Reviewing my portfolio, mutual funds have done better than I expected against indexes

slick

So much has been in the financial news lately about index funds and etfs beating mutual funds, so I decided to look at my holdings in Morningstar Portfolio and see how mine have done, I do use etfs and have about 6 individual stocks, but I do have about 2/3 of my retirement portfolio (non retirement portfolio is mostly bonds) in mutual funds. Amazingly, 60% of the funds are beating the S + P, and 78% of them are beating their benchmark. Only 2 of the 32 funds I have missed the mark by 1% or more, but barely. For those that think this is too many funds, I recently cut it back, and got rid of a few that I felt were overkill.

I am very much aware all this could change in a moments notice with the market being so high, but thought I would report my surprise finding for those that think indexes are the only way to go.

rforno

slick said:

I am very much aware all this could change in a moments notice with the market being so high, but thought I would report my surprise finding for those that think indexes are the only way to go.

Good points, and sure, there are some active funds that can beat the index, for sure. (But 32 funds? Isn't that a tad overkill?)

But your point is well taken, and I agree with it. At the risk of throwing red meat at the 'diehards' in the community, there is no one single-absolute-only-best way/vehicle to invest in other than through a process that's based on reason, critical analysis, and due diligence of the investment vehicle, markets, and a person's own tolerances, needs, & goals. What works for one person may not work for someone else, whether it's low-cost indexing, low-cost active funds, decently-priced active funds, individual stocks & bonds, or some mix thereof. (I'm in the latter category, and definitely sleep well at night. But that's what works for me.)

slick

@RForno: The 32 funds are in two seperate retirement portfolios, one a traditional ira the other a roth. The roth is the more aggressive of the two (and larger) since it will be the last to use if at all. Each portfolio does have some commonality of funds and etfs though.

hank

In theory, the index should always win. Unlike a fund, the index incurs 0 expenses.

Not quarelling with the findings above. Certainly some managers do beat indexes. How long any one manager can continue to do it is more problematic. Bill Miller case in point.

The role of selectivity? If you set out to buy funds with a recent history of beating their indexes, it's one thing. (The trend is your friend.) If you start out with a more random selection of funds - and than they all start beating their indexes after being purchased, it's a slightly different matter.

bartab

I wish I had a dollar for every time I read or hear that in the end an index investor will come out ahead. I would be rich, and would keep getting richer.

slick

Bartab have nothing against indexes i have some. But i like managed funds for certain categories and especially intl and global along with small caps and value funds

bartab

I don't have any index funds. I still don't understand the hype. I understand the lower expenses are nice, but that is about it. Portfolios of index funds seem rather lackluster to me. I should add that I am talking more about the lazy type portfolios, as well as the simple Boglehead type portfolios. Picking a correct ratio of indices is the tough part, and I don't think the answer is always in multiples of 10. If it makes it easier to sleep, then that is well worth it then.

dryflower

What time period are you talking about, Slick?

Puddnhead

Hi slick!
Congrats on your portfolio. I saw your post on what you had at M.L. and moved to Fidelity. You had some good stuff there!!
I have said in the last 2 weeks all my holdings are at 52-week highs, but I did not check their benchmarks.....silly me. Why not? I don't know. Anyway, I say that to say this: enjoy the ride! Why? Because it's beautiful. It's what you work for, so.....enjoy! The next longneck is for you.
God bless
the Pudd
p.s. Duke's upset that I don't include him. He's happy for you, too. He says, "Woof!"

slick

Dryflower, this was simply ytd info which normally means squat. Most of my funds do have a record of beating indexes more times than not, some I chose for what they do in down markets (VWINX, TWEIX etc) and some I chose for their aggressive nature (MSEQX, POGRX, ) but they don't always beat their indexes, but I like the way they fit together. My largest holdings are VDIGX and SMGIX, very middle of the road. I was simply showing that funds have their fine moments and I still like having a mix of funds stocks and funds in my stock allocation.