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.
I suspect that "forever" is longer than 10 years. I wouldn't want to leave an actively managed fund on auto pilot for that long. So, I would go with an index fund. Comparing VTSMX, NAESX, VFINX, and VIMSX back to VIMSX's date of birth for both tax free and taxable returns makes me pick VIMSX over NAESX by a hare for a forever fund...though many index fund "experts" would argue it should be a small value fund like VISVX instead.
Managers grow old, become senile, greedy, develop substance abuse or mental issues, quit, retire, get replaced or die. Fund companies are bought and sold all the time. I'd imagine fees are more often increased by new owners rather than the other way around. (Natixis buying Gateway is a case in point.) Publicly owned companies like Price and Franklin are subject to shareholder pressure to maximize value and profits. Costly shareholder lawsuits are common and could result in your favored fund being restructured or dropped from the lineup. Regulatory interference can have the same impact.
Index funds are not immune from fee increases and management decissions - though probably a better life-long choice than actively managed ones. The indexes themselves are ever-changing as companies are added and dropped. Changes in tax laws can also influence the desireability of a particular holding. The question as posed by the byline seems to me to lack merit. (I'm trying to be kind here.) However, Jack Bogle is fond of the Wilshire 5000 Total Stock Market Index as a long-term hold - and I suspect he's on to something.
@Hank, Agree with what you said. Vanguard, however, is not a public trade company and is owned by the shareholders like you and I. so there is less concern on conflict of interest.
Over the years our family's approach have evolved and index funds constituted over 70% of our portfolios. In certain asset classes or sectors, however, active management has provided (at least in our case) some alpha over their respective benchmarks. Ones I am referring to are T. Rowe Price Health Care and Vanguard Health Care, two stellar funds we held in IRAs.
NAESX was a finalist, though not the one uncle Ken Thune picked, in the end. Happy to recall that is the fund which carries my wife's 403b. Yes. It definitely puts a smile on my face!
Not Knowing what the U.S. stock market will do FOREVER, think I would mix in bonds (debt) and use VWIAX, take my *8% year, double every 9 years and have plenty of money for bananas and a couple of native girls....thinking Bud and golf would not be possible
@Junkster - re: PRPFX I've never owned that fund. I've looked at it once or twice but never got it, 'it' being why I would own this. However, if the markets were to experience another 2008-like dumping it might be the one everyone wished they had chosen. Different times, different market cycles, different goals all go into the thought process.
I'd like to think that I would own any of the six funds I currently do for the next 10 years but if I had to choose just one it would be POAGX. Ask me again in a few weeks or even next week.
@Junkster - If you were to put a gun to my head and force me to own only one fund for 30 years or longer, I guess it would be PRPFX (assuming continuation of management and fee structure, which is unlikely). I know we disagree on that and your comment was intended tongue-in-cheek.
Yes, many other investments, including junk bonds and the S&P, will outperform that fund over time. No argument there. But, assuming the economy goes through 4, 5 or more different cycles over that 30+ year period (inflationary, deflationary, stagnation, rising rates, falling rates, etc.) I like the fund as one that will not scare the hell out of a conservative investor during those cycles and will at least keep pace with inflation.
The original concept behind PRPFX (which I believe is still valid) was that it is designed to preserve purchasing power over a variety of market cycles and economic conditions (not to make you filthy rich). The fact it has gone nowhere for several years now does not concern me. We could argue about the current inflation rate - but officially, anyway, it's below the Fed's 2% target range. The fund represents about 8% of my investments. We presently take annual IRA distributions - but never from PRPFX. As a percentage of investments, therefore, it is expected to grow over time.
At my age, the odds are good that "forever" may present itself sometime within the next 30 years. So, I'll divide "forever" into 3 equal time frames:
Looking 10 years forward from today -- after thinking about it for a while -- I decided I would probably take a chance on active management outside the Vanguard shop. From a short list including WHGIX, BERIX, GLRBX, and FPACX, I went with FPACX despite its large asset size. (I was pleased to learn from @Tampabay that I won't be alone on that tropical island!)
Looking forward for both 20 and 30 years, I will stick with index funds and VIMSX...I buy in to the mid-cap "sweet spot" argument and figure that the short term noise will get cancelled out over 20 years or more. If not, I will have bigger things to worry about than the size of my portfolio!
Comments
Regards,
ted
Regards,
I love these "X fund(s) to hold forever" scenarios. LOL
Looking backwards, I'd throw in LEXCX (passive, 0% turnover) or one of the classes of AF WaMu Investors (active, low turnover).
Looking ahead, I'd include those plus MAPOX and potentially some others.
(I own all 3 listed, either in taxable or 403b accounts)
Managers grow old, become senile, greedy, develop substance abuse or mental issues, quit, retire, get replaced or die. Fund companies are bought and sold all the time. I'd imagine fees are more often increased by new owners rather than the other way around. (Natixis buying Gateway is a case in point.) Publicly owned companies like Price and Franklin are subject to shareholder pressure to maximize value and profits. Costly shareholder lawsuits are common and could result in your favored fund being restructured or dropped from the lineup. Regulatory interference can have the same impact.
Index funds are not immune from fee increases and management decissions - though probably a better life-long choice than actively managed ones. The indexes themselves are ever-changing as companies are added and dropped. Changes in tax laws can also influence the desireability of a particular holding. The question as posed by the byline seems to me to lack merit. (I'm trying to be kind here.) However, Jack Bogle is fond of the Wilshire 5000 Total Stock Market Index as a long-term hold - and I suspect he's on to something.
Agree with what you said. Vanguard, however, is not a public trade company and is owned by the shareholders like you and I. so there is less concern on conflict of interest.
Over the years our family's approach have evolved and index funds constituted over 70% of our portfolios. In certain asset classes or sectors, however, active management has provided (at least in our case) some alpha over their respective benchmarks. Ones I am referring to are T. Rowe Price Health Care and Vanguard Health Care, two stellar funds we held in IRAs.
I've never owned that fund. I've looked at it once or twice but never got it, 'it' being why I would own this. However, if the markets were to experience another 2008-like dumping it might be the one everyone wished they had chosen. Different times, different market cycles, different goals all go into the thought process.
I'd like to think that I would own any of the six funds I currently do for the next 10 years but if I had to choose just one it would be POAGX. Ask me again in a few weeks or even next week.
Regards,
ted
Yes, many other investments, including junk bonds and the S&P, will outperform that fund over time. No argument there. But, assuming the economy goes through 4, 5 or more different cycles over that 30+ year period (inflationary, deflationary, stagnation, rising rates, falling rates, etc.) I like the fund as one that will not scare the hell out of a conservative investor during those cycles and will at least keep pace with inflation.
The original concept behind PRPFX (which I believe is still valid) was that it is designed to preserve purchasing power over a variety of market cycles and economic conditions (not to make you filthy rich). The fact it has gone nowhere for several years now does not concern me. We could argue about the current inflation rate - but officially, anyway, it's below the Fed's 2% target range. The fund represents about 8% of my investments. We presently take annual IRA distributions - but never from PRPFX. As a percentage of investments, therefore, it is expected to grow over time.
Regards
Looking 10 years forward from today -- after thinking about it for a while -- I decided I would probably take a chance on active management outside the Vanguard shop. From a short list including WHGIX, BERIX, GLRBX, and FPACX, I went with FPACX despite its large asset size. (I was pleased to learn from @Tampabay that I won't be alone on that tropical island!)
Looking forward for both 20 and 30 years, I will stick with index funds and VIMSX...I buy in to the mid-cap "sweet spot" argument and figure that the short term noise will get cancelled out over 20 years or more. If not, I will have bigger things to worry about than the size of my portfolio!