In this months edition of Bottom Line Personal MFO's David Snowball has a featured article titled: Simplify Your Investment Mix.
The bullet points of the article follow.
The articles covers, from his view, the advantages of streamlining ... Better Returns and Less Effort.
He offers up a one fund portfolio ... a two fund portfolio ... and, a three fund portfolio.
In the one fund portfolio he offers two fund choices: DODBX & VWINX.
In his two fund portfolio he offers both a basic and conservative route. The basic route contains the following fund choices. They are JENRX and HABDX. The conservative route is made up of PRBLX and FTBFX.
For his three fund portfolio he offers both a basic and conservative route. For the basic route he list the following funds. They are VDIGX, TROSX and DODLX. For the conservative route he uses PRDGX, TBGVX and PONRX.
The article covers suggested weightings along with some other comments.
Nice article for those that are wanting to streamline.
Old_Skeet
Comments
As I've written in other posts, 2020 skews the figures. A 6% performance difference YTD is enough to make VWELX look better over any time frame. But this is (we hope) a once in a century situation. Outside of this period, DODBX looks better. OTOH, what 2020 highlights is the higher risk inherent in D&C funds.
David Snowball perhaps addresses this in his sidebar on index funds: although not best in bad markets, good over the long term. The same could be said of D&C funds.
One small nit to pick: PONRX is a load fund. As it says in its prospectus: "distribution fees ... may cost you more than other types of sales charges, such as [front end loads]. Therefore, ... the distribution fees payable on ... Class R shares may, over time, cost you more than Class A [front end loads]".
Better to buy PONAX load waived. The embedded (level) load in PONRX is reflected in its lower Morningstar (retrospective) star rating and its lower Morningstar (prospective) medal rating.
Where I live it's only 20200524. And I can't find the article mentioned by Old Skeet.
Footnote : You might be surprised if you looked at how DODGX has performed since the market bottomed on / around March 20. (thru last Friday +26%) Overall I agree with Ol’Skeet. Let me add that for a conservative (think older) investor to be a “winner” relatively speaking I’d say he / she needs to own some non-correlated assets. Since this invariably entails owning some “hot” sectors or funds along with some “stinkers” it’s not currently in vogue, never has been, nor will it ever be.
“But I repeat myself.” - Mark Twain
>> You might be surprised if you looked at how DODGX has performed since the market bottomed on / around March 20. (thru last Friday +26%)
Huh? What's the surprise? Did I miss something, or did you mean meh meh ?
M* old-style graph from 3/20 to date shows $10k rising to $12,157 vs SP500 $12,312 vs VONG $12,935.
Second, what's the goldenness from early Jan 09 onward? They lag SP500 hugely to date, of course, with this latest plunge + partial bounceback ... so lemme check prior endpoints. Nope. Some spans lag, some outperform, the 5y point (1/14) may be the most marked, but still meh if one held on.
Are we looking at the same graphs?
I love Rekenthaler's analyses and digging, and I am slowly coming around to embracing Vanguard more, but D&C still remain well off any lists of mine.
Standardized periods are used (and mandated by the SEC for advertising) to eliminate cherry picking. Of course a single time frame would still be subject to luck of the draw - a fact you recognize below in looking at multiple periods.
There's another part of what he did that you didn't mention or question. Why 10 years? Conventional wisdom is that one should not invest in equity for shorter time periods. Because of random market cycles, recessions, etc., it can take that long to work through a 1-3 year "glitch" in the markets. Sometimes I wonder
DODBX so outperformed VBINX prior to the 2000-2002 decline that it maintained its superior performance (over rolling 10 year periods) even incorporating this timespan until 2008 came along. One can see that work its way through the figures, as VBINX showed better 10 year performance figures for five periods, 2003-2012 through 2007-2016.
But DODBX's superior up market performance gradually won out, as it had a better 10 year period 2008-2017. That still included the 2008 market and illustrates why it helps to have patience in the market. Of course DODBX did markedly better in 2009-2018 once 2008 dropped out of the 10 year span. It also had measurably better performance than VBINX in 2010-2019.
Here's a link to the M* chart I used. Just shift the starting and ending years back by the same amount to get each of the time rolling 10 year periods.
Closing price DODGX 3/20/2020: $122.40
Closing price: Friday, May 22, 2020: $151.57
Increase in NAV: +23.81%
Dividend paid March 26: $2.80 per share
Increase including dividend: Approximately 26%
If the above doesn’t satisfy, try running the numbers from the next trade-date, Monday March 23, when DODGX closed at $118.38
https://finance.yahoo.com/quote/DODGX/performance/
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@Davidrmoran said: “Second, what's the goldenness from early Jan 09 onward ” They lag SP500 hugely to date “ David, I’m not sure whether you purposely misrepresented my remark or perhaps, I needed to add some additional qualifiers to the statement. I thought that within the context, it was concrete enough. As you are no doubt aware, comments like that need to be considered in light of the context in which they appear.
The whole point I was making is that D&C funds tend to have erratic (roller coaster) patterns of performance. So, my comment “when they rocketed back to the top of the herd beginning in 2009, they became the golden boys once again” was meant to refer to another sharp reversal in performance which lasted several years. Obviously, that “golden boys” moniker no longer applied in recent years. If it had, we wouldn’t be discussing a remark like @Shostakovich‘s “in light of some of the controversy here around D&C funds”. You don’t see that during the hot performance periods.. More likely, people are asking whether thay can buy D&C funds NTF.
“S&P 500”? Where did that come in? I thought we were discussing actively managed funds.
No dispute that if you could buy past performance, the S&P500 would be a better investment than most actively managed funds - at least since sometime in the ‘90s. I suspect by now that’s included in high school history books.
https://quotes.morningstar.com/chart/fund/chart.action?t=dodgx
as long as it is still active, and put in any start and end dates you like --- including multiple 10y periods too! No math required. It shows what I posted:
\\\ M* old-style graph from 3/20 to date shows $10k rising to $12,157 vs SP500 $12,312 vs VONG $12,935.
For which to me the only surprise is how meh it remains. So I could not understand what you wrote. Still can't.
No misrepresentation either; honest puzzlement at "But when they rocketed back to the top of the herd beginning in 2009, they became the golden boys once again." I am not seeing it for that event. That's all, nothing more.
And again, yes, I almost never look at 10y periods alone; every time I post, about, I have looked at and mentioned 9-8-7-6-5-4-3-2y performance, also longer, also with earlier endpoints than the present.
Why would I look what DODGX did since the bottom?
YTD...VFIAX(SP500) is at -7.8% while DODGX is at -20.2%
One year...VFIAX 5.5%...DODGX-10.9%
3 year........VFIAX 9.4%...DODGX 1.4%
VFIAX continues to beat DODGX for 5-10-15 years and with better SD, Sharpe,Sortino. See 15 years PV(link). How long can you underperform + have higher volatility and claim that you are OK because you can't compare DODGX to the SP500?
For moderate allocation, I would look at PRWCX,VLAIX. VLAIX has more mid-cap and higher rated bonds so owning both is a good choice.
For conservative allocation, VWIAX/VWINX is a good choice.
BTW - I’d been offloading DODIX back at the time because I felt with the 10 year somewhere around 0.50% it no longer made sense to include it in my “cash” sleeve where I’d been using it. Was down to “pennies” (figuratively speaking) in DODIX on March 20 and decided to lob the remainder into DODGX - a fund normally well outside my risk tolerance zone. It’s treated me well since the 20th of March. In no hurry to unload it.
Per M*, your conclusion is erroneous, and from close 3/20 to close last Fri it is up ~21.57%. ~$155 lower than SP500 on $10k.
Suggest learning to enjoy this:
https://quotes.morningstar.com/chart/fund/chart.action?t=dodgx
Although perhaps it's wrong somehow.