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I recently sold MAPIX because I did not want to give up all my gains from the past year. In addition, I haven't been happy with the fund's performance since Madsen left in 2012. Anyway, I'm looking for something less volatile/lower risk that is more of a World Allocation fund with some exposure to Asia/Japan. Any suggestions?
I'm not entirely sure what "world allocation" means for you. Are you looking for a global multi-asset fund (like Fidelity Global Balanced or Northern GTAA) or are you actually hoping for a pure "we'll go anywhere we see opportunity" offering (a la Leuthold Core or F P A Crescent)?
Dear willmatt72 What World Allocation means. Is this what your looking for. World Allocation
World-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. While these portfolios do explore the whole world, most of them focus on the U.S., Canada, Japan, and the larger markets in Europe. It is rare for such portfolios to invest more than 10% of their assets in emerging markets. These portfolios typically have at least 10% of assets in bonds, less than 70% of assets in stocks, and at least 40% of assets in non-U.S. stocks or bonds. Morningstar Regards, Ted
Reply to @David_Snowball: Hi David - In my mind, a "world allocation" fund means a global, multi-asset fund such as PGBAX or BAICX. I don't pay much attention to *M categories as they can limit a search in some cases.
Tough to recommend a fund for this. A money manager offering a world allocation fund has to have the analysts with "micro" expertise in numerous asset classes as well as management with the ability and courage to look at the world through a "macro" lens. In the no load category would put the T Rowe Price fund from Ted's list ( page 13 but there maybe other classes available) on your watch list as well as one of the Thornburg Investment Income Builder classes. I'm sure there are many other worthy candidates.
Reply to @willmatt72: Wouldn't be a bad choice. I am a fan, despite some inconsistency at times, of Ivy Asset Strategy (WASCX), which does have the ability to hedge and is flexible in terms of assets and in terms of what parts of the world they may focus on at any point in time.
What are you reasons for a single fund to do both worldwide allocation strategies and risk management?
Not that there aren't but it would seem to artificially limit the choices available. Does the portfolio already have too many funds? Is the amount to be invested too small for multiple funds? How much international coverage and what type do you already have in your portfolio? Are you looking for something to compliment existing ones? Some context of your needs might help people make more meaningful suggestions.
Usually world allocation includes US. Is the latter necessary given what you already have in your portfolio? If not, it opens up a lot more possibilities for international allocation.
I also own ARTGX, FMIJX and GPROX, so I'm pretty covered internationally, except Asia developed markets and foreign bonds. In addition, I'm looking to tamp down the volatility of my overall portfolio so I was looking for something more risk averse. This would be a purchase in a tax-deferred account (Roth IRA) so I'm not worried too much about tax efficiency.
Reply to @willmatt72: With risk / reward as a consideration I would tilt my Roth towards your riskiest / rewardiest (is this a word cman?) investments. If you are lucky enough to reap the reward of the risk it will also be on a tax free basis (a 10-45% bonus based on your tax rate).
Of course, potential losses (risk) are best managed in a taxable account where you can harvest tax losses and I haven't figured out a way to move my Roth losses back into my taxable accounts other than during the Roth conversion period by recharacterizing Roth conversion accounts that produce losses rather than gains.
Reply to @willmatt72: Just a pesky math thing. You cannot reduce volatility of your existing portfolio by adding another fund correlated with your existing funds. But, if you want to add another world stock fund to the collection, I am sure the group will be able to find one.
Alternatively, you might look for a very good Asia fund that fills the gap you have with less correlation to existing funds and reduce your beta exposure (sell some) to reduce volatility to your tolerances. Just a suggestion.
MAPIX is that fund. Too bad its recent performance disqualifies it for you.
Reply to @cman: I'm afraid willmatt72 doesn't understand the difference between risk and volatility. In my opinion he should never have sold MAPIX, which is an excellent fund, with a five-year return that puts it in the 7 percentile od its category. Regards, Ted
Reply to @cman: As I said, the loss of Madsen has affected that fund in a bad way. Based on my evaluation of the fund, its volatility has increased and its returns have diminished since Madsen left the fund. I believe its five-year returns are invalid now that two of the main managers have left the fund. Remember, Madsen and Foster have both left the fund.They were the main drivers behind MAPIX's five-year performance.
Reply to @Ted: Hi Ted - thanks for the fund suggestions based on my original post. I still hold a small position in MAPIX just in case it turns around someday. But I'm looking in another direction now.
I'm really confused by this. Madsen's departure was announced in July and wasn't finalized until October 31. So he has been gone less than 3 months, during which time, MAPIX has closed one position, QBE, and opened nothing new. Even since that announcement they've only opened one position, Suntory. So turnover hasn't changed more than 3% of Madsen's portfolio. Matthews does note, however, in June's Semi-Annual Report, that because of interest rate risk, Asian REITs have increased MAPIX's volatility. I think that is your more likely answer as to short term volatility.
That being said, if you want developed Asian equities and bonds with low volatility, buy MACSX. Or, if you have $100k lying around you could try GKEAX, which has been around since August.
Reply to @mrdarcey: Well, that fact that the fund has not done much trading is not necessarily a sign of good or bad investment decisions. If Madsen and/or Foster were still around, would the portfolio be the same as it is now? We don't know. The fund has had two mediocre years in a row. That's a fact. In any case, I made a decision to sell most of my holdings in the fund. I didn't start this thread to debate those merits. I was asking about alternatives in the world allocation realm. I've received a few suggestions and they are much appreciated.
Reply to @willmatt72: I think people are trying to point out the merits of MAPIX in good faith. You said you wanted a world allocation fund, but you qualified it saying you wanted it both to cover what you saw as holes in your portfolio -- Developed Asia and Foreign Bonds -- and to lessen volatility. Those are two very specific things, which an allocator might not do. The reason MAPIX was brought back up is because A) there aren't a lot of funds that will do both things, and B) adding a fund which overlaps your existing holdings won't tamp down volatility. MAPIX and MACSX stand almost alone in doing both given your existing holdings.
I might have sounded a bit incredulous in my post, but I was really more worried if I missed something in my own analysis of MAPIX. While Madsen's departure may affect it, it's far too early to tell given the low turnover nature of the portfolio. If there is a fundamental problem with the stock picking, then that falls on Madsen's feet at this point.
If you do end up buying a global allocation fund like RPGAX, I'd consider selling other foreign funds. But that's me.
Reply to @mrdarcey: Thank you for the insightful comments. They are well taken. I owned MACSX in the past as well. I'll take another look at it. As I said in another response, I will continue to hold a small weighting in MAPIX because it is closed and I still respect Matthews as a management company. I believe I've owned at least one of their funds for about 12 years now.
I for one will defend MAPIX. Foster left a three years ago, Madsen left last year, but the fund has continued doing what it has always done. It has provided pretty good returns with reasonable risk. We have used it for years as a 'chicken' way to invest in China. It has historically underperformed in bull markets and outperformed in bear markets. And remember that as for manager changes, Matthews has been around a long time, and they have been extremely good at identifying manager talent. A better measure might be the fund's 3-year ranking, since Foster left, which is top 12%. That's darned good. And, as mrdarcey points out, the fund holds essentially the same things it did 3-4 years ago.
Now, as for Global Allocation, which MAPIX is definitely NOT, there is no common denominator, simply because the definition is left up to the fund company or the managers themselves. Why be limited to a certain mix? We much prefer the go-anywhere option, provided the management team is talented and experienced. This is evident in such widely different funds as TIBIX, IVAEX, PAUIX, MALOX and FPACX, among others. Price RPGAX might be good, but I see it as one of the few times Price Funds is jumping on the marketing bandwagon. Global Allocation is a hot topic right now, so I am not sure how another one makes much difference. We have used TIBIX since it started, IVAEX going on 8 years, and FPCAX since 1998. All have great management, and all three are VERY different from each other, which make them very complimentary. I would recommend these to you for consideration.
Reply to @rjb112: I would not put SGENX in the same group as FPACX, IVAEX, TIBIX. Its allocation has hardly budged in years. Not saying the fund is unworthy, but it has not exhibited any flexible strategy, which I something that might be important to some investors.
Comments
Just curious,
David
World Allocation
World-allocation portfolios seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds, and cash. While these portfolios do explore the whole world, most of them focus on the U.S., Canada, Japan, and the larger markets in Europe. It is rare for such portfolios to invest more than 10% of their assets in emerging markets. These portfolios typically have at least 10% of assets in bonds, less than 70% of assets in stocks, and at least 40% of assets in non-U.S. stocks or bonds. Morningstar
Regards,
Ted
List Of World Allocation Funds:
http://money.usnews.com/funds/mutual-funds/rankings/world-allocation?int=af9256
Regards,
Ted
http://individual.troweprice.com/gcFiles/pdf/argaf.pdf
Not that there aren't but it would seem to artificially limit the choices available. Does the portfolio already have too many funds? Is the amount to be invested too small for multiple funds? How much international coverage and what type do you already have in your portfolio? Are you looking for something to compliment existing ones? Some context of your needs might help people make more meaningful suggestions.
Usually world allocation includes US. Is the latter necessary given what you already have in your portfolio? If not, it opens up a lot more possibilities for international allocation.
Of course, potential losses (risk) are best managed in a taxable account where you can harvest tax losses and I haven't figured out a way to move my Roth losses back into my taxable accounts other than during the Roth conversion period by recharacterizing Roth conversion accounts that produce losses rather than gains.
Alternatively, you might look for a very good Asia fund that fills the gap you have with less correlation to existing funds and reduce your beta exposure (sell some) to reduce volatility to your tolerances. Just a suggestion.
MAPIX is that fund. Too bad its recent performance disqualifies it for you.
Regards,
Ted
That being said, if you want developed Asian equities and bonds with low volatility, buy MACSX. Or, if you have $100k lying around you could try GKEAX, which has been around since August.
I might have sounded a bit incredulous in my post, but I was really more worried if I missed something in my own analysis of MAPIX. While Madsen's departure may affect it, it's far too early to tell given the low turnover nature of the portfolio. If there is a fundamental problem with the stock picking, then that falls on Madsen's feet at this point.
If you do end up buying a global allocation fund like RPGAX, I'd consider selling other foreign funds. But that's me.
Thanks. Enjoyed the take.
Now, as for Global Allocation, which MAPIX is definitely NOT, there is no common denominator, simply because the definition is left up to the fund company or the managers themselves. Why be limited to a certain mix? We much prefer the go-anywhere option, provided the management team is talented and experienced. This is evident in such widely different funds as TIBIX, IVAEX, PAUIX, MALOX and FPACX, among others. Price RPGAX might be good, but I see it as one of the few times Price Funds is jumping on the marketing bandwagon. Global Allocation is a hot topic right now, so I am not sure how another one makes much difference. We have used TIBIX since it started, IVAEX going on 8 years, and FPCAX since 1998. All have great management, and all three are VERY different from each other, which make them very complimentary. I would recommend these to you for consideration.
Right now it has 25% US, 13% Europe, 13% Asia, 12% Fixed Income and the rest in Gold & Cash equivalents.