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Your Choice: One Mutual Fund to Hold For the Next 10-15 Years
It's not a bad choice but he dismissed a lot of possibilities without much consideration. It sounds like he started with the answer and needed to write a 300 word article (or whatever it is) to get there. If you've got 15 years then Schiller's CAPE ratio is pretty much the best predictor that's been found and that wouldn't really lead you to US stocks at this point.
Terrible choices in that article if you ask me. If it was just one fund it would probably be best to choose a go-anywhere fund--world allocation--that has the flexibility to buy different kinds of asset classes, stocks and bonds. Who's to say that U.S. small caps or mid caps won't dramatically underperform in the next fifteen years?
I love dumb assignments like this. If I had to do just one and was forbidden from DSE_X, maybe FLPSX, which satisfies some of the criteria here. Non-US pluses may be true now and going forward, although DLEUX sure has not outperformed yet. Non-US would not be my sole focus or holding, though, regardless. Actually, maybe QQQ or FSPTX, taking my cue from Edelman and Ted .
@ MFO Members: For those of you who go back to the Fundalarm days , Roy Weitz ask me what was the single best investment I ever made ? The answer was simple and is still true today, Fidelity Magellan. I invested in Magellan in the spring of 1972 and cashed out in October of 1996. Thank you, Dick Habermann, PETER LYNCH, Morris Smith, and Jeff Vinik. Regards, Ted
Maybe its me, but I am an allocation guy when it come to paring down choices.
My H.S.A (@ Bruce Funds) will be BRUFX My Roth IRA (@ TRP) will be PRWCX My SD IRA (@Vanguard) will be VWINX or maybe even Global Wellesley, VGWIX My Taxable account will be VTMFX
A 10-15 Year Trend Funds: Health Care - PRHCX, VGHCX, FSMEX Tech - PRGTX, FSITX, Consumerism - FSRPX
If I was focused only on domestic and even if I wasn't I'd at least think hard about POAGX. I don't like nothing but the US but if I had to bet which funds of the ones I currently own that I'd still own 15 years from now that would be my bet.
I like the idea of go anywhere, do anything flexibility but there's just not many, if any, that I'd really trust with that. Since we wouldn't be able to know anything about the ups and downs along the way I wouldn't have a big issue with sticking to stocks and I'd probably go for something like Grandeur Peak's Global Opportunities or Global Stalwarts, neither of which I own.
@ MFO Members: For those of you who go back to the Fundalarm days , Roy Weitz ask me what was the single best investment I ever made ? The answer was simple and is still true today, Fidelity Magellan. I invested in Magellan in the spring of 1972 and cashed out in October of 1996. Thank you, Dick Habermann, PETER LYNCH, Morris Smith, and Jeff Vinik.
Sure, but by the time you invested, Magellan's best days were behind it. After Ned Johnson put up annual returns averaging 30.3% you had to make do with Lynch's measly 29.2% average performance. https://www.advisorperspectives.com/pdfs/newsltr08-2-4-3.pdf
Which SINGLE fund? My PRWCX is my call, but let me also mention my MAPOX, for the quarterly dividends--- which is going to mean more and more to me, going forward. These hypothetical answers to the original question are due to a naturally prudent approach, assuming all monies end-up in ONE fund. If I were also granted just one choice to add a foreign element to the portfolio, it would be PRIDX. And I suppose I'd go 70% domestic and 30% foreign. (Right now, though, I'm only 11% in foreign equities.)
My current equity allocation: LCV 20.41 LCG30.55 Smid-value 20.44 Smid growth 28.60
If I could only hold 1fund, it would be a fund I don't own today, a TRP Target Date Retirement fund. If it is one fund to hold for 10-15 years in a portfolio of funds - PRWCX.
@msf Sure, but by the time you invested, Magellan's best days were behind it. After Ned Johnson put up annual returns averaging 30.3% you had to make do with Lynch's measly 29.2% average performance.
Huh? Something may be off or I am misreading the graphs. From Magellan inception to mid-May '72, M* shows $10k going to ~$123k. ~12x. Ted's span from then to fall '96 shows $10k going to ~$589k, for like 59x. No?
If stranded on a tropical island I’d be spending all my time swimming and sunning on the beach. (Possibly constructing a raft.) Any pretty babes around? Still better. (Maybe forgo the raft.) I’d probably want some kind of “auto-pilot” fund like OAKBX.
But the last fund I’ll ever sell is PRPFX - got a slug of everything in it.
At some point in life one may have to make a decision to simplify their investments for the benefit of lovingly clueless relatives.
Even Warren Buffet has had to face this question:
Buffett describes advice he has left in his will as to how the trustee should invest money Buffett is leaving for his wife. Here’s Buffett’s advice:
“My advice to the trustee could not be more simple: Put 10 percent of the cash in short-term government bonds and 90 percent in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)”
Huh? Something may be off or I am misreading the graphs. From Magellan inception to mid-May '72, M* shows $10k going to ~$123k. ~12x. Ted's span from then to fall '96 shows $10k going to ~$589k, for like 59x. No?
Ted invested in a fund that used to grow faster, but had slowed down by the time he invested with relatively lackluster managers "Dick Habermann, PETER LYNCH, Morris Smith, and Jeff Vinik".
I could invest in a MMF and if I waited long enough I would "outperform" Johnson as well. Of course, and with apologies to Keynes, by then I'd be dead.
My point was that the managers Ted invested with weren't quite the best that Magellan had offered over its lifetime. Of course they were still outstanding, and Ted did quite well, both in his choice of fund and by staying with the fund a long time. Much longer than the Johnson era lasted, but also far shorter that it would take me with my MMF to get the same total return. Perhaps I should have put a smiley after my comment?
DSEEX + PONDX 50-50 beats PRWCX ... except for this year, hmm.
I'll stick with my PRWCX, despite @davidmoran choosing PONDX and DSEEX. His recipe works, "but not THIS year." OK. But I look and see "class D" PONDX. I truly don't care which CLASS of shares it might be. Because, how many frikkin' classes of shares do you (anyone) NEED? Answer: one. I just won't mess with menus full of different share classes. "See ya later."
And DSEEX, I understand, is deliberately filled with swaps. Is that not by definition a "synthetic" bet? I'm touchy about that stuff, after watching "The Big Short" again, recently. Also, check out the short-position in cash in PONDX. (-127%. "Net" -48%.) No, thanks. I think an "Average Joe" like me, who "knows just enough to know better" ought to steer clear of such stuff.
@bee: despite an overall "hold" recommendation, I continue to add to my PNM, in small doses. In terms of P/E it is no longer the bargain it was when I first bought-in at $25.41, but a necessary, regulated electric utility which is embracing solar, in the US Southwest, looks like a good bet to me. And I just got back from a visit in the Tucson, AZ burbs, went up to Sedona, too. Fabulous sightseeing helicopter ride, there. "The Big Short." http://www.imdb.com/title/tt1596363/?ref_=nv_sr_1
Question: Why has PRWCX been so successful over the past decade?
- Can’t be the manager, since it’s had (by my count) 3 different ones over that time. (And I’d guess it’s pretty much team managed anyhow).
- Can’t be its nimbleness & small size, because it isn’t.
- Can’t be its expense ratio of .70%. While competitive, that’s substantially higher than either DODBX or an index fund and lags rival OAKBX by only .10%.
- Can’t be its great market timing, because Giroux’s been talking nothing but caution for the past 5,000 points of the Dow.
- Can’t be its broadly diversified approach. The fund world is loaded with such balanced, hybrid, moderate allocation (or whatever other name one wishes to attach) type funds.
Don’t mean to be disagreeable (comes naturally) - but you can’t invest looking in the rear view mirror. I know the results have been impressive (and own the fund), but desire some logical compelling reason to think that that performance should continue.
@hank, I love the logic about PRWCX and I try to do something similar, mostly related to asset allocation decisions but also each fund to some degree. For example, I've owned PRNHX for a long time and at $21BN of assets its way beyond, and has been for quite a few years, what I think is reasonable even for a mid cap fund and certainly for the small cap fund its supposed to be. But it keeps putting up the returns and I keep holding, although I've taken all of my original investment and more out.
It has had the same manager since 2010 and the expense ratio is fine, but the conclusion I've drawn is they have a better process than most others and I'd guess the same for PRWCX, which I don't own. Capital appreciation has done well even with manager changes and I probably wouldn't keep more than a small amount of New Horizons if Ellenbogen left or retired, but T Rowe Price seems to have a good number of funds that seem to have very good processes in order to overcome the logical obstacles they face and I also think they manage succession planning very well.
Well I suppose I'd say FCNTX since I've held it since 1986 but I'd probably sell it if/when Mr. Danoff leaves/retires so POAGX or PRGTX (hold both) would be my next choices. PDI or PCI are the ones I concern myself with the least at this time.
Considering that I'm just 31 i might go with GPMCX. Should check ages of its current team leader though.
Robert Gardiner has to be in the neighborhood of 60, he's been in the investment industry since 1981, but I guess he didn't start Grandeur Peak for 10-15 years of his own thing. I'd guess he'll be around most of his life.
The two current co-managers, Amy Hu Sunderland and Mark Madsen are both young. I'd guess somewhere around 40 for both of them.
Blake Walker, who isn't managing the fund anymore but is the CEO and the manager of many of the other funds, is also young. I'd guess he's also right around 40.
With all the GP funds, I'd guess Gardiner is really the key driver of the process. I'd suspect most of those who came with him from Wasatch were people who think a lot like he does and given the team approach to their research process I wouldn't worry too much about ages and/or succession planning.
...but you can’t invest looking in the rear view mirror. I know the results have been impressive (and own the fund), but desire some logical compelling reason to think that that performance should continue.
@Hank, there are no guaranties around any mutual fund performing in the future. Why do you think OAKBX will continue solid results? Curious why you would have this statement about PRWCX and not about PRPFX or OAKBX also.
So here is the only reason I can come up with, compliments of Mr. Newton:
a body process at rest remains at rest and a body process in motion remains in uniform motion in a straight line unless acted upon by an external force
I'll go with American Funds ... Global Balanced Fund (GBLAX). There are many ticker symbols for this fund including a no load F-1 ticker of GBLEX. This is a team managed fund with global exposure to both domestic and foregin securities. Although, I don't own this fund I do own Capital Income Builder (CAIBX) which is also considered a world allocation fund and one I have owned for a good number of years. From my perspective either one would be a good choice. Capital Income Builder focus more on income generation while Global Balance takes a more balanced approach towards income and growth. Both funds can be opened with only $250.00. So, they are well suited for a starting investor as I was at the age of 12.
Trailing comment after reading a few comments below. Folks, remember Old_Skeet's first investment (at age 12) was FKINX a hybrid type fund because it gave me exposure to both the bond and stock markets. Like wise, GBLAX does the same thing but from a global perspective. In addition, it has according to Xray about a 23% weighting in growth along with having about a 25% weighting (combined) in the technology and health care sectors. Being team and sleeved managed reduces manager risk.
I like Old_Skeet's idea of a global balanced fund for a one-and-done fund. Although it does not have a long track record, RPGAX has both a great start and all of TRP's resources behind it. I'd feel comfortable putting this in a UGTM account or investing on behalf of "widows and orphans" and leaving it alone for a long time. Over the last 25 years I have become disenchanted with several balanced funds and sold them. Currently own BRUFX and RPGAX. My TIAA account has a slice of Vanguard Balanced.
@MFO Members: If your investing for the long-term,some of your money should be invested in an aggressive LCG fund and or a techonology and health care sector fund. They've had the best annualized returns over time. I can't believe some of the funds that some of you have picked. Regards, Ted
@MFO Members: If your investing for the long-term,some of your money should be invested in an aggressive LCG fund and or a techonology and health care sector fund. They've had the best annualized returns over time. I can't believe some of the funds that some of you have picked. Regards, Ted
Large cap growth, plus technology and healthcare? I agree...which is why my choice would be VHCOX. Second choice would be POAGX. (Obviously I'm a Primecap fan. Those were my top funds over the past ten years, and I see no reason to make a change).
Comments
If I had to do just one and was forbidden from DSE_X, maybe FLPSX, which satisfies some of the criteria here.
Non-US pluses may be true now and going forward, although DLEUX sure has not outperformed yet. Non-US would not be my sole focus or holding, though, regardless.
Actually, maybe QQQ or FSPTX, taking my cue from Edelman and Ted
Regards,
Ted
My H.S.A (@ Bruce Funds) will be BRUFX
My Roth IRA (@ TRP) will be PRWCX
My SD IRA (@Vanguard) will be VWINX or maybe even Global Wellesley, VGWIX
My Taxable account will be VTMFX
A 10-15 Year Trend Funds:
Health Care - PRHCX, VGHCX, FSMEX
Tech - PRGTX, FSITX,
Consumerism - FSRPX
I like the idea of go anywhere, do anything flexibility but there's just not many, if any, that I'd really trust with that. Since we wouldn't be able to know anything about the ups and downs along the way I wouldn't have a big issue with sticking to stocks and I'd probably go for something like Grandeur Peak's Global Opportunities or Global Stalwarts, neither of which I own.
https://www.advisorperspectives.com/pdfs/newsltr08-2-4-3.pdf
My current equity allocation:
LCV 20.41
LCG30.55
Smid-value 20.44
Smid growth 28.60
My current foreign equity funds: SFGIX and PRIDX.
Sure, but by the time you invested, Magellan's best days were behind it. After Ned Johnson put up annual returns averaging 30.3% you had to make do with Lynch's measly 29.2% average performance.
Huh? Something may be off or I am misreading the graphs.
From Magellan inception to mid-May '72, M* shows $10k going to ~$123k. ~12x.
Ted's span from then to fall '96 shows $10k going to ~$589k, for like 59x.
No?
What are the criteria?
- Most exciting?
- Most potentially profitable?
- Least worrisome?
- Most fashionable?
If stranded on a tropical island I’d be spending all my time swimming and sunning on the beach. (Possibly constructing a raft.) Any pretty babes around? Still better. (Maybe forgo the raft.) I’d probably want some kind of “auto-pilot” fund like OAKBX.
But the last fund I’ll ever sell is PRPFX - got a slug of everything in it.
At some point in life one may have to make a decision to simplify their investments for the benefit of lovingly clueless relatives.
Even Warren Buffet has had to face this question: the-warren-buffett-guide-to-retirement-investing
(Don’t know what David’s excuse is?)
@Ted - Please allow this thread to run longer.
Time to call it a night.
Derf
I could invest in a MMF and if I waited long enough I would "outperform" Johnson as well. Of course, and with apologies to Keynes, by then I'd be dead.
My point was that the managers Ted invested with weren't quite the best that Magellan had offered over its lifetime. Of course they were still outstanding, and Ted did quite well, both in his choice of fund and by staying with the fund a long time. Much longer than the Johnson era lasted, but also far shorter that it would take me with my MMF to get the same total return. Perhaps I should have put a smiley after my comment?
And DSEEX, I understand, is deliberately filled with swaps. Is that not by definition a "synthetic" bet? I'm touchy about that stuff, after watching "The Big Short" again, recently. Also, check out the short-position in cash in PONDX. (-127%. "Net" -48%.) No, thanks. I think an "Average Joe" like me, who "knows just enough to know better" ought to steer clear of such stuff.
@bee: despite an overall "hold" recommendation, I continue to add to my PNM, in small doses. In terms of P/E it is no longer the bargain it was when I first bought-in at $25.41, but a necessary, regulated electric utility which is embracing solar, in the US Southwest, looks like a good bet to me. And I just got back from a visit in the Tucson, AZ burbs, went up to Sedona, too. Fabulous sightseeing helicopter ride, there.
"The Big Short."
http://www.imdb.com/title/tt1596363/?ref_=nv_sr_1
Sedona:
http://www.gatewaytosedona.com/images/cathedral-rock-sedona-arizona/cathedral-rock-from-lower-loop-sedona.jpg
- Can’t be the manager, since it’s had (by my count) 3 different ones over that time. (And I’d guess it’s pretty much team managed anyhow).
- Can’t be its nimbleness & small size, because it isn’t.
- Can’t be its expense ratio of .70%. While competitive, that’s substantially higher than either DODBX or an index fund and lags rival OAKBX by only .10%.
- Can’t be its great market timing, because Giroux’s been talking nothing but caution for the past 5,000 points of the Dow.
- Can’t be its broadly diversified approach. The fund world is loaded with such balanced, hybrid, moderate allocation (or whatever other name one wishes to attach) type funds.
Don’t mean to be disagreeable (comes naturally) - but you can’t invest looking in the rear view mirror. I know the results have been impressive (and own the fund), but desire some logical compelling reason to think that that performance should continue.
It has had the same manager since 2010 and the expense ratio is fine, but the conclusion I've drawn is they have a better process than most others and I'd guess the same for PRWCX, which I don't own. Capital appreciation has done well even with manager changes and I probably wouldn't keep more than a small amount of New Horizons if Ellenbogen left or retired, but T Rowe Price seems to have a good number of funds that seem to have very good processes in order to overcome the logical obstacles they face and I also think they manage succession planning very well.
The two current co-managers, Amy Hu Sunderland and Mark Madsen are both young. I'd guess somewhere around 40 for both of them.
Blake Walker, who isn't managing the fund anymore but is the CEO and the manager of many of the other funds, is also young. I'd guess he's also right around 40.
With all the GP funds, I'd guess Gardiner is really the key driver of the process. I'd suspect most of those who came with him from Wasatch were people who think a lot like he does and given the team approach to their research process I wouldn't worry too much about ages and/or succession planning.
So here is the only reason I can come up with, compliments of Mr. Newton:
http://www.morningstar.com/funds/XNAS/GBLAX/quote.html
____________________________________________________________________________________________________
Trailing comment after reading a few comments below. Folks, remember Old_Skeet's first investment (at age 12) was FKINX a hybrid type fund because it gave me exposure to both the bond and stock markets. Like wise, GBLAX does the same thing but from a global perspective. In addition, it has according to Xray about a 23% weighting in growth along with having about a 25% weighting (combined) in the technology and health care sectors. Being team and sleeved managed reduces manager risk.
Again, I staying with my pick.
Regards,
Ted