Portfolio review for a 30 year old

bee

Got a note today from a friend who's son is recently changed jobs after 8+ years and is looking at rolling over his 401k to a new employer's 401k plan. He's been given the following recommendation of funds and percentage allocations. I told him that it might be worth sending it through the "MFO carwash".

Any thoughts would be much appreciated from the point of view of fund choices (individually) and from the perspective of overall portfolio construction. Here's the suggestions he received:

JVASX - 21%
MFEIX - 21%
GOGIX - 16%
HFMIX - 8%
JVMIX - 8%
PONPX - 8%
PVSYX - 8%
MLPOX - 5%
HIEMX - 5%

Thanks in advance.

Mark

Just wondering why they use PONPX instead of PIMIX. Same fund, same minimum, different ER (0.55% vs. 0.45%)? Also, depending on how he feels about the MLP sector I might be inclined to split or swap MLPOX for something in the REIT sector. I know, heresy for someone as deep in energy as I am but I hold lots of REIT stuff as well.

davidrmoran

Too much. Consolidate each area into the best-rated single fund, and ditch Pimco and anything else other than equities.

PopTart

@davidrmoran +1

Mark

@davidrmoran & @PopTart - it's been awhile since I've washed my MF car so humor me please. Why do you say it's too much?

According to Bee's list he has LG, LV, Int'l, 2-MidCap's, 2-bond funds and an emerging market fund. I can understand combining the midcaps and possibly the LC G&V. Maybe all of them fit together in an index (total market) of some sort. OK, so now we've combined 4 for 1. Next, maybe you are of the opinion(s) that investing outside of the US is a waste of time. You also might be thinking that a 30-yr old has no need for bond funds although I think that at least 10% of an all equity portfolio would be prudent (so I'd keep the Pimco offering). Am I on the right track here?

jerry

I agree that there are probably too many funds.If index funds are available with reasonable expense ratios I would compare the performance of the total stock market fund to the suggested portfolio reflecting the weightings. I suspect that he total market fund will outperform . I think a reasonable portfolio fora 30 year old would be 75% us stocks 5% emerging market, 10% developed market and 10% bonds. After a market rise for 8 years it seems piggish to not have a source of funds like a bond fund to rebalance after a significant decline

davidrmoran

I am sure you are on the right track, being so thoughtful, but an implication of your query is how would some of us do it, and some of us would do zero non-equity, LC 1, MC and SC 1 or maybe 2, EM 1 sure, then call it a day. What I would do and have done, including w my kids. I do not know what your choices are.

Mark

To be honest with you I don't know how I would do a MF portfolio these days as the 5 I hold add up to less than 6% of my total portfolio. That's kinda why I asked those that do. And up until a few years ago I also held no bond or bond type funds but I am currently ridiculously long in two bond CEF's, PDI & PCI. What Ivascyn has done and is doing is hard to ignore. Thank you for some clarity.

Ted

@bee: KISS, the S&P 500, QQQ or technology fund, and a health care fund. Someone at the age of 30 doesn't need an allocation to bonds.
Regards,
Ted

bee

Thanks so far...

A REIT investment seems like a reasonable substitute for the MLP option. I have also wondered if funds like GASFX, GLFOX or a equal split of Vanguard etfs: (VPU/VNQ/VDE/VIS) would offer more diversification than an MLP investment.

I back tested MLPOX against an equal weight portfolio of (VPU/VNQ/VDE/VIS). MLPOX had a recent serious drawdown (41%) that an investor would need to expect from time to time while the combined investment of (VPU/VNQ/VDE/VIS) only a third as severe.

Gary

I have reservations about turning funds over to a new retirement fund manager. I would think it would be more advantageous to put into a personal IRA and manage independent of a new 401K. Just saying!!!

Gary

[Deleted User]

The user and all related content has been deleted.

davidrmoran

Sorry, maybe I missed it, but is there a match? If not, consider not participating, them put amap into a Roth (up to 6k now or something) and into DSENX.

bee

I invited him to read the thread (we welcome newbies)...I'll see if there are any follow up questions. Thanks again...I continue to follow @Ted's advice.

MikeM

@bee, I agree with your assessment of @Ted 's comment, keep it simple. I wish I would have done that many years ago and kept the faith. Sometimes here at MFO I think we, and I'll include myself, want to build a fantasy football team (or fantasy-fund manager team might be a better analogy) collecting all the best funds we can muster when a few simple index funds, especially at 30, would beat any fantasy team over the long haul.

Congrats to you bee for helping a friend and also to your friend for looking for advice.

davidrmoran

oh, clearly this has often been a fantasy-fund site

bee

davidrmoran said:

oh, clearly this has often been a fantasy-fund site

I tend to relate John Bogle's concepts of Indexing to that of Henry Ford and the automobile.

"You can have it (a Ford Model T) in any color you want, so long as that color is black"

and,

"I will build a motor car for the great multitude. It will be large enough for the family but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one - and enjoy with his family the blessing of hours of pleasure in God’s great open spaces."
-Henry Ford