Morningstar's Portfolio Manager Price Updating Concern ... Like the rest of you, my own TIME is valuable enough, so I don't anymore keep going back to check if M* is finally, finally updated each evening. I just don't EXPECT it to be correct and accurate until the late hours. I never bothered with what they call a "transaction" portfolio, recording all cap gains and pay-outs, to get my own personal "investor earnings" rather than to rely just on their published statistics for the funds. Yes, I have a porfolio at Yahoo. But it's just a tracking list to check against Morningstar, which always "brings up the rear." I often see, at Morningstar, that when I click on a particular fund in my M* portfolio (evening,) the updated share price is correct, but not yet entered --- for a long time--- over at the Portfolio Manager! .... I still keep my simple portfolio at Morningstar only because it has been my experience that it's the most user-friendly. Too bad it's so always damn tardy with info, though. I see contradictions on its "performance" pages for funds, compared to its daily calculations, also. I think that's because the performance comparisons are done MONTHLY, only? Another fly in the ointment. Yes, M* sucks it, but I tried loading-in my portfolio at other sites including google, and M* is still simplest and user-friendly. Unless you want news and daily share prices that are fresh when you go to look and read!
a quick survey: which managers write letters that are worth reading? In terms of US funds, I like Whitebox, Marketfield, Wintergreen (although I don't always agree, I think his recent battle with Coke was kind of absurd) and Seafarer for solid letters. Tekla's outstanding investor day presentation from earlier this year (which I'd missed) got me more excited about owning their funds and I've added recently - I hope they do another presentation next year.
They're brief and it's not a US fund, but it's interesting to hear from Jacob Rothschild a couple of times per year via RIT Capital Partners letters (ritcap.com)
Morningstar's Portfolio Manager Price Updating Concern ...
iShares Frontier ETF’s Monster Cap Gains
Manager Change at Meridian Funds As MFO reports, Meridian Equity Income Fund is changing managers. Minyoung Sohn is taking the reins. He apparently earned a good but short record [3 years] with Janus Growth and Income.
I’ve been invested in this small Meridian fund since the day it opened. My investment has more than doubled, and I liked the conservative value approach of its experienced managers [the same people who manage Meridian Contrarian Fund, formerly Meridian Value Fund].
I’ve experienced many manager changes over the years [always an unsettling experience if you had confidence in the founding managers. The most distressing was when Michael Price sold his Mutual Series funds to Franklin Templeton].
The first result of this change at Meridian Equity Income is that the fund almost immediately issued a large capital gain. This occurred because the new manager sold a large number of holdings so he could invest in stocks that meet his different investing style. I suspect the distribution was made early [before December] to prevent existing shareholders from selling the fund in an effort to avoid the large capital gain distribution. [Fewer shareholders to share the taxable gain obligation] [Last year, Meridian Growth Fund also sold a large portion of its holdings as its new managers implemented their investment style].
The second result of this change of managers is that my money will now be invested in a more growth than value style.
I plan to keep my money in this small fund and give the new manager an opportunity to impress me. But these manager changes may be an argument in favor of investing in ETFs.
Does anyone have any thoughts about Minyoung Sohn?
Creating a More Tax-Efficient Portfolio Nice post msf. It looks like neither the Vanguard 500 Index fund VFIAX nor the Vanguard Total Stock Market Index Fund VTSAX have had any
capital gains distributions in the past 10 years
Source:
https://advisors.vanguard.com/VGApp/iip/site/advisor/investments/price?fundId=0540#state=30And the tax cost ratio and tax adjusted returns for VTI (Vanguard Total Stock Market Index ETF) and VTSAX (Admiral shares, Total Stock Market Index Fund) were just about identical over 1, 3, 5 and 10 years, per Morningstar.
Creating a More Tax-Efficient Portfolio Sometimes ETFs are not more tax efficient.
Vanguard Admiral class shares and ETF class shares are identical in tax efficiency. Vanguard Investor class shares, which are a poorer choice, are inherently more tax efficient.
For example, for the Vanguard 500 fund, its admiral share class (VFIAX) and ETF share class (VOO) have 1 year tax cost ratios of 0.83%, and 3 year tax cost ratios of 0.57%. (VOO doesn't go out five years.)
VFINX, the investor share class, has corresponding tax cost ratios of 0.78% and 0.53%.
The reasons are twofold:
1) These are different share classes of the same (not merely identical) portfolio, so they share equally in the realized gains.
2) Interest and dividends of the underlying stocks are used to pay the ERs. So the higher the ER of a share class, the less that is distributed in the way of income dividends. That means that the higher the ER, the higher the tax efficiency (lower dividends).
It's the same idea as hoping a fund will have small distributions because it made little money. Not something to be hoped for.
Admiral shares and ETF shares currently have the same ERs, so they'll have the same tax efficiency. All else being equal, the ETF will lose a little bit on a round trip, because of the bid/ask spread that is absent from the other share classes.
Your Roth IRA in retirement I think this depends on a great many factors, including age, tax situation, etc.
(my age 69.5)
We got into Roths late - doing a conversion of a portion of our Traditional near the '09 market bottom and after we had already begun taking SS benefits. Initially it was 100% invested in aggressive global growth funds because they were among the most beaten-up when we converted. Now, we're more interested in protecting our sizeable tax free gains (counter to the traditional approach to Roths).
Roth now comprises nearly half our investments. it's still a bit more aggressively positioned than the Traditional IRA portion - but not that much so. Mostly balanced funds along with a portion in diversified income funds. I will say the Roth contains what I consider the finest funds we own - so overall quality of the Roth investments is better - and it continues to out-perform the Traditional IRA. Kinda begs the question: Why don't we move everything to those select funds? Go figure.
Future uses? (1) Would be handy should we encounter some unexpected major expense - as wouldn't incur the tax cost pulling from the Traditional would. (2) Since Roths aren't subject to RMD, we'll be able to protect that tax-sheltered portion longer than otherwise.
PS: Goal is to run completely out of money the day before we die. :)
a quick survey: which managers write letters that are worth reading? Maybe there is one more category: the manager remains completely silent as in the semi-annual report from Brown Capital Management I just received.
Fidelity Fifty Fund to reorganize http://www.sec.gov/Archives/edgar/data/35348/000003534814000086/Main.htmSupplement to the
Fidelity Fifty®
August 29, 2014
Prospectus
Proposed Reorganization. The Board of Trustees of each of Fidelity Hastings Street Trust and Fidelity
Capital Trust has unanimously approved an Agreement and Plan of Reorganization ("Agreement") between Fidelity Fifty® and Fidelity® Focused Stock Fund pursuant to which Fidelity Fifty® would be reorganized on a tax-free basis with and into Fidelity® Focused Stock Fund.
The Agreement provides for the transfer of all of the assets of Fidelity Fifty in exchange for shares of Fidelity Focused Stock Fund equal in value to the net assets of Fidelity Fifty and the assumption by Fidelity Focused Stock Fund of all of the liabilities of Fidelity Fifty. After the exchange, Fidelity Fifty will distribute the Fidelity Focused Stock Fund shares to its shareholders pro rata, in liquidation of Fidelity Fifty. As a result, shareholders of Fidelity Fifty will become shareholders of Fidelity Focused Stock Fund (these transactions are collectively referred to as the "Reorganization").
A Special Meeting (the "Meeting") of the Shareholders of Fidelity Fifty is expected to be held during the second quarter of 2015 and approval of the Agreement will be voted on at that time. A combined proxy statement and prospectus containing more information with respect to the Reorganization will be provided to shareholders of record of Fidelity Fifty in advance of the meeting.
If the Agreement is approved at the Meeting and certain conditions required by the Agreement are satisfied, the Reorganization is expected to take place on or about June 5, 2015. If shareholder approval of the Agreement is delayed due to failure to meet a quorum or otherwise, the Reorganization will become effective, if approved, as soon as practicable thereafter.
The foregoing is not a solicitation of any proxy. For a free copy of the Proxy Statement describing the Reorganization (and containing important information about fees, expenses and risk considerations) and a Prospectus for Fidelity Focused Stock Fund, please call 1-800-544-8544. The prospectus/proxy statement will also be available for free on the Securities and Exchange Commission's web site (www.sec.gov).
Biotech/healthcare @catch22, yes, venture
capital, although somehow "venture
capital" makes me think of professional investors who invest in these kinds of companies, whereas here I think most of the investors are family and friends of the founders, or people who have connections to insiders such as the Board, which is how I got involved. As we can see from bee's nice graph, healthcare is pretty good at tracking the market on the upside and then does much better on the downside. I'm sure that won't go on forever, but I wouldn't want to fight the trend as long as it continues.
Matthews Asia This morning I had a email response from Matthews Asia. Their explanation is a bit more thorough than previous replies other posters have noted. One question is still on my mind. They did not pay the distribution due to the tax rules on PFICs and what impact that would have on their shareholders. Would this also apply to future distributions as well? I replied back with that question in mind.
Here is their response:
Thank you for your investment in the Matthews Asia Dividend Fund and for contacting us. As you noted, there was no ordinary income distribution estimates for the Matthews Asia Dividend Fund primarily due to the tax treatment of the portfolio’s Passive Foreign Investment Companies (PFICs).
A PFIC is a non-United States company that primarily derives its income from investments. A corporation is classified as a PFIC if it passes one of two tests (with a few exceptions)—the Income Test (75% or more of the company's gross income is passive income) or the Asset Test (50% or more of the company's assets produce passive income). U.S. investors who invest in PFICs must follow unique tax regulations that differ from regular investments.
U.S. tax code requires investors under certain circumstances to deduct from the distributable income capital losses stemming from holdings in companies deemed to be PFICs. The Fund’s holdings in real estate investment trusts (REITs) are deemed PFICs. And while our inclusion of REITs in the portfolio can result in higher variability—both negatively and positively—in the income distribution, we continue to find them attractive for their significant yield premium to other equities. Please note that the Matthews Asia Dividend Fund does have income from dividends (book income) and the income is built into the value of the Fund but is not being distributed primarily because of the above tax rules. This is not an indication of a change in how the portfolio is managed. The strategy remains focused on total return while investing in companies with high dividend payouts and growth-oriented businesses.
Creating a More Tax-Efficient Portfolio One obvious suggestion is not to reinvest dividends, but to apply the money toward more tax-efficient funds such as ones you've identified.
Also, unless you know that dividends are going to be pure long term gain, sell before the distribution rather than after. (That way, you can avoid some ordinary income distributions, though you'll have higher capital gains on the shares you sell.) That's not a suggestion to liquidate a fund, or to sell now, but just if you are planning to sell some shares soon, do it before rather than after the end of year distribution.
Creating a More Tax-Efficient Portfolio I posted this question on *M's discussion page but I guess it wasn't sexy enough due to the endless fascination with day trading of CEFs, ETFs, MLPs, etc.
After getting hit with lots of year-end capital gains once again, I've decided to make a few moves next year to create a more tax efficient portfolio. I've identified a few culprits that belong in tax deferred accounts, such as BERIX, VWENX, FLPSX and FCNTX. I've found a few funds that could take their place in taxable accounts (VTMFX, HDV, SCHM, to name a few). The main issue is that all of the taxable funds have built up very large capital gains, so a sale would trigger capital gains, albeit mostly in the long term category. I was thinking maybe selling one fund each year so I wouldn't get hit badly in one year. Any other suggestions on how to maneuver my portfolio to make it more tax efficient? Thanks.
Biotech/healthcare @LLJBYou noted:
"But here's another question. I have a couple investments in start-up companies that happen to be healthcare related, medical devices. M*'s X-ray says I have 17.5% of my equity in healthcare, which I consider to be fairly overweight because healthcare is about 14% of large cap funds, a bit more for the S&P 500, only 9-12% of mid and small caps and more like 8.5% of market
capitalization outside the U.S. So I'm anywhere from 20-100% overweight. But...that's without my start-ups. When I think about my exposure to healthcare, would you stick with M*'s numbers or would you add in the start-ups? I've always excluded them, because while the ultimate value of the company may be influenced by the equity markets generally and the healthcare sector more specifically, the real success or failure is almost totally dependent on whether they can successfully develop devices that are valuable in the marketplace. Essentially its an all or nothing proposition based on the skill of the inventors more than anything else."
>>>I suppose I would count money in startups as "other"; regardless of the sector.
About 6 weeks ago we purchased an IPO stock, DPLO (Diplomat Pharmacy); but this is an established company that went public, which is a whole different proposition. We do treat this holding as part of our healthcare sector percentage.
Your 17.5% in traditional healthcare would be fine by my standards at this time. But you, of course; are the one to determine this amount.
Are these startups at a venture
capital stage and have not issued public stock?
Regards,
Catch
