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This looks like data mining. Out of many ETFs one can always find some that match any given fund during a short period of time. Too bad Contrafund is so big...
She also says she doesn't trust Contra's classification, so let's test it against different benchmarks. She comes up with MSCI US large growth - a virtually preordained result, since her other benchmark candidates included a blend index and two all-cap indexes.
It is curious that she assumes no style drift based on Fidelity stating that according to its definition of growth, Contra doesn't stray. If she's so skeptical of what growth means, and whether Contra is even large cap growth, isn't is possible that Contra does drift according to other definitions - perhaps even definitions that the ETFs use?
It is likewise curious that she then trusts that the ETFs do match their stated category (large cap growth). Even though as she noted, there's no standard for what "growth" means, and each indexer uses its own definition (along with its own buffer zones).
She then uses the ETFs' self-stated classification as LCG to select the candidate pool. The benchmark is never used for the ETFs. The only function it served was to "prove" that FCNTX really is (currently) a LCG fund.
So why use the benchmark at all? Just use a larger pool of candidate ETFs in the second step (trying to match FCNTX). It's not as though her computer would choke on, say, 20-30 ETFs instead of the half dozen she chose via the benchmark's category.
Remember, her stated objective was to match FCNTX, not a benchmark. (The only reason I know for doing a two-step analysis as she did is to winnow the candidate pool, which wasn't necessary here.
What really put me off, though, was her opening tax "analysis". She takes long term gains, and then says, well, if we taxed them as short term gains, look at how much more it would have cost. Sure, and if pigs could fly ....
It was gratuitous. She never did anything with the figure. It was meant to shock. Had she analyzed post-liquidation, after-tax results, I would have been impressed.
Thanks, I know. However, I am less sure whether it is still a good place for new money, compared with other options. And it is indeed true that its taxable distribution last year was very significant, and there was an additional one, two weeks ago. Mostly long term, but...
What Mark said (true also of Tillinghast with me) and what msf wrote too. I would add only that I am recommending to my kids, who have a longer investment horizon obvs, that they put new moneys (some anyway) into FLVCX.
Thanks and an interesting bit of research. Glancy looks great for sure, if you want to get involved with Putnam and its fees. I would stick with Fido, I think.
Do you still have the 5.75% front-end load? Or is that waived also?
Edit - Per fido: "This fund is now available NTF (No Transaction Fee) and offered load-waived through Fidelity"
Looks like it's going on my list.
This is interesting: Scottrade is offering the 'Y' (PYSYX) shares with an expense ratio .25% lower. You'd pay the $17 Transaction Fee, but get a quarter percent better return.
And at Wells Fargo PYSYX is available without load, if you call and ask (you cannot buy it without calling, but it does not cost anything for this fund).
Comments
She also says she doesn't trust Contra's classification, so let's test it against different benchmarks. She comes up with MSCI US large growth - a virtually preordained result, since her other benchmark candidates included a blend index and two all-cap indexes.
It is curious that she assumes no style drift based on Fidelity stating that according to its definition of growth, Contra doesn't stray. If she's so skeptical of what growth means, and whether Contra is even large cap growth, isn't is possible that Contra does drift according to other definitions - perhaps even definitions that the ETFs use?
It is likewise curious that she then trusts that the ETFs do match their stated category (large cap growth). Even though as she noted, there's no standard for what "growth" means, and each indexer uses its own definition (along with its own buffer zones).
She then uses the ETFs' self-stated classification as LCG to select the candidate pool.
The benchmark is never used for the ETFs. The only function it served was to "prove" that FCNTX really is (currently) a LCG fund.
So why use the benchmark at all? Just use a larger pool of candidate ETFs in the second step (trying to match FCNTX). It's not as though her computer would choke on, say, 20-30 ETFs instead of the half dozen she chose via the benchmark's category.
Remember, her stated objective was to match FCNTX, not a benchmark. (The only reason I know for doing a two-step analysis as she did is to winnow the candidate pool, which wasn't necessary here.
What really put me off, though, was her opening tax "analysis". She takes long term gains, and then says, well, if we taxed them as short term gains, look at how much more it would have cost. Sure, and if pigs could fly ....
It was gratuitous. She never did anything with the figure. It was meant to shock. Had she analyzed post-liquidation, after-tax results, I would have been impressed.
Regards,
Ted
I would add only that I am recommending to my kids, who have a longer investment horizon obvs, that they put new moneys (some anyway) into FLVCX.
Regards,
Ted
http://www.bloomberg.com/video/69004108-fidelity-s-soviero-interview-on-investment-strategy.html
Edit - Per fido: "This fund is now available NTF (No Transaction Fee) and offered load-waived through Fidelity"
Looks like it's going on my list.
This is interesting: Scottrade is offering the 'Y' (PYSYX) shares with an expense ratio .25% lower. You'd pay the $17 Transaction Fee, but get a quarter percent better return.