This seems to be my focus du jour - I've started looking at funds in this area with moderate to low expenses, turnover and risk, above average returns, reasonable tax costs, and stable management. (Yeah, I know, the perfect fund - but I'm not shooting for the top in any area, just all things in moderation.)
So far, what I've come up with includes:
-American Century MCV (ACMVX) - low risk, generally good to excellent relative returns, 1.01% ER, moderately high tax costs though (run by same managers as AC Equity Income, which is designed for income)
[This is a fund I've been watching for years - I included it as a choice in a fund-picking contest several years ago]
- Nicolas Equity Income (NSEIX) - low risk, generally very good to excellent performance, concentrated portfolio (somewhat mitigated by the small size of the fund), 0.85% ER, similar tax costs to Am Cent, generally incurs transaction fee, lead manager has been in the business since the 60s (risk of imminent change)
- Invesco Van Kampen American Value (MSAIX) - average risk, outstanding performance, concentrated portfolio, 1.01% ER, better to excellent (low) tax costs, generally incurs transaction fee
- Victory Established Value (VETAX) - moderately low risk, generally very good to excellent performance, 1.07% ER, slightly better tax costs than Am Cent, avail NL/NTF through Schwab
- JPMorgan Mid Cap Value (JAMCX) - moderately low risk, outstanding performance, 1.25% ER, great (low) tax costs (if M* figures are correct - seem to be buggy), avail NL/NTF through Schwab
I've been looking at 3 and 5 year performance, because these demonstrate ability to adapt to different environments (the two periods exclude and include 2008, respectively), and there aren't that many funds that handled both well.
Thoughts on the approach, or specific funds (these or others), appreciated. I still need to delve more deeply into what they hold and anything else one can find about the funds.
Comments
Thanks for the suggestion. As with the ones on my watch list, it doesn't quite meet all my wishes, but it's pretty close too. Excellent returns, low turnover, passable (not great) ER at 1.23%, terrific (low) tax cost. A bit higher risk (M* rates risk as high and high std deviation) than I'd like, but as I said, everything is a matter of compromises.
I'll take a closer look at it.
I believe this is the Institutional version of the RPMGX. It's basically the same fund but, but with a slightly higher ER of 0.80%.
Relative to its category, this has very good 3 and 5 year performance as well - 3 year: 21.13, 5 year: 4.22
Ted
http://www.standardandpoors.com/indices/sp-midcap-400-growth-and-value/en/us/?indexId=spusa-400-usdufg-p-us-m--
The TRP mid cap funds are great funds, and had it been open, their mid-cap value fund would have been on my list (despite its lackluster three year performance).
On the growth side (though I'm not looking there right now), RPMGX is closed, but New Horizons (PRNHX) is open - that's a fund I've used in the past (when it was more of a small cap fund). Generally a fine family of funds to keep in mind in any search (and one where they do manager transitions well, so manager continuity is somewhat less of a concern).
I considered adding this to my posted list, in part because I thought you might bring it up. For at least a couple of reasons I can think of (and probably others that will come to mind later), it doesn't fit my particular needs right now. But it's a fantastic fund, and one of only two I think are really good at Fidelity (Contrafund - FCNTX - being the other).
I consider it a unique fund in its breadth and center (which you describe briefly) - I've found nothing else close to it. M* recently noted that Fidelity has assigned 5% of its assets to managers other than Tillinghast. That could be noise, or it could portend more changes. Several years ago, Fidelity gave Danoff a co-manager for VIP Contrafund (the annuity clone of Contra). Not that much later, they took Danoff (and his co-manager) off the fund and gave it to a team of managers, where it remains today. Of course, Danoff still kept his major charges - Contra and New Insights. Still, Fidelity doesn't handle manager transitions, or even co-management, well.
Stocks go through what seem to me to be multi-year cycles, where growth leads, then value leads. Here are figures going out ten years for M*'s Mid Growth Index and its Mid Value Index
Over ten years, their performance is nearly the same: 7.38% (growth) vs. 7.10 (value). But over the past five years, value returned nothing (0.01% annualized), while growth returned 3.46% annualized. So in the previous five years, value must have significantly outperformed.
I don't try to time these cycles, I don't try to guess when value will resume its lead role. Growth may continue to lead, but for how long? Better, IMHO, to hedge one's bets.
Thanks for the additional information - it's reassuring that he (and you) kept your cool through that period.
Weirdly, Fidelity offers the cheaper Select shares (JMVSX) NTF to "retail" investors, but they still require a $1M minimum, even in IRAs. That's a bit more than my pocketbook can afford I'm afraid, which is why I looked to JAMCX.
You noted, "M* recently noted that Fidelity has assigned 5% of its assets to managers other than Tillinghast. That could be noise, or it could portend more changes."
I will assume you are aware of the recent moves by Fido to form teams around some of their mutual fund managers and operations. I, of course; don't know how far they want to travel this idea.
Just a trinket note. A benefit could be a learning method or mentoring from those like,Tillinghast. A good thing, if these folks don't choose to move on to other work.
As to mid-cap. I agree this is a fine area of investment; but for myself I would not attempt to lean to value or growth as initial criteria (or at least what M* or even the fund company placed for a name) as the choices and holdings of any given may become value or growth going forward. We then may have a mid-cap blend, eh?
Take care,
Catch
Regarding Fidelity teams ...
Fidelity has been trying for some time to form teams, or at least co-manage funds. They started experimenting with pairing managers in 2005, with Mid-Cap Stock (FMCSX). And as I'd mentioned, they tried pairing someone with Danoff on VIP Contrafund in that timeframe as well.
In 2007, they tried the team approach, tapping several lead managers (e.g. Stansky - see Magellan) to take over for Danoff on VIP Contrafund. A year later, almost to the day, they started a clone - Fidelity Series All-Sector Equity (FSAEX).
After VIP Contra/All-Sector Equity's team did such a good job (not - see where M* said their middling record doesn't inspire very much confidence), Fidelity started applying the team approach more widely in 2009, with Balanced FBALX (see link), Stock Selector (now called Stock Selector All Cap - FDSSX), Small Cap Selector (now called Stock Selector Small Cap - FDSCX). Then there was Fidelity Value (FDVLX) that went "team" in 2010. More came in March/April of this year, including Fidelity Large Cap Value (now called Stock Selector Large Cap - FSLVX) and Fidelity Midcap Growth (FSMGX).
Some of the funds' objectives got overhauled in the process, and it seems that most if not all are mediocre at best.
So the recent addition of more teams is nothing new. Fidelity continues to flounder - FSLVX I believe was one of the funds started a decade ago as a "style-pure" fund - that would stick to one square of the style box. When that marketing approach didn't work, Fidelity went to the "analyst team" approach, where different sector managers get their own sleeves to run in multiple funds. A lot of people I've never heard of (they seem to be primarily analysts), operating independently.
Regarding mid-cap ... don't read too much into my "style box du jour". Identifying good candidate funds in advance helps to modify a portfolio with substitutions, or to rebalance, or to swap a couple of boxes for a couple of other boxes.
In the domestic MC space (all styles), funds that look attractive include UMBMX, WPFIX ($2K minimum in Scottrade retirement accounts per site), and DEFIX, in that order.
Kevin
I believe it already is one except maybe they make it official.
I really do not have good candidate for this asset class. Outgrown small cap value funds typically occupy this style box. If you want exposure you might be better off with a good index fund/ETF than a mediocre managed one.
Thanks. I'm not averse to mult-cap funds, and in fact prefer them. (My goal in identifying funds that fit particular "squares" is not to pigeonhole them but to identify building blocks that can be used to construct a balanced portfolio. A multi-cap fund, almost by definition, is balancing out several (but hardly all) squares. At the same time, because it still averages out to a particular part of the market, its "center of gravity" can be used to adjust a portfolio that is skewed elsewhere, or to replace other funds that ply the same waters.)
All that said, though your suggestions work for you, they're not quite what I am looking for.
FSNAX - this is indeed a multi-cap value fund, as classified by Lipper, and even M*'s style breakdown shows a distinct value leaning (though M* puts it in the blend column, and the fund benchmarks itself against the Russell 1000, not 3000).
But it is a new fund; and the managers, though they have managed private accounts, do not seem to have prior experience running retail funds. These factors tend to add to risk. I'm more inclined to accept high turnover (here, 174%) in a growth fund than a value one. Since the fund holds securities for just a few months, that makes it hard to figure out what it's doing by looking - and being able to do so is even more important given its short track record. Might be worth watching to see how it does in a variety of markets, though the high turnover and expenses (1.36% even after waivers) make it less attractive to me.
GOODX - you do like new funds. Here though, the managers have long track records. And the turnover is extremely low (12%), with reasonable costs (1.10%).
A bit larger cap than I'd like (with over 2/5 of the portfolio invested in large caps). Also, a really concentrated fund (20 stocks plus other securities) makes me uneasy - others love this show of confidence by fund managers. M* notes that due to this and the managers' general style, the they expect the fund to be rather volatile. Not what I'm particularly looking for, though that can work out well in the long term. (And especially with low turnover, they won't be dumping stocks in response to the volatility.)
As you note, the other funds are not value-leaning, so I'll just comment briefly on them.
UMBMX - good fund, worth keeping in mind for mid cap core.
Nothing's perfect, and the thing for me to watch here is the turnover (195%). That doesn't seem to have affected tax costs yet, but that may be due to the fund growing so quickly (so that gains realized early in the year are spread over a larger number of investors at the end of the year, reducing the impact of the turnover). The fund tripled in size between 2009 and 2010, and again tripled between 2010 and 2011. (Years ending June 30, per prospectus). To date, since June of last year, it's "only" doubled in size. This is not necessarily a good thing, and needs to be monitored too.
WPFIX - excellent fund, worth watching on the growth side. Does okay in down markets, somewhat outperforms in up ones. Very low turnover, reasonable expenses, very low tax costs. Somewhat concentrated portfolio (but somewhat mitigated by extremely low turnover).
DEFIX - already commented in previous post above.
Thanks again. Some interesting funds. Not necessarily my cup of tea, but they work for you and they seem to have a lot going for them.
Short answer - three years of solid underperformance (94th percentile!) and it's closed. In the previous seven years, it never dropped below the third quintile (worse than 60th percentile). It's now done that in 2009, 2010, and (so far) 2012.
Investor's right - it's been creeping up in market cap also. I had to tweak my screens to have this fund show up.
Regarding ETFs - In my mind, ETFs are little more than marketing of index funds (Vanguard demonstrates that clearly - it sells a single portfolio as a retail fund, as an institutional fund, and as an ETF). So I would rephrase the question as why not an index fund?
I'm happy to consider index funds if I have a hole I want to fill and can't find something else I feel is better. But I don't need to watch different indexes - I just need to look at the different methodologies employed, consider the portion of the market I'm interested in, and then pick the lowest cost one that uses that methodology effectively.
I have used index funds in the past, and expect to do so in the future. I have helped people construct portfolios using (in part or in whole) index funds. The point of the exercise is to see if there's something better.
Total return chart for FMIMX and IJJ
I am generally hesitant to click on these abbreviation/redirection URLs as there is no way to tell where you will be going in advance. Hackers use these to trick users to visit their sites and to infect not-updated browser, plug-ins etc.
Do all of us a favor, stop using tinyurl.com, bit.ly etc. while posting here.