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What's the difference between constructing your own "Fund of Funds" and being told by some MFOers that having too many funds is inefficient, wasteful, and self-defeating, as we've all heard here so many times over the years?
@ Hank. Another old geezer here. You nailed the senior risk paradigm as I see it. I am so old that I spent this afternoon adding our adult daughter to our checking account.
What's the difference between constructing your own "Fund of Funds" and being told by some MFOers that having too many funds is inefficient, wasteful, and self-defeating, as we've all heard here so many times over the years?
How many articles did I read at M* telling me I didn't need a utility sector fund in my IRA? Whoopsie. When utes took off I was already there. I won't claim that I anticipated what happened.
What's the difference between constructing your own "Fund of Funds" and being told by some MFOers that having too many funds is inefficient, wasteful, and self-defeating, as we've all heard here so many times over the years?
d - My response has always been: Give me 10 funds as good as PRWCX. The combined return should be the same.
I consolidated down from 15-20 funds to just 6 (+ cash) over the past couple of years. FD was one of the posters that I listened to. I found that with fewer funds you tend to concentrate more on the quality of each fund (management / goals / methodology, holdings, etc.). There’s a lot more money riding on each selection so you are pushed to do more due diligence. All good.
It does create a bit of a headache should you decide to exit a fund in favor of another, as you are moving a much larger sum of $$. I actually had trouble selling all my shares of a Cambrea etf the other day because it is so thinly traded. Took several sell orders over about 10-15 minutes to fully exit.
I explained earlier my thinking in creating a fund-of-funds with the proceeds from one of those 6 major positions. I want to learn whether I can take advantage of the volatility of CEFs by actively trading them - mostly within the group of 7. Don’t know. Seems like a reasonable exercise for someone who follows markets closely. I can report back in a year whether the experiment was successful.
Re “Funds of Funds” & fees. Most do not add an additional layer of fees, but some do. TRRIX from T. Rowe is an example of a fund-of-funds. With an equity target of 40% the fund (Silver at M*) has returned better than 6% annually since inception (2002). The 0.49% ER reflects the aggregate of fees from the underlying funds.
I suspect all of us on the board, followers of David and MFO, me since 2011 and before that with Fund Alarm, look to build our own FOFs.
David publishes his periodically.
In recent years, the proliferation of model portfolios, do essentially provide FOFs.
Ditto most FAs or RIAs, either those they download from their platforms, likely sponsored, or those they create on their own ... the more independent and thoughtful ones, perhaps.
Target Retirement Funds are essentially FOFs too.
At quick search on MFOP shows there are presently 1719 FOFs offered in the US: 1276 are Mixed-Asset, nearly all "actively managed," including 386 Insurance Funds.
Focusing just on actively managed OEFs and ETFs, Federated Hermes Global Allocation (FSTBX) is the oldest at 65 years. And, not surprisingly, Vanguard Target Retirement funds are the largest, followed by American Funds Target Date Retirement funds.
VWELX inception is 1929, DODBX 1931, FPURX 1947. These aren't funds-of-funds, but allocation/hybrid stock-bond funds. Generally, firms' equity groups handle stock portion, fixed-income groups the bond portion. Funds-of-funds formally evolved much later.
@FD1000, I was comparing returns the last few period, and want to ask you of the bond players here why for the last several years you did not simply combine FIGXX or similar at Fido with STIP, instead of putzing around w PONAX and all of the other bond funds you do?
I stopped using PIMIX on 01/2018 and never looked back. Its risk/reward stopped doing as well as before. STIP + FIGXX are so behind the best bond funds in the last 1-2 years such as THOPX,CLOZ,ICMUX. I'm also looking for low SD bond funds and why I stay away from any who have had more than -1% peak-to-trough in the last several months. (https://schrts.co/VMvtuPZn)
Comments
https://www.mutualfundobserver.com/discuss/discussion/comment/158241/#Comment_158241
d- My response has always been: Give me 10 funds as good as PRWCX. The combined return should be the same.I consolidated down from 15-20 funds to just 6 (+ cash) over the past couple of years. FD was one of the posters that I listened to. I found that with fewer funds you tend to concentrate more on the quality of each fund (management / goals / methodology, holdings, etc.). There’s a lot more money riding on each selection so you are pushed to do more due diligence. All good.
It does create a bit of a headache should you decide to exit a fund in favor of another, as you are moving a much larger sum of $$. I actually had trouble selling all my shares of a Cambrea etf the other day because it is so thinly traded. Took several sell orders over about 10-15 minutes to fully exit.
I explained earlier my thinking in creating a fund-of-funds with the proceeds from one of those 6 major positions. I want to learn whether I can take advantage of the volatility of CEFs by actively trading them - mostly within the group of 7. Don’t know. Seems like a reasonable exercise for someone who follows markets closely. I can report back in a year whether the experiment was successful.
Re “Funds of Funds” & fees. Most do not add an additional layer of fees, but some do. TRRIX from T. Rowe is an example of a fund-of-funds. With an equity target of 40% the fund (Silver at M*) has returned better than 6% annually since inception (2002). The 0.49% ER reflects the aggregate of fees from the underlying funds.
David publishes his periodically.
In recent years, the proliferation of model portfolios, do essentially provide FOFs.
Ditto most FAs or RIAs, either those they download from their platforms, likely sponsored, or those they create on their own ... the more independent and thoughtful ones, perhaps.
Target Retirement Funds are essentially FOFs too.
At quick search on MFOP shows there are presently 1719 FOFs offered in the US: 1276 are Mixed-Asset, nearly all "actively managed," including 386 Insurance Funds.
Focusing just on actively managed OEFs and ETFs, Federated Hermes Global Allocation (FSTBX) is the oldest at 65 years. And, not surprisingly, Vanguard Target Retirement funds are the largest, followed by American Funds Target Date Retirement funds.
STIP + FIGXX are so behind the best bond funds in the last 1-2 years such as THOPX,CLOZ,ICMUX. I'm also looking for low SD bond funds and why I stay away from any who have had more than -1% peak-to-trough in the last several months.
(https://schrts.co/VMvtuPZn)