospectus; but it appears the fund does have a fair amount of flex; obviously a very important ability going forward. I also have not noted DBLNX, which Mr. Gundlach appears to have an ultimate skill in the mortgage bond area; but is a very narrow choice of fund style; but could be part of a mix, too.
I have not listed PRPFX, but is also a consideration for its balanced and mixed holdings. I also have not mentioned any Pimco bond funds; although there are more than enough to satisfy any bond needs. I am not sure what happens in their meetings or who has the powers of decision making; but many of their bond funds have not performed as expected for the total type funds; and also the "unconstrained bond" funds. By chance of investment style of a particular Pimco bond fund, those in the Treasury/TIPs areas have performed well; as they are in the right place at the right time for 2011 to date. If our holding of PTTRX was not the only bond fund available in one acct.; the holding would have already been reduced and moved elsewhere.
bee, I have not passed these funds through the M* cruncher machine; which would provide a better picture of overlap and related; and would provide a better starting point for choices, as I am not sure of what the bond/equity mix as a percentage may have with these funds.
I would personally prefer 8 funds, versus 4 for a wider exposure and better support of perform when equities or bonds are moving in opposite directions. So, I have to discard 2 of the 10 above. Ultimately, for this house; we have no problem holding 20 plus funds for a broad mix; attempting to maintain a likely slow, but forward moving boat.
Top 8: VWINX RNDLX FAGIX FNMIX FLPSX FFGCX MAPIX SIRRX
Top 4: VWINX RNDLX MAPIX SIRRX (someone would have to threaten my life or a family member's life to form this too short list !!!) an impossible mix for this house, that would not cover the sectors.
I have noted before that I run out of time for the type of research that I/we demand at this house for our investments; but we try. With several thousand fund choices at Fido, there are bound to be better choices than what we have in the funds boat, but; to little time.
I sure as heck have forgotten to mention something..........so, rattle my brain cells.
Back to work for me, now.
Take care,
Catch
Wow...thanks for the comprehensive response. I completely understand the dilemma of too few funds trying to covering too many bases. I will digest your suggestions over chips and beer tonight. I appreciate the thoughtfulness that you dedicate to your investing.
Thanks again!
Hi Bee. I might argue that the least amount of investments would be much easier to handle (obviously) and you could even do it with 1 fund along with a CD ladder. VWINX or RPSIX would be great 1 fund holdings. They are diversified on their own, great track records and are relatively conservative holdings. I think VWINX is typically 40% equity, RPSIX ~15-20%. You didn't say how much you were investing to get $600/month ($7200/yr) but here is a scenario:
Expected estimate on return:
VWINX: 10yr avg return = 6.4% (from M*)
estimate on a CD ladder over 10 yrs =~3%
Having a mix of 60% VWINX and 40% CD's, you would have a 5% return with very little risk. Obviously some risk... in fact, if you used 10 year standard deviations and return values, you would average a 5% return with a 90% probability of yearly returns falling between +12.7% and -2.6%.
The 60% investment in VWINX gives you ~24% stocks. Slightly higher then you wanted.
So, back to being able to withdraw $600/month, $783 by the 10th year (I estimated 3% inflation increase per year), if you invest ~$66000 into this 60/40 portfolio, it should last 10 years - zero value at the end of 10 years.
Catches suggestions are good ones. But for an 88 year old mother (I have a similar situation with my 92 year old mom) I think you are just trying to get a stable return (?). Just my 2 cents from another "mom's money manager".
By the way, I think they're right, but I did these calculations quickly, so don't take them to the bank
Thanks MikeM,
I like the simplicity of your plan. Part of the problem at our mom's ages...hopefully our ages one day... is the spend down dynamic. My feeling is that a portion this money needs to be in a "spend down investment". CDs are not spend down vehicles...the money needs to be locked away even if for short periods of time. There isn't much difference between a short term CD and a high interest checking account in today's markets. Maybe this will change, but possibly not in our parent's life time.
So I am looking for an investment that I could fund with two years of money ($600*24 = $14400) while letting the remaining money (in my mom's case, another $21K) to "grow". Also, at the end of each year a reallocation of any gains could be moved into the :spend down" fund. In some years there would not be a gain but a nice thing about a fund like VWINX or RPSIX (also suggested) is their track record of consistent positive yearly gains. Not home runs and strike outs...but instead a lot of singles and doubles.
I seem to be leaning toward a total return fund like TGMNX or similar for a spend down fund along with a conservative allocation fund like VWINX or RPSIX. I might further diversify with a foreign bond fund like TGBAX. Maybe a tad of PRPFX...and a smidge of MAPIX...wait a minute! Its really hard to just pick one or two flavors.
Thanks for your comments.