Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
@jafink63: Please know that I meant no offense to yourself or to anyone else with a propensity to invest. Truly, I'm not qualified to pass judgment on any choices or motivations nor is that my intention. My leading thought was that perhaps more experienced players in the game could give sage advice that we all could benefit from initially.....nothing more. Then, after time spent pondering their ways, we could invite the contributions of all who dare to throw their hats into the ring. But we might do well to slow the game down a bit by focusing on the submissions of a few, inquire and ponder, and then move on to the next few. All are welcome, as I previously stated, and I meant it. God bless the Pudd
This was started before other replies appeared. I'm not changing the write and hopefully nothing redundant.
So that a new investor reading here; is not confused about wrap fees.......and that a wrap fee is always involved when investing. It is not.
Old_Skeet writing with 4) must be read and understood properly, the portion shown next: "There are those on the board that are against commission based advise. I'm one that is not. For me to purchase no load funds I'd have to open another brokerage account that charges a wrap fee in order to hold these no load funds."
The link provided in a prior reply about wrap's, provides what is needed to be known.
The simple side is that one chooses to manage their own accounts or have them under the adviser umbrella (the wrap). Our Fidelity accounts opened in the late 1970's are self directed and we added the brokerage feature at the time. Today, all Fidelity accounts have an automatic brokerage feature; whether one wants or needs or chooses to purchase stocks, bonds, etf's or other allowed investments. 'Course one may also choose to have an advised accounts with Fidelity, too. On the etf side, there are 91 no fee choices. $4.95 per trade for equity. I'm not sure how many 1,000's of etf, non-Fidelity mutual funds and similar are available. More choices than I/we have a need for; but available. I have absolutely no rub against an investor using an adviser; if this is their only means for investing and keeping fingers crossed that the adviser knows what they are doing with other peoples money and the "wrap fee or fee" is in line with other adviser choices.
Hi guys!y WOW! Got more than I bargained for. Would like to sidestep here for just a minute......
Art: You said what I tried to ask for initially. Just one portfolio at a time......offered by a volunteer in the group.....and open it up for discussion. The discussion might last a few hours or days......but, ultimately, we glean insight from that offering and move on to the next. Does that sound like a plan we want to pursue? God bless the Pudd p.s. If so, I would like to suggest that we work with what we currently have in the way of portfolio submissions. When we are through discussing all of those, we can solicit new ones from the group.
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Interesting thread - Though it’s not clear to me just what the “bottom line” is. People invest for many reasons. I’ve gotten the impression over time that Pud is one of those most comfortable with momentum investing - perhaps best illustrated by jumping on the fastest train(s) and than hopping off again before the next sharp curve or derailment. Nothing wrong with that. Some folks are darned good at it - especially if they have nerves of steel, time to study the trends, and if they know how to read and interpret the charts well.
25 years ago after leaving my fee based “advisor” and taking control of my own investments (while in need of direction) I logged into some of the fund sites that offered allocation models based on age and goals. They worked by having you input age, goals, risk tolerance, years to retirement, etc. And came up with recommendations. By working with 2 or 3 different ones, I came up with a moderate growth plan that I thought best fit my needs and personality. AC had a very good one back than. I’ve modified my approach a bit with passing experience - but the basic model is still pretty much the same. I’ve always thought any perceived deficiencies better dealt with by carefully considered tweaks, rather than by throwing everything out the window and starting over.
Another way to approach the allocation issue is to look at how the target date funds set-up their allocations - easily seen by reading their regular reports. Now, if you consider yourself smarter than the allocation people at T. Rowe Price or Vanguard, than that approach won’t work for you. And while on the topic - performance may not be the only reason people buy particular funds. Some have limited options. Others highly value the customer service rendered by this or that house. Some are more fee conscious than others. And for still others legacy issues affect considerations.
My basic model has been shared over the years (albeit piece-meal) and I don’t have time to try to explain it now. It’s a pretty sedate approach compared to most I suspect. I’m comfortable pulling 5-7% real return (after inflation) as averaged out over 5-10 year stretches. Some of us pull our horns in a bit past age 70. But there seems a goodly number here in their 70s and 80s who appear to be still charging full speed ahead. Good for them. Thanks to all who shared their funds.
Thanks for the response on wrap fees @Old_Skeet, but I believe you are mistaken to believe a wrap fee is involved in purchasing a mutual fund A-share when available at a brokerage like Schwab. A wrap fee is paid IF you are getting a service from the brokerage or a financial adviser, like if they were putting together a portfolio of A share funds as an investing service to you and then managing that portfolio. If you are simply buying the fund or funds available on the Schwab platform, there are no added charges, no transfer fees, no ongoing or one time commission fees, no 12b-1 fee.
A-share ownership is not a special club you need to buy into anymore, a.k.a, upfront loads. Many A-share funds are available through the big supermarket brokerages. I guess that is my point.
All that said, you have already paid the load fees and over time those fees have been recouped by lower expenses. That's a good thing. But in today's world the investment choices are different than when you started investing. There is no need for anyone starting out today to follow the load-path.
Thank you for making comment about Charles Schwab and your ability to purchase A share funds load waived without commission, etc. With this, I have a question. Can you do nav exchanges in this account without any charges, etc? If not, what would the charges be to do a nav exchange? If you don't know could you please look into it and advise since you are a client? I just might be interested in opening an account if I here the right answer(s).
In addition, are there account fees associated with maintaining such an account?
Must thank Mrs. Pudd for the last post. Hoping to get another way of saying what I meant. I thought she might do better.
Skeeter: Every time I come to this thread I swear your portfolio gets bigger. But it shows me how organized things can be with a plan....i.e., sleeves. My first question: no indexes, and what do you do with index huggers? Anything? Also, how is the volatility in the sleeves? Does it matter? On a good day, is the port up more than the S&P? On a bad day, how is it? Also, how many holdings do your funds have, 500 in some or 50? Right know I'm going to funds with less. What about overlap in sleeves, i.e., companies? In your bond sleeves, how do you work bond quality A, B, C ratings? Just some thoughts....
Ted, Ted, Ted: Pedestrian.....really? Preferred something I've never thought about owning----I do like some of your stocks: KKR, PHE, VZ. Also, since you posted your portfolio, I understand the MSOPX buy. Since I now can own an ETF in my IRA, please give me your thoughts on QQQ, if you would.
Jafink63: I'm glad you're going to an advisor. One day this week, I had a meeting with one with family.....they're elderly and get confused easily, so they ask me to go along. I feel it's well worth your time. They will help you tweak your portfolio which could equal more money maybe. Also, do come back and tell us about your experience.....what you learned and if you changed your portfolio. I'm curious. And your thoughts, pro or con, could help others.
DavidrMoran: How do you keep your portfolio so small? I could never. I see you have FRIFX. How do you think that will do in rising rates? PONDX and FLPSX I like. PDI and PTY I also like, but then I like PIMCO. Looks good, Big Guy!
@Old_Skeet , sorry, that is work you will have to do yourself.
I get the sense you are being facetious in your request. I personally don't care what you do, but I think it is prudent to suggest to other MFO readers (which I'm sure isn't news to most) that your A-share approach is not a good choice in today's world.
I keep looking for the A share American Funds on Charles Schwab's platform all I see is F-1. This indicates to me this is a fee based account as this is what American Funds states their F-1 shares are designed for. In addition F-1 shares are not nav exchange eligible. Is this a fee based account you hold? I do see some A share funds; but, not many? And, what gives with the $25.00 transaction fee for broker assisted? Do you use on-line trading to purchase? Or, the phone? I see some of the stuff you state; but, not a lot. And, again what is the account fee? Is it a percent of your full account balance? Do they charge a fee on your cash if held in your account?
Thanks for looking. I thought if you had confirmed what I had asked earlier ... I'd be calling them tomorrow. But, after looking at the link I don't think so. And, not finding A share American Funds leaves me in flux.
Thanks again for your comments.
Skeet
Not being a client I can not see the full list ... Are A share American Funds listed?
>> How do you keep your portfolio so small? I could never.
Good question. The chief motive, some of which I have detailed in these posts over the past, or at least whined about, was realizing over time how little improvement conventional diversification has made to me over the recent past, like 20y, and certainly 10y.
I used to have much more midcap, and healthy slugs of smallcap (GABSX, WEMMX, Royce, Fido ...) in two or three of the tilts. I used to have a bunch of balanced and would post here about the excellences of Janus Balanced and ICMBX, and I stuck forever with GLRBX and OAKBX. Urged a sibling into MAPOX, as it was available to her. Had numerous LC funds too, Contra and some of the other top ones. Not all active management either, would regularly put slugs into various etfs to please my sense of balance. Years ago had been a big fan of Fido Asset Mgr and then a fan of the AO_ family. Had some REITs and some individual bonds. More gamble / tip stocks. Small option positions. All in numerous accounts at various places.
This is not an uncommon approach here, turns out, chasing performance and balance allocations.
After two shocks, 2k and 08, including unemployment for me while kids were in fancy colleges, I saw that this diversification was not worth it, really. But I did not abandon it, yet. I did pay much more attention to LCV and divs, starting to push moneys toward them. But broad diverse remained my practice even though.
The last few years, thanks to MFO (which I have modestly supported and shall again) and other sites, I came to study the Pimco bunch, and then learned of this new CAPE approach and its DSE_X expressions featuring special bond sauce atop. I also read Waggoner and others on the relative inutility of international investing, which I had been big on as well, like everyone. Diversification.
And so eventually I bailed out of other brokerages, stuck w Fido and ML only, and started to move my SC, MC, and foreign into DSE_X. I examined my years with VNQ and VNQI and FRESX and whatnot and saw that they too did not make a worthwhile difference in performance, up or down. I backtested a lot of what I had been advising my kids about (WEMMX, e.g.) and saw that it did not make a difference either. And so on.
>> I see you have FRIFX. How do you think that will do in rising rates?
No idea. I wanted to have one last tablespoon or five of diversification in other asset class, and did not want to put a ton back into RWT, say, much less stay in VNQ / VNQI / FRESX, and there was one other good one, I forget who.
My goal was and is of course to make a cushioning difference in drops. No idea if I have succeeded, or will. But life is simple.
I have another sib who on my sayso went big into DSE_X and is happy and thinks I am a real smart investor, which is droll. I calmed him down by relating how 20y ago I lost effectively a year's salary holding stock in my hot startup employer, about the same same as I had done 5y prior with another incredible startup runup. Both startups are still in business, actually. But I shoulda sold during the runup, duh, rather than holding and holding over the subsequent decline. I have not told him about my equal REIT losses in 08ff.
So I am left simple, and IFF you include our SS as being like a bond, we are around 50-50 LCV stocks (with some MC and foreign) and somewhat gogo (Pimco) bonds.
Hi Pud ... Here is a recap of how I roll along with my comment to your questions at the end.
Sleeve Management System
Now being in retirement here is a brief description of my sleeve management system which I organized to help better manage the investments held within mine & my wife’s combined portfolios. Currently, the master portfolio is comprised of two taxable investment accounts, two self directed retirement accounts, a health savings account plus two bank accounts. With this, I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of five sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve, a specialty/theme sleeve plus a special investment (spiff) sleeve. Each sleeve (in most cases) consists of three to nine funds with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and amounts held. By using the sleeve system one can get a better picture of their overall investment landscape and weightings by sleeve and area. In addition, I have found it beneficial to Xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets along with using an equity allocation weighting matrix (driven by my market barometer & compass) as an aid to help set the stock allocation weighting. In addition, I follow a seasonal trend investment strategy as well. All funds pay their distributions to the cash area of the portfolio with the exception being those in my health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash disbursement amount (if necessary) with the residual being left for new investment opportunity. Generally, in any one year, I take no more than a sum equal to one half of my portfolio’s average five year return. In this way, principal builds over time. In addition, most buy/sell trades settle from, or to, the cash area with some net asset value exchanges between funds taking place between funds.
Master Portfolio Last Revised 10/31/2017
Here is how I have my asset allocation broken out in percent ranges, by area. My neutral allocation weightings are cash 20%, income 30%, growth & income 35%, growth & other assets 15%. I do an Instant Xray analysis on the portfolio quarterly (sometimes monthly) and make asset weighting adjustments as I feel warranted based upon my assessment of the market, my risk tolerance, cash needs, etc. Currently, according to Morningstar Instant Xray, I am about 17% in the cash area, 25% in the income area, 31% domestic stock area, 20% foreign stock area & 7% in the other asset area. In addition, I have the portfolio set up in Morningstar’s Portfolio Manager by sleeve and as a whole for easy monitoring plus I use brokerage account statements along with some other Morningstar reports and fund fact sheets as well.
Cash Area (Weighting Range 15% to 25% with neutral weighting being 20%) Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual) Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 25% to 35% with neutral weighting being 30%) Fixed Income Sleeve: BAICX, CTFAX, FMTNX, GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX Hybrid Income Sleeve: APIUX, AZNAX, CAPAX, DIFAX, FISCX, FKINX, ISFAX, JNBAX, PCGAX & PGBAX
Growth & Income Area (Weighting Range 30% to 40% with neutral being 35%) Global Equity Sleeve: CWGIX, DEQAX & EADIX Global Hybrid Sleeve: CAIBX, PMAIX & TIBAX Domestic Equity Sleeve: ANCFX, FDSAX & SVAAX Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FBLAX, FRINX, HWIAX & LABFX
Growth Area (Weighting Range 10% to 20% with neutral weighting being 15%) Global Sleeve: ANWPX, SMCWX & THOAX Large/Mid Cap Sleeve: AGTHX, AMCPX & SPECX Small/Mid Cap Sleeve: IIVAX, PCVAX & PMDAX Specialty & Theme Sleeve: LPEFX, PGUAX & NEWFX Spiff Sleeve: None at this time. Frequently use VADAX & IALAX
Total Number of active Mutual Fund Positions = 47
On your questions.
My portfolio is not benchmarked as such. However, I do compare it to the Lipper Balance Index and consider it my bogey for several reasons. If I am leading the Index it means I am probally taking on more risk than the Index. And, if I trail the Index perhaps I am not taking on enough risk. So, not only is it a measuring stick (of sorts) it is part of my risk management and allocation assessment tool kit.
Some of the things I follow in Morningstar's Portfolio Manager are natrually the fund name, its ticker, star rating, cost per share, current price, % below 52 week high, dividend yield, duration, maturity, turnover, shares held, position value, % weight in portfolio, 1 week return %, 1 month return %, 3 month return %, ytd return %, 1 year return %, 3 year return %, 5 year return % & 10 year return %. There are others. From this I think you can see that I indeed do monitor my portfolio as well as the funds themselves. To view daily results all I have to do is click on the track tab in portfolio manager.
On the number of securities each funds holds? You will have to check each fund's fact sheet. That is something I don't follow. However, this might be something I look at fund selection time.
On the quality of bonds? I don't hold any bonds directly and let the fund manger make bond selections. But, if you wish the fund tickers work in Xray and that will give you an idea of bond quality in each fund that holds bonds. In addition, you can also check each fund's fact sheet for this information. Moringstar's Portfolio Manager indicates that the portfolio as a whole has an average duration of 3.4 years with an average maturity of 5.3 years. And, if I were to guess, I'd say bond quality was on average somewhere around BBB or better.
Hi guys! I would like to post Dukester's Corner II on Saturday morning. I will post my portfolio then and would like if some of you (four (4) portfolios, to be more to the point) would also post yours. We'll post, ponder, and inquire all week long regarding the new five (5). Then, next Saturday (the 18th), we'll take offertories from the next five (5) contestants, and so on. To lend some order, I've assembled your names below in the order of your posting on the thread. Please give me a shout out if interested. I will post Saturday morning. Also, Art, thanks for riding shotgun on a wobbly thread, Big Guy!
The List:
Slick Art LLJB MikeM Mark Derf Catch Hank
We'll start at the top with Slick, and give it a go. Shout out "yes" or "no" ..... a "no" response is ok. No pressure, just good stuff. God bless the Pudd
Lots of good stuff since I posted. I don’t particularly care what the eventual goal or outcome of a thread is. I just enjoy discussing investing and seeing how others approach things. “Learning just for the sake of learning” some would say.
When I get around to sharing mine, the most prominent feature is the “bucket approach” - though I don’t call it that. The value to me is in the discipline it fosters. After ditching my advisor, who had me 100% in an aggressive growth fund (back in ‘95), I went on a spending spree, piling up funds at a half dozen or so different fund houses. Buy ... Sell ... Buy ... Sell. I knew that doing this wasn’t healthy (in more ways than one) and so in a few years eventually settled on a rigid plan. Most of the funds I owned at that point found homes inside the various buckets. Some had to be sold or reduced in scope. A few added.
You can use buckets, branches, sleeves, planks or any number of other terms to describe this popular approach. What it does is provide visible structure and (in my case fortunately) reduce the temptation to keep buying new funds. I’ve got “buckets on top of buckets“ in my mental diagram. And it’s not easy to explain to others. You more or less have to grow into the system. Ol’Skeet’s (bucket-like) approach makes mine look simple in comparison. However, he does an admirable job laying it out. Where we differ is in making changes based on market readings. I have some limited discretion to vary cash or speculate a bit if I see an opportunity elsewhere. But not nearly the same degree of latitude he seems to enjoy.
Note: A bucket plan does not rule out buying or selling new funds, It does, however, force you to think long and hard before swapping out one of the current horses for another. Additionally, if you have a dozen or more funds, you can’t bruise yourself too badly with one poorly timed change.
Not sure I can say it any clearer @Old_Skeet, there are no additional charges or account fees for purchasing A-shares available on Schwab's mutual fund platform!!!! There may be some not ono their NTF list, I don't know. There was no transaction fee for the one A-share fund that I purchased (did you catch that - no additional any-kind of fees). You buy and sell shares on the computer just like everyone else does today. American funds very well may not be on their platform. And finally, who the heck uses a broker to buy mutual funds anymore????
With all the mutual fund and ETF choices available today, I can not think of one reason you would need a middle man to take your money. Let's just say this is not for you and be done with it. Anyone else today who would go the root you took decades ago would be absolutely crazy in today's world.
>> I cannot think of one reason you would need a middle man to take your money.
I myself agree, but I have family members who much prefer to have someone 'taking care of all of it', including a certain amount of tax planning, RMDs, budgeting including for big or surprise expenses, rebalancing and allocating and projecting, forms and filings supposedly, and a known voice on the phone who also offers the occasional free tickets. They would not have it any other way, would never (and say they could never) do it themselves, and would not have me (say) do it for them. I know these are familiar arguments, but they sure are real.
With this, I plan to get in touch with the local Charles Schwab office and schedule a visit. I'm just not sure they can get my expenses back (the average and accross the board) of the current 0.87%. But, we will see.
@ Old_Skeet: I sent off your question to consultant @ Schwab . As of this evening no reply, which doesn't totally surprise me. I looked at ABALX & CWGIX, redemptions only. AMFFX F class only.
Currently for the portfolio as a whole my average combined expense ratio is 0.87%. There is no wrap fee on my account nor do I pay any fees, etc. to the broker. Everything the broker receives (expense wise) now comes from my mutual funds companies. I am currently doing a study to see what my expense ratio would be on my American Funds to convert them to the F-1 shares. In addition, I'm thinking this would become a taxable event and would kill the deal. So, if I can't transfer the current A share funds (in kind) there is no reason for me to move assets. However, I might open an account at Schwab to buy new funds outside of the current fund families already owned. My purchase of some funds are still commissionable while some are at nav or reduced rates.
Here is what I have discovered thus far. In the review of my American Funds' A share expense ratios I am finding they are generally less accross the board over their fund's F-1 share class. In my largest position, Income Fund of America, I currently have an expense ratio of 0.56% on my A shares and if I moved to the F-1 share class the ratio would increase to 0.67%. That amounts to just short of a 20% increase plus the F-1 shares don't carry the free nav exchange feature that the A shares have. I'm also finding that the F-1 share class funds are for fee based accounts.
With this, I'm thinking it might not be in my best interest to move my exisitng portfolio(s) to Schwab. But, it might still be worth looking into about opening a new account for purchases that are not currently available to me.
And, if converting A shares to F-1 shares will be a taxable event then this is a sure a deal killer. Thus far, it looks as though I've got the low cost deal (expense wise).
@Old_Skeet, why are you fixated on American funds? Plenty of comparable funds in every category out there. The tax thing would certainly be a show stopper though.
You are an astute financial guy. Your decision will no doubt be the best one for you.
Allowable AA/Cash Weightings (As a % of entire portfolio) 10% = Minimum 15% = Nominal 20% = Maximum
* ”AA/Cash” refers to a mix of highly liquid short term bonds or cash and a limited portion of intermediate duration investment grade bonds held through funds. Bond portion is normally less than half. Currently it consists of DODIX.
II. CORE Portfolio 75% (Range 74.5%-75.5%)
Hybrid Funds: Range 35-40% (Currently OAKBX, PRPFX, TRRIX)
Balanced Funds: Range 18-21% (Currently RPGAX, DODBX)
Multi-asset Income Funds: Range 18-21% (Currently RPSIX, PRFHX)
Global Bond: Range 7-9% (Currently DODLX)
Real Asset Funds: Range 7-9% (Currently PRAFX, OREAX, OQGAX)
Limited Term Bond Fund: Range 7-9% (Currently OUSGX)
CORE Portfolio Binding Policies:
1. Maintain Core Portfolio at 74.5% to 75.5% of total. 2. Do not rebalance within Core unless target zones are breached. 3. Normal distributions may be used to rebalance Core.
Less than 5%: OREAX, OQGAX, PRAFX, PIEQX, PRWCX, DODBX, PRFHX
Goals: (1) Stability of Principal, (2) Preservation of Capital, (3) Moderate Growth, (4) Inflation Protection
Strategy: Increase/Decrease risk according to market valuations thru changes in “Flexible” portion. Currently at low risk position as reflected by 20% AA/Cash weighting. Maintain a stable “Core” position.
Custodians (largest to smallest investment): (1) T. Rowe Price, (2) Dodge and Cox, (3) Permenant Portfolio Funds, (4) Oakmark, (5) Oppenheimer
Years into Retirement: 20
Years Taking Distributions: 15
% in Roth IRAs - 60%
% in Traditional IRAs - 28%
% in Taxable Accounts - 12%
Benchmark: TRRIX (40/60 Balanced)
10-Year Returns vs. TRRIX
2007 +6.50%. / +6.1%
2008 - 21.9% / -18.4%
2009 + 28.86% / +22.1%
2010 +9.39% / +10.1%
2011 +1.2% / +1.43%
2012 +10.4% / +10.05%
2013 +8.25% / +9.15%
2014 +1.82% / +3.9%
2015 -4.27% / -0.74%
2016 +11.31% / +6.48%
Recent Strategic Buys/Sells
Real Estate (OREAX) Pur 2015 (benefitted returns) - Holding
Energy/Nat.Res. (PRNEX) Pur 2015/2016 (benefitted returns) - Sold 2016
Latin America Equity (PRLAX) Pur 2016 (benefitted returns) Sold 2016
International Equity Index (PIEQX) Pur 2016 (benefitted returns) - Holding
Commodities Pur 2015 (QRAAX) (detracted from returns) Fund Liquidated/Closed 2016
Gold (OPGSX) Pur 2017 (benefitted returns) - Sold 2017
Global Infrastructure Pur 2017 (OQGAX) (new) - Holding
Prior to 2017 cash positions were somewhat lower. They were increased marginally at the beginning of 2017 by (1) Increasing the Flexible portfolio from 20% to 25% and (2) instituting the “Limited Term Bond” position in the Core Portfolio where it had not existed prior. If these changes are continued, returns going forward will likely be lower than in the past. I’ll let Mr. Market provide future guidance in this regard.
My portfolio does not need a thread of its own. I was invited to share my holdings by @Puddinhead and am happy to comply. Not much new here. Been on the board many years and have referenced this approach piece-meal many times. Could probably go 100% cash at 72 - but trying to eke out a little better return without taking a lot of risk. I’ve laid it all out for whatever purpose it may serve.
Thanks for sharing @Hank. Believe it or not, you are one of the people here that helped me establish my portfolio thinking, simpler is better and buy a good fund and stick with it. 10 years ago I had a collection of funds with lots of category duplicates. Not any more.
One question, though incidental. Why do you classify PRWCX an equity fund, OAKBX a hybrid and DODBX a balanced fund? They are all equity/bond balanced at their core, aren't they?
One clarifying comment; your brokerages are definitely not fiduciaries.
Derf said: “Inflation protection. Do you use TIPS or other funds for this protection. % if not to time consuming.”
Re TIPS - Wouldn’t rule them out completely, but haven’t yet used them. Several of the funds I own (like RPSIX) do hold them in small amounts. Many investors view TIPS as inflation protection. I’m not so certain. To me, they’re still a bond and stand to suffer should interest rates rise dramatically along with inflation. While their principal is adjusted upward along with the CPI, they also carry a fixed-rate. A few years from now, when compared to much higher yielding newer issues, an older TIP might not look so attractive. And as discouraged investors flee TIPS funds, even more damage might ensue. A good “give away” is that many fund companies offer TIPS funds of varying duration (ie short-term, intermediate, long). If they truly expected TIPS to keep pace with inflation there’d be no need for such differentiation.
Re inflation - I’ve always kept a sail to the wind in that direction. Generally, it has dinged my returns over the past decade. We really haven’t had the type of torrid inflation experienced in this country during the 1970-85 era. (By one source it topped 13% in a single year). In fact, until very recently, deflation seems to have been a bigger worry among economists.
Equities over longer periods offer great inflation protection. (Best if purchased at reasonable valuations). You can beef-up your inflation defense with things like real estate, gold, energy, metals, agriculture. The problem is these get hit the hardest during economic slowdowns or periods of falling prices. They can also be highly volatile. I vary my inflation-hedge components over time based on valuations (as I perceive them). So that segment of the core does turn over a bit. The current ones are the real assets fund, the real estate fund, the infrastructure fund. To a lesser extent the global bond fund and the limited-term bond fund I also view as inflation hedges. Actually, I’ve substituted both the more aggressive OIBAX (international bond) and OEMAX (emerging markets local currency bond) for the less aggressive DODLX when those other fund’s appeared good buys.
Note: Price offers a couple funds directed towards people looking for an added degree of inflation protection: PRENX and PRAFX. Both good funds under the right conditions. I’ve usually opted towards PRAFX because it appears more distanced from the S&P and other measures of equity performance. It’s also less tied to a single segment - energy.
Thanks for the question. I hope I wasn’t too long winded. Feel free to ask more.
Hi Mike. Thanks for the correction. I changed fiduciaries to custodians in the earlier posting, which I hope is more accurate.
You asked: “Why do you classify PRWCX an equity fund, OAKBX a hybrid and DODBX a balanced fund? They are all equity/bond balanced at their core, aren't they?”
Good question Mike. Let me try to explain from a few different angles.
- Original portfolio construction (sometime in the late 90s) evolved out of a mix-match of several good funds, but lacking any defined roles. Part of the early process involved trying to fit existing funds into the structure that was evolving. PRWCX was one of the first funds I owned and fell into the equity zone. Not sure how Price views the fund today. But I’ve owned it nearly since inception and it was originally promoted as a very conservative equity fund - not a balanced fund. I’ve always considered it more equity than balanced - albeit conservative equity.
- DODBX was initially incorporated as the balanced fund. After Price introduced RPGAX, I began adding it to the point where it now dominates the balanced area. I’ve come to favor international over domestic and also think RPGAX will hold up a bit better in a severe downturn.
- The three actually appear to fluctuate in terms of risk profile as markets change and management makes adjustments to holdings - especially PRWCX and DODBX. At times one will seem more correlated with equities and experience bigger daily swings. At other times the other will appear more correlated. Underlying investment philosophies appear quite different as well when viewed through their commentaries.
- The hybrid idea was conceived as something “not like everything else” for more diversity and protection against a big equity sell off. It was seen to have some equity-like features - but less correlated with the equity market than the balanced area. In adding OAKBX I went out on a limb. I believed it fits - but just barely - in the hybrid arm. I would never allow it to comprise more than about 35% of that area. It does add a bit of “octane” to that segment over what PRPFX ot TRRIX are likely to provide. In reading their fund reports (particularly their holdings) I continue to believe that OAKBX is better hedged against a potential equity downturn than the other two. (They’re more “deep-value” than given credit for, keep a foot in the defense sector, and will go out longer on bonds when valuations warrant.)
- Lipper classifies OAKBX as “Mixed Target Allocation-Moderate”. It bumps both PRWCX and DODBX up a notch to its “Mixed Target Allocation-Growth” model, implying a bit more risk.
Here’s the numbers from 2008:
DODBX -33.5% PRWCX -27.17% OAKBX -16.18%
Thanks. Hope this at least partially satisfies inquiring minds.
* Worth noting: The Core segment hasn’t always been set at 75%. In the early goings (late ‘90s) I started with only 50 or 60%. Gradually, as my understanding and experience grew, I raised it in increments to as high as 80%. As noted in the initial posting, I cut the Core back to 75% around the start of 2017 to bolster cash holdings in what I percieve to be a very risky market.
Do you own these funds in a brokerage account, or with each fund company individually? The reason I ask is that I think some of the funds could potentially be replaced by better performing, similar funds from other fund companies. (Although tax handcuffs may make switching difficult unless in tax advantaged accounts)
GLFOX for your Oppenheimer Infrastructure fund, for instance. Or PONDX/PIMIX for RPSIX (I get dyslexic sometimes on the ticker for the Spectrum Income fund). I know PIMCO ruffles feathers with all their fancy derivatives and swaps and such (“own what you know” mantra), but they make money (potentially....but their track record suggests “probably”) on interest rate moves in addition to their bond holdings. They use “all the tools in the toolbox” available to bond mutual fund managers.
I know you have been doing this for a long long time, and aren’t asking for advice, and I am a relative novice at this, but just a suggestion from the “peanut gallery” if you will. TRP is a much loved fund company by myself, especially now that it is NTF at Fidelity. And PRWCX is my largest fund holding. And I love many many of their other funds, but have always been underwhelmed at their fixed income type funds.
Thanks to everyone for sharing their portfolio ideas. It helps me start to think about how to organize my own. Cheers
Comments
God bless
the Pudd
So that a new investor reading here; is not confused about wrap fees.......and that a wrap fee is always involved when investing. It is not.
Old_Skeet writing with 4) must be read and understood properly, the portion shown next:
"There are those on the board that are against commission based advise. I'm one that is not. For me to purchase no load funds I'd have to open another brokerage account that charges a wrap fee in order to hold these no load funds."
The link provided in a prior reply about wrap's, provides what is needed to be known.
The simple side is that one chooses to manage their own accounts or have them under the adviser umbrella (the wrap).
Our Fidelity accounts opened in the late 1970's are self directed and we added the brokerage feature at the time. Today, all Fidelity accounts have an automatic brokerage feature; whether one wants or needs or chooses to purchase stocks, bonds, etf's or other allowed investments. 'Course one may also choose to have an advised accounts with Fidelity, too.
On the etf side, there are 91 no fee choices. $4.95 per trade for equity. I'm not sure how many 1,000's of etf, non-Fidelity mutual funds and similar are available. More choices than I/we have a need for; but available.
I have absolutely no rub against an investor using an adviser; if this is their only means for investing and keeping fingers crossed that the adviser knows what they are doing with other peoples money and the "wrap fee or fee" is in line with other adviser choices.
--- a 2015 article listing advisor fees by major firms and the cost of fees over long time frames.
https://www.financialsamurai.com/average-adviser-fees-charged-by-brokerage/
Interesting thread - Though it’s not clear to me just what the “bottom line” is. People invest for many reasons. I’ve gotten the impression over time that Pud is one of those most comfortable with momentum investing - perhaps best illustrated by jumping on the fastest train(s) and than hopping off again before the next sharp curve or derailment. Nothing wrong with that. Some folks are darned good at it - especially if they have nerves of steel, time to study the trends, and if they know how to read and interpret the charts well.
25 years ago after leaving my fee based “advisor” and taking control of my own investments (while in need of direction) I logged into some of the fund sites that offered allocation models based on age and goals. They worked by having you input age, goals, risk tolerance, years to retirement, etc. And came up with recommendations. By working with 2 or 3 different ones, I came up with a moderate growth plan that I thought best fit my needs and personality. AC had a very good one back than. I’ve modified my approach a bit with passing experience - but the basic model is still pretty much the same. I’ve always thought any perceived deficiencies better dealt with by carefully considered tweaks, rather than by throwing everything out the window and starting over.
Another way to approach the allocation issue is to look at how the target date funds set-up their allocations - easily seen by reading their regular reports. Now, if you consider yourself smarter than the allocation people at T. Rowe Price or Vanguard, than that approach won’t work for you. And while on the topic - performance may not be the only reason people buy particular funds. Some have limited options. Others highly value the customer service rendered by this or that house. Some are more fee conscious than others. And for still others legacy issues affect considerations.
My basic model has been shared over the years (albeit piece-meal) and I don’t have time to try to explain it now. It’s a pretty sedate approach compared to most I suspect. I’m comfortable pulling 5-7% real return (after inflation) as averaged out over 5-10 year stretches. Some of us pull our horns in a bit past age 70. But there seems a goodly number here in their 70s and 80s who appear to be still charging full speed ahead. Good for them. Thanks to all who shared their funds.
A-share ownership is not a special club you need to buy into anymore, a.k.a, upfront loads. Many A-share funds are available through the big supermarket brokerages. I guess that is my point.
All that said, you have already paid the load fees and over time those fees have been recouped by lower expenses. That's a good thing. But in today's world the investment choices are different than when you started investing. There is no need for anyone starting out today to follow the load-path.
Thank you for making comment about Charles Schwab and your ability to purchase A share funds load waived without commission, etc. With this, I have a question. Can you do nav exchanges in this account without any charges, etc? If not, what would the charges be to do a nav exchange? If you don't know could you please look into it and advise since you are a client? I just might be interested in opening an account if I here the right answer(s).
In addition, are there account fees associated with maintaining such an account?
Thanks much.
Old_Skeet
Must thank Mrs. Pudd for the last post. Hoping to get another way of saying what I meant. I thought she might do better.
Skeeter: Every time I come to this thread I swear your portfolio gets bigger. But it shows me how organized things can be with a plan....i.e., sleeves. My first question: no indexes, and what do you do with index huggers? Anything? Also, how is the volatility in the sleeves? Does it matter? On a good day, is the port up more than the S&P? On a bad day, how is it? Also, how many holdings do your funds have, 500 in some or 50? Right know I'm going to funds with less. What about overlap in sleeves, i.e., companies? In your bond sleeves, how do you work bond quality A, B, C ratings? Just some thoughts....
Ted, Ted, Ted: Pedestrian.....really? Preferred something I've never thought about owning----I do like some of your stocks: KKR, PHE, VZ. Also, since you posted your portfolio, I understand the MSOPX buy. Since I now can own an ETF in my IRA, please give me your thoughts on QQQ, if you would.
Jafink63: I'm glad you're going to an advisor. One day this week, I had a meeting with one with family.....they're elderly and get confused easily, so they ask me to go along. I feel it's well worth your time. They will help you tweak your portfolio which could equal more money maybe. Also, do come back and tell us about your experience.....what you learned and if you changed your portfolio. I'm curious. And your thoughts, pro or con, could help others.
DavidrMoran: How do you keep your portfolio so small? I could never. I see you have FRIFX. How do you think that will do in rising rates? PONDX and FLPSX I like. PDI and PTY I also like, but then I like PIMCO. Looks good, Big Guy!
God bless
the Pudd
I get the sense you are being facetious in your request. I personally don't care what you do, but I think it is prudent to suggest to other MFO readers (which I'm sure isn't news to most) that your A-share approach is not a good choice in today's world.
Derf
I keep looking for the A share American Funds on Charles Schwab's platform all I see is F-1. This indicates to me this is a fee based account as this is what American Funds states their F-1 shares are designed for. In addition F-1 shares are not nav exchange eligible. Is this a fee based account you hold? I do see some A share funds; but, not many? And, what gives with the $25.00 transaction fee for broker assisted? Do you use on-line trading to purchase? Or, the phone? I see some of the stuff you state; but, not a lot. And, again what is the account fee? Is it a percent of your full account balance? Do they charge a fee on your cash if held in your account?
Having questions ...
Here is what I found ... Look at this link!
http://www.schwab.com/public/schwab/investing/investment_help/investment_research/mutual_fund_research/mutual_funds.html?path=/Prospect/Research/mutualfunds/overview/selectlists.asp?symbol=SWANX&type=incomeselectlist
Thanks for looking. I thought if you had confirmed what I had asked earlier ... I'd be calling them tomorrow. But, after looking at the link I don't think so. And, not finding A share American Funds leaves me in flux.
Thanks again for your comments.
Skeet
Not being a client I can not see the full list ... Are A share American Funds listed?
>> How do you keep your portfolio so small? I could never.
Good question. The chief motive, some of which I have detailed in these posts over the past, or at least whined about, was realizing over time how little improvement conventional diversification has made to me over the recent past, like 20y, and certainly 10y.
I used to have much more midcap, and healthy slugs of smallcap (GABSX, WEMMX, Royce, Fido ...) in two or three of the tilts. I used to have a bunch of balanced and would post here about the excellences of Janus Balanced and ICMBX, and I stuck forever with GLRBX and OAKBX. Urged a sibling into MAPOX, as it was available to her.
Had numerous LC funds too, Contra and some of the other top ones.
Not all active management either, would regularly put slugs into various etfs to please my sense of balance.
Years ago had been a big fan of Fido Asset Mgr and then a fan of the AO_ family.
Had some REITs and some individual bonds.
More gamble / tip stocks. Small option positions.
All in numerous accounts at various places.
This is not an uncommon approach here, turns out, chasing performance and balance allocations.
After two shocks, 2k and 08, including unemployment for me while kids were in fancy colleges, I saw that this diversification was not worth it, really. But I did not abandon it, yet. I did pay much more attention to LCV and divs, starting to push moneys toward them. But broad diverse remained my practice even though.
The last few years, thanks to MFO (which I have modestly supported and shall again) and other sites, I came to study the Pimco bunch, and then learned of this new CAPE approach and its DSE_X expressions featuring special bond sauce atop.
I also read Waggoner and others on the relative inutility of international investing, which I had been big on as well, like everyone. Diversification.
And so eventually I bailed out of other brokerages, stuck w Fido and ML only, and started to move my SC, MC, and foreign into DSE_X.
I examined my years with VNQ and VNQI and FRESX and whatnot and saw that they too did not make a worthwhile difference in performance, up or down.
I backtested a lot of what I had been advising my kids about (WEMMX, e.g.) and saw that it did not make a difference either.
And so on.
>> I see you have FRIFX. How do you think that will do in rising rates?
No idea. I wanted to have one last tablespoon or five of diversification in other asset class, and did not want to put a ton back into RWT, say, much less stay in VNQ / VNQI / FRESX, and there was one other good one, I forget who.
My goal was and is of course to make a cushioning difference in drops. No idea if I have succeeded, or will. But life is simple.
I have another sib who on my sayso went big into DSE_X and is happy and thinks I am a real smart investor, which is droll. I calmed him down by relating how 20y ago I lost effectively a year's salary holding stock in my hot startup employer, about the same same as I had done 5y prior with another incredible startup runup. Both startups are still in business, actually. But I shoulda sold during the runup, duh, rather than holding and holding over the subsequent decline.
I have not told him about my equal REIT losses in 08ff.
So I am left simple, and IFF you include our SS as being like a bond, we are around 50-50 LCV stocks (with some MC and foreign) and somewhat gogo (Pimco) bonds.
A windy answer.
Sleeve Management System
Now being in retirement here is a brief description of my sleeve management system which I organized to help better manage the investments held within mine & my wife’s combined portfolios. Currently, the master portfolio is comprised of two taxable investment accounts, two self directed retirement accounts, a health savings account plus two bank accounts. With this, I came up with four investment areas. They are a cash area which consist of two sleeves … an investment cash sleeve and a demand cash sleeve. The next area is the income area which consists of two sleeves … a fixed income sleeve and a hybrid income sleeve. Then there is the growth & income area which has more risk associated with it than the income area and it consist of four sleeves … a global equity sleeve, a global hybrid sleeve, a domestic equity sleeve and a domestic hybrid sleeve. An finally there is the growth area, where the most risk in the portfolio is found and it consist of five sleeves … a global sleeve, a large/mid cap sleeve, a small/mid cap sleeve, a specialty/theme sleeve plus a special investment (spiff) sleeve. Each sleeve (in most cases) consists of three to nine funds with the size and the weight of each sleeve can easily be adjusted, from time-to-time, by adjusting the number of funds and amounts held. By using the sleeve system one can get a better picture of their overall investment landscape and weightings by sleeve and area. In addition, I have found it beneficial to Xray each fund, each sleeve, each investment area, and the portfolio as a whole quarterly. Again, weightings can be adjusted form time-to-time as to how I might be reading the markets along with using an equity allocation weighting matrix (driven by my market barometer & compass) as an aid to help set the stock allocation weighting. In addition, I follow a seasonal trend investment strategy as well. All funds pay their distributions to the cash area of the portfolio with the exception being those in my health savings accounts where reinvestment occurs. With the other accounts paying to the cash area builds the cash area of the portfolio to meet the portfolio’s monthly cash disbursement amount (if necessary) with the residual being left for new investment opportunity. Generally, in any one year, I take no more than a sum equal to one half of my portfolio’s average five year return. In this way, principal builds over time. In addition, most buy/sell trades settle from, or to, the cash area with some net asset value exchanges between funds taking place between funds.
Master Portfolio Last Revised 10/31/2017
Here is how I have my asset allocation broken out in percent ranges, by area. My neutral allocation weightings are cash 20%, income 30%, growth & income 35%, growth & other assets 15%. I do an Instant Xray analysis on the portfolio quarterly (sometimes monthly) and make asset weighting adjustments as I feel warranted based upon my assessment of the market, my risk tolerance, cash needs, etc. Currently, according to Morningstar Instant Xray, I am about 17% in the cash area, 25% in the income area, 31% domestic stock area, 20% foreign stock area & 7% in the other asset area. In addition, I have the portfolio set up in Morningstar’s Portfolio Manager by sleeve and as a whole for easy monitoring plus I use brokerage account statements along with some other Morningstar reports and fund fact sheets as well.
Cash Area (Weighting Range 15% to 25% with neutral weighting being 20%)
Demand Cash Sleeve… (Cash Distribution Accrual & Future Investment Accrual)
Investment Cash Sleeve … (Savings & Time Deposits)
Income Area (Weighting Range 25% to 35% with neutral weighting being 30%)
Fixed Income Sleeve: BAICX, CTFAX, FMTNX, GIFAX, LALDX, LBNDX, NEFZX, THIFX & TSIAX
Hybrid Income Sleeve: APIUX, AZNAX, CAPAX, DIFAX, FISCX, FKINX, ISFAX, JNBAX, PCGAX & PGBAX
Growth & Income Area (Weighting Range 30% to 40% with neutral being 35%)
Global Equity Sleeve: CWGIX, DEQAX & EADIX
Global Hybrid Sleeve: CAIBX, PMAIX & TIBAX
Domestic Equity Sleeve: ANCFX, FDSAX & SVAAX
Domestic Hybrid Sleeve: ABALX, AMECX, DDIAX, FBLAX, FRINX, HWIAX & LABFX
Growth Area (Weighting Range 10% to 20% with neutral weighting being 15%)
Global Sleeve: ANWPX, SMCWX & THOAX
Large/Mid Cap Sleeve: AGTHX, AMCPX & SPECX
Small/Mid Cap Sleeve: IIVAX, PCVAX & PMDAX
Specialty & Theme Sleeve: LPEFX, PGUAX & NEWFX
Spiff Sleeve: None at this time. Frequently use VADAX & IALAX
Total Number of active Mutual Fund Positions = 47
On your questions.
My portfolio is not benchmarked as such. However, I do compare it to the Lipper Balance Index and consider it my bogey for several reasons. If I am leading the Index it means I am probally taking on more risk than the Index. And, if I trail the Index perhaps I am not taking on enough risk. So, not only is it a measuring stick (of sorts) it is part of my risk management and allocation assessment tool kit.
Some of the things I follow in Morningstar's Portfolio Manager are natrually the fund name, its ticker, star rating, cost per share, current price, % below 52 week high, dividend yield, duration, maturity, turnover, shares held, position value, % weight in portfolio, 1 week return %, 1 month return %, 3 month return %, ytd return %, 1 year return %, 3 year return %, 5 year return % & 10 year return %. There are others. From this I think you can see that I indeed do monitor my portfolio as well as the funds themselves. To view daily results all I have to do is click on the track tab in portfolio manager.
On the number of securities each funds holds? You will have to check each fund's fact sheet. That is something I don't follow. However, this might be something I look at fund selection time.
On the quality of bonds? I don't hold any bonds directly and let the fund manger make bond selections. But, if you wish the fund tickers work in Xray and that will give you an idea of bond quality in each fund that holds bonds. In addition, you can also check each fund's fact sheet for this information. Moringstar's Portfolio Manager indicates that the portfolio as a whole has an average duration of 3.4 years with an average maturity of 5.3 years. And, if I were to guess, I'd say bond quality was on average somewhere around BBB or better.
I hope this has been helpful.
Skeet
I would like to post Dukester's Corner II on Saturday morning. I will post my portfolio then and would like if some of you (four (4) portfolios, to be more to the point) would also post yours. We'll post, ponder, and inquire all week long regarding the new five (5). Then, next Saturday (the 18th), we'll take offertories from the next five (5) contestants, and so on. To lend some order, I've assembled your names below in the order of your posting on the thread. Please give me a shout out if interested. I will post Saturday morning. Also, Art, thanks for riding shotgun on a wobbly thread, Big Guy!
The List:
Slick
Art
LLJB
MikeM
Mark
Derf
Catch
Hank
We'll start at the top with Slick, and give it a go. Shout out "yes" or "no" ..... a "no" response is ok. No pressure, just good stuff.
God bless
the Pudd
When I get around to sharing mine, the most prominent feature is the “bucket approach” - though I don’t call it that. The value to me is in the discipline it fosters. After ditching my advisor, who had me 100% in an aggressive growth fund (back in ‘95), I went on a spending spree, piling up funds at a half dozen or so different fund houses. Buy ... Sell ... Buy ... Sell. I knew that doing this wasn’t healthy (in more ways than one) and so in a few years eventually settled on a rigid plan. Most of the funds I owned at that point found homes inside the various buckets. Some had to be sold or reduced in scope. A few added.
You can use buckets, branches, sleeves, planks or any number of other terms to describe this popular approach. What it does is provide visible structure and (in my case fortunately) reduce the temptation to keep buying new funds. I’ve got “buckets on top of buckets“ in my mental diagram. And it’s not easy to explain to others. You more or less have to grow into the system. Ol’Skeet’s (bucket-like) approach makes mine look simple in comparison. However, he does an admirable job laying it out. Where we differ is in making changes based on market readings. I have some limited discretion to vary cash or speculate a bit if I see an opportunity elsewhere. But not nearly the same degree of latitude he seems to enjoy.
Note: A bucket plan does not rule out buying or selling new funds, It does, however, force you to think long and hard before swapping out one of the current horses for another. Additionally, if you have a dozen or more funds, you can’t bruise yourself too badly with one poorly timed change.
Regards
With all the mutual fund and ETF choices available today, I can not think of one reason you would need a middle man to take your money. Let's just say this is not for you and be done with it. Anyone else today who would go the root you took decades ago would be absolutely crazy in today's world.
I myself agree, but I have family members who much prefer to have someone 'taking care of all of it', including a certain amount of tax planning, RMDs, budgeting including for big or surprise expenses, rebalancing and allocating and projecting, forms and filings supposedly, and a known voice on the phone who also offers the occasional free tickets.
They would not have it any other way, would never (and say they could never) do it themselves, and would not have me (say) do it for them.
I know these are familiar arguments, but they sure are real.
Thanks for the trailing comment.
With this, I plan to get in touch with the local Charles Schwab office and schedule a visit. I'm just not sure they can get my expenses back (the average and accross the board) of the current 0.87%. But, we will see.
Thanks again for making comment.
Old_Skeet
I looked at ABALX & CWGIX, redemptions only. AMFFX F class only.
Good investing'
Derf
You noted: " I'm just not sure they can get my expenses back of the current 0.87%"
I presume this (.87%) is the average of the mutual fund(s) expense ratio. I will also presume the "wrap fee" is in addition to the E.R.
Correct me if I am wrong about this.
Thank you.
Catch
Currently for the portfolio as a whole my average combined expense ratio is 0.87%. There is no wrap fee on my account nor do I pay any fees, etc. to the broker. Everything the broker receives (expense wise) now comes from my mutual funds companies. I am currently doing a study to see what my expense ratio would be on my American Funds to convert them to the F-1 shares. In addition, I'm thinking this would become a taxable event and would kill the deal. So, if I can't transfer the current A share funds (in kind) there is no reason for me to move assets. However, I might open an account at Schwab to buy new funds outside of the current fund families already owned. My purchase of some funds are still commissionable while some are at nav or reduced rates.
Here is what I have discovered thus far. In the review of my American Funds' A share expense ratios I am finding they are generally less accross the board over their fund's F-1 share class. In my largest position, Income Fund of America, I currently have an expense ratio of 0.56% on my A shares and if I moved to the F-1 share class the ratio would increase to 0.67%. That amounts to just short of a 20% increase plus the F-1 shares don't carry the free nav exchange feature that the A shares have. I'm also finding that the F-1 share class funds are for fee based accounts.
With this, I'm thinking it might not be in my best interest to move my exisitng portfolio(s) to Schwab. But, it might still be worth looking into about opening a new account for purchases that are not currently available to me.
And, if converting A shares to F-1 shares will be a taxable event then this is a sure a deal killer. Thus far, it looks as though I've got the low cost deal (expense wise).
Anyway, this is the first brush look.
Old_Skeet
You are an astute financial guy. Your decision will no doubt be the best one for you.
Got all prospects: slick, hank, LLJB and Art. Mine makes five in all. The fun starts Saturday morning. Don't miss it!!
God bless
the Pudd
I. FLEX Portfolio 25% (Range: 24.5% - 25.5%)
Consists of:
(1) equity funds (Currently PRWCX, PIEQX)
(2) AA/Cash* (Currently TRBUX, DODIX, Cash on Deposit / FDIC insured)
Allowable AA/Cash Weightings (As a % of entire portfolio)
10% = Minimum
15% = Nominal
20% = Maximum
* ”AA/Cash” refers to a mix of highly liquid short term bonds or cash and a limited portion of intermediate duration investment grade bonds held through funds. Bond portion is normally less than half. Currently it consists of DODIX.
II. CORE Portfolio 75% (Range 74.5%-75.5%)
Hybrid Funds: Range 35-40%
(Currently OAKBX, PRPFX, TRRIX)
Balanced Funds: Range 18-21%
(Currently RPGAX, DODBX)
Multi-asset Income Funds: Range 18-21%
(Currently RPSIX, PRFHX)
Global Bond: Range 7-9%
(Currently DODLX)
Real Asset Funds: Range 7-9%
(Currently PRAFX, OREAX, OQGAX)
Limited Term Bond Fund: Range 7-9%
(Currently OUSGX)
CORE Portfolio Binding Policies:
1. Maintain Core Portfolio at 74.5% to 75.5% of total.
2. Do not rebalance within Core unless target zones are breached.
3. Normal distributions may be used to rebalance Core.
Most Recent Allocation:
FLEX: 24.82% (10/15/17)
CORE: 75.18% (10/15/17)
AA/Cash 20.10% (11/10/17)
Most Recent CORE Positions:
Hybrids: 38.24%
Balanced: 19.14%
Income: 19.18%
Real Assets: 7.61%
Glb.Income: 8.00%
Limited Bd. 7.83%
Ten Largest Holdings (percent of portfolio):
RPSIX 11.6%
TRRIX 11.2%
RPGAX 10.75%
TRBUX 9.35%
PRPFX 9.0%
OAKBX 8.45
OUSGX 6.9%
DODLX 6.0%
DODIX 5.35%
CASH 5.35%
Total: 84%
Less than 5%: OREAX, OQGAX, PRAFX, PIEQX, PRWCX, DODBX, PRFHX
Goals: (1) Stability of Principal, (2) Preservation of Capital, (3) Moderate Growth, (4) Inflation Protection
Strategy: Increase/Decrease risk according to market valuations thru changes in “Flexible” portion. Currently at low risk position as reflected by 20% AA/Cash weighting. Maintain a stable “Core” position.
Custodians (largest to smallest investment): (1) T. Rowe Price, (2) Dodge and Cox, (3) Permenant Portfolio Funds, (4) Oakmark, (5) Oppenheimer
Years into Retirement: 20
Years Taking Distributions: 15
% in Roth IRAs - 60%
% in Traditional IRAs - 28%
% in Taxable Accounts - 12%
Benchmark: TRRIX (40/60 Balanced)
10-Year Returns vs. TRRIX
2007 +6.50%. / +6.1%
2008 - 21.9% / -18.4%
2009 + 28.86% / +22.1%
2010 +9.39% / +10.1%
2011 +1.2% / +1.43%
2012 +10.4% / +10.05%
2013 +8.25% / +9.15%
2014 +1.82% / +3.9%
2015 -4.27% / -0.74%
2016 +11.31% / +6.48%
Recent Strategic Buys/Sells
Real Estate (OREAX) Pur 2015 (benefitted returns) - Holding
Energy/Nat.Res. (PRNEX) Pur 2015/2016 (benefitted returns) - Sold 2016
Latin America Equity (PRLAX) Pur 2016 (benefitted returns) Sold 2016
International Equity Index (PIEQX) Pur 2016 (benefitted returns) - Holding
Commodities Pur 2015 (QRAAX) (detracted from returns) Fund Liquidated/Closed 2016
Gold (OPGSX) Pur 2017 (benefitted returns) - Sold 2017
Global Infrastructure Pur 2017 (OQGAX) (new) - Holding
Prior to 2017 cash positions were somewhat lower. They were increased marginally at the beginning of 2017 by (1) Increasing the Flexible portfolio from 20% to 25% and (2) instituting the “Limited Term Bond” position in the Core Portfolio where it had not existed prior. If these changes are continued, returns going forward will likely be lower than in the past. I’ll let Mr. Market provide future guidance in this regard.
My portfolio does not need a thread of its own. I was invited to share my holdings by @Puddinhead and am happy to comply. Not much new here. Been on the board many years and have referenced this approach piece-meal many times. Could probably go 100% cash at 72 - but trying to eke out a little better return without taking a lot of risk. I’ve laid it all out for whatever purpose it may serve.
Thanks for your time,
Derf
One question, though incidental. Why do you classify PRWCX an equity fund, OAKBX a hybrid and DODBX a balanced fund? They are all equity/bond balanced at their core, aren't they?
One clarifying comment; your brokerages are definitely not fiduciaries.
Re TIPS - Wouldn’t rule them out completely, but haven’t yet used them. Several of the funds I own (like RPSIX) do hold them in small amounts. Many investors view TIPS as inflation protection. I’m not so certain. To me, they’re still a bond and stand to suffer should interest rates rise dramatically along with inflation. While their principal is adjusted upward along with the CPI, they also carry a fixed-rate. A few years from now, when compared to much higher yielding newer issues, an older TIP might not look so attractive. And as discouraged investors flee TIPS funds, even more damage might ensue. A good “give away” is that many fund companies offer TIPS funds of varying duration (ie short-term, intermediate, long). If they truly expected TIPS to keep pace with inflation there’d be no need for such differentiation.
Re inflation - I’ve always kept a sail to the wind in that direction. Generally, it has dinged my returns over the past decade. We really haven’t had the type of torrid inflation experienced in this country during the 1970-85 era. (By one source it topped 13% in a single year). In fact, until very recently, deflation seems to have been a bigger worry among economists.
Equities over longer periods offer great inflation protection. (Best if purchased at reasonable valuations). You can beef-up your inflation defense with things like real estate, gold, energy, metals, agriculture. The problem is these get hit the hardest during economic slowdowns or periods of falling prices. They can also be highly volatile. I vary my inflation-hedge components over time based on valuations (as I perceive them). So that segment of the core does turn over a bit. The current ones are the real assets fund, the real estate fund, the infrastructure fund. To a lesser extent the global bond fund and the limited-term bond fund I also view as inflation hedges. Actually, I’ve substituted both the more aggressive OIBAX (international bond) and OEMAX (emerging markets local currency bond) for the less aggressive DODLX when those other fund’s appeared good buys.
Note: Price offers a couple funds directed towards people looking for an added degree of inflation protection: PRENX and PRAFX. Both good funds under the right conditions. I’ve usually opted towards PRAFX because it appears more distanced from the S&P and other measures of equity performance. It’s also less tied to a single segment - energy.
Thanks for the question. I hope I wasn’t too long winded. Feel free to ask more.
You asked: “Why do you classify PRWCX an equity fund, OAKBX a hybrid and DODBX a balanced fund? They are all equity/bond balanced at their core, aren't they?”
Good question Mike. Let me try to explain from a few different angles.
- Original portfolio construction (sometime in the late 90s) evolved out of a mix-match of several good funds, but lacking any defined roles. Part of the early process involved trying to fit existing funds into the structure that was evolving. PRWCX was one of the first funds I owned and fell into the equity zone. Not sure how Price views the fund today. But I’ve owned it nearly since inception and it was originally promoted as a very conservative equity fund - not a balanced fund. I’ve always considered it more equity than balanced - albeit conservative equity.
- DODBX was initially incorporated as the balanced fund. After Price introduced RPGAX, I began adding it to the point where it now dominates the balanced area. I’ve come to favor international over domestic and also think RPGAX will hold up a bit better in a severe downturn.
- The three actually appear to fluctuate in terms of risk profile as markets change and management makes adjustments to holdings - especially PRWCX and DODBX. At times one will seem more correlated with equities and experience bigger daily swings. At other times the other will appear more correlated. Underlying investment philosophies appear quite different as well when viewed through their commentaries.
- The hybrid idea was conceived as something “not like everything else” for more diversity and protection against a big equity sell off. It was seen to have some equity-like features - but less correlated with the equity market than the balanced area. In adding OAKBX I went out on a limb. I believed it fits - but just barely - in the hybrid arm. I would never allow it to comprise more than about 35% of that area. It does add a bit of “octane” to that segment over what PRPFX ot TRRIX are likely to provide. In reading their fund reports (particularly their holdings) I continue to believe that OAKBX is better hedged against a potential equity downturn than the other two. (They’re more “deep-value” than given credit for, keep a foot in the defense sector, and will go out longer on bonds when valuations warrant.)
- Lipper classifies OAKBX as “Mixed Target Allocation-Moderate”. It bumps both PRWCX and DODBX up a notch to its “Mixed Target Allocation-Growth” model, implying a bit more risk.
Here’s the numbers from 2008:
DODBX -33.5%
PRWCX -27.17%
OAKBX -16.18%
Thanks. Hope this at least partially satisfies inquiring minds.
* Worth noting: The Core segment hasn’t always been set at 75%. In the early goings (late ‘90s) I started with only 50 or 60%. Gradually, as my understanding and experience grew, I raised it in increments to as high as 80%. As noted in the initial posting, I cut the Core back to 75% around the start of 2017 to bolster cash holdings in what I percieve to be a very risky market.
Do you own these funds in a brokerage account, or with each fund company individually? The reason I ask is that I think some of the funds could potentially be replaced by better performing, similar funds from other fund companies. (Although tax handcuffs may make switching difficult unless in tax advantaged accounts)
GLFOX for your Oppenheimer Infrastructure fund, for instance. Or PONDX/PIMIX for RPSIX (I get dyslexic sometimes on the ticker for the Spectrum Income fund). I know PIMCO ruffles feathers with all their fancy derivatives and swaps and such (“own what you know” mantra), but they make money (potentially....but their track record suggests “probably”) on interest rate moves in addition to their bond holdings. They use “all the tools in the toolbox” available to bond mutual fund managers.
I know you have been doing this for a long long time, and aren’t asking for advice, and I am a relative novice at this, but just a suggestion from the “peanut gallery” if you will. TRP is a much loved fund company by myself, especially now that it is NTF at Fidelity. And PRWCX is my largest fund holding. And I love many many of their other funds, but have always been underwhelmed at their fixed income type funds.
Thanks to everyone for sharing their portfolio ideas. It helps me start to think about how to organize my own. Cheers