Looking to add some balanced and income oriented funds

slick

It’s been quite a while since I regularly read and contributed to MFO ( I go back to the Fund Alarm Days), since I switched over to ETFs and just a few funds. I recently inherited a portfolio comprised of Traditional IRA and Roth IRA along with a brokerage account, so need to do a little homework since I will be adding some funds to the mix. The Roth is the last that I will tap, it is the most aggressive, little change needed there. The Traditional IRA is a bit less aggressive, but will not need to tap it until 2021. For funds, it is concentrated in dividend growth funds, emerging market and a basket of 7 dividend and growth stocks and etfs. I am 61 and still working, but may retire in the next year. The portfolio in total is 39% bonds, 35% stocks (mainly large cap), 6% foreign, mainly emerging market debt and stocks, and 17% cash and cash equivalents ( I will be reducing that down to 12% in 2013). The taxable portfolio which represents 41% of the total is 80% in muni bonds ( 4 of them whose first call date is 2015 and pay between 4.25% and 5,0% ). Additional monies will be coming into this portfolio raising the cash to 25% so will need to put some money to work. I am looking to add a small cap fund, I seem to like Fidelity Small Cap Opportunities Fund for that sector, and want to add either a balanced, hybrid or allocation fund to the mix., along with some bond funds, can be emerging market, I have those in the IRAs (Fidelity New Market and Loomis and Sayles Global) Ones I am leaning towards are Vanguard Wellseley Income Fund,, Osterweis Strategic Income Fund, Dodge and Cox Balanced and some more income oriented funds. This portfolio should be my least aggressive, but do want growth in it. I want to also add an all market fund or etf, I have VTI in my other portfolio. I am keeping these monies separate from my previous holdings since I will be leaving these monies to different heirs . My spouse died way too early, but want to honor him by investing wisely. We picked funds, stocks and etfs together, we did not always agree, but we both did pretty well.
Any suggestions?

Slick

MaxBialystock

I cannot say yea or nay to the Fido small-cap item you mention. I am very happy with a small-cap domestic fund I bought-into during this past Spring: MSCFX, from Mairs and Power, out of the Twin Cities. It's still a very young fund, however. For a balanced portfolio, I must recommend its sister fund, MAPOX. It has a long history, and its rank among peers is near the top of the list. Conservative bond fund: DODIX. EM bonds: FNMIX or PREMX. "Break a leg!"

Sven

Sorry about your loss. From your message, I assume you have an account with Fidelity. Some suggestions are listed below:

Balanced funds:
Greenspring, GRSPX (NTF fund), invested mainly in mid-smaller caps and the rest with bonds

Smaller cap funds:
T. Rowe Price Small Cap Value, PRSVX (transaction fee fund) - consistent performance
T. Rowe Price New Horizon, PRNHS (transaction fee fund) - growth oriented smaller caps, consistent performance
Don't know much about Fidelity Small Cap fund. My issue is they tend to change managers too frequent and contribute to poor long term track record. Few exceptions: Low Priced Stocks, Contra, and New Markets Income. Thus I recommend looking elsewhere.

Income funds:
Osterweis Strategic Income, OSITX - experienced and risk adverse managers (Kaufman and Lee).
Vanguard Vanguard Wellseley - solid choice
T. Rowe Price Spectrum Income, RPSIX - fund-of-funds encompassing corporate, TIPS, emerging markets, foreign, and high yield bonds.

MaxBialystock

Let me add that I've owned PRSVX in the past. It is quite a good fund--- less volatile than another TRP small-cap fund: OTCFX. Yet the latter gets better overall marks from Morningstar. But its better long-term performance comes with more volatility than PRSVX.

slick

Thanks for your comments and suggestions. Before I lived in New Mexico, I lived in Baltimore, and had many of the TRP mentioned funds. I eventually traded out of them in favor of ETFs. I am intrigued by the Osterweis funds . I always liked funds that had some freedom as to where to go instead of being tied into formulas. I have heard of Mairs and Powers over the years,but thought they were restricted to certain states. I was never that big a fan of the Fido funds except for their convertible fund in years past, but must admit that darn small cap FSCRX fund has a great record. I always liked smaller funds when investing in small caps, and would leave them when they got too large, but it seems to do pretty well. I do have FMNIX in both of the IRAs. Ok, how do you get the fund names to appear when you type the fund symbols?

Merry Christmas everyone

slick

Opps, I meant FNMIX above, and I guess I solved the mystery of the links to the fund names. Nice touch David! You have been doing a great job with this site !

Old_Skeet

Hi Slick,

First, let me say I am sorry about your loss. However, I find favor in the fact you were both involved and versed in your investing decisions. … and, with this you are, from my thoughts, far ahead of others. I feel you know your destination and you are looking for good avenues to get there. With this, I have two, funds, avenues to suggest that I have my own money in … and, a third that I have under review for purchase.

You might wish to do due diligence on PGBAX, Principal Global Diversified Income and PMDAX, Principal Small-Mid Cap Dividend Fund. They both have performed well and both kick off a good income stream.

I have linked their fact sheets to get you started.

http://www.principal.com/allweb/docs/RIS/investments/factsheet/PMDAX.pdf

http://www.principal.com/allweb/docs/RIS/investments/factsheet/PGBAX.pdf

In addition, I have the below linked fund under review for purchase. Its ticker symbol is PMSAX, Principal Global Multi Strategy Fund. Iam not sure that I am going to move on this fund though.

http://www.principal.com/allweb/docs/RIS/investments/factsheet/PMSAX.pdf

Even if you choose not to pursue these … others might find favor in them.

I hope you arrive at your destination in the style and fashion that you desire.

Good Investing,
Skeeter

Investor

Reply to @slick: I am still a big fan of Fidelity Low-Priced Stock fund, FLPSX

It is an all cap fund now with a weighted average of mid cap. Holds a good chunk in international as well.

MikeM

I will second the choice of PGDPX. It's a well diversified dividend income fund holding every thing from EM bonds to Global equities, mlp's and more. Go to the Principlefunds.com website if interested. Fairly young fund, but good record so far. But I am biased having 10% in the fund.

I still like ARIVX for small cap only because conservative and capital protection is what I wanted. The 1year under performance will come with the decision to own this manager's skills. The total returns in 3-5-10 years is what I'm hoping for.

David_Snowball

Reply to @slick: Slick! It's so good to hear from you.

I'd love to take credit for the site's cool technical features but that's all the doing of friend Accipiter (the artist formerly known as Falcon) and chip (our technical director. They're the reason I can continue to view a website as an act of magic. Cool stuff just happens, whereupon I blink and smile.

David

David_Snowball

Hi again, Slick!

In January, we'll publish a list of fund profiles sorted by style. You might find some of the smaller or newer funds of interest.

In general, I'm a bit concerned about the prospects for longer-term investment grade bonds - we're at the tail end of a thirty year rally with real yields at or below zero. That tends to make me a bit skeptical of bond or hybrid funds and especially those staying close to a standard benchmark allocation. And I'm a bit concerned with small caps whose greatest gains tend to occur when we're coming out of recession and interest rates are dropping. GMO projects small caps and almost all bonds for negative real returns over the next 5-7 years.

In the hybrid realm:

1. I could imagine a buy-write or covered call fund as an alternative to a traditional stock/bond hybrid. Instead of relying on bonds for income, these funds can generate 1.5 - 2% per month in income from selling calls. I recently profile RiverNorth Dynamic Buy-Write and I'll update Bridgeway Managed Volatility (formerly Bridgeway Balanced) for January. Likewise, a good long/short fund (there aren't many) would give you the risk/return profile that hybrids have traditionally achieved without the risk of a bond bubble.

2. I'd certainly look at funds with a fair degree of flexibility and a strong track record. Osterweis Strategic Investment is a blend of Osterweis Income and Osterweis. And I do own T Rowe Price Spectrum Income, which Sven endorses and which can hold 15-20% in dividend-paying stocks.

3. I wouldn't rule out an emerging markets hybrid fund. GMO likes the prospects of both e.m. stocks and bonds. Fido just launched one (Total Emerging Markets) and the closed-end First Trust/Aberdeen Emerging Opportunities has a long, strong record.

In the income realm:

1. as a cash management option, I've been using RiverPark Short Term High Yield. It's structured to return 3-4% above a money market with very low volatility.

2. I might consider registering for my January conference call with Teresa Kong, manager of Matthews Asia Strategic Income. She's sharp, Matthews is first rate, and it would seriously diversify a domestic bond portfolio.

3. In the world of bond funds, Osterweis Income is distinguished and the new Scout Unconstrained Bond draws on the skills of one of Morningstar's Fixed-Income Manager of the Year nominees. They've got a really solid record. RiverNorth is about to launch a collaboration with OakTree (first-tier institutional bond guys who also run Vanguard Convertibles), focused on high income.

In the small cap world:

1. Aston River Road Independent Value and Pinnacle Value are managers with a distaste for over-priced stocks and an eye for value; over time, they tend to hold a lot of cash when they can't find stocks priced to produce "absolute returns."

2. for solid, unspectacular performance, I'd think about Mairs and Power Small Cap, at least in part because M&P have such a record for solid performance without drama.

3. finally, I would at least look at the Grandeur Peaks Global folks. They once ran the Wasatch global small cap operation and have now gone independent.

Nothing against the suggestions that the folks raised above, I'm just not as familiar with them and thought I might flag a few ideas.

Take great care,

David

slick

Thanks all. David, your willingness to help and provide solid reasons for each of your choices never surprises me, as many others have done too. I will be doing some researching this week, am not afriad to try new funds with experienced managers. I remember buying Fasciano's fund when it first started, then sold when it got larger, before he sold it to neuberger berman in 2000, also liked Warren Isabelle when it was small. Keep those suggestions coming, love to research Happy Holidays

Old_Joe

Hey Slick- (love the handle...) for an insight into almost all of the MFO site mysteries check out the User's Guide, located under "Resources", in the blue bar above. Nice to have another FundAlarmer back in the fold.

A happy Christmas and good (heck, I'll settle for "decent") New Year to all!

BobC

Like, David, I am also concerned with the prospects for the traditional bond fund. I would prefer the managers have a pretty wide latitude in what they invest. For that reason, we use OSTIX, BSIIX, and LSBRX as core holds in most accounts. We have owned OSTIX almost since its beginning, and have never been disappointed in Carl Kaufman's efforts. Rick Reider's team at BlackRock is continuing to keep durations super low, but still turning out strong numbers. And Loomis just keeps going. Its potential volatility is a concern, but until rates start moving up (and maybe even when they do), the flexible mandate of this fund provides a pretty good base. We allocate 50% of bond holdings to specific foreign bond funds, and we continue to employ TGBAX, GSDIX, and GIMDX.

As for dividend income stock funds, we are starting to use GSRLX, a new Goldman fund run by a talented subadvisor group Dividend Assets Capital out of South Carolina. We are cautious about owning stocks that pay the highest dividend yields, since their prices have been bid up pretty high. But GSRLX and TIBIX are attractive since they look for GROWING dividends. GSRLX offers a chunk of MLPs, which is a plus.

And you might also look at PAUIX, which has had a very good dividend yield, currently at more than 4%.

Mark

Good to see that you're still peeking in now and then. With respect to your inquiry I defer to Bob and David. I can't compete with that. Happy Holidays!