In retirement, given the streakiness, hot and cold characteristics of small caps and small-cap funds, is it worth holding them at all? If preservation and reduced volatility is the goal in retirement, small-caps would never be the main component of a portfolio. But anyhow, with all of this in mind, my own dedicated small-cap fund is down to just 2% of total. In a fund that's closed, so I'm reluctant to cash-out of it completely.... What think ye all? PRDSX. (And whatever others, too...)
There may be more tame ways to hold SC's if you are worried about volatility. One is to use a balanced fund. I bought PMEFX earlier this year but I'm sure there might be others like it. GPGOX is a small/mid cap global fund I've held since inception. I think it's closed though. I have a SC value fund and a SC growth fund in smaller quantities (QRSVX and ARTSX). Recently I decided to over weight SCV a bit and bought VBR, Vanguard small cap value ETF.
I rambled a bit, but to answer your original question, yes I think it is worth having some SC in a diversified buy-and-hold portfolio. The percentage is of course per your liking, but 2% doesn't seem like it would add much to portfolio volatility. I would tend to pick a blend fund (both growth and value stocks) if I only owned 1.
If I didn't own any SCs, I would definitely wait until after distributions are paid to buy a fund I was interested in.
If the volatility of a dedicated small-cap fund is worrisome,
you may want to consider funds which invest in a spectrum of different-sized companies.
My only small-cap fund is VTMSX and it comprised 8.3% of my total portfolio a few months ago.
Other SC indexes don't have similar issues (SLY, VIOO).
For small-cap indexes, I prefer the S&P 600.
S&P stock selection criteria introduces a slight quality tilt which helps investors avoid the "junkiest" small stocks.
Would you care to comment more on that statement. Are you talking from the high point to mean or low point to mean ? Also, does this statement work for growth as well as value ?
Thanks for your time , Derf
As for myself, I always found smaller cap funds provide more opportunities through the market cycles. I use Queens Road Small Cap Value, QRSVX, T. Rowe Price New Horizon, PRNHX (closed to new investors), and T. Rowe Price Mid-cap Value, TRMCX. Last year PRNHX did very well but the rotation from growth to value since last fall has greatly benefited QRSVX and TRMCX. Similarly I am shifting my foreign allocation to smaller caps as well in light of EM impact and China. Grandeur Peak International Stalwarts, GISYX, is my main fund but it is closed to new investors. The global version, GGSOX, is still open.
MSCFX: +15.38 and the lowest ER of the list.
1 week 13 week YTD 1 year 3 year
CSMVX (3.43) 12.69 41.30 56.26 31.75
MSCFX (2.08) 4.96 25.58 33.62 14.40
WAMCX (6.04) (0.85) 8.90 20.32 34.38
MSSMX (9.21) (13.09) 5.57 32.28 51.53
FCPGX (5.32) 2.12 14.51 25.55 25.70
AFDVX (0.79) 14.42 45.17 54.29 24.72
FSCRX (0.47) 6.01 35.29 40.96 19.55
Good luck everyone.
Gobble gobble, Derf
Curious how others diversify their small cap choices...I prefer starting with Style and have Growth, Blend and Value in both of our (Rollover) retirement accounts.
AFDVX could be a replacement option for ASVIX...slightly cheaper, slightly more value focused (P/E), Sector allocations are better fit (somethimes I get hungup on this)
IRA (Wife) -
Edit Add: Latest Kiplinger (best ETF's for 2022) lists CALF as a SC Value recommendation along with DEEP . Both are up quite a bit YTD: CALF +43% and DEEP +38.94
Previously mentioned: AFDVX has my attention. I like to wait until January to make my moves.
With a 35.84% YTD return and 45% in 1 year and 40% in 3 years, I was surprised to find only 1 mention of it here in the discussions by @BenWP in a timely moves for 2022 thread: https://www.mutualfundobserver.com/discuss/discussion/comment/144021/#Comment_144021
If I were our old friend The Linkster, I would scream bloody murder at this point because I posted a link to the Kiplinger article on ETFs before you mentioned it. RIP, Ted.
Re: Small Caps: I mean when its YE and you look at a Fido SC Growth comparison like THIS HERE you question why you might still hold MSSMX. Review the MFO Premium and lots of 5's until this last year when it's earned a 1 and a first miss to SPY. So, given this and the MFO profile, would you continue to hold MSSMX or have they lost their mojo? Trying not to chase funds but...
We own two MS funds, MGGPX and GLCAX, Kristian Heugh funds. I reduced MGGPX, but increased GLCAX in a tax deferred account just after a huge ST and LTCG distribution in hopes that 2021 was just one bad year. Our initial purchase was really badly timed, not the first time that’s happened. I’m not sure if my approach, admittedly scattershot, can give you any insight. BTW, that’s a handsome chart from Fidelity.