Hi guys,
The Mrs. IRA is mostly cash or CDs right now. A small position in FXAIX is all that's in the market right now. As CDs come due, I would like to invest in index funds.....say, foreign, global, world and U.S. Say, total market or equally weighted or real estate index fund. Again, will trickle in over time.....no rush. She likes CDs right now after seeing my losses last year and her having none. But we all know at some point that will change, so I'm looking to compose a buy list. Would appreciate your ideas. I would like this to be a mostly set and forget portfolio. Also, you can throw in bond ideas if you have any....thanks.
God bless
the Pudd
Comments
Pacer has a herd of other Bovine ETFs...Emerging Market (ECOW), International (ICOW), Fund of Funds (HERD), Global (GCOW), US Large Cap (Bull), Small Cap (CALF)
Very Interesting...thanks @MikeW.
SCHP= TIPS. (Schwab.)
FCBFX. 58% in triple B. (Fidelity corporate.)
HYMU. Munis. (Blackrock.)
Balanced: DODBX. Over 15 years, it's in top 7 percent of category. +7.63%.
Global stocks: YTD +8.42%. (TRP.) PRGSX . Over 15 years: +7.82%, top 18% of category.
52 USA. 43 foreign, presently.
Maybe SCHP is an Indexer. None of the others.
VMIAX. Basic Materials/Chemicals. (Vanguard. Stinky service.). YTD +6.49%. Over 15 years: +7.47, top 22 percent in category.
Single stocks for steady dividends: BHB. (I own it.) Regional bank in Northern New England. HQ in Bar Harbor, Maine. That's where Acadia National Park is. Branches in ME, NH, VT.
O is the mother of all REITS. Over 15 years, it's up by +10.45%. Dividends to reinvest. But I don't know how they keep doing it. The payout ratio is a huge, out of line number... But REITS are different animals, too. Since 1994, the stock is up by +730%. That's not a typo.
(Among REITs, I own PSTL. But it's still rather young.)
"Happy Motoring!"
"No, No, NO! Don't open that closet!"
Best Regards,
Baseball Fan
Do they do any better, or are you just looking relative to a particular moment in time (i.e. now)? Comparing their three year rolling cumulative returns by calendar years (e.g. Jan 2019-Dec 2021), the figures (from M* charts) are: Over its lifetime (July 1, 2014 through Feb 10, 2023), CDC has done slightly worse than FXAIX, returning a cumulative 138.04% vs FXAIX's 143.78%.
More importantly, all the cumulative figures ending Dec 31, 2022 are significantly skewed by FXAIX's sizeable underperformance in 2022 relative to the other funds: -18.13% vs -3.23% (SCHD) or -7.76% (CDC). (FXAIX has done better so far this year.)
I'm not knocking any of these funds, and I can certainly see the point in suggesting dividend oriented funds to someone who has been focused on cash returns. It's just that there's a tendency for people to look at "what have you done for me lately" even when trying not to - sometimes it's baked into the numbers.
For a set and forget fund that covers all bases ("foreign, global, world and U.S", and fixed income) one might consider VGWIX / VGYAX. Not an index fund, but still a low cost fund. Its 35/65 stock/bond mix may also suit someone moving from a cash portfolio. Funds with more traditional blends include VGWLX / VGWAX and CIBFX (though jumbo). A drawback of these funds (notably the Vanguard ones) is a dearth of EM investment. You may consider that a plus (arguably a more conservative approach).
Thanx for all your responses and ideas. You gave me a lot to think about and research in the days to come. This is going to be slow and take a while. Again, thanx for all the input.
God bless
the Pudd
https://indexologyblog.com/2023/01/20/the-dow-jones-dividend-100-indices-part-1-a-focus-on-dividend-sustainability-and-quality/
And this provides further useful analysis of the index as it stands today:
https://indexologyblog.com/2023/01/24/the-dow-jones-dividend-100-indices-part-2-strong-fundamentals-and-the-benefits-of-diversification/
Had you looked at the same figures at another point in time, say on SCHD's 10 year anniversary (10/31/2021), SCHD's cumulative performance would have underwhelmed:
10 year: 309.10% vs 348.91% (FXAIX)
5 year: 118.00% vs. 137.75%
3 year: 71.20% vs. 79.20%
1 year: 44.08% vs. 42.89%
The fairly recent outperformance should be obvious from my table showing SCHD outperforming FXAIX by a cumulative 20% over the three past calendar years (2020-2022).
Do you give any consideration to "regression to the mean"? The same table shows FXAIX outperforming SCHD by as much as 10% cumulative in other three year periods. With actively managed funds, there's a lot that can change. But with index funds, a "true buy & hold type" is going to need more than a one year anomaly to "sell & trade":
2023 YTD: 1.67% (SCHD) vs. 6.71% (FXAIX)
2022: -3.23% vs. -18.13% <-- 15% spread
2021: 29.87% vs. 28.69%
2020: 15.08% vs. 18.40%
2019: 27.28% vs. 31.47%
What's the theory for buying SCHD? That any time the market goes down, SCHD will win big? Or that we can expect, or at least hope for, another huge year (relatively speaking) for SCHD in the future? One that will make up for its typical slightly underperforming years?
At least we can dispense with the former idea - that SCHD outperforms in down markets.
2018: -5.56% (SCHD), -4.40% (FXAIX)
2015: -0.31% (SCHD) vs. 1.38% (FXAIX)
interestingly, FXAIX/IVV is on the honor roll too, and not SCHD
This is a good example of why I continue to urge people to understand numbers, not just quote them. Honor roll status is based on raw performance relative to category, i.e. top quintile over 1,3,5 year spans. Immediately we see one potential issue - these are funds in different categories.
At least as important is the fact that FXIAX's performance is being compared with that of (only) other S&P 500 funds. With a 2 basis point ER, it's a sure bet that FXIAX will always be in the top quintile of its narrow category of peers. Instant honor roll.
SCHD is in Lipper's Equity Income category - a broad category, and SCHD doesn't always come out in the top 20%.
The fact that FXAIX is a LC Blend fund (M* terminology) while SCHD is LCV goes far to explaining the 2022 split in relative performance. Value simply had a once in a generation (relative) banner year: VVIAX lost 2.08%, while VFIAX lost 18.15%. This 2σ+ fluke is hardly suggestive of future outperformance.
To reiterate, SCHD is a fine fund. But a better long term fund? I wouldn't place heavy bets on one style of investing - value or otherwise. Sure, use SCHD, but then counter balance it.
It's hard for recommendations, as everyone has a unique set of requirements, as well as tolerance for risk.
? SCHD longterm performance shows this is, again, a rather misleading way to put it.
>> Had you looked at the same figures at another point in time,
sure, cherrypick away
>> that we can expect, or at least hope for, another huge year (relatively speaking) for SCHD in the future? One that will make up for its typical slightly underperforming years?
and now you make it sound like SCHD is more this volatile / Heebnerlike instrument.
>> a "true buy & hold type" is going to need more than a one year anomaly
huh ?
god forbid they look at the 10y (end of January) comparison.
>> but then counter balance it.
Oh. Of course!
What do you suggest?
So often when one does this, performance suffers. Just compare FXAIX with VONE over time.
Or with RSP, a different kind of balancing.
'Tis the great mystery of investing decisionmaking.
Pleasing outcomes --- recently. Recently, go with VONV or RSP.
But oops, not the last month.
So: everybody, just do VT, and let its broad diversification (counterbalancing) be the drag, most often, or the plus.
As always, where is that breadth sweet spot?
* fidelity 2015 tdf FFVFX (bulk of her holdings)
*Dodge cox and balance
*Fidelity contrafund FCNTX
*tlt and shy
*Lots Corp/ private Bond %large companies ytm ~5 6%, Ave ytm 5 YRS.
Portfolio moves upward like turtle since xmas but did not loose much last yr (-12%), think 5 7% from all time high
Capital preservations are keys. She is happy w fixed 3 5% annually returns
For mine very aggressive 15% in tsla + growth stocks
* 35% in sp500 (spy spxl)
*30s% in mid caps + small caps ( vo vong Tna soxl tqqq )
*10% in overseas etf indexes (yinn FXI veu)
*15% in private Corp Bonds.
Few % in speculative plays and btc ethe silver 3xgold etf tmf labu Tsll Fngu + smallcaps plays VRM nvta bbig, ~3% daily tradings (short term p&l was up 33% last wk but now only +13%)
Use 12% of margin powers for CSP
Lots leap call or monthly cover calls contracts for Tsla bros nvda snow Rivn amaz goog brk.b O. Sold lots bonds last 6 months cover csp and assignments
Mine overall portfolio is 10% down from all time high since dca aggressively past 6 wks
I am happy w yearly 5 7%% returns but hard to say
Hope bottoms don't fall out under
PLS do critique thankyou
I looked at the long term (read lifetime) performance of SCHD on every trading day since inception and found that on most of them, its long term performance was superior to that of FXAIX. At least by eyeballing it.
The easiest way to see this is to plot the two over SCHD's lifetime, and note that there are long (multi-year) runs where FXAIX's cumulative performance exceeds that of SCHD:
11/2/13 - 2/5/16 (2¼ years), 7/27/16 - 5/12/21 (4¾ years).
Here's Portfolio Visualizer's graph. You won't get quite the same detail I'm providing (gory details below). The PV graph looks as though FXAIX led the whole way until five months ago. Though that's not far off from what happened.
FXAIX outperformed SCHD for virtually its whole life until five months ago. Are those few recent months supposed to stand in for long term performance?
When you talk about cherry picking, recognize that if one were to pick a date at random, much more likely than not, FXAIX would have outperformed SCHD to that point in time. I'm looking not at SCHD, but the difference in annual returns between the two funds. This has got little to do with volatility of either component, but of volatility of their correlation.
If, for example, you take two share classes of the same, wildly volatile fund, differing only in ERs, then the volatility of the gap in performances will be zero.
The difference in annual returns ranges in magnitude between a half percent (0.52%) and 4½ percent (4.59%) except for 2022, when the difference in performance is more than triple the next largest annual difference. In the "biz" we call that an outlier.
Lewis linked to a couple of pieces that suggest an explanation for this outlier. Assuming you buy the reasoning, the question for you is whether you believe similar conditions (with similar results) will happen again.
11/1/11 - 1/24/12 - SCHD leads
1/25/12 - 5/15/12 - FXAIX leads
5/16/12 - 5/18/12 - SCHD leads (ends on a Friday)
5/21/12 - 5/23/12 - FXAIX leads
5/24/12 - 5/25/12 - SCHD leads (ends on Friday, Mon holiday)
5/29/12 - one day - FXAIX leads
5/30/12 - 6/19/12 - SCHD leads
6/20/12 - one day - FXAIX leads
6/21/12 - 8/16/12 - SCHD leads
8/17/12 - 3/20/13 - FXAIX leads
3/21/13 - 8/13/13 - SCHD leads
8/14/13 - 8/16/13 - FXAIX leads (ends on a Friday)
8/19/13 - one day - SCHD leads
8/20/13 - 9/18/13 - FXAIX leads
9/19/13 - one day - SCHD leads
9/20/13 - 11/5/13 - FXAIX leads
11/6/13 - 11/12/13 - SCHD leads
11/13/13 - one day - FXAIX leads
11/14/13 - one day - SCHD leads
11/15/13 - one day - FXAIX leads (ends on a Friday)
11/18/13 - 11/20/13 - SCHD leads
11/21/13 - 2/5/16 - FXAIX leads (ends on a Friday)
2/8/16 - 2/9/16 - SCHD leads
2/10/16 - one day - FXAIX leads
2/11/16 - one day - SCHD leads
2/12/16 - 6/23/16 - FXAIX leads
6/24/16 - 6/28/16 - SCHD leads
6/29/16 - one day - FXAIX leads
6/30/16 - 7/11/16 - SCHD leads
7/12/16 - one day - FXAIX leads
7/13/16 - 7/15/16 - SCHD leads (ends on a Friday)
7/18/16 - one day - FXAIX leads
7/19/16 - 7/26/16 - SCHD leads
7/27/16 - 5/12/21 - FXAIX leads
5/13/21 - one day - SCHD leads
5/14/21 - 4/25/22 - FXAIX leads
4/26/22 - 4/27/22 - SCHD leads
4/28/22 - 5/4/22 - FXAIX leads
5/5/22 - 7/20/22 - SCHD leads
7/21/22 - one day - FXAIX leads
7/22/22 - tie, Friday
7/25/22 - 7/27/22 - SCHD leads
7/28/22 - 8/18/22 - FXAIX leads
8/19/22 - 8/24/22 - SCHD leads
8/25/22 - one day - FXAIX leads
8/26/22 - 9/8/22 - SCHD leads
9/9/22 - 9/15/22 - FXAIX leads
9/16/22 - present - SCHD leads
I wrote: there's a tendency for people to look at "what have you done for me lately" even when trying not to - sometimes it's baked into the numbers.
Here's a paragraph from CBS News describing how "what have you done for me lately" is baked into M*'s ratings. On the surface, it looks like M* is biasing its ratings toward long term performance, because it weights 10 year performance at 50%, while weighting 5 year performance at 30%, and 3 year performance at just 20%. But something else is going on. https://www.cbsnews.com/news/whats-right-and-whats-wrong-with-morningstar-fund-ratings/
There's a similar problem in looking at good 1/3/5/10 year figures and concluding that performance is somewhat uniformly good, especially over longer terms. The final year's performance is influencing (I would say skewing) all the numbers. We saw this effect clearly (though with respect to bad, not good, performance) in figures published after March 2020. Suddenly good (and not so good) funds looked terrible, even long term.
Now I'm not expecting another once in a century pandemic anytime soon, nor do I think that nothing has been done to make economies more robust. So I'm inclined to discount (but not ignore) 2020 figures to the extent that they distort averages.
Context matters. For instance, in the well-wrought analysis of the math behind funds MFS just posted, he makes a surprising non-math fundamental statement at the end. That belief informs his investment strategy. I and a number of medical experts disagree with that belief. I think serious pandemics will now occur more frequently, and we aren’t even finished with the current one. And it matters whether or not you agree because certain companies, sectors and investment strategies will benefit or be hurt by which side of that argument comes true. SCHD by design favors a certain type of company and a certain factor—quality comes to mind. It also historically has been overweight certain sectors of our economy. Interestingly, the international version of SCHD, with the ticker SCHY, has different sector overweights and will benefit or be hurt by different dynamics as a result. I also think interest rates and the direction they’re going matter significantly to dividend strategies. In general, I have problems intellectually with simplistic rules-based investment strategies for funds that may not be able to adapt to changing conditions in an extraordinarily complex world.
All of which is basically just a long winded way of saying past performance is no guarantee of future results. You have to look beyond those numbers, ask why and whether conditions are similar or different today.
I can remember not to many years ago, all the comparison and clear winner from that comparison was CAPE over the S&P 500. It was the clear winner - until it wasn't. I'm sure many bought into CAPE high and sold when it faltered. The key is having the conviction to stay with one scheme over another. Value and dividend stocks will have their day, same as growth or tech or using the CAPE methodology. Isn't the S&P500 a collection of all those sub sets?