A couple fund "swaps" that paid off

MikeM

During the down turn, I didn't really sell equity funds but I did rearrange my International holding back in early April. I always hold my breath when I swap funds but this time it paid off. Wondering if anyone else did the same.

I held SFGIX as my EM fund and FMIJX as my International holding for many years. I don't like to hold to many funds in a category so I decided to swap all or some of both funds for one fund that recently became available after being closed for a while, ARTYX. I sold all my SFGIX and put it into ARTYX. I held SFGIX from the start and I think became married to it. But, with a historically better performing fund available I made the switch. I sold all of SFGIX and put it into ARTYX. As I watched this new fund perform I decided to sell most but not all of my FMIJX and add that money to ARTYX. Sooooo happy so far. I held out a long time expecting better results from SFGIX and FMIJX that never came.

Anyone else make adjustments fund-for-fund like this. Again, I held SFGIX and FMIJX for so long and defended their poor performance the past few years. But I bit the bullet and divorced them.

since April 1st:
ARTYX +38%
FMIJX +14%
SFGIX +19%

Anybody else trade like-funds?

Derf

@MikeM: Congrats on your swap ! Only problem I see, now you have to change your photo. You're no longer caught in the headlights !!

Derf
P.S. I'll confess , I'm still holding the
the two you swapped.

TheShadow

I still hold all three; however, I sold WAEMX, WAIGX, and OBIOX after holding the initial fund for many years, the second and third for several years as well as one other laggard. Bought LLSCX with the proceeds. The four I sold are performing about as well as LLSCX so it appeared to be a wash based on performance.

MikeM

Only problem I see, now you have to change your photo. You're no longer caught in the headlights !!

You're right @Derf, it's almost football season. Time to change back.

hank

Good thread. In mid march I posted about initiating a “gradual rotation” from RPGAX into DODBX. Since accounts are directly with the respective houses, what I did was shift (eventually 100%) of funds from DODIX into DODBX. And, at Price, I shifted corresponding amounts out of RPGAX into TRBUX (ultra short).

Long story short: The move hasn’t made much difference to date. Over 13 weeks DODBX leads RPGAX at last look, but only by a slim margin. One benefit to me - the RPGAX shares sold were all from a Traditional IRA, while DODBX is in a Roth. Since markets did well over those 13 weeks, I’m a bit ahead re tax positioning. BTW - I still own RPGAX within my Roth.

Gave a lot of reasons & thinking when I posted in mid March, so won’t repeat here. FWIW - the thinking expressed back than hasn’t changed.

MikeM

@hank, I know you are a TRP guy. Have you looked at the new'ish TMSRX fund, Multi Asset Strategy? Another portfolio change I've made the past few months was to go with more conservative alternative type funds. TMSRX is one of those, along with a pretty heavy dose of MNWAX and most recently started an investment into GAVAX.

BenWP

I think @MikeM already knows I put my international holdings in FMIJX and BCSVX into ARTYX and ARTJX. Also switched GPGCX for GUSYX. I added a slice of MEGMX and for the first time a quite a while EM is working. I decided, based on David Snowball’s writeup, that a part of the cash I have earned nothing on for the past six months would be better off in TMSRX as opposed to trying to squeeze yield out of some Schwab MMF. I have held or increased global fund holdings, so international exposure has not been slighted.

hank

MikeM said:

@hank, I know you are a TRP guy. Have you looked at the new'ish TMSRX fund, Multi Asset Strategy? Another portfolio change I've made the past few months was to go with more conservative alternative type funds. TMSRX is one of those, along with a pretty heavy dose of MNWAX and most recently started an investment into GAVAX.

Hi Mike. Great minds don’t always think alike. The changes (albeit minor) I made a few months ago were to add more risk to the table. DODBX is arguably more risky than RPGAX. I also carved-out a new “spec” position from my 15% allocation to cash-like instruments. For example, the 15% that previously was all allocated to cash-like funds is currently allocated about 35% to a couple equity funds I think have potential with the remaining 65% invested in cash & ultra short. It’s a 2-pronged spear. At our age we should be cutting back on risk, as you seem to have done. But with the current super-low (err ... “non-existent”) interest rates, one needs more risk if he is to stay ahead of inflation.

Re TMSRX - Yep. I dove in as soon as David mentioned it here or as soon as it opened (not sure which came first). It constitutes about 45% of my 25% allocation to alternative funds, which, mathematically speaking, makes it about 11% of total portfolio. Sounds to me like David has a larger chunk, but don’t think he mentioned percentages. Good review by David. Maybe even “intriguing

MikeM

@hank, it was David's commentary that got me interested enough to buy TMSRX also. As @BenWP mentioned about MMs and CDs paying nothing. When a couple of my CDs matured I wasn't going to invest in that path again. I also sold my HY muni fund, at a loss. With that I started an allocation to more conservative "alternative" funds, TMSRX, MNWAX and GAVAX, Leuthold Core ETF LCR (though I don't think M* categorizes TMSRX as an alternative fund, close enough).

hank

Thanks for the additional clarification @MikeM / BTW - Your “deer in the headlights” was a classic. I think we all felt that way a few months ago.

carew388

In addition to TMSRX dropped a few bucks into BACPX PCBAX BAMBX JOELX and HMEAX which I bought at E-Trade ntf and transferred to Schwab.

Sven

Interesting tread here for sure. I left FMI funds several years ago to other options perhaps better suit my purpose. FMIJX holds high quality stocks but the growth oriented stocks seem to do better in today environment as value stocks have lagged badly. Swapped FMIJX for Vanguard International Growth, VHIGX several years ago - much better. Also move part of SFGIX to Matthews Asia Asia Innovation, MATFX - so far so good. Will check out TMSRX - available as Transaction fee fund at Fidelity.

@MikeW, Interesting that ARTYX has 20% exposure to US - high growth stocks.

Observant1

Sven said:

Interesting tread here for sure. I left FMI funds several years ago to other options perhaps better suit my purpose. FMIJX holds high quality stocks but the growth oriented stocks seem to do better in today environment as value stocks have lagged badly. Swapped FMIJX for Vanguard International Growth, VHIGX several years ago - much better.

I also swapped FMIJX for VG International Growth (VWILX) a little over a year ago. The poor FMIJX performance this year really surprised me. FMI funds usually perform well during downturns.

Sven

Equity performance has shifted in last several years as growth out-perform value style. This year the difference is even bigger.

YTD: Vanguard Growth index, 17.2% versus Vanguard Value index, -15.0%.

Prior to the pandemic, FANNG stocks heavily dominate the indices. Even though US is not yet official in recession, few stocks are showing decent earning and many retract their earning forecast. Time like this is similar to the time period prior to the 2000 dot-com bubble. Growth stocks way out-perform value stocks for several years, then came the crash. Value stocks held up better from 2000-2002 until market recovered. Can this repeat again?

FMIJX held high quality stocks but I believe it is slowing environment that steered away from these stocks. Still believe FMI stock picking skills but perhaps bad timing. For now the change to VWILX has been good sofar.

msf

Even though US is not yet official in recession,

The official definition, such as it is, is whatever the National Bureau of Economic Research (NBER) says is a recession. And NBER said last month:

in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.

https://www.nber.org/cycles/june2020.html

Since 1929, the NBER has mapped the U.S. business cycle, which is the up-and-down fluctuation in U.S. economic activity. ...

The NBER measures peak-to-trough declines in economic activity through a number of macroeconomic variables. While the popular definition of a recession is “two consecutive quarters of negative real gross domestic product (GDP) growth,” the NBER does not strictly abide
by this designation.

Douglas C. Smith (Research Analyst, Federal Reserve Bank of St. Louis), What is a Recession
https://files.stlouisfed.org/files/htdocs/pageone-economics/uploads/newsletter/2009/200902.pdf

Sven

Sorry, I stand corrected. We are in a recession.

MikeW

I swapped out ARTJX and entered into MIOPX back in April. So far, this has been a good move as MIOPX has strong exposure to China and emerging Asia and has performed well.

BenWP

@MikeW is nominated for best swapster on MFO.

FD1000

@MikeM: Congrats on your swaps. I love great stories and successes.
I swap funds all the time and since I have 2-4 funds these are huge swings.