Thank you, David, for your Oct 2014 profile of Sarofim Equity - SRFMX.
Link:
http://www.mutualfundobserver.com/2014/10/sarofim-equity-srfmx-october-2014/What do those who share David's enthusiasm for Sarofim, and Sarofim's enthusiasm for
Quality Stocks, as identified by the S&P High Quality Index [1], think about the Powershares exchange traded fund, SPHQ ?
Also - the E.R. on SPHQ is currently 29 bps.
[1] Links with info on Quality Stocks and ETF:
[2] Note: There is a similar document on the Dreyfus site:
Comments
I don't profess to any particular insight on SPHQ nor any great passion for SRFMX. My argument for SRFMX comes down to this: "many folks found DGAGX's ultra-low turnover approach to ultra-large cap stocks attractive. It does, over time, work and SRFMX is a cheaper way to play."
In general, turnover is the enemy of a large cap portfolio. One of my favorite funds remains the Corporate Leaders Trust (LEXCX) with an annual turnover of zero. Also a decennial turnover of zero and coming up on a centennial turnover of zero.
As I overlap the charts for the three funds, LEXCX has been skipping right along. DGAGX and SPHQ end up in the same place, roughly, but SPHQ bounces a bit more. While it has a shorter lifespan, if I were an ETF investor I might look at the Morningstar Market Vectors Wide Moat ETF (MOAT). 1% turnover, modestly better returns than SPHQ though about 20 bps more expensive.
For what that's worth,
David
Thanks for comment and suggestions.
Portfolio Visualizer ("PV"): http://tinyurl.com/dg-vd-sp-wm-lex
I would not have thought of either MOAT or LEXCX in this context.
In the "don't try this at home" department, putting on my "factor investor" beanie...
Looking (FWIW) at the funds mentioned, plus what I had thought was my "go to" option for quality (VDIGX), and running them through the Portfolio Visualizer factor-analysis tool since SPHQ converted to current index (and using the WMW ETN in lieu of the MOAT ETF, since the ETN has longer history than ETF)....
After expanding PV link above to see the stats re: significance....
DGAGX has negative significant size load, along 3rd highest high quality factor.
VDIGX appears to be the strongest quality 'play'.
SPHQ closely follows VDIGX in its quality load.
MOAT (nee WMW) appears to be 'only' market play, with a pretty poor fitting regression and lots of alpha - must be a slug of 'moatness'.
LEXCX is 'mainly' a market & value play (as opposed to quality, FWIW), having beaten pants off of the others except WMW recently, with high alpha.
Now craning my neck to look (again) out back, I see:
SYMBOL.....DGAGX......VDIGX.......SPHQ.......WMW.......LEXCX
3Y TR *......14.51%......18.31%......19.73%....23.18%....20.49%
RANK.........5.................4................3..............1..............2
* Annualized, Source FT.com
Note: FT Fund comparison: http://funds.ft.com/us/Fund-Comparison
Full disclosure, I have dogs in this hunt, having bought some SPHQ earlier this year, liking the ETF efficiency, expense, diversity and 'story' of SPHQ, versus relatively concentrated WMW or other choices - but have owned VDIGX since forever.
PS: Falling for the fracking fairy tale, also figure that the high industrial weight of SPHQ should do just fine, as our energy gulping economy learns to sneer "Saudi Aray-be who"?
Finally, I wonder if turnover, when fishing in the large cap space, is somewhat over-rated as an attribute. Think (really guessing) that the ETF tax efficiency outweighs the market impact penalty, when comparing a fund to an ETF.