Bloomberg Article:
markets-without-havens-are-becoming-all-too-realThe Bloomberg article got me thinking about doing a portfolio review.
Much of the article was focused on volatility and earlier this year I watched VMVFX deal with the pandemic's impact on this fund's focus, minimizing volatility.
I initially liked the concept of a fund (VMVFX)...a global equity fund... that attempted to minimize volatility. The Pandemic tested its strategy and proved its volatility wasn't at all minimal on the downward side of things. I sold out of that position and decided to except "normal" market volatility by purchasing PRGSX instead. The two have diverged since March with PRGSX offering the rewards of upward volatility.
I also noticed that my Moderate Asset allocation fund (PRWCX) YTD lost less and regain more than VMVFX proving that allocation funds are still a great way to manage market risk and reward.
VWINX performed as expected losing less and continues to be my portfolio benchmark (a fund that I compare all my other funds performance against). When other funds in my portfolio out perform VWINX I consider capturing that out performance by selling that fund's alpha back into VWINX. This helps me grow my portfolio's conservative base in good times and is a place where I will pull assets from during retirement minimizing the volatility of my withdrawals. I struggle going one step further by holding sizeable amounts of my portfolio in pure bond funds. I own VFSTX, PRWBX, PTIAX, THOPX, and (a Schwab bond eft) SCHZ.
Q: Is there anything magical out there in mutual/eft fund-land similar to PONDX of yesterday?
I believe even with bonds at historically low returns they still maybe the best way to minimize volatility, especially when thoughtfully combined with well managed allocation funds.
Other fund holdings that have not performed to my expectation:
FRIFX - Very correlated on the downside (to VGSIX) with little upside capture.
THOPX - A Short Term Corporate fund that has performed absolutely awful in the short (YTD) term. Showing no signs of its former performance.
Comments
I've been phasing into ARTTX (Artisan Partners Focus Fund) the past week or so, do like that it attempts to be "risk - aware", looking at crowding, volatility, correlation, factor analysis, macro drivers, liquidity, stress tests and can use options to mitigate risk etc
Also hold TGUNX TCW Premier New America, full of cash flow rich, compounders, lower asset base
I attempt to barbell these holdings with ROSOX (Rondure Overseas) in case of falling dollar, FPFIX FPA Flex Income, IOFIX Q Infinity and large holdings in DERI Dominion notes, like money market, no FDIC, easy access to funds and 5 year CDs.
Who knows what will happen...do think this Virus etc has pulled forward many trends, one of them being software companies etc who are losing money now but are growing their market share tremendously and will have huge revenue streams with the life time value of customer annuity effect when customers get into their eco system and don't want to change out...many mutual fund managers are older (maybe not in age but maybe in thinking/training) and might be fighting the last war...
Good Luck to all,
Baseball_Fan
Stocks/allocation:
PRWCX has been my top moderate allocation for years and YTD did well. Great manager with insight.
VWINX/VWIAX-has been my top conservative allocation for years and YTD did well. Great long term team investing in stocks and Corp bonds which is the "secret" of theis fund.
Beyond that simple indexes such as SPY. For more growth simple QQQ
Remember, 40% of the SP500 and 50% of QQQ revenues are from abroad.
Bonds:
BIV a great ballast index and better than BND at about 50% treasuries (better ballast) + 50% investment grade Corp(better for rate rise+higher distributions). BIV has better performance from 3 months to 10 years. BIV er=0.05 is cheap and you can buy it with no commission. BIV is so good you can use it instead of managed core + core plus funds.
PTIAX in the Multi sector category
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VMVFX used to be pretty good but is doing bad.
PIMIX-used to be an easy choice but lost its mojo in early 2018. There is a new fund JASVX in MBS/securitized. It did well in the crash and YTD. Can't guarantee you anything.
THOPX-I never liked it. Looks Sometimes OK but crashes.
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Voaltility: I have learned over the years that only several funds can play volatility well longer term but it's difficult to predict and why I'm the one who does it manually.
Momentum: similar to the above, funds can do pretty well for several years and suddenly be behind for years because the environment changed(example: growth vs value). This is why diversification is not a good choice if you can observe this.
Do I really need to hold 10+ funds...3 moderate allocation + 3 conservative allocation + 3 LC stock funds + 3 SC,MC + 3 international?
You can do it all with 5-7 funds.
On the bond side, I, like you wish there was a viable PONDX alternative. I don't believe there is and I didn't like what happened to many of these funds during March. My bond holdings currently include MWTRX, PTIAX, BSV and VCSH.
I'm wondering going forward if I need to hold a smaller position in bonds, especially so with the bond component in VWINX and PRWCX. I'm not sure what the options would be, however, I have around 3% of my total portfolio(s) in GLD. Other possibilities could be utilities, reits, international bonds and possibly tips. Safety would be the utmost importance to me in this area as I use the equity etf's to provide a little kick to performance.
Would be interested in hearing others thoughts on this topic.
Thanks for your post as I enjoyed reading and commenting as I have similar concerns!
With respect to VMVFX, this global fund has underwent several sizable changes while trailing its benchmark badly this year. YTD -8.1% versus Vanguard total world index, 4.3%. I too invested in this fund since inception but left two years ago to refocus my oversea exposure elsewhere toward growth oriented funds.
1. the top 10 holding of VMVFX has changed considerably. Now it holds Alibaba (#1) and Taiwan Semiconductor (#3) and they are certainly NOT low volatility stocks.
2. a change of fund manager in 2018 (Antonio Picca)
3. an increased of emerging market exposure to 10.1%
4. Currency hedging hurts its performance as USD has been declining this year.
5. Large % of REITs early in the year does not help as REIT is still not doing well. Recent data indicated that REIT holding has reduced to 4%.
My Vanguard total bond market index fund, institutional share, in a target date fund has done a solid job this year and that is good enough for us.
@Ironranger61, bond funds you picked are quite good. One suggestion I have is Vanguard International Total bond index, Admiral share, VTABX - a conservative bond fund. https://investor.vanguard.com/mutual-funds/profile/portfolio/vtabx
Per the article cited, I don't feel like I've lost out on much by having plenty of cash on hand.
After spending some time around some hospitals I became a big fan of "medical devices." Hospitals burn through stuff at an astonishing rate.
Stay safe, Derf
Accounts & Trade
Account Features
Payments & Transfers
Set up auto tran or inv
Set up auto inv
You can check with your Fidelity rep as well & they can assist. Some reps may not be aware of this and will need to check with a more senior person.
Hope this helps as there are no good subs for VWINX in my opinion!
If you're looking at investing more than $50K, you could save 7 basis points ($35/year) by buying VWIAX at Vanguard and (if you want to keep everything at Fidelity) transferring the account to Fidelity. Generally you can hold Admiral shares at Fidelity but not buy any more.
If you still want to buy a similar fund at Fidelity, you could look at HBLYX/HBLAX submanaged by Wellington. It is managed by St. John/Reckmeyer/Hand/Illfelder. St. John is the lead manager for VWESX, and Reckmeyer is the lead at VWINX. HBLYX takes a bit more credit risk than VWINX and is a bit more volatile, still generally not dissimilar to VWINX. The equity profiles are quite similar, and both funds lean toward longer durations.
The Y shares are available at Fidelity at a low min, but with the $49.95 initial fee. As discussed above, this could still save you money in the long run. (You should be able to add shares for a $5 fee via automatic investments, but that should be verified with Fidelity. I'm less certain about the ability to use automatic investments with Vanguard Investor shares, though you should check with Fidelity for VWINX also.
See the attached SEC filing which states D share class was converted to A share class:
https://www.sec.gov/Archives/edgar/data/810893/000119312518015966/d500842d497.htm
It appears that D share class investors were grandfathered from the "A" share class load on future purchases after the conversion.
They both are similar in performance and speak to an ESG perspective...but...what turned me off on the BIAWX fund is they really play up the ESG perspective...then hold AMZN as their largest holding...Whiskey Tango Foxtrot! You mean the company that undercuts all our local businesses and puts them out of business so the local leaders now have to increase out property taxes, fines and fees to the sky? The one company who will deliver a tube of tooth paste to your door, ya, that is environmental friendly, not!
But more so I like TGUNX better...I like the manager's background and the funds perspective, very subjective statement I'm about to make but I used to spend a lot of time doing business out West, Silicon Valley in the 90's, LA area and San Dog...used to have business dealings with many folks who went to Stanford or UCLA, really sharp folks, modern thinkers, open to different viewpoints. TGUNX, Shaposhnik seems cut from that cloth, I've seen interviews on CNBC, like his moxy and poise. Like that fund is nimble, can hold stalwarts like MSFT but can also hold co's such as the The Trade Desk. Foreign holdings are Canadian companies, North America.
Take care, stay safe everyone, Vote and Good Luck to all,
Baseball_Fan
(Should be a good World Series between Team Hollywood and Team Walmart)
What was I think ? 8% or 4% =50 - 50. Stay Safe, Derf
VWINX vs. HBLYX:
LCV: 69% vs. 73%
LCBl: 21% vs. 15%
LCG: 2% vs. 3%
MCV: 5% vs. 6%
MCBl: 0% vs. 1%
Others: 0%
VWINX: 9.5% of equity is foreign (1.47% Canada, 1.48% UK, 6.59% Europe developed)
HBLYX: 9.4% of equity is foreign (1.69% Canada, 1.34% UK, 6.35% Europe developed)
Even in terms of equity allocation, the historical differences tend not to be quite so large. Closer to 5% than to 8%. Again from M*, VWINX vs. HBLYX:
2020: 36.46% vs. 41.46%
2019: 38.11% vs. 42.87%
2018: 36.90% vs. 40.15%
2017: 38.56% vs. 43.25%
2016: 38.30% vs. 41.27%
Derf
But some people balk at that. (Hence the alternative suggestion.) Actually, a lot of people balk at that - look at how many people would rather buy higher ER retail shares than pay a fee to get into lower ER institutional shares. Many people would buy HBLAX NTF over HBLYX with a transaction fee. Or they'd buy C class shares before paying a load for A shares (e.g. TEGBX over TPINX before the latter was sold load-waived).