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Mutual Fund Research Sites: PRWCX vs RPGAX

hank
edited October 2019 in Off-Topic
Here’s a list of some favorably mentioned fund rating services. (Obviously, they’ve overlooked rising star MFO.): https://www.thebalance.com/best-mutual-fund-research-sites-2466453
Others may have additional sites to share. ..... I like to look at Max Funds , but have no insights into who operates it or what their ethics and independence may be. I’ll assume, until proven wrong, they’re at least dealing from a position of objectivity and integrity. http://www.maxfunds.com/

What I was looking at this morning was their take on PRWCX vs. RPGAX. Expect I’ll need to pull a small distribution from one or the other sometime soon. Here’s what’s curious: Max Fund rates PRWCX substantially lower (Score 82% / “good”) compared to RPGAX (Score 96% “excellent”). Both, they project, could experience a “worst case” 40% drawdown over the next year. In most other respects their performance outlook for the two funds is quite similar. PRWCX has the lower fees. And everybody and his brother has fallen in love with it. So why the sharp difference in ratings? Admittedly, the funds belong to different peer groups. But I suspect there’s more than that going on here.

These guys aren’t dumb. I’ve followed them for many years. Especially, I value that they’re often “out of step” with other fund rating services. Anytime everyone agrees about this fund or that fund I get nervous. All I can detect in this case is that they see PRWCX as bloated and also much more vulnerable to hot money flows and therefore rapid redemptions than is RPGAX (as reflected in their max-o-meter graphics.) My own take is that RPGAX is much less a “one man band” than is PRWCX. Most of its investments are in other TRP funds, making RPGAX something of a fund of funds..

Comments

  • TedTed
    @MFO Members: Hank said, "I like to look at Max Funds , but have no insights into who operates it or what their ethics and independence may be."
    Jonas Max Ferris (born September 13, 1971, Southfield, Massachusetts) is an economist, investment advisor, and Fox News economic analyst who regularly appears as a panelist on Fox Business' Channel stocks and investment news program Cashin' In. Ferris joined Fox Business Network (FBN) as a panelist on the stocks investment/news program Cashin' In in 2002. He provides financial advice and services to consumers, and founded MAXFunds.com. He is married to Dagen McDowell anchor who serves at the Fox Business Network. She is also a business correspondent for the Fox News Channel.
    Regards,
    Ted
    Source: Wikipedia
  • BenWPBenWP
    @hank: Thanks for this topic and the link to Max Funds. I spent a few minutes on their site trying to figure out what they have to offer. I was a bit confused by their rating system. By entering a fund family name (although not a big one like TRP) with which I'm familiar, I was able to compare the ratings of a few funds within the family. One salient feature seems to be that the expense ratio plays heavily in the rating, to the point that the retail versions of BCSIX, BIAWX, and WAGOX, funds I own, score much lower than the institutional shares. For Wasatch Global, it's 19 points lower on a scale of 100, yet the difference in ERs is on the order of 30 basis points and this appears to be the only difference between the two. One of my favorite funds, AKREX, scores miserably low. This may be due to Max Funds' attempt to quantify "hot money" in the rating. Chuck Akre recently reported the fund is holding a lot of cash, in large part due to inflows. Max Funds seems to claim these inflows could quickly turn to outflows, thereby lowering the rating. Each fund rating carries a "worst case" drop; IMHO, if AKREX dropped 50%, as they prognosticate, we'd all be so screwed that MFO would fold its tent.
    I'll check out other sites that The Balance may suggest.
  • hank
    edited October 2019
    Thanks @Ted!

    The Wikipedia article I uncovered was pretty sketchy - pretty much the blurb you copied. Found a couple more insightful ones on Mr. Ferris linked below.

    Holy Geez. I’ve never watched this dude, but if he’s anything like Bartiromo or Dobbs, I don’t think I want to. That said, I will steer that way some day when he’s on. I’ll say that if Dobbs, Bartiromo or Cavuto had their own website on mutual funds, I’d run from it. Hopefully this guy is better.

    PS: I’m hoping / expecting Ferris will prove to be Fox’s “Mike Wallace” of their finance crew.:)

    - https://www.sun-sentinel.com/news/fl-xpm-2000-05-21-0005190861-story.html

    - https://articlebio.com/jonas-max-ferris
  • hank
    edited October 2019
    Thanks @BenWP - Yes, agree with you about their over-emphasis on fees, etc. I’ve compared a number of Invesco funds with similar TRP funds there since Oppenheimer merged into Invesco. Invariably, the higher-fee Invesco funds score much lower, even though, in some cases, the 5 & 10 year performance records are quite similar.

    I like their apparent focus on asset bloat & hot money. We don’t get many opportunities to view how a fund behaves when the “jello hits the fan” and weaker hands start bailing. I’ve never thought of PRWCX as a “hot money” fund. But - dang - they may have a good point there. I suspect many have been lulled into a false sense of security owning such a successful “conservative” fund. But as most know, when investors start fleeing en masse from even a good fund, the fund can go into a downward spiral.

    Been looking all over for a book by or about Mr. Ferris I could read to learn more about his fund rating methods and investment philosophy. Thus far, this is the best I could find ... :)

    image
  • MikeMMikeM
    PRWCX has been closed to new investors for a few years now. Those in it have been in it for a while, not hot money IMHO. I don't see people bailing from this fund any more than any other. At least I hope that's the case. It's by far my biggest holding.
  • hank
    edited October 2019
    @MikeM - Nobody is bailing because the fund’s been screaming hot for many years. How many who had a “foot-in-the-door” (modest holding) in 2014 before the fund closed moved much larger amounts in during the subsequent years as it outpaced its peers?

    PRWCX’s AUM is just under $36 Billion. Much newer RPGAX comes in at under $1 Billion.

    Interesting thread from 2015: https://mutualfundobserver.com/discuss/discussion/22450/is-there-a-backdoor-entry-to-t-rowe-price-capital-appreciation-prwcx-as-it-is-closed
  • MikeMMikeM
    Nobody is bailing because the fund’s been screaming hot for many years. How many who had a “foot-in-the-door” (modest holding) in 2014 before the fund closed moved much larger amounts in during the subsequent years as it outpaced its peers?
    Hi @hank. I will continue to contend this fund is at no greater risk of outflows than any other fund, maybe less so in my mind. And that includes RPGAX. There is no reason to believe the % outflow of one will be different than the other. In fact, isn't RPGAX a fund of funds? Who knows how outflows from the sub-funds will affect the make-up of RPGAX.

    PRWCX is a classic buy and hold fund. I'm truly not anymore worried about this fund than my other funds, actually less so.
  • hank
    edited October 2019
    @MikeM - I have a good memory. Hope this post doesn’t come back to haunt you in a few years.
    :)

    I agree with you and most others that it’s been a phenomenal fund since inception 25 or so years ago. However, I’ve never been very good at “commitment.” Refuse to fall in love. Hold it in relatively small proportion (under 10% of total investments). Lightened up a bit over the past year,

    Thanks for commenting.
  • David_Snowball
    Hi, Mike.

    RPGAX holds other funds only for its fixed-income exposure and its market hedge. Otherwise, lots of individual stocks.

    David
  • MikeMMikeM
    @hank, can you show me where that statement came from? I don't even think I can spell phenomenal.
  • hank
    edited October 2019
    David_Snowball said:

    Hi, Mike.

    RPGAX holds other funds only for its fixed-income exposure and its market hedge. Otherwise, lots of individual stocks.

    David

    Thanks for the correction David. I (first) incorrectly referenced RPGAX as investing largely in other TRP funds. (Mike followed my lead.:) ) On closer look, as you indicate, it’s the fixed income part that leans heavily on their in-house funds. Looking at Lipper, 8 of the fund’s top 10 holdings are in-house (income) funds, accounting for about 20% of investments. Beyond that, the fund focuses heavily on individual securities.http://www.funds.reuters.wallst.com/US/funds/holdings.asp?YYY622_VeRFqMFSS/aQEPE4BKqfARuZTH3KwZb8EX/lL+8rQLdotAZM9z8avO4GThPLEGWZ
    -

    @MikeM - Don’t worry about phenomenal. Enjoy the ride. This year PRWCX is trouncing 3 other moderate risk finds I like to compare it to. It’s easily outdistancing: RPGAX, OAKBX and DODBX.
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