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I can't comment on PRGTX, have never invested or looked into it.
I own DSEEX/DSENX and I pair it with AUEIX/AUENX as my LC core holding. These are long-term investments for me and I do not worry if they under-perform short-term.
I don't view them as safe-havens in a downturn, I do believe the combo will perform better in a downturn and over a full market cycle than the S&P500 itself.
Not sure if this answers your question or helps! I'm sure others will comment.
I hold 2 large cap equity funds FWIW. DSENX for value and GTLOX for growth. So yes on DSENX (IMHO) to answer your question.
I like minimal funds, so I personally wouldn't add a sector fund as a core holding. I'm not sure a sector fund even meets definition for core, though core seems to hold many definitions here.
FWIW, M* lists 49 technology funds, 4/5 (39) are LCG. It classifies 1 of these as supporting, 8 funds are called specialty, and the remainder are unclassified.
At one of the (technology) startups where I worked, the HR person told me that most people were pouring 401k money into Ultra (TWCUX). It was the closest thing we had in our plan to a technology fund. (I think it was about 45% technology then, it's 1/3 now.)
So maybe those are a few votes for technology as a core fund, or maybe they were simply following Peter Lynch's advice - invest in what you know. Though they were also violating another rule of thumb - don't double down on where your job is.
For those who might think that they absolutely need a tech fund I would suggest that you take a look at the Josh Brown article Ted linked earlier today.
Hi @Mark Agree. I read, last week, the initial article linked within the "Reformed Broker" link. These changes will possibly affect some funds and/or indexes. Regardless of the "new" category names, the tech. has been inside of many funds and indexes of many equity flavor types. Ted asked me (Jan. 6) about our holdings seeming to be "lite" on the tech. side; and the below is a broad sample of choices I grabbed to indicate the overall inclusion of tech. in so many places.
>>>Reply: Correct at this time, as to no direct "tech" holding; but with the broad based etf's and/or funds one will discover enough tech. of some form; mostly of the large cap. type and of course, the FANG kids show up just about everywhere, except a bond fund. Tis everywhere in some form. A few samples of various tech. inclusions by percentage of the fund:
I've been in and around tech. all of my adult life; and have always kept an eye to this area. One of my first exposures to the early life of what is nano and micro tech. today was a week of training of "how to remove and replace a defective integrated micro chip". The class was taught by a NASA engineer from Houston. A micro what? These were mostly the 8 leg variety that had just begun to be used on integrated circuit boards in the newest versions of cryptographic equipment; the repair of which would be my livelihood for the next several years, and indirectly connected to me to a few folks that fully triggered my investment perspectives and forward directions. ADD: I'm inclined towards large cap. tech., with mergers and acquisitions, but this may play well towards the smaller cap. companies. Take care. Catch
For those who might think that they absolutely need a tech fund I would suggest that you take a look at the Josh Brown article Ted linked earlier today.
Thanks for the nudge.
I like the observation that there's no such thing as purely passive investing (though IMHO investing in, say, the Wilshire 5000 comes darn close), just degrees of passivity. Having pointed out that the S&P indexes are constructed by committee of course I'd agree with the statement
Regarding the girth of the technology sector, the article says that technology currently constitutes "almost a quarter" of the S&P 500 market cap. "Something had to be done, I suppose, before the IT sector became 27%, 30% and so on."
In March 2000, technology represented over 1/3 (34.5%) of the market cap. Regardless of whether the circumstances were different then, a bald appeal to the size of numbers doesn't make the case. NYTimes, Aug. 6, 2016, When Every Company Is a Tech Company, Does the Label Matter?
Nor are individual companies near record market weight. In 1932, AT&T alone constituted 13% of the total stock market. It was so large that S&P declined to include it in a predecessor of the S&P 500. NYTimes citing J. Siegel, Stocks for the Long Run.
So on the one hand, technology has become so all-pervasive that one benefits from it in virtually every fund, and on the other hand, "pure" technology companies are nowhere near their market peak, either individually or collectively. Which lets everyone read whatever they want into the current situation.
and he did often say things like 'know what you own and know why' etc.
Investopedia is describing stock investing (as one can tell from the URL). Investing in sectors/industries is a little different - one does not dig into the balance sheets of scores of companies.
I'll let Mr. Lynch speak for himself regarding how his oft quoted advice applies to stocks and to sectors/industries:
“I’ve never said, ‘If you go to a mall, see a Starbucks and say it’s good coffee, you should call Fidelity brokerage and buy the stock,’” Lynch says, some 25 years after his retirement ... “People buy a stock and they know nothing about it,” he says. “That’s gambling and it’s not good.”
and
“If you’re in the steel industry and it ever turns around, you’ll see it before I do.”
As it should have. He was talking about stocks, and there's a big difference between being a customer of a company and knowing a company. It's the latter sense in which he meant one should know what (company) one is investing in.
Still, when it comes to industries, knowing means something different. Working in an industry can give you a good sense of the health of that industry if you are attentive.
I was wondering whether you had any thoughts about how the CAPE index model will be adjusted for the new sector since this is a thread about DSENX. When real estate was carved out of financials, the CAPE index was modified to use a non-SPDR index fund, IYR.
I imagine that was done because it needed an index fund with a ten year history, and by definition, XLRE was a new fund without a history. Though IYR might have been chosen because it was more inclusive, holding mortgage REITS such as NLY that XLRE excludes.
However, that might mean that the CAPE index added a new group of companies (mortgage REITs) that it had not tracked before. A discontinuity. Regardless, another imprecision arose - the old history of the financial sector included real estate, while the sector itself no longer did. Was any attempt made to correct for this (e.g. recalculating the financial index history after pulling out the real estate component)?
This time things are even more interesting. The CAPE index tracks XLK for technology, but XLK combines technology and telecom. That's why there are ten "sectors" that the CAPE index uses, while there are eleven S&P sectors.
It is possible that State Street will decide to keep XLK as it is, in which case the CAPE index won't have to do a thing (other than watch the technology+communications "sector" continue to grow in weight). But what if State Street does finally create a communications Select Sector SPDR? There won't be any history for the new SPDR (just as there was no history for XLRE). Would the CAPE index turn again to a non-Select Sector SPDR? Also, as happened with XLF, the history for XLK will no longer precisely represent the new XLK after communications companies are carved out.
DSENX in turn will need derivatives that track whatever index or indexes the CAPE index chooses to track. Will they exist?
And they say that a machine can run an index fund.
No good thoughts (or stupid thoughts) on any of this, but their RE flexibility makes me think they would do as they wished pretty much wrt technology parsing and parent aegis as well.
I did note inclusion of MREITs, which made me wince since I made so much money on them long ago (Novastar, RWT, others) and then lost even more.
Speaking of making scads of money and losing even more subsequently, I have worked for many tech startups, including v successful and in most cases ones still extant, but attentive or not, I could never profitably see in real time how that field was going to go as a general investment or otherwise. Security Dynamics turned out to be as successful as it had appeared promising, in some senses, but 2-factor token security has taken forever to take off and become a wide standard even as RSA became part of EMC (now Dell). Elcom was the Honda of the B2B startups, said the WSJ, but the quick standardization of ecommerce web technologies and domination by MS sank its much larger competitors OpenMarket and Ariba, which much money lost. I thought Bell Labs would go forever when I worked there, likewise Thinking Machines (ha), to compared huge and tiny, likewise robotics w/ Foster-Miller / QinetiQ and little Vecna. Robots are getting commoditized, sort of, even military and healthcare and quite sophisticated ones. And my longer CE (audio) career is an even longer chapter, talk about market caprice and commodization. Anyway, this would be a digression into the vagaries of 'working in an industry can give you a good sense of the health of that industry if you are attentive'. If only.
@catch22: There is nothing wrong in owning the market, and taking the returns it gives you, but for enhanced returns one needs to overweight a given sector. Once again in my opinion, not owning a pure tech fund is a big flaw in your investment thinking. Regards, Ted
@Ted - how much weight would you assign to that tech fund in one's portfolio? My sense is that most would not hold enough to move the needle so to speak and may also be less exposure than one would get in an S&P 500 index fund or it's equivalent. We all have to build the portfolio we are comfortable with.
Comments
I own DSEEX/DSENX and I pair it with AUEIX/AUENX as my LC core holding. These are long-term investments for me and I do not worry if they under-perform short-term.
I don't view them as safe-havens in a downturn, I do believe the combo will perform better in a downturn and over a full market cycle than the S&P500 itself.
Not sure if this answers your question or helps! I'm sure others will comment.
Regards,
Ted
I like minimal funds, so I personally wouldn't add a sector fund as a core holding. I'm not sure a sector fund even meets definition for core, though core seems to hold many definitions here.
At one of the (technology) startups where I worked, the HR person told me that most people were pouring 401k money into Ultra (TWCUX). It was the closest thing we had in our plan to a technology fund. (I think it was about 45% technology then, it's 1/3 now.)
So maybe those are a few votes for technology as a core fund, or maybe they were simply following Peter Lynch's advice - invest in what you know. Though they were also violating another rule of thumb - don't double down on where your job is.
https://www.investopedia.com/articles/stocks/06/peterlynch.asp ---
and he did often say things like 'know what you own and know why' etc.
http://thereformedbroker.com/2018/01/15/breaking-up-tech-indexes-doing-what-the-economy-wont/
Agree.
I read, last week, the initial article linked within the "Reformed Broker" link. These changes will possibly affect some funds and/or indexes. Regardless of the "new" category names, the tech. has been inside of many funds and indexes of many equity flavor types.
Ted asked me (Jan. 6) about our holdings seeming to be "lite" on the tech. side; and the below is a broad sample of choices I grabbed to indicate the overall inclusion of tech. in so many places.
>>>Reply: Correct at this time, as to no direct "tech" holding; but with the broad based etf's and/or funds one will discover enough tech. of some form; mostly of the large cap. type and of course, the FANG kids show up just about everywhere, except a bond fund. Tis everywhere in some form.
A few samples of various tech. inclusions by percentage of the fund:
--- ITOT = 24%
--- VTI = 25%
--- SPY = 26%
--- FHLC = 25%
--- ACWI = 21%
--- FSPHX = 32%
--- GPROX = 21%
--- FPURX = 28%
I've been in and around tech. all of my adult life; and have always kept an eye to this area. One of my first exposures to the early life of what is nano and micro tech. today was a week of training of "how to remove and replace a defective integrated micro chip".
The class was taught by a NASA engineer from Houston. A micro what? These were mostly the 8 leg variety that had just begun to be used on integrated circuit boards in the newest versions of cryptographic equipment; the repair of which would be my livelihood for the next several years, and indirectly connected to me to a few folks that fully triggered my investment perspectives and forward directions.
ADD: I'm inclined towards large cap. tech., with mergers and acquisitions, but this may play well towards the smaller cap. companies.
Take care.
Catch
I like the observation that there's no such thing as purely passive investing (though IMHO investing in, say, the Wilshire 5000 comes darn close), just degrees of passivity. Having pointed out that the S&P indexes are constructed by committee of course I'd agree with the statement
Regarding the girth of the technology sector, the article says that technology currently constitutes "almost a quarter" of the S&P 500 market cap. "Something had to be done, I suppose, before the IT sector became 27%, 30% and so on."
In March 2000, technology represented over 1/3 (34.5%) of the market cap. Regardless of whether the circumstances were different then, a bald appeal to the size of numbers doesn't make the case.
NYTimes, Aug. 6, 2016, When Every Company Is a Tech Company, Does the Label Matter?
Nor are individual companies near record market weight. In 1932, AT&T alone constituted 13% of the total stock market. It was so large that S&P declined to include it in a predecessor of the S&P 500. NYTimes citing J. Siegel, Stocks for the Long Run.
So on the one hand, technology has become so all-pervasive that one benefits from it in virtually every fund, and on the other hand, "pure" technology companies are nowhere near their market peak, either individually or collectively. Which lets everyone read whatever they want into the current situation.
I'll let Mr. Lynch speak for himself regarding how his oft quoted advice applies to stocks and to sectors/industries:and https://www.marketwatch.com/story/peter-lynch-25-years-later-its-not-just-invest-in-what-you-know-2015-12-28 (originally in WSJ.com)
I heard him speak locally a couple times in the 1980s, and the misunderstanding bothered him even then.
Still, when it comes to industries, knowing means something different. Working in an industry can give you a good sense of the health of that industry if you are attentive.
I was wondering whether you had any thoughts about how the CAPE index model will be adjusted for the new sector since this is a thread about DSENX. When real estate was carved out of financials, the CAPE index was modified to use a non-SPDR index fund, IYR.
I imagine that was done because it needed an index fund with a ten year history, and by definition, XLRE was a new fund without a history. Though IYR might have been chosen because it was more inclusive, holding mortgage REITS such as NLY that XLRE excludes.
However, that might mean that the CAPE index added a new group of companies (mortgage REITs) that it had not tracked before. A discontinuity. Regardless, another imprecision arose - the old history of the financial sector included real estate, while the sector itself no longer did. Was any attempt made to correct for this (e.g. recalculating the financial index history after pulling out the real estate component)?
This time things are even more interesting. The CAPE index tracks XLK for technology, but XLK combines technology and telecom. That's why there are ten "sectors" that the CAPE index uses, while there are eleven S&P sectors.
It is possible that State Street will decide to keep XLK as it is, in which case the CAPE index won't have to do a thing (other than watch the technology+communications "sector" continue to grow in weight). But what if State Street does finally create a communications Select Sector SPDR? There won't be any history for the new SPDR (just as there was no history for XLRE). Would the CAPE index turn again to a non-Select Sector SPDR? Also, as happened with XLF, the history for XLK will no longer precisely represent the new XLK after communications companies are carved out.
DSENX in turn will need derivatives that track whatever index or indexes the CAPE index chooses to track. Will they exist?
And they say that a machine can run an index fund.
I did note inclusion of MREITs, which made me wince since I made so much money on them long ago (Novastar, RWT, others) and then lost even more.
Speaking of making scads of money and losing even more subsequently, I have worked for many tech startups, including v successful and in most cases ones still extant, but attentive or not, I could never profitably see in real time how that field was going to go as a general investment or otherwise. Security Dynamics turned out to be as successful as it had appeared promising, in some senses, but 2-factor token security has taken forever to take off and become a wide standard even as RSA became part of EMC (now Dell). Elcom was the Honda of the B2B startups, said the WSJ, but the quick standardization of ecommerce web technologies and domination by MS sank its much larger competitors OpenMarket and Ariba, which much money lost. I thought Bell Labs would go forever when I worked there, likewise Thinking Machines (ha), to compared huge and tiny, likewise robotics w/ Foster-Miller / QinetiQ and little Vecna. Robots are getting commoditized, sort of, even military and healthcare and quite sophisticated ones. And my longer CE (audio) career is an even longer chapter, talk about market caprice and commodization.
Anyway, this would be a digression into the vagaries of 'working in an industry can give you a good sense of the health of that industry if you are attentive'. If only.
Regards,
Ted
Regards,
Ted