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. 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.....Well, Mr. Patient has more of a smile, so far; this month, this year. Mr. Patient is one of those little characters whom we've seen portrayed as the pro or con perspective resting upon either shoulder, voicing opinions and thoughts. Mr. Twitchy could be named for the other shoulder character. Mr. T is relaxed most of the time, or at least keeps his thoughts to himself. Mr. P and Mr. T generally do offer a balance, related to most things; and in particular, investing and investments. Mr. P is the one with patience, Mr. T. is less patient; but is also the most curious and is the explorer, and therefore discovers more and new items of interest. Mr. P is indeed the named and actual pilot of the investment boat, using the charts and information placed before him. He is generally content with the tried and true safe passage ways upon the investment waters. But, it is Mr. T who offers up thoughts and suggestions about new passage ways and ports of call. As patient as Mr. P may be, he realizes that the ports and safe harbors he is most familiar with and has enjoyed in the past, can change. Mr. T is the one who keeps track of the reports from the other investment pilots as to their perspective of changes in the familiar ports of call; and who also offer up alternative ports of call; to which, the Funds Boat has yet to visit. Mr. T will investigate these reports and offer a navigational passage, to a new port of call. The boat may not stop or stay at a new port; but will at least take a closer look and make some notes for future reference.
Mr. P is a decent boat pilot; and Mr. T is a decent navigator. Both realize that their travels upon the waters of investments are best served and safer when both of their skill sets are combined; as neither could perform both positions as well, on their own. They continue to attempt to find the best passages and ports of call, going forward.
You may find a slight pressure of weight upon each shoulder top from time to time. The pro's and con's friends you have; debating this or that. One may name the "con", as is sometimes referred; the devil's advocate. Although this naming has its own reference to many; it should not be taken as a negative aspect; but as the balancing argument as to setting an investment plan.....the "why should I" or "the convince me".
I have noted a few things below, in the Buy/Sell/Portfolio section.
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
This 1st link to Bloomberg is for their list of balanced funds; although I don't always agree with the placement of fund styles in their categories.
http://www.bloomberg.com/apps/data?Sector=888&pid=invest_mutualfunds&ListBy=YTD&Term=1These next two links are for conservative and moderate fund leaders YTD, per MSN.
http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Symbol=$HF&Category=CAhttp://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Category=MA&Type=&symbol=$HFSuch 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:
NONEA reflection upon the links above; we attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 4 funds we watch for benchmarking are the following:
***Note: these YTD's per M*
VWINX ....YTD = + 1.6%
PRPFX ....YTD = + 5.8%
SIRRX .....YTD = + .8%
HSTRX ....YTD = + 1.1%
None of these 4 are twins to our holdings, but we do watch these as a type of rough guage.
Portfolio Thoughts:Our holdings had a + 1.45 % move this past week. Related to the Mr. P and Mr. T above. Patience has won out so far this year, as is related in particular to LSBDX. This fund's performance in 2011 was a bit on the rocky side; and Mr. Twitchy offered choices for change and to split this fund 4 ways in 2012, forget 2011 and move on into other investments with the proceeds of the sale. LSBDX has performed very well in 2012, to date. The investment positions taken by the managers in 2011 were apparently not incorrect; but as with many other investment areas, continued to be hammered to the downside with the continued unknowns from Europe in particular. Mr. Patient will continue to watch the situations surrounding us; and is assured that Mr. Twitchy will be in place, too; looking at as much as possible, using his curiousity, to perhaps discover something that has been overlooked. To the high praise of MFO and the members, it is very difficult to find a topic to note here that has not been placed into the discussion boards. Excellence, as usual.
---Below is what M* x-ray has attempted to sort for our portfolio---
U.S.Stocks 11%
Foreign Stocks 11.14%
Bonds 70.83% ***
Other 7.03%
Not Classified 0.00%
***about 35% of the bonds are high yield category (equity related cousins)
---This % listing is kinda generic, by fund "name"
-Investment grade bond funds 26.8%
-Diversified bond funds 19.8%
-HY/HI bond funds 23.2%
-Total bond funds 17.8%
-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
I also hold LSBDX (or rather, the retail version LSBRX). I am not sure this fund is doing what I want and the expenses are rather high (even for LSBDX). For tepid 2011 performance I could have just stuck with Pimco Total Return or Metropolitan West Total Return, which also seem to pursuing diversified bond strategies. In fact given how quickly investors were willing to dump Bill Gross, it is disappointing to me that my other bond managers also bet against treasuries with similar results. (Except for VBMFX - hah!)
One question: Given the retirement focus of the portfolio, is inflation a concern and if so, are you also holding gold, commodities, property, etc. or are you solely relying on your TIPS funds for protection? I notice you have a commodity fund and gold fund but those seem to be stock funds and only a small portion of your portfolio. I'm still far from retirement but I am interested to see what an overall conservative/retirement strategy looks like.
Another thing I have been wondering (and my apologies if this has been asked and answered before): why so many different funds? For the diversified/total return bond funds, I can understand a little, perhaps these managers all use different strategies and you want to diversify among them. But presumably (I have not checked) the investment bond funds are not that dissimilar from each other, so why 5 of them? I'm thinking maybe they are left over from various retirement plans, but surely you have an opportunity to consolidate/reorganize them at some point?
Also with the equity funds, I can understand that they are all different sectors/strategies, but this is a very small part of your portfolio and it looks like you basically have about 1% in each fund. Completely hypothetically, if the total portfolio was around $5 million (which would be nice!), then 1% would be $50k. In that scenario, a 20% rally in a particular sector would get you a $10k upside -- it's not pocket change, but seems rather insignificant considering the bonds should be yielding maybe $100k-200k a year in interest alone.
Alternatively, why not give the whole 8% equity allocation to one or two crazy market gamblers. Then a 20%+ swing would seem a little more interesting.
I'm curious about this because I have been trying to actively trying to reduce the number of funds I hold. Granted I'm far from retirement so my portfolio is quite small, but I don't plan to invest less than say 5% in any single fund on the theory that any risk/reward will not be worthwhile.
Is there a rationale for this? Or maybe it is just for fun?
You noted:
I noticed that you don't always get responses to your weekly posts, so I just wanted to mention that I always read and greatly appreciate these updates, even if I do not always comment on them.
>>>>>Every once in awhile someone will make a comment or ask a question. I presume "x" number of folks at least take a peek from curiousity. I am pleased to know there may some value with at least a few of the words or thoughts. I can't ask for more than that.
I also hold LSBDX (or rather, the retail version LSBRX). I am not sure this fund is doing what I want and the expenses are rather high (even for LSBDX). For tepid 2011 performance I could have just stuck with Pimco Total Return or Metropolitan West Total Return, which also seem to pursuing diversified bond strategies. In fact given how quickly investors were willing to dump Bill Gross, it is disappointing to me that my other bond managers also bet against treasuries with similar results. (Except for VBMFX - hah!)
>>>>>Many professional investment managers missed targets in 2011. Our house is not displeased with LSBDX; but were surprised with it and PTTRX , as to the returns in 2011. On more than one occasion, I would look at the pc screen and ask (when viewing the current return); what is going on here, into what are you invested? We'll stick with both of them for the time being; as it is not clear where else to move any monies that suit our current risk and reward.
One question: Given the retirement focus of the portfolio, is inflation a concern and if so, are you also holding gold, commodities, property, etc. or are you solely relying on your TIPS funds for protection? I notice you have a commodity fund and gold fund but those seem to be stock funds and only a small portion of your portfolio. I'm still far from retirement but I am interested to see what an overall conservative/retirement strategy looks like.
>>>>>Inflation and mandatory withdrawal amounts after age 70.5 that will be taxed as ordinary income; excluding the Roth IRA's. Both are and should be concerns, eh? I will say that the overall/total return of the portfolio is the attempt to stay ahead of inflation; not just relying upon what are noted to be traditional inflation fighters. A properly positioned equity portfolio may be able to stay at pace or ahead of inflation, too. Although TIPS funds imply an inflation tool; at least for current yield, there isn't much value. The value is in the pricing at this time from money flows into this area; not unlike many other bond sectors. This momentum will last until the sellers step in, to out number the buyers; and the pricing retreats. Something all of us attempt to monitor for all areas of funds.
One theoretical, and in my opinion; a true advantage to U.S. debt, be they TIPS or other and also higher quality corporate debt; is that this area is very large as to total value and very liquid. One is not likely to get trapped too fast with a move in the negative direction, if the "tea leaves" are being monitored.
Another thing I have been wondering (and my apologies if this has been asked and answered before): why so many different funds? For the diversified/total return bond funds, I can understand a little, perhaps these managers all use different strategies and you want to diversify among them. But presumably (I have not checked) the investment bond funds are not that dissimilar from each other, so why 5 of them? I'm thinking maybe they are left over from various retirement plans, but surely you have an opportunity to consolidate/reorganize them at some point?
>>>>>The different bond funds in similar sectors are because of several different retirement accts., which likely will be consolidated in another year. As to the premise of holding 3-5 funds in a sector that you favor; I do not find this to be a problem. One gets the benefit of a particular fund having problems being in the right place at the right time; and being supported by the other similar funds If that given sector is moving up or down, all similar funds may track in a similar fashion to allow one to make a better decision about pulling some monies for profits or starting to unload going in the other direction. As is the case with so many funds today, is trying to determinet "what is in a name"? Not unlike 3 of our bond funds LSBDX PTTRX and FTBFX . Two of them are named "total" and Loomis is likely as multi-sector as the other two. The winner in 2011 was FTBFX. So, from these 3 was received a blended return, with one better performer supported the other two. That could change this year again. The two TIPS funds we hold are not pure twins, except that they both are oriented towards TIPS. But the performance does vary based on some other holdings and/or the duration of the holdings and the skills of management. One may find a fairly large variance both on a daily and weekly basis for the following: STPZ TIP LTPZ .
Even with consolidation of all of the retirement portfolios to one vendor, I suspect we will maintain a 3-5 fund holding in a given sector be it equity or bond; and go for the blended return.
Also with the equity funds, I can understand that they are all different sectors/strategies, but this is a very small part of your portfolio and it looks like you basically have about 1% in each fund. Completely hypothetically, if the total portfolio was around $5 million (which would be nice!), then 1% would be $50k. In that scenario, a 20% rally in a particular sector would get you a $10k upside -- it's not pocket change, but seems rather insignificant considering the bonds should be yielding maybe $100k-200k a year in interest alone.
>>>>>Yes, currently the equity portion of the portfolio is not a large percentage. Smilingly, I will say that Our House has been awaiting, for more than two years upon the House of Europe, for clarification of an political/economic direction.
---Below is what M* x-ray has attempted to sort for our portfolio:
U.S.Stocks 11%
Foreign Stocks 11.14%
Bonds 70.83% ***
Other 7.03%
Not Classified 0.00%
***about 35% of the bonds are high yield category (equity related cousins)
I do believe I will adjust and note this M* data again in the weekly report; as it provides a better overview of the holdings.
Alternatively, why not give the whole 8% equity allocation to one or two crazy market gamblers. Then a 20%+ swing would seem a little more interesting.
>>>>>As most of the equity holdings are correlated; they do tend to move up or down together; not unlike the HY bond funds. The majority of the equity funds are U.S. oriented (M* thinks otherwise) at this time; among LC growth down through small caps. The Fido Leisure fund offers exposure to consumers...McD's, Yum Brands, Darden, casinos, etc. These areas are still expanding globally and old habits (fast food and restaurants) are hard to break. FSAGX and FFGCX lend towards the metals, energy and agriculture equities. As you note, we do not have any investments at this time that are directed towards the likes of GLD or SLV . We will rely upon the equity positions at this time, for precious metals exposure. Some of the other equity funds are mixed with their bond positions, and also offer a decent yield. Even the FAGIX fund, which is listed as a HY bond fund, maintains about 20% towards the equity sectors. Our smallest equity position is the Asian area with MACSX.
I'm curious about this because I have been trying to actively trying to reduce the number of funds I hold. Granted I'm far from retirement so my portfolio is quite small, but I don't plan to invest less than say 5% in any single fund on the theory that any risk/reward will not be worthwhile.
>>>>>Too many funds to monitor may present a problem; although less so today, with our handy-dandy computers. This is an individual choice. Less than 5% per fund is a reseasonable consideration. Part of this decision is involved with types of retirement accounts. One 401k plan I am familiar with has used both Vanguard and Fidelity as the vendors. Both very good vendor choices, but the company did not open up the plan to very many investments; and of course, dollar cost averaging into the fund choices all begin with much less than 5%.
As a side note to employer retirement plans; I did battle with the employer for 10 years to greatly expand the investment choices, The HR folks knew my name well. The agrument being that our job description (15,000 employees) indicates that we are responsible for managing and making smart business decisions each and every day; and yet you (HR) will not allow the employee to also be use their skills with a wide open investment plan. This is even more critical today with the demise of a defined benefit retirement plan; leaving the plan upon the back of the employee with a defined contribution 401k plan. The plan has since opened to more choices; but is still a very poor offering.
Is there a rationale for this? Or maybe it is just for fun?
>>>>>Hopefully, I have offered some rationale to our mish-mash of holdings.
Lastly, our house is at the sunset of our traditional work careers. This places even more emphasis upon our investing skills, to maintain what we have built to date. You and many others here at MFO find yourselves at a most wonderful place; being this site, to help build your investments going forward, too. While there are 1,000's of sites from which to gather other data and comments, be most assured that we are all at one of the best sites for fund discussions. In particular, the civil nature of exchanges related to all of our investments and thoughts.
I may have missed something.......don't hesitate to let me know.
Thank you for your excellent questions and thoughts.
Regards,
Catch
I look forward to and enjoy reading your commentaries, and I would never acuse you of being Mr Twitchy.