Christine Benz's withdrawal suggestion (3%, rather than 4%)...3.3% to be precise... has a lot to do with future expectation of portfolio returns during the next 30 years. To me it really has more to do with future expectation over the next five years and next year, it will be about the next five years. In my 60's I am looking at a rolling five year withdrawal strategy when it come to retirement income from my retirement investments.
Retirement Income is more about providing an income floor rather than an income ceiling. If you spend some time prior to retirement determining your income floor (basic expenses) and than determine where you will derive this income from, you find yourself forming a pecking order of income sources.
Full time income will end and will need to be replaced with other sources of income such as - SS, pension, part time work, passive income from rental investments, investment income, etc.
Fine tune your basic expenses. You have the time (in retirement) to shop what things cost...this might help lower your income floor. Shop your monthly expenses (cable, phone, internet, insurances, etc.) for the best service at the best price. Shop those larger one-time purchases (a car, setting up your workshop, taking a vacation, etc.)
it was prudent to keep 3-6 months of emergency cash on hand in case work income got interrupted. In retirement, keep this same cash on hand for market interruptions or emergencies (such as unexpected health care costs).
If part of your income in retirement come from your investments, match the time horizon of your income need with the time horizon of the investment so you have a better chance of achieving your investment objective.
Equities need 5 - 15 years to smooth out the volatility inherit to its asset risk. If, in retirement you need some of your investments for income, you should have "a rolling 5 year income strategy" for some of your retirement money that is less risky... less volatile.
Using Christine's safe withdrawal rate (3.3% of your total investment portfolio) you can approximate what your can afford to spend and how much you should keep safely invested for withdrawal purposes to fund the next 3-5 years of withdrawals.
Would love to hear how others view this topic.

Most jobs do not require more than 2-3 yrs to be very good at it, provided one has aptitude for that job.

That’s the reason I deleted the line about some of us having 50+ years investment experience. I agree it’s a non-issue. Thanks for the note.

I hope those arguing against term limits for elected offices take note of your comment. Unfortunately, we citizens confuse ability to win elections with ability or even desire to govern.

Most jobs do not require more than 2-3 yrs to be very good at it, provided one has aptitude for that job.

That’s the reason I deleted the line about some of us having 50+ years investment experience. I agree it’s a non-issue. Thanks for the note.

Let’s start with the assumption that the individual investor designs a portfolio (allocation model) that meets his needs and which he or she deems appropriate for his or her situation. He or she decides X amount will be allocated to fixed income; X amount to equities; X amount to commodities or alternatives or hedge funds or whatever he or she decides.
Is it the view of @MikeM that the very investor who designed the portfolio to begin with is somehow engaging in risky or foolish behavior to alter, modify or embellish his original plan based on new information or perhaps a different “playing field” than on the day he drew that plan up?
Let’s say he had 50% nominally allocated to equities before a 30% market sell-off. Would the investor not be wise to increase his equity exposure - upping the allocation to 55 or 60% afterward? Or, in the case of extraordinarily narrow high yield credit spreads developing, would it not be prudent to shift some HY holdings into investment grade bonds or cash? Should deep value or EM stocks look cheap after years of underperformance, would you fault someone who had earlier avoided them for adding some to their portfolio?
There are allocation funds, as some have observed, who do this for you. That’s a good alternative. But these tend to have very large asset bases and need to deal with ever changing inflows and outflows . Changing allocations for them is a bit like changing course for an oil tanker. The individual investor is far more nimble. Not to say one approach is better than the other - just that they are different.

It appeared that international value funds are leading their growth counterparts this year. They trail growth style for over 10 years. Will they persist in the near term?

Sorry for asking. Your “Bad Moon rising” perked my interest.
Yep - 20 years is a long time.

@msf yes you raise some excellent points. I went through that same analysis that you describe above and evaluated both funds 2 years ago. Long term they both have similar track records. But MFAPX gets there with much less volatility. MIOPX actually held up quite well in the March 2020 selloff -- only dropping about 15% in comparison to 19% for its category. But things really turned south for MIOPX and other funds with large emerging markets exposure when China cracked down on its technology industry last year. I think you can trace its underperformance starting then. I might return to MFAPX at some point but am looking for more of a large cap blend. I find selecting an international fund to be quite difficult because they have underperformed the U.S. for so long. This year to date foreign value is doing quite well with funds like Dodge and Cox International up over 6% YTD but I wonder if this is a short term thing. Their long term track record is pretty poor. Again international is real conundrum.
@carew388 It's funny you mention MSFBX because that one has come up on my screens too. I really like that funds defensive posture with about 30% in consumer staples. Unfortunately it also has a 20% allocation to tech so if tech continues to get hit as I believe will happen -- you won't be safe in the fund. YAFFX is intriguing with a great long term track record -- also more of a global fund. It is one fund I'm looking at also. I think this is going to be a difficult year to make money though.

@hank
To be clear I never would make suggestions for anyone to do anything with their monies. I'm not qualified, don't know you, don't know anything about anything
That said, who says you have to be all in cash now until 20 years from now ..brk.b, doesn't seem like a bad place to hide out, I mentioned pvcmx and pmefx as places where I have some monies. Ibonds. CDC ETF maybe...is 2022 the year of hussy?
Just sharing my view is to be very careful as this might be the most dangerous time in the market since 08
Best
Baseball Fan

This will be a bit painful to do but I will be selling most of my position in MIOPX. I really like the manager -- Kristian Heugh. But there is too much downside risk in his portfolio.

If you like the manager and want to dial down the risk a bit, you could consider MFAPX. The difference between the MS summaries is that MIOPX includes emerging companies, while MFAPX is primarily focused on established companies.
Morgan Stanley MIOPX page
Morgan Stanley MFAPX page
Obviously they have a lot of overlap, but their figures are significantly different.
Portfolio Visualizer comparison
Close performance over 3, 5, 10 years (through year end 2021). A notable distinction is that from 2Q2020 on, MIOPX rose and fell faster. For example, YTD (2022), MIOPX dropped 9.23% and MFAPX dropped 2.83%. PV shows other significant differences (better figures are MAFPX):
std dev: 16.58% vs. 12.99%
max drawdown: 26.18% vs. 17.26%
Sharpe ratio: 0.77 vs. 1.00
Sortino ratio: 1.27 vs 1.71
As one might expect with its higher volatility MIOPX had a much better best year (55.06% vs. 44.18%) and a much worse worst year (down 12.36% vs down 5.48%).
According to M*, the best fit index for MIOPX is US Convertible Bonds!
http://performance.morningstar.com/fund/ratings-risk.action?t=MIOPX
From inception through 2016 MIOPX tracked FISCX pretty closely. (MIOPX even returned less over this period). Then it became more volatile and returned more. But it wasn't until 2020 that it took off like a rocket. And then fell like a stone. In that same period, MFAPX also rose with MIOPX, but not as quickly and with much gentler spikes.

All this talk in DC about taming the highest inflation in 40 years has the fed fund futures traders spooked and they are now projecting 4 rate hikes (in Q1, Q2, Q3, Q4) at the CME FedWatch.
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

DODBX at $15B is very small compared to VWELX, PRWCX, & FBALX to name a few. It had outflows consistently in the past 10 yrs per M*, even though some of those years performance was quite good. Any comment on the outflows? Not sure if it is the Value style. VWELX gave up its Value style recently.

Good question. Money today is fickle.To the extent money has fled DODBX in recent years, here’s some possible reasons:
- Dodge & Cox equity funds (including DODBX) faired poorly in 2008. They got caught leaning the wrong way on some financials early on and never recovered. DODBX lost 33.5% that year. (By contrast, PRWCX lost 27% in 2008.) Prior to that, D&C had been a board favorite and had seen steady inflows. It’s the old saw about reputations, like china, being easily damaged and hard to mend.
- There’s a long held perception that DODBX is bloated. Gained traction during the ‘07-‘09 bear market. While accurate, investors seem to overlook that PRWCX has greatly outdistanced it in AUM over the last decade.
- There’s an aversion nowadays to typical 60/40 “balanced” funds owing to low interest rates and a belief (true to some extent) that bonds no longer offer protection. This weighs against DODBX in investors’ eyes. Overlooked is that DODBX is actually more of a 70/30 fund. And perhaps unknown to some, it’s been holding a 5% short position against the S&P. Further, its heavier than average weighting to financials stands to benefit investors as rates rise.
- D&C underplays the significance of individual managers. Committees make the big calls, as I’ve understood them. Given the choice between investing with a bland committee or a well known figure with the aura of a David Giroux*, the latter likely wins out among today’s investors.
- D&C does not make their funds available NTF at brokerage houses. That has to hurt inflows and may lead to outflows.
* Not pertinent to the question, but I should note the performance of DODBX and PRWCX are quite similar. Over the past year DODBX led, gaining 18.9% to PRWCX’s 16%. Over 10 years, PRWCX wins at 13.36% compared to 11.91% for DODBX.

DODBX at $15B is very small compared to VWELX, PRWCX, & FBALX to name a few. It had outflows consistently in the past 10 yrs per M*, even though some of those years total return performance was quite good. Any comment on the outflows? Not sure if it is the Value style. VWELX gave up its Value style recently.

Sounds like an acknowledgment by D&C that the typical 60:40 equity:bonds portfolio just isn't going to cut it anymore. They may be having PRWCX envie, maybe?

Correct.
Let’s hope their “cure” isn’t worse than the disease. I’ve been scaling out of DODBX as it’s risen the past couple years. Still hold a bit. In the event of a big market selloff, I’d probably buy into one of their equity funds.
One year performance (from Lipper): DODBX +17.85% / PRWCX +15.08%. However, at 3 & 5 years out PRWCX holds a slight edge. This is a radical move from a very conservative house. What comes next? Maybe D&C funds NTF at Fido, Schwab, etc.?
If you haven’t read Ed Studzinski’s column in the January Observer you might. He mentions “firms in the San Francisco Bay Area which face a problem of unaffordable housing costs for junior professional staff.” He mentions these employees having to commute long distances to work or reside in crime ridden areas. D&C is headquartered in SF - so I’d guess they’re one of the referenced here - but there’s a chance I’m wrong. In any event, read for yourself.

I fail to see where they’ve yet changed the approach. The 2-3 page statement sounds like it was written by a committee. I might ask “Why change now?” since the past couple years seem to have been very good considering the type of fund. In recent years they’ve kept close to 70% in equities - higher than their “balanced” designation might suggest. ISTM they’ve had near 20% foreign holdings in the recent past, if not now. One concern will be fees. If they go into alternatives that may jack-up fees a bit.
Interesting line. Wonder what date they made this shift? Obviously the past couple weeks have seen some modest yield increases.
“More recently, we have reduced the Fund’s equity exposure in light of higher equity valuations and modestly more attractive bond yields.”

Thanks. I hope this thread can discuss investable funds in the subject space.
As an aside, I took your chart back to 10 years. XLE total return was only 20% while ICLN had nearly 10 times as much. Seems like investors have been working out the transition for a while.

OAKMX and OAKLX did not beat SPY during the last 10 years, but since inception of OAKLX in 1996, it is up 1780%, whereas SPY is 936% up, and VTV (Vanguard Value) is 761%. Thus OAKLX significantly outperformed both S&P 500 and Value index since inception. I would not necessarily bet my house on its future outperformance, but I take Nygren's opinions seriously.

“We expect equity investors to perform well relative to bond investors over the next decade. We also believe that our portfolios are more attractively priced than the S&P 500.”
Hard to disagree as worded. “our portfolios” doesn’t mean the same as what you, I, or somebody else may own. And they seem to disavow the S&P. Unfortunately, we’ll have to wait 10 years to see if the manager’s perceptions re his portfolio are accurate.
Note that the blurb does not differentiate among bonds, lumping all into one hopper. Well, now, there are short, intermediate and long term bonds. Corporate and sovereign. Investment grade and poorer quality. U.S. domiciled and those from other nations. And, there’s EM as well.
I think for many of us the past week is a great opportunity to compare how different asset class we held faired compared to one another. It hasn’t been too often that so many different assets suffered together (Maybe Qtr 1, 2020?).
When all is said and done, I’m glad I had exposure to bonds last week. RPGAX (30% bonds) fell 1.48% as compared to PRWCX which lost over 2.0%%. My worst performing bond fund, DODIX, fell 1.07%. In contrast, my worst performing equity holding, WPM, fell over 10%. Equity funds themselves were all over the place of course. Those heavy into banks saw gains. Similar variance existed among various alts, long shorts, etc. PRPFX surprised, losing just 1% for the week, despite exposure to gold, bonds and growth stocks.
So, if you have a 10 year or longer time horizon and can live with higher volatility, send your $$ to the folks at Oakmark. BTW - I read a lot of Dodge & Cox’s commentary. They might well have written the same blurb.

I own BGAFX and MIOPX, have had for several years. My reasons for buying are still valid, so I am holding and will add/rebalance if this slide continues. Both are MFO Great Owl funds with proven management. They hold foreign and global high quality GROWTH stocks, and the rotation to value is evident. I had trimmed a bit from them in the fall as part of my regular rebalance, along with some risk reduction at the time. If I were to sell now, I think I’d be making the same mistake I’ve made in the past… watch a great fund fall, and sell at lows. These are more B&H core funds.
Best of luck,
Rick

@Derf, Not sure if the following is what you are asking -
If the fund prospectus provides for exchanges between classes (i.e., conversion), then one can exchange (convert) tax free, and the prospectus would say it. These conversions are pretty routine for a lot of fund families. But certain brokerages may not participate in conversions, in which case, one is stuck with selling one class and buying the other in a taxable transaction, subject to wash sale rules or simply transfer the fund out to another brokerage that participates in conversion and convert there. (E.g., Schwab did not convert until a couple of years ago and I have no knowledge of their current status but Fidelity converts quite routinely.) If a fund is closed to new investors, that prohibition may extend to conversions.

"(I personally faced a similar decision years ago. I owned service class shares of a fund. The A shares, with a slightly lower ER, were subsequently offered load-waived. The fund declined to do a tax-free exchange for me. So I continued to hold the higher cost service class shares.)" as per @msf
Does that decision still hold today ? In other words does the fund , any fund, dictate if the exchange is taxed or not ?
Thank you much, Derf