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This fund, MFLDX, certainly did become the darling of the board for a while. The quintessential 'group think' fund to use a phrase thrown around some times. The proof is in how many people are commenting they either are holding it or selling it. I never heard of it until Scott and Bob brought it to the boards attention. I doubt many hear have owned it more than a couple year.
I've never owned it, but seems like a great fund that has gotten to big.
VF is correct. His question pertained to down funds and whether folks were adding to their's - not which funds have done the best. I'm not sure, but think he was prodding us to consider whether or not it's wise to add to our laggards on the way down. Doing so runs contrary to the adage about not trying to catch a falling knife. I don't think its a clear cut choice. There are a tremendous number of other variables one must consider.
Scott - sorry for my overstatement. Not a darling, but highly regarded back than by those with an inclination towards the "alternative" category. As you say, not all view this area as something they want to own.
These alternative funds come in many colors. They operate differently. Some types are: Long-Short, Market Neutral, Hedged, Strategic Allocation, Strategic Growth, Alternative Strategies. I think the one thing they have in common is the prospect of "market like" returns with less downside risk to principal. I doubt anyone here seriously thinks these will outperform stocks over very long periods (measured in decades).
The appeal of these funds is understandable. Folks like OJ been around the block a few times and understand better than most what down markets are like. In addition, for retires there's more desire to avoid big losses. So, I certainly value his take on this one. I've mentioned my reticence to own these vehicles several times in the past along with the reasons, so won't repeat again here.
...... down funds and whether folks were adding to their's..............whether or not it's wise to add to our laggards on the way down. Doing so runs contrary to the adage about not trying to catch a falling knife. I don't think its a clear cut choice. There are a tremendous number of other variables one must consider.
The question as to whether to add to down investments is a very difficult one. All the precepts of value investing say to buy the unloved, buy the out of favor, be greedy when and where others are fearful......buy at a discount.
Other precepts say 'Let your winners run'. Peter Lynch said don't 'water the weeds and don't cut your roses', or something like that.
Remember at the end of 2013 and very beginning of 2014 when almost No One wanted emerging markets. They just kept going down and down. They had a terrible 2013 performance compared to the US market, -5% vs. +32.4%. Would have been a perfect time to buy emerging markets I believe in February 2014, not sure when they bottomed....but ever since them they just can't be stopped. I've seen several down stock market days [US and developed int'l] where emerging markets were up in the past several months.
I own Sequoia, SEQUX. Underperforming the market by 9.5% year to date. Good time to buy more? I think so, but I'm already fully invested in my equity allocation.
What about small cap growth? A big underperformer this year. Good time to buy?
What about megacap stocks, as represented by XLG. On a relative basis, megacaps have underperformed for many years. A 2% underperformance relative to the S&P 500 over the past 5 years. An excellent time to buy? They are the most stable companies, at relative bargain valuations vs. the market.
everything growthy, small and european has been lagging YTD. i added a percent to growthy MC and 2% to EAFE benchmarked thingies. also, put 1% into CBI. i have been underweight equities for years since i felt my employment had very high correlation to the equity market. i now feel a bit more stable at work and am trying to get equities a bit higher. it's very painful for me, i have to admit. i don't have any defined benefit pension waiting in the wings and capital preservation is one of the goals. so i lack the risk tolerance of our chief linkster. but slowly and surely am on the way to get half of my portfolio in equities.
everything growthy, small and european has been lagging YTD. i added a percent to growthy MC and 2% to EAFE benchmarked thingies. also, put 1% into CBI. ....... i don't have any defined benefit pension waiting in the wings and capital preservation is one of the goals.
@fundalarm: what was the growthy megacap name you added a percent to? Not sure what you mean by CBI....I take it you are not referring to Chicago Bridge & Iron Company
2% into EAFE things: EFA and IEFA are lagging a lot, so that certainly fits the theme of buying what has not done well recently.
You mentioned Europe, so I looked up FEZ and FEU. I'd have to look up the difference between the two, but both lagging quite a bit.
I never had access to a defined benefit plan either. I would have had to find a government job to get a defined benefit plan.
@rjb112: actually by MC i meant MidCap (apologies) -- midcap growth category went in locksteps with small cap growth and negative YTD. my fund choices are mostly institutional (former) 401k choices and thus i haven't specifically listed any of them. for whatever interest it holds, my 1% spec addition was for MPEGX; my EAFE additions were in ARTIX and MSIQX, and CBI is indeed an equity ticker. the bet is that growing US GDP will lift industrials, and this guys was particularly hit recently.
elsewhere in my portfolio, i continue to favor short or hedged duration fixed income closed-end funds specializing in non-agency mortgages and other types of short term lending, such as PDI, BGH, BOI etc. and MUNIs (mostly via my state-specific closed-end funds).
@rjb112, you might want to check out BRLIX too, a megacap fund with an index-fund like ER and a couple of tweaks to improve tax efficiency and maybe performance.
@expat, I've been aware of that and keeping an eye on it. It's a very good one. Bridgeway has some interesting funds, including an interesting microcap fund, BRSIX Thanks expat.
@rjb112: i don't necessarily follow mega caps, but i own a chunk of S&P500 index, VGHCX and a few individual names that are considered mega caps. i like GAINX (heavily subsidized ER and global market leaders). institutionally, we are overweight US large caps in multi-asset accounts. the argument is that, fundamentally, profitability of US companies is rising and, technically, large caps usually lead when the rally is mature -- like it is now.
incidentally, just got this from citi (to advocate for larger caps at this stage):
As the impact of US QE wanes, asset markets are set to enter the third of this four phase cycle. From here, credit spreads usually turn up but equities rally on further increases in EPS*. Notably, while in the 1980s and 1990s this phase lasted another 1-3 years, in 2007-08 it only lasted 4 months. History suggests that investors should favour equities over corporate bonds. Within the global equity markets, it is associated with bubbles and outperformance from growth, large-cap and cyclical stocks. This profitable but increasingly unstable period ends when global EPS turns down, which we do not expect in the next two years – Phase 4 is not imminent
*EPS here is earnings per share
separately, apologies to the OP for diverting this thread. there are, in my opinion, way too many threads on MFO to start a new one, so i thought it made sense to continue if in a bit revised direction: what has not worked YTD and what asset classes are worth adding to going forward. regards.
To swing from +20.93% for 12 months (Vanguard data) to -2.61% total return (their numbers) for the 3 months ending 6/30/14 (-0.91% YTD) ... something went sour.
Credit Suisse Group is their largest holding as of 6/30 and it has had, shall I say, challenges. This explains some of their results.
After the banking bath of 2008 I wonder about the wisdom of any fund having a substantial portion of their portfolio in banking. Their next largest holding is Allianz which doesn't concern me. 26% of OAKIX's investments are in financials.
@rjb112: i don't necessarily follow mega caps.......the argument is that.......and, technically, large caps usually lead when the rally is mature -- like it is now.
@fundalarm: I haven't personally seen the original research on megacaps, but as you mention, supposedly they lead in the back half of bull markets. They also supposedly lead in bear markets.
Have you seen any decent research on megacaps that I can read?
They apparently have not been in favor since the mid/late 1990's, when there were some years in the 1995-2000 time frame where you could have just invested in the largest [by market cap] 25-50 stocks and captured the market leadership.
Seems to me that buying the largest, safest companies at a discount is not a bad idea. XLG, IOO, and as @expat points out, BRLIX, seems to be a good way to invest in megacaps.
You mention "WE are overweight xyz in such and such accounts".....if this is personal, please don't answer, but are you working for a company that professionally manages investment accounts? Do you feel comfortable saying the name of the company, and what your job is with them?
Comments
I've never owned it, but seems like a great fund that has gotten to big.
Scott - sorry for my overstatement. Not a darling, but highly regarded back than by those with an inclination towards the "alternative" category. As you say, not all view this area as something they want to own.
These alternative funds come in many colors. They operate differently. Some types are: Long-Short, Market Neutral, Hedged, Strategic Allocation, Strategic Growth, Alternative Strategies. I think the one thing they have in common is the prospect of "market like" returns with less downside risk to principal. I doubt anyone here seriously thinks these will outperform stocks over very long periods (measured in decades).
The appeal of these funds is understandable. Folks like OJ been around the block a few times and understand better than most what down markets are like. In addition, for retires there's more desire to avoid big losses. So, I certainly value his take on this one. I've mentioned my reticence to own these vehicles several times in the past along with the reasons, so won't repeat again here.
All the precepts of value investing say to buy the unloved, buy the out of favor, be greedy when and where others are fearful......buy at a discount.
Other precepts say 'Let your winners run'.
Peter Lynch said don't 'water the weeds and don't cut your roses', or something like that.
Remember at the end of 2013 and very beginning of 2014 when almost No One wanted emerging markets. They just kept going down and down. They had a terrible 2013 performance compared to the US market, -5% vs. +32.4%. Would have been a perfect time to buy emerging markets I believe in February 2014, not sure when they bottomed....but ever since them they just can't be stopped. I've seen several down stock market days [US and developed int'l] where emerging markets were up in the past several months.
I own Sequoia, SEQUX. Underperforming the market by 9.5% year to date. Good time to buy more? I think so, but I'm already fully invested in my equity allocation.
What about small cap growth? A big underperformer this year. Good time to buy?
What about megacap stocks, as represented by XLG. On a relative basis, megacaps have underperformed for many years. A 2% underperformance relative to the S&P 500 over the past 5 years. An excellent time to buy? They are the most stable companies, at relative bargain valuations vs. the market.
Not sure what you mean by CBI....I take it you are not referring to Chicago Bridge & Iron Company
2% into EAFE things: EFA and IEFA are lagging a lot, so that certainly fits the theme of buying what has not done well recently.
You mentioned Europe, so I looked up FEZ and FEU. I'd have to look up the difference between the two, but both lagging quite a bit.
I never had access to a defined benefit plan either. I would have had to find a government job to get a defined benefit plan.
elsewhere in my portfolio, i continue to favor short or hedged duration fixed income closed-end funds specializing in non-agency mortgages and other types of short term lending, such as PDI, BGH, BOI etc. and MUNIs (mostly via my state-specific closed-end funds).
The benchmark M* is using is the Russell 1000. Category: Large Blend.
I don't have a good example of a foreign megacap stock fund.
I just found IOO as an excellent example of a global megacap fund.
I think the megacaps have been underappreciated and unloved for quite some time, and represent very high quality names at reasonable prices.
You won't hurt my feelings if you totally disagree!
It's a very good one.
Bridgeway has some interesting funds, including an interesting microcap fund, BRSIX
Thanks expat.
separately, apologies to the OP for diverting this thread. there are, in my opinion, way too many threads on MFO to start a new one, so i thought it made sense to continue if in a bit revised direction: what has not worked YTD and what asset classes are worth adding to going forward. regards.
http://www.oakmark.com/Commentary/International/Oakmark-International-Fund-Second-Quarter-2014.htm
To swing from +20.93% for 12 months (Vanguard data) to -2.61% total return (their numbers) for the 3 months ending 6/30/14 (-0.91% YTD) ... something went sour.
Credit Suisse Group is their largest holding as of 6/30 and it has had, shall I say, challenges. This explains some of their results.
After the banking bath of 2008 I wonder about the wisdom of any fund having a substantial portion of their portfolio in banking. Their next largest holding is Allianz which doesn't concern me. 26% of OAKIX's investments are in financials.
Have you seen any decent research on megacaps that I can read?
They apparently have not been in favor since the mid/late 1990's, when there were some years in the 1995-2000 time frame where you could have just invested in the largest [by market cap] 25-50 stocks and captured the market leadership.
Seems to me that buying the largest, safest companies at a discount is not a bad idea.
XLG, IOO, and as @expat points out, BRLIX, seems to be a good way to invest in megacaps.
You mention "WE are overweight xyz in such and such accounts".....if this is personal, please don't answer, but are you working for a company that professionally manages investment accounts? Do you feel comfortable saying the name of the company, and what your job is with them?