FYI: Have you noticed that the majority of stock funds typically tend to move in the same direction, and frequently, with close to the same magnitude on any given day? For example, if the biggest US stock fund, Vanguard Total Stock Market Index (VTSMX), goes down 1.5%, most other US stock funds will likely go down too, often not far from the same percent. Of course, the degree of corresponding movement isn't 100% but can be surprisingly high, even across totally different fund categories, such as growth vs. value funds, or large-cap vs. small-cap.
Regards,
Ted
http://funds-newsletter.com/may18-newsletter/may18_newest.htm
Comments
What are your favorite low correlation funds?
PRPFX =0.58
What's the correlation of one Vanguard fund to another...find it here:
https://adviseronline.investorplace.com/parts/tools/correlation-tool.html?fund1=500+Index&fund2=Wellesley+Income
Portfolio Correlation tool (enter mutual funds, ETFs and or stocks):
https://portfoliovisualizer.com/asset-correlations
From Mr. Madell's write: The eft's in his list vs the VTSMX total market index (U.S.)
The list is broad market of various styles, but not really much to sectors within styles. I will agree to this point of his notation of correlation in the equity area. I see that he mentioned a few sectors for correlation reference, but I didn't see any tech. or health.
http://stockcharts.com/freecharts/perf.php?VTSMX,VUG,VV,VTV,VOT,VO,VOE,VBK,VB,VBR&n=1258&O=111000
We tend to travel in equity sectors (bond sectors, too) vs broad, although this path has been chosen from time to time with ITOT.
A few of the sectors and active managed funds where we have had monies in the past 5 years to align with the writers time frame.....versus VTSMX. They are: FDGRX , FCNTX , JAGTX , FSPHX , and PRHSX.
http://stockcharts.com/freecharts/perf.php?VTSMX,FDGRX,FCNTX,JAGTX,FSPHX,PRHSX&n=1257&O=111000
I can't disagree with the correlation he indicated for his choices; but sector choices can and do matter, too.
However, sector investing can cause more emotional risk to the investor; and at times, monetary risk. One being curious about investments in these areas, must also tie this to study and patience.
Sectors have cycles too, for any number of reasons and there are times of what I call the doldrums or "horse latitude" investing.
--- What are horse latitudes and how did they get the name?
There are two sub-tropical high-pressure belts extending approximately between latitudes 15 and 30 degrees to the north and south of the Equator. Horse latitudes are generally areas of high pressure marked by calm, subsiding air that gets heated during descent. It is said that Spanish sailors ferrying horses to the West Indies were usually stuck for months in these calm waters and had to throw their horses into the water to conserve drinking water for themselves. This led to the term ‘horse latitudes’.
The equity markets found "horse latitudes" during 2015 and 2016 to the point of potentially making one scratch their head wondering, "What have I done?"
M* categories continue to indicate the lead of lg cap growth, with tech. and healthcare in the lead for the past 5 years. Small growth is the leader for the year by a tiny bit.
At times, in spite of having to wait; one gets lucky ever now and then.
Okay, done with self-therapy.
Take care,
Catch