I was thinking about buying this fund early in the year. Fortunately, I never pulled the trigger. YTD performance is in the 98th percentile (only up 0.26% compared to S&P 500 up 8.27%), 1 year performance is in the 95th percentile, and 3 year performance has fallen to the 66th percentile. Prior to 2016, this fund had stellar returns. Since 2011, the fund beat the S&P 500 every year and was at or near top percentile wise for each year. It's value or contrarian style has hurt it lately.
My question is: would this actually be the right time to buy this fund? It holds stocks that as a whole have not gone up with the rest of the market this year, so should be undervalued and may be more likely to outperform if the market is deemed to be expensive or remains flat and people look for bargains. The fund has had an excellent history prior to this year, so surely the managers know what they are doing and have just run into a rough patch. Or is this a case where one should stay away from this fund, as it has finally lost its magic and might not get it back, like other funds have in the past.
I'm also curious if any current SMVLX owners have become frustrated with this fund and are thinking of selling it, or if anyone has recently sold it because of it's poor performance over the last year.
Comments
I looked into this fund for a while, read a lot of their articles, but didn't really see the outperformance for the price at the end of the day. It's a high active share strategy that'll be different at times for what that's worth.
If you want something that moves with the s&p but is less volatile and seems to out perform, then. DSENX has been an outperformer for quite a while.
Be patient until everyone starts cursing the fund. Yes, those people who you asked if they owned it will come and tell you
Needless to say I sold SFGIX too early. I didn't think it would become the fund it has. I figured dollar would stay strong and EMs wouldn't do well. I also didn't have as much gains in WAEMX so I chose to sell SFGIX. Did I leave money on the table? Yes, I don't regret it. Now I know it is closing. I bought a fraction, and will wait patiently for the trough.
You like SMVLX, you should do the same. I'm waiting on BVAOX right now. Also waiting on WGRNX, but I'm getting worried that wait will never end, the point being it's all right if that happens.
Love is not for Mutual Funds. For everything else there is VFINX, etc.
Edit to add: I followed it for ~ 3y, thinking I might buy in if discretionary tanks and afterwards begins to turn up, because I'd noticed that it was always the #1 sector, usually by a lot, and that was pretty much all Smead talked about on his fairly frequent visits to Nightly Biz Report on Pbs.
Then finally, a few months back, it dawned on me to chart it vs. a simple discretionary etf, VCR, didn't see any advantage for SMVLX, and so deleted Smead from my watchlist.
Gmarceau, thanks. I actually already own DSEEX (institutional shares of DSENX) . Great fund.
VintageFreak, thanks. One of the main catalysts for a market pullback should be a rise in interest rates IMHO. Looking at the top holdings, JP Morgan, Wells Fargo, and Bank of America make up 3 of the top 13. One of the reasons these stocks have not kept up is interest rates remaining low. If the market goes down due to a rise in interest rates, I would think these financial stocks should benefit (or at least not go down as much as the rest of the market). Other top holdings have low PE's, which I would think would not go down as much as higher PE stocks in a downturn...but who knows.
AndyJ. Thanks. I do not know much about the longer history of the fund as far as it's holdings are concerned. I just assumed the fund was concentrated in financials, consumer cyclicals, and healthcare because that is where the fund mangers currently see value. It is good to know that you say the fund is always in those sectors, and that its previous outperformance was due to that. Something to consider.
PRBLX of course balances riskier sectors (tech, industrials) with defensives (staples, utes) so it doesn't get killed in down-markets.