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The chart seems to be worth posting as a point of conversation so I took the liberty of adding it below.
Dodge & Cox seems to be in an enviable position of size (slightly smaller and possibly more nimble), lower fees, and number of high quality funds. I have never owned any of their funds, but would like to ask the opinion of others that do.The chart seems to say the same for American Funds.
Also, I see T. Rowe Price as an interesting fund company. Their funds carry reasonable fees and perform well. Does anyone own TROW as a stock holding? Is TROW a concentrated holder of any TRP funds? Are TRP's fund managers restricted from owning TROW in their funds?
Columbia Funds seems to get a bum wrap on the chart. Their "Z" shares are reasonable priced and available in some of their more successful funds.
That's a pretty cool chart! I sometimes worry because TRP (where I invest) seems to be perpetually cranking out new funds - some very similar in nature. But looking at these "balloons" I think I understand why. They're struggling to stay large (and competitive) among some real giants.
Maybe I missed something. But to state "The best firms ... are American and Dodge and Cox" strikes me as somewhat presumptuous. For sure, D&C (where I have a little) has a lot to recommend it. They have some of the lowest ERs among the active managers. They're a privately held held firm. And have a great long-term record.
The one thing I'd caution against is that tit-for-tat I think you'll find their equity and balanced funds are a bit more volatile than those of many peers. Don't know if this is (1) just part of their investment culture or (2) whether perhaps the mamouth size of their funds necessitates they stay pretty much fully invested in larger cap stocks and assume a longer-term time horizon. Probably both.
@bee - If you missed it, there's some discussion of DODGX in @Ted's: "M*: 10 Funds That Beat the Market Over 15 Years" thread.
I don't tend to post much with respect to our actual investment funds, because of the perception at MFO that American Funds is a almost a pariah because of their front loads. We may be somewhat of an exception on that, as we haven't been subject to those "A" share loads for almost forty years now.
The ER at American is among the lowest, and the management style, with no emphasis on so-called "stars", suits us just fine. As the chart shows, American is just below Vanguard with respect to ER. If your investment at American is long-term, that ongoing low ER will eventually offset the load if you do have to pay it.
We keep about half of our investments at American, about one quarter at American Century, and the other quarter mostly at Schwab, where we take positions mostly based on information gleaned here at MFO. That Schwab bunch is certainly the most interesting to deal with, if not always fun to watch.
Thanks OJ. That's the part of the picture I was missing. Didn't see those labels along the chart's edges (which don't show up very well on a 5 year old iPad). Was wondering how they arrived at the conclusion that 2 particular fund houses were "the best." Perfectly clear now.
I've heard only positive things about American Funds. In fact, I referenced a very positive Barron's write up on American Funds perhaps 2-3 months back in one of my posts (but couldn't dig it up tonight).
Busy packing for a few quality days down in the Keys next week. Biggest fear now is that I'll get in some kind of altercation with a flight attendant and end up leading-off the evening news.
@hank: Yesterday I flew from Richmond to Atlanta. My wife was in row behind me and the guy next to her moved. She suggested I move back to join her and I did. Within a couple of minutes the attendant made me move back saying "seats are assigned," and the Captain forbade moving. I complied fearing getting dragged off. Cattle must stay in their chutes...
For the mathematically inclined, the graph is not of two variables (fees and size), but of three - risk adjusted performance (stars) on the x-axis, fees on the y-axis, and size on the z-axis (projected into 2D space by mapping size into dot radius).
Also, it's not clear whether the x and y (stars and fees) are asset weighted. One would hope so given the suggestive title of the graph (largest fund companies by assets), but I suspect these are unweighted values.
In addition, when M* talks about a share class being above or below average in expenses, it usually it talking about average for that type of share. So A shares will be compared against front end load shares from other funds, but not against typically lower cost investor/noload shares.
While I agree with Hank and OJ that American Funds performs well at low cost, this "peer ranking" by share class may have distorted AF (and other load fund families). It may have made them appear somewhat cheaper relatively speaking than they deserve.
A picture may be worth a thousand words, but sometimes you need those thousand words to know what the picture represents.
Comments
The chart seems to be worth posting as a point of conversation so I took the liberty of adding it below.
Dodge & Cox seems to be in an enviable position of size (slightly smaller and possibly more nimble), lower fees, and number of high quality funds. I have never owned any of their funds, but would like to ask the opinion of others that do.The chart seems to say the same for American Funds.
Also, I see T. Rowe Price as an interesting fund company. Their funds carry reasonable fees and perform well. Does anyone own TROW as a stock holding? Is TROW a concentrated holder of any TRP funds? Are TRP's fund managers restricted from owning TROW in their funds?
Columbia Funds seems to get a bum wrap on the chart. Their "Z" shares are reasonable priced and available in some of their more successful funds.
Here's the chart from your Article:
Maybe I missed something. But to state "The best firms ... are American and Dodge and Cox" strikes me as somewhat presumptuous. For sure, D&C (where I have a little) has a lot to recommend it. They have some of the lowest ERs among the active managers. They're a privately held held firm. And have a great long-term record.
The one thing I'd caution against is that tit-for-tat I think you'll find their equity and balanced funds are a bit more volatile than those of many peers. Don't know if this is (1) just part of their investment culture or (2) whether perhaps the mamouth size of their funds necessitates they stay pretty much fully invested in larger cap stocks and assume a longer-term time horizon. Probably both.
@bee - If you missed it, there's some discussion of DODGX in @Ted's: "M*: 10 Funds That Beat the Market Over 15 Years" thread.
Regards
The ER at American is among the lowest, and the management style, with no emphasis on so-called "stars", suits us just fine. As the chart shows, American is just below Vanguard with respect to ER. If your investment at American is long-term, that ongoing low ER will eventually offset the load if you do have to pay it.
We keep about half of our investments at American, about one quarter at American Century, and the other quarter mostly at Schwab, where we take positions mostly based on information gleaned here at MFO. That Schwab bunch is certainly the most interesting to deal with, if not always fun to watch.
Thanks OJ. That's the part of the picture I was missing. Didn't see those labels along the chart's edges (which don't show up very well on a 5 year old iPad). Was wondering how they arrived at the conclusion that 2 particular fund houses were "the best." Perfectly clear now.
I've heard only positive things about American Funds. In fact, I referenced a very positive Barron's write up on American Funds perhaps 2-3 months back in one of my posts (but couldn't dig it up tonight).
Busy packing for a few quality days down in the Keys next week. Biggest fear now is that I'll get in some kind of altercation with a flight attendant and end up leading-off the evening news.
Regards
@Hank- Please try to keep your shirt pulled down properly as they drag you off the plane.
OJ
Also, it's not clear whether the x and y (stars and fees) are asset weighted. One would hope so given the suggestive title of the graph (largest fund companies by assets), but I suspect these are unweighted values.
In addition, when M* talks about a share class being above or below average in expenses, it usually it talking about average for that type of share. So A shares will be compared against front end load shares from other funds, but not against typically lower cost investor/noload shares.
While I agree with Hank and OJ that American Funds performs well at low cost, this "peer ranking" by share class may have distorted AF (and other load fund families). It may have made them appear somewhat cheaper relatively speaking than they deserve.
A picture may be worth a thousand words, but sometimes you need those thousand words to know what the picture represents.
Still, a pretty (and pretty informative) picture.