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Retirement within 1 year. I want to reduce the number of funds I have. Thought I would see what the collective thinks.
IVWIX or RPGAX. Keep or sell one of these world allocation funds. ARTGX or PRGSX or FWWFX. Keep or sell which one these world large stock funds. GGSOX or GPROX?
I tend to look at things in a different color of lens than most on the board. I'm thinking, this is because of my baackground being a former credit manager of a fairly large wholesale distribution company servicing the Carolinas, parts of Virginia, Tenn and Georgia. We would not let any one customer become more than 1 percent of our gross revenue nor carry more than two percent of our receivables. To keep the DSO low we required pre payment on special (non stock) items, as most were not returnable, along with good discounting for timely payment of invoices such as 2% ten days, net 30. Our larger and better customers just about always paid taking their discounts.
One might ask ... How does this have any light on your investment portfolio? It's simple. Even in my cash area of my portfolio I will not put more than a couple of percent of my portfolio into any one security weather it be a CD or money market mutual fund. Then moving on to the income area I keep the upper limit at a two to three percent range as well with two exceptions. In the growth & income area, I also have a cap on how much, percent wise, I'll hold in a single position. This also applies, as well, to the growth area of my portfolio.
If one or even a few funds falter then there are a good number of others that can continue to propel my portfolio. After all, funds do change managers and they have styles and strategies that move in and out of favor during market cycles as well. Think growth vs. value, small vs, large, domestic vs foreign, varrying regional allocations, varrying stock vs bond allocations, etc.
Not knowing more about your goals, positioning along with whatelse you own and in what percentages I find it hard to make comment on which funds you should "can" and which ones you should keep. There possibly could be tax issues that might need to be considered along with some other things as well.
Generally, the more risk associated with a fund the less of it I'll own in realation to other funds held within its sleeve, its area, and my portfolio as a whole. Take the growth area of my portfolio which now accounts for about 15% of my overall portfolio and holds a total of 12 funds with these being divided among four sleeves. The two largest sleeves are my large/mid cap sleeve and my global growth sleeve at about 30% each. The two minors are my small/mid cap and specialty & theme sleeves at about 20% each. Generally, for a three member sleeve, I'll run about a 50/30/20 percent mix. An example. In my large mid cap sleeve I'm 50% SPECX, 30% AGTHX and 20% AMCPX.
With all of the above being said ... I'm thinking you should do as you feel best and discount the thoughts of others (mine included).
If you want to reduce the number of holdings held within your portfolio I'm sure you have good reason to do this. Likewise, I have good reason, as well, to govern they way I do.
I'm also thinking, they are all good funds. Why "can" any of them?
Tend to agree with Ol’Skeet that number of funds doesn’t matter a lot. Getting the number down may well be a sign that you’ve successfully identified the funds that are most aligned with your own personal needs. So I suggest you view a lower number more as a measure of how well you’ve identified the right funds for you rather than a goal in itself.
A few things important to me in adding or culling funds (highly subjective criteria):
- Low fees - Diversification across fiduciaries (fund houses or other) - Diversification across asset classes - Moderate exposure to international markets - Superior downside protection relative to peers
Absent from my list is performance. Perhaps that’s due to it being so obvious a consideration. In addition, capital preservation becomes more important in retirement - especially later on. I’ve always strived to keep the number under 20, believing that meets my needs and is fairly easy to get my head around. Currently I hold 15 funds across 4 different management houses. In addition, I have one ultra-short bond fund that I treat the same as cash.
RPGAX is one of the 3 balanced funds I own - the only one with significant international exposure. I suspect the choice has as much to do with my preference for T. Rowe Price as with anything else. But RPGAX is a good fund with reasonable fees.
Art, Congratulation on your pending retirement. In general, I like T. Rowe Price funds since many of their managers have long track record and lower fee than the MF industry. The other metric worthwhile to consider is the recovery period after the maximum drawdown (risk consideration) - something you can search for if you are a MFO Premium subscriber. In April's commentary, David Snowball talked about the remake of his portfolio and he now uses a TRP target date to consolidate part of his funds. I consider that is wise move as TRP offers one of the better performing target date funds in that space.
At present I have two balanced funds - TRP Cap Appreciation, PRWCX and Vanguard Wellesley Income, VWINX.
I'm not commenting on any particular fund in your holdings, but I believe that putting your entire resources into ANY one holding is close to insanity, for the reasons that Old_Skeet mentions. The person who made that suggestion is very wealthy, no longer active in the markets (albeit after doing very well there), and he can personally afford to do just about whatever he wants.
To make that suggestion to someone else without having any idea of all of the circumstances and factors involved is not only reckless and irresponsible, but close to incompetence, in my opinion. If a similar recommendation were made by a professional financial advisor it would likely be considered actionable malfeasance.
Congrats on your coming retirement Art. I'm about there myself, but will probably work part time to ease into retirement.
Over the last 5 years or so I've simplified my self-managed portfolio to about 8 funds that I feel good about. That's 1/2 the pot. The other 1/2 is in a well diversified robo. The 8 self managed funds include equity and fixed income funds. About 20% of that is in 1 balanced fund, PRWCX. I am not a believer in duplicating funds in categories or asset classes but to each their own. I also believe a 1 fund portfolio can be a fine idea coupled with a cash bucket in retirement. That 1 fund would be a target/retirement fund. How simple is that, but I don't think that is what you are looking for.
You, having 7 world/global funds, tells me that you and I have different portfolio building ideas, so I can't offer much help. 1 or 2 of those would be fine in my mind (or none depending on what else you hold). You can't go wrong with TRP (I'd pick PRGSX fwiw), and maybe even holding one of the Grandeur Peek funds might make sense IF they were different enough from TRP.
@Art- Well, since the funds that you mentioned are only 10% of your portfolio, that gives a much better overall picture. It's reasonable to surmise that the other 90% is invested so as to give you decent diversity. In that case, it seems perfectly reasonable to reduce a number of similar funds to only one or two. I'll leave the specific recommendations on that to the other folks here, who have a better idea of funds which are currently doing a decent job.
We, like Ted, are now disinvested in the general market except for a very small part of our resources. During our accumulation years we primarily used American Funds, and while they certainly have some excellent funds with reasonable ERs, I can't recommend that anyone invest in a load fund in this day and age.
Comments
I tend to look at things in a different color of lens than most on the board. I'm thinking, this is because of my baackground being a former credit manager of a fairly large wholesale distribution company servicing the Carolinas, parts of Virginia, Tenn and Georgia. We would not let any one customer become more than 1 percent of our gross revenue nor carry more than two percent of our receivables. To keep the DSO low we required pre payment on special (non stock) items, as most were not returnable, along with good discounting for timely payment of invoices such as 2% ten days, net 30. Our larger and better customers just about always paid taking their discounts.
One might ask ... How does this have any light on your investment portfolio? It's simple. Even in my cash area of my portfolio I will not put more than a couple of percent of my portfolio into any one security weather it be a CD or money market mutual fund. Then moving on to the income area I keep the upper limit at a two to three percent range as well with two exceptions. In the growth & income area, I also have a cap on how much, percent wise, I'll hold in a single position. This also applies, as well, to the growth area of my portfolio.
If one or even a few funds falter then there are a good number of others that can continue to propel my portfolio. After all, funds do change managers and they have styles and strategies that move in and out of favor during market cycles as well. Think growth vs. value, small vs, large, domestic vs foreign, varrying regional allocations, varrying stock vs bond allocations, etc.
Not knowing more about your goals, positioning along with whatelse you own and in what percentages I find it hard to make comment on which funds you should "can" and which ones you should keep. There possibly could be tax issues that might need to be considered along with some other things as well.
Generally, the more risk associated with a fund the less of it I'll own in realation to other funds held within its sleeve, its area, and my portfolio as a whole. Take the growth area of my portfolio which now accounts for about 15% of my overall portfolio and holds a total of 12 funds with these being divided among four sleeves. The two largest sleeves are my large/mid cap sleeve and my global growth sleeve at about 30% each. The two minors are my small/mid cap and specialty & theme sleeves at about 20% each. Generally, for a three member sleeve, I'll run about a 50/30/20 percent mix. An example. In my large mid cap sleeve I'm 50% SPECX, 30% AGTHX and 20% AMCPX.
With all of the above being said ... I'm thinking you should do as you feel best and discount the thoughts of others (mine included).
If you want to reduce the number of holdings held within your portfolio I'm sure you have good reason to do this. Likewise, I have good reason, as well, to govern they way I do.
I'm also thinking, they are all good funds. Why "can" any of them?
Regards,
Ted
A few things important to me in adding or culling funds (highly subjective criteria):
- Low fees
- Diversification across fiduciaries (fund houses or other)
- Diversification across asset classes
- Moderate exposure to international markets
- Superior downside protection relative to peers
Absent from my list is performance. Perhaps that’s due to it being so obvious a consideration. In addition, capital preservation becomes more important in retirement - especially later on. I’ve always strived to keep the number under 20, believing that meets my needs and is fairly easy to get my head around. Currently I hold 15 funds across 4 different management houses. In addition, I have one ultra-short bond fund that I treat the same as cash.
RPGAX is one of the 3 balanced funds I own - the only one with significant international exposure. I suspect the choice has as much to do with my preference for T. Rowe Price as with anything else. But RPGAX is a good fund with reasonable fees.
At present I have two balanced funds - TRP Cap Appreciation, PRWCX and Vanguard Wellesley Income, VWINX.
To make that suggestion to someone else without having any idea of all of the circumstances and factors involved is not only reckless and irresponsible, but close to incompetence, in my opinion. If a similar recommendation were made by a professional financial advisor it would likely be considered actionable malfeasance.
Over the last 5 years or so I've simplified my self-managed portfolio to about 8 funds that I feel good about. That's 1/2 the pot. The other 1/2 is in a well diversified robo. The 8 self managed funds include equity and fixed income funds. About 20% of that is in 1 balanced fund, PRWCX. I am not a believer in duplicating funds in categories or asset classes but to each their own. I also believe a 1 fund portfolio can be a fine idea coupled with a cash bucket in retirement. That 1 fund would be a target/retirement fund. How simple is that, but I don't think that is what you are looking for.
You, having 7 world/global funds, tells me that you and I have different portfolio building ideas, so I can't offer much help. 1 or 2 of those would be fine in my mind (or none depending on what else you hold). You can't go wrong with TRP (I'd pick PRGSX fwiw), and maybe even holding one of the Grandeur Peek funds might make sense IF they were different enough from TRP.
Good luck to you.
Ted, Thanks for your opinion on the funds I listed.
Hank/Sven, TRP is looking like a good place to consolidate monies once I retire. Or buy TRP at Fidelity.
Old Skeet, I knew what you would say old friend. True to form.
Any wisdoms or ideas /tricks you wish to share regarding funds picking before heading to the peaceful sunset.
Any lessons learnt regrets you may want to share
Thank you so much
We, like Ted, are now disinvested in the general market except for a very small part of our resources. During our accumulation years we primarily used American Funds, and while they certainly have some excellent funds with reasonable ERs, I can't recommend that anyone invest in a load fund in this day and age.
Best of luck!