Looking to collect the gold watch soon (absent the actual gold watch), and am looking to replace 2 good SC/MC value funds currently in my 401K which I will transfer to Schwab..the two current funds are TRMCX and PCVAX, and these are closed and not available for purchase. I'm not firmly wedded to having two distinct funds, so a fund with both small and mid-caps would be fine...but I would prefer the value tilt.
I've spent a fair amount of time identifying and tracking candidates, and have narrowed it down to the following funds. I'm interested in whether the contributors here have opinions of those on the list...or may have others to consider.
PMDAX
KSMVX
WSVRX
HUSIX
DEFIX
VETAX
HIMVX
Thanks in advance.....
Comments
Looking at past performance in this category would be very misleading as funds have moved between small and midcaps, not always intentionally (e.g., too much asset growth for small caps).
If you are looking for a long time holding, it would be good to understand what each fund does than just a few years of performance. That is a better indicator what it might do in the future.
But that evaluation has to be in the context of what you are looking for.
Otherwise, opinions will have the implicit assumptions of what people look for in a fund and will be as relevant to you as asking a bunch of strangers as to which wine they like in a list.
NSEIX for midcap value, although this is really an all-cap value fund that comes out midcap on average. If that eliminates it for you, VASVX is a good choice.
QRSVX had its day as a popular choice for small value. Probably for most that day has passed, but I still like it. And the only thing RYTRX has going against it is the Royce name, also once popular but now rather soiled by over-marketing (okay, it's not exactly nimble, either).
If you prefer strong outperformance on the upside, you should probably look elsewhere.
from their website: I'm just saying I wouldn't use it as a pure midcap fund. For lack of a better classification, most publications call it a long/short fund. I use it as an alternitive equity investment to reduce stock market volatility. The managers hedging approach has been super since inception as a mutual fund... But, whatever. You can call it mid-cap/small cap if you want.
@MikeM is right because RGHVX is a Long/Short fund, @davidrmoran is right because it is a dominant mid cap in its long positions with rest in large caps with shorting primarily for downside hedge. It does not have much, if any, of small caps, so it may not satisfy the requirement of the original poster in coverage unless paired with a small cap.
Portfolio allocation by labels can be misleading though.
I would consider RGHVX as a candidate for midcap value (David's report is wrong in comparing it to large cap value) WITH downside protection like any "pure" fund that may go to cash for downside protection. The differentiation between funds that protect downside by going to cash vs hedging as in the case of this fund seems like a difference without a distinction to me in behavior or even in risk.
It is like classifying as Bordeaux vs classifying as Cabernet or Merlot. It is the result characteristic that matters.
The strategies are just means to an end which is to participate in mid-long market with downside protection for this fund. Pure seems like an arbitrary label. Is a fund that has allocation to large caps pure? Not any more or less than using index options to hedge in my view. Most funds are not pure.
The problem is that L/S category includes many different categories with different goals. If the goal of RGHVX in its short position was to remain market neutral to get absolute returns then I would agree with @MikeM and not put it in a mid cap category because its return profile would be very different from a mid cap.
Suitability
Vanguard Extended Market Index ETF is a suitable core holding for investors who want to complement a U.S. large-cap equities allocation with exposure to mid-cap, small-cap, and micro-cap stocks. This exchange-traded fund tracks the S&P Completion Index, which holds nearly the entire U.S. market, except for those stocks already in the S&P 500 Index. Its constituent companies are widely diversified across sectors and the value-growth spectrum. For those looking to control their market-cap exposure, this fund works well with an S&P 500 Index fund such as Vanguard S&P 500 ETF to cover the range of U.S. stock market capitalizations with minimal holdings overlap.
I don't know if there is an extended market value index fund. That would fit the bill IF the goal of the OP is pure and full market exposure with no downside protection. Or a combination of mid cap value and small cap value index funds if which there are plenty.
But since, the original question is under-specified (need a Cabernet/Merlot) in requirement, it allows for creative interpretations to fit one's own pet fund.
My request was specifically for my 401K/IRA account. I mentally allocate money to different sleeves, which I believe others on this board do as well. They are:
Bucket 1: money currently saved, and allocated for years 1-4 spend
-CMNIX
-SUBFX
-PIFZX
-RSIIX
Income sleeve: generating annual dollars to replenish Bucket 1 or annual spend
-TGINX
-OSTIX
-PONDX
-LSBRX
-BERIX
-RSIIX
-WOBDX
-A few stocks...HCN, WPC, AEP, O, PAYX, RPM, KMI, JNJ, NGG
Funds for general growth: These get periodic haircuts to fund Bucket 1, add to the income sleeve, or annual spend:
-FAIRX
-RPMGX
-TRMCX
-PCVAX
-VHCOX
-FPACX
-YAFFX
-GPGOX
-ARTGX
-SFGIX
It is from this last group that I am needing to replace TRMCX and PCVAX. Just looking for a good mid and small cap value fund to replace these good performers...my goal is for solid total return...from which I can give haircuts when the accumulation warrants. I'm ok with risk, as I have sufficient ballast to accommodate the waves.
To this point, I am leaning to HIMVX and WSVRX, thanks Ben.
What a great exercise...thanks.
Press
HIMVX loses more in down markets and does very little over an index in the long term. WSVRX isn't really a value fund and makes its performance look better in M* by diversifying across midcap and small growth. Besides, it doesn't have a long enough record to understand what it might do in a correction.
I would either stick with the pair of index funds or active managers that have a significant advantage over the indices in a full cycle. The YAFFX you have for large caps is a good example of that. Otherwise, you are just making these managers rich to hug the indices over long term.
FLPSX is an example of such an idiosyncratic fund that makes taking the manager risk worthwhile.
Or you could buy a small position into the really idiosyncratic OSFDX and keep the rest in index funds! That will likely give you better alpha than these huge index hugger active funds.
Press, you have way too many funds and are doing expensive indexing, or coming close.
MM, correct: RGHVX is not pure. Note that it's ~16% SC, compared with, oh, I dunno, 0% for Yackts, 4% for PRBLX, and 21% for FLPSX. So in the game of 'which is most like the other' or whatever it is, it has quite a nontrivial amount of SC in addition to all its MC (of course its M* class is MCV).
All I was sayin' at the start.
Giant 0.39 0.26 4.22
Large 5.19 28.56 14.53
Medium 48.38 65.48 57.93
Small 32.62 5.66 23.16
Micro 13.41 0.04 0.16
I've used HDPMX to help with alpha in up markets, but it's a volatile offering.
BRSIX is a unique "index" fund to access very small companies. It has done well in up markets. It did not do well in 2007/2008 and Bridgeway tweaked the recipe a bit.
FWIW