Hi, been awhile since i've been here and wonder if i could get some opinion. My port is 40% equity, 60% FI. I have held OAKIX and OAKBX to fulfill diversification in providing foreign market exposure, and the positions combined comprise
less than 10% of my Taxable account. I'm disappointed in performance of both - lagging for a few years now but YTD both down double-digits. I recognize these are being hurt by the value-bias style that has been out of favor for quite a few years... Herro @ Oakmark has favored financials which of course negative interest rates are pummeling worse than the overall market. IF rates rise, theoretically financials - and in turn Oakmark funds would be expected to improve. However to exit basically 'at the bottom' in current conditions obviously invokes tax consequences. That said, how long is long enough to give these a chance; they are in the bottom 2% of Foreign Blend funds. NAV losses have mounted radically and obviously the CV market volatility is accelerating that. Similarly a recent buy into VG EM Fund VMMSX has yielded significant immediate losses but the OAK funds are more my concern right now. Longwinded lead-in to the question.. What would be pros/cons of holding vs taking the losses - what's an educated guess as to the realistic chance that the OAK funds rebound anytime in say, the next year or so.... What might be a lower risk more 'normal' international fund(s) substitute to consider? As for the EM equity side, again not a huge position but had been in the lagging AEMGX before chosing - a little too hastily to swap into VMMSX (VG) - tho Black Rock in hindsight MDDCX would've been a better choice IMO... but open to suggestions on others to study as well.
BTW, am 61 y/o, no debt, working less, PF generating in the realm of 55-65k/year in Dividend Income. PF value after today's/past week's crash, about 1.87M after recent all time high(Feb) of 2.1M. Thanks! Mike
Comments
What you want to look for is a fund with good "downside capture." Check the Risk profile for any that catch your eye.
OAKIX: 148, quite bad. (Morningstar.)
OAKBX 160, also poor.
DODFX 127, not great.
MAPIX 93, much better, but its upside capture is not fabulous, though: 93. (yes, same number.)
FIGSX 68 downside, 109 upside. Quite good. Still, that is only one metric, one statistic. It's down YTD by over 13%, though. I dunno if you'd find anything at all above the break-even line, tonight.
Domestic: VLAAX
BRUFX
...Hope this helps.
OAKIX, 2.3% of my taxable account, is down 20.8% as of yesterday. OAKEX, (2%
position) down 16%. VMMSX -(3% position) down 17%. With the OAK funds, it comes
down to not if but when I want to exit. I def. want to be in a less concentrated value
holding(s) for foreign markets - finding an alternative isn't so much the issue as
whether to cut losses because it's a difficult read how long a slog it might be to even
get close to break even on these positions for a better price to sell. Appears to be
pretty much total guesswork at this point.
Am inclined too to look to an ETF vs MF. Not familiar with the VL option you mention. Will take a look around for that thread. Thanks
so now am focused on deciding between candidates suggested here and elsewhere to go with in place of these.
Looking back over the last 25 years, merely owning a conservative allocation fund such as VWINX and taking a 4% withdrawal annually (based on the PF annual value) would have:
-limited downside (worst year) losses to 9% (which is where you are right now)
-provided an ever increasing annual withdrawal never less than year 1 withdrawal
(4% of $1.87M = $86K)
-almost doubled your portfolio value during these draw downs from $1.87M to $3.45M
You have done very well.
I used Portfolio Visualizer to construct the historical data:
https://portfoliovisualizer.com/backtest-portfolio
Yep, actually I would. I've reflected on that many times in just the past year or so...and VWINX as a benchmark but well you know, hindsight!: ). I'll likely look at some form of consolidation such as you suggest to simplify things, and of course have to take all of the tax aspects into account for the transition. Have been with Schwab for a long time but might consider taking everything to VG and converting it all to a simple handful of allocation funds or whatever it may be;
Meantime tho, to maintain a diversified PF, have an immediate need to fill in the small OAKEX/OAKIX holdings to be replaced... (about 4.5% of PF combined). Part of me wants to select a managed fund for foreign exposure, but recommendations have leaned toward index ETFs for this, such as FNDC and FNDF (for the OAK funds respectively). ALternately EFAV, IEFA.
Just having a few percent in EM VMMSX is irking me since I only recently replaced AEMGX with that - and as of now would've been better off simply going to cash with it for awhile ; )
Comparison (FMIJX is Blue)
https://screencast.com/t/aH8SN5eam
IMO stop worrying about beating the market, category or being performance leader. Focus on WHEN to buy before WHAT to buy.
If you ever think an actively managed fund is not working for you, look for an index fund. In this case you can look at VBINX instead of OAKBX.
For the record, I own OAKBX. I also own VWELX. Now if you look out 5 years, VWELX outperforms VBINX, otherwise VBINX edges out VWELX for shorted periods. Bottom line, you are not going to know which fund is going to outperform OAKBX over the next 5 years.
IMO stop worrying about beating the market, category or being performance leader. Focus on WHEN to buy before WHAT to buy.
If you ever think an actively managed fund is not working for you, look for an index fund. In this case you can look at VBINX instead of OAKBX.
For the record, I own OAKBX. I also own VWELX. Now if you look out 5 years, VWELX outperforms VBINX, otherwise VBINX edges out VWELX for shorted periods. Bottom line, you are not going to know which fund is going to outperform OAKBX over the next 5 years.
Oh, I don't doubt the notion of a turnaround like that ' as soon as i sell' : ) - I mean, this very afternoon, while pondering a sell order on OAKEX - I happened to flip on CNBC today and out of the entire universe of possible fund mgrs - and someone I've NEVER seen interviewed on FI-Media EVER, there's Oakmark Manager David Herro at 3:30 LOL. And I don't 'watch' CNBC much other than occasionally checking indexes. I totally get where you are coming from on this. That said I may hang on to OAKIX - but OAKEX i is spotty and quite disappointing over a 5 year timeframe at this point with 98% of funds outperforming. I don't think it's 'the right' fund as a core position for exposure to foreign/international - bit too concentrated/value oriented - so, still probably going to replace it - maybe with an index such as FNDC, EFAV IEFA... a few that've been mentioned as a possible substitution by a Schwab CFP I chat with from time to time.
For replacement of OAKBX, consider Vanguard Wellington, Wellesley or VLAAX. I am not as familiar with the last one, but looks good at first glance. The Vanguard duo has a long history of consistent performance in their class. You can choose one or a mixture of both to adjust the risk profile between conservative and moderate allocation.
For global allocation, I have been using SGENX for a long time.
Hi! I did sell OAKEX - about a 3% i had in it yesterday. Have been using this and OAKIX to comprise international exposure. OAKIX is slightly less concerning than OAKEX - so I decided not to sell out of both. Any event, am inclined to use an ETF to replace OAKEX... Not racing right back into it - figuring there's no sudden surge in store, but hate to wait too long - again the OAK funds just serve the role as diversifier for my stake in International, While VMMSX is a recent purchase as main equity EM fund - which i'd rather use Black Rock MDDCX for, and may swap after 90 day early redemption period into that bec. Schwab offers for NTF vs fee for VG funds.
Any thoughts on OAKEX substitute in ETFs? Again I am not foreseeing how being in cash with the proceeds for it can hurt, with this much uncertainty out there... but i don't want to make mistake of not getting back in with a "like" sector equity fund - because I had significant losses in it.
Thanks
I hold Oakmark (as well as D&C) so that I can readily allocate between funds in market downturns. They have without a doubt hit a rough patch the last few years. I don't think OAKBX has been the same since Ed Studzinski left.