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..... Liberal it is; as in a Liberal Arts degree, whether an actual diploma from a course of study, or the ongoing study of everything. One may have formal training or a degree in a specialized field that allows your employment and/or maintaining that your employer views "you" as the last person they could afford to lose; as your work ethic and knowledge are an asset. I have specialized training in the electo-mechanical/computer based world of knowledge, that has served me well for income over the years. ;
I am a naturally curious person; which may also mean that I am a jack of all trades/knowledge, and perhaps a master of none. However, such broadbased knowledge for a curious mind; does, in my opinion have value as it translates into the investment world. These broadbased knowledge areas for anyone may favor particular areas for one's own comfort zone. Such an example for myself; among the many areas of music to which I listen, is that I am not a fan of opera and some forms of classical music. This does not mean that I do not revisit these areas of music; as we all constantly evolve and re-form who we as we experience more life, whether being aware of these sometimes, slow changes, or not. My naturally curious mind does not let me become locked into confined areas of potential knowledge; the exception being the broadbased areas of knowledge for investments. I have no problem discovering and obtaining knowledge, as related to investing; from any number of folks on the tv business channels, that vary from the hard "right or left" style of thinking about where or what to invest, as well as the 1,000's of opinions since the market melt of 2008 and "how" to help correct the current economic situation. No one is twisting my arm to watch and listen to any of this; but I/we personally must draw in these opinions to help this house digest and attempt to realize the meanings and/or ramifications of potential actions and what the end result may be upon current and future investment sectors.
Focus upon what you must for your employment; or if retired, what you enjoy. But, do not become entrenched in a narrowly focused journey of knowledge that would preclude you from any new adventure in learning.
I am singing to the MFO choir; but there are always some new visitors here.
As one's time allows, continue the Liberal Arts studies; as one never knows what little piece of text or spoken words will trigger a new thought, a clarification of previously unconnected dots of thought or perhaps the simplification of what one thought was a more complex proposition. The source may be from a book, a movie, a television program or a spoken conversation from any subject area one chooses to discover. The source need not be new; and could come from perhaps a book or movie from the 1940's.
At a point in my very early 20's, while writing a letter to a friend; I noted that, "If I could make a statement or ask a question, that caused someone to think of something they had never before considered; or to observe a topic they were familiar with, but from a different perspective, I would find that particular day, as fulfilled." We, at this house; must also apply this same function when presented with a statement or question.
MFO, and formerly FundAlarm are prime, positve examples of "eyes wide open" statements and questions for helping navigate the investment highway. Combine what you learn here, with all of the other pieces from your Liberal Arts of the World of Everything knowledge and you may find a type of intuition for your investment choices.
Never stop learning.....
A short blip about Europe. One may choose any number of connective stories about the "conditions" that exist. For more than 2 years, one may consider that the collective EU has been aware that their "house" is a "fixer upper". So, buy another house or fix the existing house would be the common question for an indivivdual. The EU has known about the problems with the old house; and has started to make a list of fixes, and the projected cost of repairs. This is all well and good; but the problem remains, in terms of the housing market; that they have not yet qualified for the loan to make the repairs. Until this is settled, the overhang of doubt and ability to "get the loan" remains and will continue to affect the value of all homes in the neighborhood (read that as global markets and investment sectors). So, a kinda fix; from the plan last week, but all the neighbors are still a watch'in with their shoulders hunched upward.
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 FNMIX, which already had some monies invested from this house; and the percentages of holdings has been adjusted accordingly. The $U.S. has maintained and gained value since this past spring. This has kept dollar denominated emerging markets bond funds in a somewhat sideways mode relative to NAV's. Recent downward moves in the $US may or may not be in place at this time to hold going forward. So, the EM bond additional monies is a bit of a coin toss; but we will gather the yield while hopefully awaiting a continued upward move in NAV.
Portfolio Thoughts:
Our holdings had a +1.76 % 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 !)
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 = 3.2%
Mixed bond funds = 88.7%
Equity funds = 8.1%
-Investment grade bond funds 26.8%
-Diversified bond funds 19.8%
-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
MACSX Matthews Asia Growth-Income
Comments
http://www.moneynews.com/AndrewPacker/Muni-Bond-Implosion/2011/10/25/id/415606
http://www.mossadams.com/mossadams/media/Documents/Publications/MA Now/MA-Now_FSG_Nov11.pdf
Now I have been with MFO and FA for a long time but frankly I did not pay much attention to your fund boat because essentially I was a somewhat aggressive investor.
I suddenly had a conversion after the last market downturn realizing that because of a health change I may not be able to work as much as in the past . I started to try and construct a portfolio that world give me a growth of about 5-6% but have a good historical downside protection. I had never dabbled in bond funds before as they seemed boring. Awhile back I started to invest in balanced funds. Then I took a beating in Dodge and Cox balanced DODBX. So I said there has to be a better way. Prior to recently, I ignored MFO discusions on Bonds. Now I look for them intensly.
I read your post today and I was taken back by the thoughtfulness of it.
You have to pause occasionally and think about your philosophy to absorb and appreciate your thoughts with regard to ones own life.
I do have some specific questions.
1. How do you differentiate a total bond fund from a diversified fund.?
2. With regard to your equity fund choices what was the rationale of your picks from a diversification choice and risk?
3. How did you get the load waved on tegbx?
4. Like you my money is heavily into Fidelity funds and they do have my custodial account. I noted that most of your fund choices are Fidelity. Do you choose them because of convenience which it seems or have you compared carefully your choices with
other similar non Fidelity Funds and found them to be superior? Since this is a tax deferred account do you use the benefit of upgrading your funds to others doing better
when the opportunity presents itself?
Thanks Catch,
Burt
Your questions:
1. How do you differentiate a total bond fund from a diversified fund.?
>>>>>One really has to obtain the most recent prospectus and attempt to discover the primary plan of a given bond fund that may contain the names:
Total, Diversified, Strategic or Multi Sector, to name the most often used terms. For most practical purposes, I find these four names for bond funds to be correlated closely for their goal of bond diversification among sectors, as the managers move monies around attempting to find what they feel is or will be the "sweet spot" for the best returns in a sector. I was asked at FA, as to why so many bond funds in a related sector? Two answers are required; in that we currently have several accts holding retirement funds spread among 401k, 403b, traditional and Roth IRA's with each acct having its own choices for various bond sectors. Secondly, if we had all of our retirement monies at Fidelity; we would likely have 3-5 funds invested into a given grouping of bond or equity funds to further enhance the diversification and help eliminate one fund having a bad quarter or year. A prime example of this event, relative to Total bond funds; is Mr. Gross and Co. choosing to sell down the Treasury holdings of PTTRX and missing most of the profits in this area for 2011. While most monthly, quarterly or yearly returns may not vary too much among funds of the same style (bond or equity); this house prefers to spread out the risk a bit more away from management miscues and we'll take the average return of funds within a given sector.
NOTE: I do indicate (just above the funds list, that the funds are listed by "name" type)
2. With regard to your equity fund choices what was the rationale of your picks from a diversification choice and risk?
>>>>>Some of the more pure equity funds are more directed to value vs growth, with notes for the funds below:
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
>>>>> hoping for an equity value increase, while patiently receiving a yield
FRIFX Fidelity Real Estate Income (bond/equity mix)
>>>>> a conservative real estate equity play & the yield from the bond area
FFGCX Fidelity Global Commodity
>>>>> energy, agri, metals equity play related to global demand/inflation
FDLSX Fidelity Select Leisure
>>>>> multi national/global equity play, restaurants, gambling & related (folks are still doing all of these activities)
FSAGX Fidelity Select Precious Metals
>>>>> nervous markets, inflation insurance policy
RNCOX RiverNorth Core Opportunity (bond/equity)
>>>>> a balanced type fund with the equity/bond mix
---Equity-Domestic/Foreign
FDVLX Fidelity Value
>>>>> value equity vs growth in the mid cap area
FSLVX Fidelity Lg. Cap Value
>>>>> value equity vs growth (actually a mistaken purchase...wrong ticker, but we have kept this)
FLPSX Fidelity Low Price Stock
>>>>> value equity? vs growth, noted as mid-cap, but ranges from mega-small (decent track record/management)
MACSX Matthews Asia Growth-Income
>>>>> quality fund for the Asian exposure before the fund closed to new money
3. How did you get the load waved on tegbx?
>>>>>TEGBX is a fund choice within one of our non-Fidelity retirement accts. The internal prospectus for this fund, in this acct. indicates an ER of .80%.
4. Like you my money is heavily into Fidelity funds and they do have my custodial account. I noted that most of your fund choices are Fidelity. Do you choose them because of convenience which it seems or have you compared carefully your choices with other similar non Fidelity Funds and found them to be superior?
>>>>>As noted above, we have several active retirement accts. and most do not have many Fido fund choicesthat we would choose to use; so the Fido funds we hold are via our Fidelity IRA accts. All retirement accts will likely be rolled over into our Fidelity accts. We will then have to spread our fund wings further into other fund families via the 1,000's of other fund family choices at Fidelity. While Fido doesn't have a large list of superior funds; as the competition has increased so much over the years, some funds match well against the competition, and Fido's record keeping and ability for one to perform many internal compares and measurements is excellent.
Since this is a tax deferred account do you use the benefit of upgrading your funds to others doing better when the opportunity presents itself?
>>>>>I would have to answer yes; but we really don't move investments around too much. We were 90% equities prior to June, 2008 and then sold 84% of our portfolio, with the remainder (16%) in Fido Contra and Pimco Total Return bond and the 84% moved into stable value or MM funds. In the late spring of 2009 we moved into HY bonds and some equities/bonds. We missed most of the hugh rallies in equity sectors; as we were still not convinced of the stability of the market place, but we also did not have hugh losses to recover from, as we had a -8% for 2008.
I would have to say that I find it most difficult to always determine which funds may be doing better at some given point. Although a fund manager(s) have a mandate of a fund prospectus, I often wonder how these managers remain to be affected from 2008 and what they also continue to see today. Fido Contra is considered a defensive equity fund; but is Mr. Danoff more defensive now than prior to 2008? My non-scientific guess is that at least 25% of the equity fund managers "think" differently about the investments held in a fund; versus how they felt prior to the 2008 market melt. I also suspect this is part of the market swings the year; as I believe many equity fund managers are "still nervous." The problem lies with which managers may be thinking different these days. One can only imagine the mad scramble considerations to have a winning fund before the end of the year, with only 2 more trading months.
I hope I have covered most of the questions with some success.
Ring my bell, if need be.
Take care,
Catch
2 weeks back, we sold some HY and purchased APOIX; and at the same time used cash to purchase FINPX. We added more to FINPX this past week, from cash holdings.
Below is a look of some of what I follow throughout a day, as time allows; to help provide an overview of which direction monies may be moving in a few bond sectors. As you noted, Treasury/IG related had positive moves today. Many of our bond funds hold IG, Tips and Treasury issues to some extent. The $ was much stronger again today, too; and this placed a bit of downward on the EM bonds.
Any of this (bonds) may flip at some point in the future; but apparently just not now, as money is still too nervous.
JNK 38.97 -0.59%
HYG 89.28 -0.93%
EMB 110.40 -0.19%
LQD 114.70 +0.26%
IEF 103.51 +1.34%
TIP 116.49 +1.03%
LTPZ 64.56 +1.48%
STPZ 53.79 +0.156%
Take care,
Catch
http://www.businessinsider.com/jon-corzine-flies-mf-global-into-a-mountain-2011-11
Essentially, a tale of unbelievable (and very highly leveraged) recklessness - as I've said before, these companies have learned nothing from 2008 and are just as reckless today.
APOLOGIES TO CATCH for inadvertently hijacking your thread. (-:
In calculating the percentages of your funds boat each month do you have a website where you can put in the new values and units of the fund and prices every month and it automatically calculates it to show if you are still in balance. It seems that it would be a very laborious task to do it manually each month.
Burt
At this time, we have 7 retirement accts. 4 of these are at Fidelity, being Traditional and Roth IRA's. The other 3 accts are each at their own web sites.
We calculate the % gain or loss each week for the Fund Boat post.
All accounts web sites give us the total value of each account on a daily basis. On Saturday or Sunday we check each account for its total value and then add all of the totals together for a grand total value; which is used to compare with the grand total value from the previous week ending. Using our handy-dandy HP-12C calculator, we enter the prior week grand total dollars against the new value and this particular calculator has a one button math function to present the % gain or loss.
So, if last weeks ending grand total value was $102,500 and this week's ending grand total value is $103,500, we ma calculate a gain of +.98% for the total of all holdings combined. We also have our starting total dollar value for a new year and use that number to determine our YTD.
We also do this for each account; just to have those numbers.
The vast majority of the bond funds have distributions on the last business day of a month. There are exceptions, as with LSBDX and periodically both bond and equity funds post a captial gain, too. We reinvest all distributions to buy more fund shares and know that whatever the NAV may be for "x" number of fund shares is also part of the final value of a fund reflected in the additional shares.
There are circumstances based upon market moves where we check individual funds for trends going in one direction or the other. For these quick looks, I have been using the "Falcon's Eye" link here for a quick link and look for a closer look at a fund.
So, we don't load into or use an Excel or similar program to download to and/or finalize the numbers.
We have a one page sheet layout that we put together using MS Word, and merely fill in the dollar numbers for each week from the dollar values at the acct web sites and the weekly/YTD % changes as determined from the calculator.
30 minutes maximum to gather the numbers from the sites, do the % math and enter the numbers for current and future reference.
I recall a discussion at FA about downloading one's investment numbers into a program on the home computer; or transferring them to an online program to crunch numbers. You should start a new post about this aspect to find what other folks are doing.
If you have any cash-flows in/out of your funds your calculation should include the effects of these flows. Otherwise, your return calculation is meaningless.
I keep a spreadsheet and enter month end portfolio totals. I also enter the monthly inflow/outflows as well.
Then I calculate the monthly return using the formula:
Return = 100 * (FV - BV - IF) / (BV + 0.5 * IF)
FV = Final Portfolio Value
BV = Beginning Portfolio Value
IF = Net Inflow (additions - withdrawals)
(This formula is a simplified version of modified Dietz where all flows are moved to the middle of the month)
Next the monthly returned are chained to compute YTD as follows:
Rytd = 100 * (((1 + R1 / 100) * (1 + R2 / 100) * ... * (1 + Rn / 100)) - 1)
(Note: If you like you can remove multiplication and division by 100 from above formulas and you will get return as a fraction. eg. 2.5% is 0.025. You can then format the cell in Excel to show as a percentage and Excel will do the multiplication by 100 implicitly)
This is not perfect either but it accounts for cash flows.
Here are some more information on portfolio return calculations:
http://www.dailyvest.com/prr/prr_calcmethods.aspx
Thank you for the info; but don't presume what I did not write. I did not indicate any cash flows; and adjusting for drawdowns will require an adjustment in calculations.
The Funds Boat is all tax sheltered retirement accts and if the math we used in the reply to prinx is faulty; then one may presume a best guess + or - a quarter of a percentage or so. I do not find this to be the case, with the example given.
Your point is a consideration for those doing their own math who do have inflows/outflows to consider.
Take care,
Catch
Anyway, I used this as an opportunity to help participants calculate their portfolio returns more accurately without introducing undue computational complexity. I believe above formulation is simple enough for most people to do on paper, pencil and a simple 4 function calculator.