It's my best performer, lately. But it's worrisome that this fund holds over 37% of my total: PRWCX. I wanna keep the money within TRP. Should I open a position in the Balanced Fund RPBAX? Div. Growth PRDGX? PEXMX? I have no midcap fund yet. This would be a core holding. With PRWCX and MAPOX, I already own two Mod. Alloc. funds. Not wanting to collect any more funds, but this needs to be done. Current lineup: DLFNX, PRSNX, PREMX, MAPOX, MSCFX, SFGIX, PRWCX, PRDSX, TRGRX, PRASX, and VSCIX. (Or NAESX or maybe one or two other tickers for the same fund, in wifey's 403b. We have received literature from both Vang. and the Plan Admin. (Mass. Mutual) which includes references to 4 different tickers. Because they don't care whether or not we know which doggone share class we're in. So, wifey will have to go to HR to find out. And they won't know anything, and will tell us to call Mass. Mutual. And they won't know what Vang. has sent us directly, and vice-versa. FUBAR.) .....
DLFNX, SFGIX, PRASX, MSCFX, VSCIX are all very small positions, less than 3% each of total portfolio. Thoughts? Thanks in advance.
Comments
Do you hold PRWCX in a taxable or non-taxable account?
If taxable, have you halted reinvestment of distributions?
If taxable, what gain (or loss?) do you have om PRWCX?
If taxable, do you have losses on any of your other taxable holdings?
I have taken no IRA distributions at all, yet. PRWCX ended-up with a big chunk of the money I cashed-out of PRASX, and I was looking for an excuse to dump most of the PRASX, anyhow. When China started playing around with the renminbi and with all the tension over US rates, I recently pulled the plug on PRASX. I have read a discussion thread over at M* about MAPOX and PRWCX. Some folks hold PRWCX as up to HALF of their stuff. That seems awful scary to me. Anyhow, MAPOX and PRWCX are my core funds, my anchors. Thanks for the reply...
(For anyone who thinks I follow M* blindly, notice that their analysts rate TRIGX "neutral", in part because the manager has been there "only" five years.)
If it doesn't matter to you who owns what, then I'd suggest picking the best T. Rowe Price funds for the account(s) you have there, and the best funds available in the 403(b), subject only to the constraint that you want to come up with a particular overall allocation.
Were I looking to diversify for long term growth only among Price's funds (as you prefer to do), PRWCX would be my first choice and RPGAX my second. RPGAX has a short track record and the 1% ER is a bit higher than I might like (owing to its 10% stake in a Blackstone hedge fund). But I own and like it as a good substitute for a moderate allocation fund. Also adds some global exposure which PRWCX lacks.
http://www3.troweprice.com/fb2/fbkweb/snapshot.do?ticker=PRSIX
1. If you look at the top 25 stock holdings of all the Personal Strategy fund in the TRP series, you'll note that many of them are shared with PRWCX, the fund you are leaving. Consequently, you would be maintaining a presence in many of the same type of companies, just reducing your exposure;
2. As part of the move to reduce your high exposure in a single fund to ... umm, a more prudent level (how could you let that happen? 5 lashes with a wet noodle!), this also would be a good time to incorporate a reset of some of your shares in other funds that have gone underwater, e.g. PRSNX (I only know this because we initiated circa the same time in that one).
3. Given its different nature, it also wouldn't be criminal to slip a bit of the PRWCX harvest into MAPOX, a finer balanced fund than you'll find at TRP.
Just off the top of my head musing, FWIW.
Here's what you should consider: PRWCX has been around for over 25 years. Its worst year was a 27% loss in 2008. Bad as that sounds, many equity funds lost 50% or more in '08. TRIGX lost 45% that year.
Re the "talking heads" - If they're saying equities are overpriced and likely to decline and that you should reduce equity holdings and gravitate to cash and bonds, they make some sense. I might even agree. (Some of Price's "funds-of-funds" would serve that purpose with their varying allocations to cash and bonds. Since the allocations differ by fund, the math could get tricky for you.)
If these "talking heads" are telling you to sell a solid conservative equity fund like PRWCX and split the money up among 3 or more equity funds (for safety) that makes no sense. If three funds each fall by 35% your net loss is still 35% - same as if one fund fell by 35%. No safety in numbers alone.
My largest holdings - for whatever benefit it might offer:
RPSIX (multi-asset income) 16%
OAKBX (conservative equity) 15%
TRRIX (equity/bond hybrid) 15%
PRNEX (equity/NR) 12%
I can understanding looking at past performance and being reluctant to sell PRWCX. If you can get your self to do that I would vote for RPGAX. Charles Shriver is not too bad. FWIW, I have some on my in-laws money is PRWCX and RPGAX in equal parts.
Let's understand how we think diversification. IF we are investing in index funds, we wouldn't be discussing One Balanced Index vs Another Balanced Index. With active funds, we should be diversifying manager risk. THAT is the only reason in my mind to not hold a large portion of your assets in one fund. Ideally I would go outside TRP for the other fund, but I can understand your options may be limited.
1. In isn't clear (to me) that you have come up with an overall asset allocation that you want to "get to". I think that you need to do that.
2. As a TRP investor, I am pretty sure that you have access, on TRP's own website, to Morningstar Premium Portfolio Tools, that you might otherwise have to pay for. You should use them, and enter your portfolio into the tool, and see where you stand (versus the "goal", described in #1). Call them if you are unfamiliar, and ask about it.
[I believe that there are also TRP/M* Portfolio Stress Testing tools, as well, but have not used them myself.]
3. Identify where you are +/-, and identify the lowest cost (or otherwise "best") TRP funds to get there. Simply put, is your overall stock/bond mix OK or not?.... etc.
4. (If TRP has a "directed dividends" option like Vanguard does...) You might use "directed dividends" from all of your funds to gradually invest in a particular fund or funds in which you are light.
5. Set a goal - time period - for which you want to get to your goal. If say -short (immediately) or longer (say a year) then figure out what changes you need to make every month to get there over desired time period and do it.
6. Or something like that.
NOTE: For example..... Looking at PRWCX's 2014 annual report (page 18, Investor Class). In 2014, the fund paid out $2.62 in distributions, which was more than 10% of the Yr End 2013 value of $25.66. In a month or so [?], TRP will post estimates of distributions for the current year.
If you stop reinvesting the distributions, but "direct" them to the funds in your retirement accounts in which you are short, you might be able to effect at least a part of your re-allocation "automagically".
In wonderful English grammar, I will state: "I don't see no barking dog with PRWCX and no need to take part of the fund and escort it to another place."
I am sure you are aware of the category return status of this fund over the years, per M* or just the numbers, if you want to compare at some other site.
For the past 15 years through the good and the bad, you would be hard pressed to find better in this category and/or "build your own mix".
So what if it is 37% of your portfolio! Do you think you can remove half (or whatever % you are considering) of the fund and redirect to other fund type holdings and receive better performance from the monies?
I'd keep this one where is it at now; and reinvest the distributions back into the fund and let this one simmer along.
Play with the other holdings if you choose.
There are folks in the world of investments who desire to have this fund in their portfolio, but do not have access (closed), except for openings in some retirement programs.
You may choose to read through some of the list of "things" at this link to help with your decision. I personally would use the list of goodies to find a reason(s) to convince oneself of "why I should reduce the holdings of PRWCX ."
Disclaimer: my economic studies degree is from "Whatsamatta U". My suggestion(s) is free and may hold similar "value". I am not affiliated in any method with TR Price. Lastly, I am listening to "Days of Future Passed", by the Moody Blues; which may or may not affect my thinking at this time.
Good luck.
Catch
One can buy that Fido fund that invests in 4 indices (I think) and be diversified across asset classes that way. Why does not everyone pile into that fund? Frankly, I'm not sure what the basis of discussion is any more.
Here's my story and I'm sticking to it. In my 401K I have stopped investing in bonds. I own cash, some S&P 500 index, and some S&P 400 index. That's it. In my my taxable portfolios, knowing how good/bad active fund managers are it is prudent to diversify manager risk. If one is going to invest in Active fund managers, I don't see why one would bet the farm on a single fund / fund company. It makes no sense whatsoever. 37% of portfolio in one actively managed fund should given anyone pause. Heck, put 100% in PRWCX then. Then why ask question?
One decides portfolio should have 60% stocks 40% bonds. One can buy XYZ balanced fund. There is a 1 in zillion possibility Bernie Madoff was cloned and his clone will start managing XYZ Balanced. 3 years later, one will come and tell VF he is an idiot for not investing entire portfolio in XYZ Balanced. VF will rue the day but go to sleep knowing he invested in ABC, DEF, GHI, .... Balanced funds knowing chance Bernie Madoff's clone managing any one of his funds is now 1 in gazillion.
8% cash (but held in the funds, not by me.)
US 41
Foreign 10
Bonds 40 (Of that 40%, 29.2% is in dedicated bond-only funds: DLFNX, PREMX, PRSNX.)
"other" 2
Bond quality is LOW, with 67% at Moderate risk, 22% with Limited risk.
Equities: 44 growth, 34 Core and 22 Value.
Large cap: 62.72
Mid and small-caps. 37.26
...If the 8% cash position (aggregate) were invested in equities, I'd be just a baby-step from a 60/40 stocks/bonds portfolio, which pleases me. I'd like to have more overseas exposure, but I think this much smaller foreign chunk at the current time is prudent. Asia is the future. But I could let a lotta years pass waiting and hoping for it to be fruitful. I have only 1.57 in UK and 3.26 in Europe Developed. Emerging Europe = 0.71%, and that's fine with me. Japan is at 1.3%.
I have found 2 rather good Balanced funds in PRWCX and MAPOX, though the latter is not performing as well as the former. MAPOX pays quarterly divs, and I like that. PRWCX pays only in December. That's fine, too.
The exercise of spelling all of this out to you guys is a response to a very good question or two from ibartman. ALL of the input is valuable, and of course, there's no perfect answer or resolution.
One last thought: I'm intending to invest all of this for heirs. And the tiny, new position (joint with wifey) in the electric utility PNM will grow by tiny baby-steps each month, too. I chose it from among a list of companies offering DSPP, and after examining it. I know that utilities are going nowhere, but this one looks like a good relative prospect in a category I didn't have any money in, yet.
http://www.morningstar.com/stocks/XNYS/PNM/quote.html
I'm grateful to you all. Vintage Freak, from among your replies, is most concerned about the size of my PRWCX holding. I'm taking his words seriously, but does that "rule of thumb" about keeping holdings down to 20% of total or lower a good idea, here? (10%, per VF.) It's not a pure equity play. Maybe M* rates it to be riskier than it really is...And I'm not ignoring heezsafe.
As it is, I'd prefer not to collect any more funds. With wife's 403b, I'm up to 11 (eleven.) That's enough for me.
I made good profit in TRAMX, waited too long to get out, but still happy about it. I funneled that profit (back at the New Year) into PRWCX precisely because PRWCX is domestic and thus "safer," and riding high in a core-fund category.
New IRA money is earmarked for MAPOX. I think I WILL stand-pat. Thanks, all.
PRWCX whose managers make an asset allocation decision for you . Clearly you should feel free to substitute any of these funds for a substantially identical fund you already own. Exchange slightly less than half the funds you have in PRWCX as follows(assuming the amount you will reallocate/invest is X
Hedge against deflation with The long term Govt fund PRULX or the etf TLT 10%X
Hedge against inflation with I bonds (in taxable account) and TIPs and the Floating rate fund PRFRX in your tax deferred account 10%x
Go with a popular choice for country diversification Global allocation RPGAX 10%X
Hedge against picking the wrong bond fund with spectrum income 30%
Hedge against management mistakes with the total stock market POMIX 30%X
Hedge against the stock market going down with PRWBX 10%X
and use it as a fund source to rebalance into stocks(not into underperforming bond funds)
The resulting portfolio may be a bit too diversified for your taste but should help somewhat if the world is unkind . Its clearly less risky than PRWCX though it may or may not be less rewarding.
(I think it's always important to hedge against our own mistakes.)
There are some Trow price international funds suggested above, but they are all mediocre funds. If I were you, I would chose none of the Trow Price international funds except PRIDX if you can live with the volatility of International smallcap funds. I did not include EM funds in my opinion above, and I don't have an opinon on them.
To hedge against ...
- Global warming - Buy a utilities fund.
- Global cooling - Buy an energy fund..
- Flood & earthquake - Sell insurers short.
- Unexpected pregnancy - Buy a growth fund.
- Divorce - Buy bullion (and hide it well).
Since war is ongoing nowdays, I see no additional need to hedge against it.
For example, TRIGX is Trow's International Lcap value fund for a long time. When it is already there, what was the need for them to introduce TROSX. Looks like, they created to just retain the talent that has aspirations to manage its own fund.
Same is the case with Asia Opportunities fund, when they already have New Asia fund.
Also, they started Global Growth stock fund (a supposedly Global Lcap growth fund), when they already have PRGSX (prdominently a global largcap growth fund that also delves into midcaps).
So am I and I have been very pleased with my choice for over 20 years.
Your investment experience has led you to this position. So........don't change it as you might regret it later. PRWCX is a diversified fund and the best I know. If you want more bond diversification then sell some other funds and open up an account with PONDX.
prinx
A couple of years ago, I had a conversation with a pro. He was great. Time well spent.