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Greenspring (GRSPX) and James Balanced: Golden Rainbow (GLRBX)
i own both funds and i am not pleased with performance. would like some opinions on keeping them or replacing them with better funds. please note i am risk adverse.
They are both pretty good conservative style balanced funds. I know GRSPX uses small cap stocks on the equity side so that may be hindering it's short term performance. Small stocks have not done as well as large cap over the last year. A quick look in M* shows GLRBX is a similar fund using smaller stocks and uses a lot of conservative treasuries on the bond side.
I guess it all depends on why you have them in your portfolio. What were your expectations when you bought them? They will hold up better then most in bear markets but aren't going to be high fliers in bull markets either. They are meant to do well through longer term market cycles - buy and hold.
Keep, sell, that's up to you. They are similar type funds and both have shown to be good conservative long term holding. Their style may just be out of favor right now. You say you are risk adverse, so these are your type of funds. If you like balanced funds, maybe you could trade one of them for a large cap balanced fund for more diversity, OAKBX, FPACX.
I just sold my position in GRSPX yesterday. It has been lagging for several years and with small/md cap stocks doing pretty well during that time. Like Mike said, it does do well in downturns. It could be that the manager shifted towards larger names ( cisco ) and they've done poorly too. That money purchased more shares of JPVTX. It can also invest in small/mid cap names.. but the Perkins group has much better research with international investing. I also like that the fund pays out every month. Perkins picks the stocks and Janus the bonds - I like the idea.
Given the long term record of JABAX ( Janus balanced ) I can't see anything but good from this newer fund. Perkins is one fine value shop that has some very good small and mid cap funds. I already own OAKBX, and FPACX.
"Legend has it that Albert Einstein once called compound interest the most powerful force in the universe. To that end, compound investment returns can be just as powerful, with one additional important requisite: consistency. For an investment to fully capitalize on its compounding potential, it must preserve capital during down periods, thus allowing future portfolio returns to build upon previous results. An inconsistent investment (that is, one with a pattern of sharp gains and steep losses) is always battling to get back to “even” and is challenged to produce a long-term positive return."
I'm curious about your relative praise for Perkins vis a vis Greenspring. Like Greenspring, their small and mid cap value funds have had an abysmal time over the past three years. JMCVX (mid cap T shares) ranks 94th percentile over the past three years, while JSCVX (small cap T shares) did only slightly better, at 90th percentile.
The Perkins paper you link to could provide an explanation - Perkins acknowledges that they go after "high quality" stocks, and from mid 2009 to mid 2011 (and presumably since, as the market has continued to rise) "low quality" stocks outperformed "high quality" 121% to 80% (p. 7). What Perkins says you're buying with them is overall outperformance through the entire market cycle. And that seems to agree with what Mike (and you) are saying about Greenspring - that it will outperform in the remainder of the cycle.
I'm not saying both are good or both are bad; I'm just asking how they differ. What's always intrigued me about Greenspring is not their equity sleeve but their fixed income portfolio, with its penchant for busted convertibles.
"I'm not saying both are good or both are bad; I'm just asking how they differ."
I think both are good long term funds. However, I believe the difference is with the bond and international expertise. Another benefit with the Perkins fund is that the dividends are compounded monthly. Over time that alone adds great value. With me having such large positions with one man shows ( OAKBX, FPACX ) I decided one team run fund couldn't hurt. And the Lord knows I have enough straight small/mid cap funds already.
It should also be said that 'balanced funds' are usually held by investors for their ease of use. With the Perkins fund you get one hell of a bond team ( the same folks that manage JAFIX ) and you get a very good value shop. If the OP is searching for some conservative small cap funds ( since ARIVX is closed ) he could always look into ICMAX.
Thanks. I see your point about how people use balanced funds, and in that sense the Perkins fund is clearly more diversified. It has a healthy dose of international equity, which I like (even though international is currently out of favor).
On the bond side, these are very different funds (so my question had to do more with the equity portion). What Greenspring does with fixed income is fill out an often void portion of people's portfolios (convertibles). Not at all providing an "all in one" bond sleeve as most people expect from a balanced fund, and what the Perkins fund does.
Greenspring has the flexibility to increase or decrease that portion of its portfolio, unlike a pure convertibles fund. So it can be viewed as a way of dabbling in convertibles, while letting the manager deal with the allocations (i.e. you still get a benefit of being a balanced fund).
With regard to monthly dividends and compounding, you may be thinking of cash drag inherent in unit investment trusts (like SPY). UITs cannot reinvest earnings, so they hold the cash and distribute it to investors periodically - monthly, quarterly, etc. It's only when the investors themselves reinvest (by buying more shares) that the cash earnings get put to use.
But the vast majority of ETFs, and all open end mutual funds AFAIK put the cash earnings to use immediately. When it comes time to distribute dividends (monthly, quarterly, etc.) they can either raise cash (e.g. by selling holdings) or gradually build cash in anticipation of the distribution. And realistically, much of the distribution gets immediately reinvested, lessening the actual need for cash. (I'm not certain of that last part.)
So I don't think that monthly vs. quarterly distributions has much of an effect on compounding of investment returns. The virtue of monthly distributions is IMHO primarily for those who are not reinvesting (retirees, etc.)
Reply to @Ted: It seems that much of the relative difference is due to Villere being a growth oriented fund vs. the value leanings of the other funds. As I posted in another thread, on average, over decades, growth and value do about the same, and it's been several years since value had its day in the sun.
I haven't looked further into Villere, but that's a difference that pops out immediately. It would take a closer look at the figures and portfolios to make some guess as to whether there are other factors at work as well.
Comments
I guess it all depends on why you have them in your portfolio. What were your expectations when you bought them? They will hold up better then most in bear markets but aren't going to be high fliers in bull markets either. They are meant to do well through longer term market cycles - buy and hold.
Keep, sell, that's up to you. They are similar type funds and both have shown to be good conservative long term holding. Their style may just be out of favor right now. You say you are risk adverse, so these are your type of funds. If you like balanced funds, maybe you could trade one of them for a large cap balanced fund for more diversity, OAKBX, FPACX.
Given the long term record of JABAX ( Janus balanced ) I can't see anything but good from this newer fund. Perkins is one fine value shop that has some very good small and mid cap funds. I already own OAKBX, and FPACX.
"Legend has it that Albert Einstein once called compound
interest the most powerful force in the universe. To that end,
compound investment returns can be just as powerful, with one
additional important requisite: consistency. For an investment to fully capitalize on its compounding potential, it must preserve capital during down periods, thus allowing future portfolio returns to build upon previous results. An inconsistent
investment (that is, one with a pattern of sharp gains and
steep losses) is always battling to get back to “even” and is
challenged to produce a long-term positive return."
https://ww3.perkinsinvestmentmanagement.com/perkins_siteobjects/published/B290ADC8822C8C1B07D8AC1A5B08858B/976BEE2FA8EF453D69E6460A08D37A0D/pdf/Perkins Quality Whitepaper_JCG exp 12-30-12.pdf
The Perkins paper you link to could provide an explanation - Perkins acknowledges that they go after "high quality" stocks, and from mid 2009 to mid 2011 (and presumably since, as the market has continued to rise) "low quality" stocks outperformed "high quality" 121% to 80% (p. 7). What Perkins says you're buying with them is overall outperformance through the entire market cycle. And that seems to agree with what Mike (and you) are saying about Greenspring - that it will outperform in the remainder of the cycle.
I'm not saying both are good or both are bad; I'm just asking how they differ. What's always intrigued me about Greenspring is not their equity sleeve but their fixed income portfolio, with its penchant for busted convertibles.
Regards,
Ted
http://online.barrons.com/article/SB50001424053111904317504577488611186126048.html?mod=BOL_funds_highlight#printMode
Villere vs. Greenspring-James Balanced Golden Rainbow Returns:
http://www.marketwatch.com/tools/mutual-fund/compare?Tickers=VILLX+GRSPX+GLRBX&Compare=Returns
I think both are good long term funds. However, I believe the difference is with the bond and international expertise. Another benefit with the Perkins fund is that the dividends are compounded monthly. Over time that alone adds great value. With me having such large positions with one man shows ( OAKBX, FPACX ) I decided one team run fund couldn't hurt. And the Lord knows I have enough straight small/mid cap funds already.
It should also be said that 'balanced funds' are usually held by investors for their ease of use. With the Perkins fund you get one hell of a bond team ( the same folks that manage JAFIX ) and you get a very good value shop. If the OP is searching for some conservative small cap funds ( since ARIVX is closed ) he could always look into ICMAX.
On the bond side, these are very different funds (so my question had to do more with the equity portion). What Greenspring does with fixed income is fill out an often void portion of people's portfolios (convertibles). Not at all providing an "all in one" bond sleeve as most people expect from a balanced fund, and what the Perkins fund does.
Greenspring has the flexibility to increase or decrease that portion of its portfolio, unlike a pure convertibles fund. So it can be viewed as a way of dabbling in convertibles, while letting the manager deal with the allocations (i.e. you still get a benefit of being a balanced fund).
[Here's a recent article on convertibles, including sections on busted convertibles:
https://news.fidelity.com/news/article.jhtml?guid=/FidelityNewsPage/pages/fidelity-3-ways-to-convert-to-higher-income&topic=investing]
With regard to monthly dividends and compounding, you may be thinking of cash drag inherent in unit investment trusts (like SPY). UITs cannot reinvest earnings, so they hold the cash and distribute it to investors periodically - monthly, quarterly, etc. It's only when the investors themselves reinvest (by buying more shares) that the cash earnings get put to use.
But the vast majority of ETFs, and all open end mutual funds AFAIK put the cash earnings to use immediately. When it comes time to distribute dividends (monthly, quarterly, etc.) they can either raise cash (e.g. by selling holdings) or gradually build cash in anticipation of the distribution. And realistically, much of the distribution gets immediately reinvested, lessening the actual need for cash. (I'm not certain of that last part.)
So I don't think that monthly vs. quarterly distributions has much of an effect on compounding of investment returns. The virtue of monthly distributions is IMHO primarily for those who are not reinvesting (retirees, etc.)
It seems that much of the relative difference is due to Villere being a growth oriented fund vs. the value leanings of the other funds. As I posted in another thread, on average, over decades, growth and value do about the same, and it's been several years since value had its day in the sun.
I haven't looked further into Villere, but that's a difference that pops out immediately. It would take a closer look at the figures and portfolios to make some guess as to whether there are other factors at work as well.