I have been contemplating putting about 5% of my portfolio into this arena. But I'm not sure if that is a wise move right now. Would I be "late to the party"?
I have been hearing and reading that this is the place to be but the returns over the last few years (and YTD) have been unbelievable. I don't expect that to continue, but is there still room for Healthcare to prosper going forward?? What about the Biotech arena? I know it is much more volatile than the broader "Healthcare" sector; but is it worth it???
I can take some volatility, so that is not a major concern. Furthermore, this industry also seems to be a nice diversifier, little correlation to the stock market as a whole!
Any and all thoughts, comments, ideas and suggestions welcome!!!
Thank you, Matt

@LewisBraham,
I agree completely and funny enough we were discussing the same about healthcare not too long ago.
mutualfundobserver.com/discuss/discussion/comment/50872/#Comment_50872
Obviously Emerging Global Advisors wasn't able to generate interest in their fund but did they or anyone else offer any reasons why no one is interested? Is it a question of marketing (because I'd never heard of Emerging Global Advisors) or a true lack of interest on the part of investors? You're article seems to suggest the latter but I also don't think there's much of the former. Considering the returns you cited over the past 10 years, both are a surprise to me.

I actually looked for the health care fund the other day to consider investing in, only to realize that the fund company had dropped a lot of their EM funds. Oh well. Long ABT as a boring EM healthcare play.

This 'SLOTH' at Morningstar with their 'Portfolio tool' updates has been going on for ------
YEARS !!!!!!!!!!!!!!!
Ralph

I believe these miners are down around 75-80% from their highs a few years ago. Once year-end tax loss selling is over, I must admit that I'm tempted to play the January Effect with them. A lot of people must be looking for tax losses this year, and these stocks are where they'll find them. The conditions for total capitulation seem ripe.

Turnover ratio is one of those statistics that should be colored coded in my opinion. According to the website Investopedia:
"Mutual fund turnover is calculated as the value of all transactions (buying, selling) divided by two, then divided by a fund's total holdings. In simpler terms, mutual fund turnover typically measures the replacement of holdings in a mutual fund, and is commonly presented to investors as a percentage over a one year period. If a fund has 100% turnover, the fund replaces all of its holdings over a 12-month period."
So turnover isn't just the selling out of holdings, but also the adding of holdings. Is it not plausible that a mutual fund that doubles its size (AUM) and then puts that new money to work by only adding shares (holdings) would have an annual "turnover ratio" of 50%? This scenario seem very positive and I color it green. OAKMX AUM hasn't double in size this year, but has seen almost a 50% increase ($12B to $17B):

Rummaging through OAKMX's M* data (which only list the top 25 stocks of a fund) I noticed that only one stock, (HD (Home Depot), has been held for at least 10 years. HD was first bought by OAKMX in 2002.
OAKMX holds 52 stocks (a fairly concentrated fund... see OAKLX if you want the Ultra - Nygren concentrated fund)
Of OAKMX's top 25 holdings listed on M*:
- Six are new as of this year
- Three more have been held for less than 2 years
- 14 stock have been held less 3 years or less
- 24 have been held less than ten years
- Nygren has increased shares to 23 of his funds top 25 holdings
Of these increases, Nygren made bigger bets on:
- Google by 24%
- Diageo by 20%
- AIG by 18%
- Qualcomm by 16%
- Saniflo, Apache, Mastercard, and Oracle by 12%
I guess my point is that even a fund with a mere 19% turnover can have an entirely different portfolio of stocks in any 5 year period (19% x 5 years). Conversely, mutual fund turnover ratio can be nothing more than a manager attracting more assets and putting that money to work by buying more shares of the same holdings.
I could be wrong, but much of Nygren's turnover this year seems to be attributed more to buying than selling (increasing the number of shares of holdings). His track record speaks for itself, but his recent share increases seems to speak optimistically of the holdings he presently holds. I color this manager's turnover ratio "green".
Another important note from Investopedia:
"The turnover rate in your mutual fund is really a measure of the frequency of transactions in your funds. In general, investors should analyze the turnover rate in conjunction with several considerations in determining whether or not to purchase a particular mutual fund. The fund turnover rate is not a silver bullet for your investment portfolio; it should be used as a complimentary decision-making tool. Other indicators, such as expense ratios, load/no-load, management tenure, investment philosophy and performance are (at least) as important as the turnover rate in helping you make the right investment decisions. "
Here are the holdings Nygren has added to:

Hi Hank. $2.90 not high by NY standards. Lowest I've seen around here is ~$3.05.
I was temped to get back into PRNEX about a month ago. Obviously glad I didn't. I'll just let the oil wars with the Saudis and Russian sanctions and North American oil ventures play out until I see some uptrend. No sense trying to catch a falling knife.
And miners? Haven't touched them in over 3 years and never will gamble like that again. Yeah, some year they'll go up 80%, but maybe 1 out of 100 people can time that right and make money at it... and that isn't me. Actually, fund managers playing the value game with PM miners is the reason I left ARIVX a couple years ago. A loosing game IM<HO.

@LewisBraham,
I agree completely and funny enough we were discussing the same about healthcare not too long ago.
mutualfundobserver.com/discuss/discussion/comment/50872/#Comment_50872
Obviously Emerging Global Advisors wasn't able to generate interest in their fund but did they or anyone else offer any reasons why no one is interested? Is it a question of marketing (because I'd never heard of Emerging Global Advisors) or a true lack of interest on the part of investors? You're article seems to suggest the latter but I also don't think there's much of the former. Considering the returns you cited over the past 10 years, both are a surprise to me.

FYI: (Click On Article Title At Top Of Google Search)
The playbook never changes that much for Bill Nygren, co-manager of the Oakmark fund. Emphasizing fundamental research and patience, he looks for undervalued stocks that can overcome their discounts. (The fund’s annual turnover is 19%, versus an average of 61% for Morningstar’s large-cap blend category.) However, Nygren isn’t afraid to make a few tweaks. Following a big upswing in equity prices since the market bottomed in 2009, the Chicago-based manager is finding few attractive companies that sport a single-digit price-earnings multiple. So he has added some growthier names like Google (ticker: GOOGL), which doesn’t trade at a big premium to the Standard & Poor’s 500 index. Nygren, 56, who has co-managed the $17.8 billion fund with Kevin Grant since 2000, has compiled good long-term performance. Oakmark (OAKMX) has beaten the S&P 500 over three, five, and 10 years, and ranks in the top 10% of its Morningstar peer group over those periods. Barron’s spoke with Nygren recently by phone.
Regards,
Ted
https://www.google.com/search?newwindow=1&amp;q=Oakmark’s+Bill+Nygren+Likes+Financials+and+Techs&amp;oq=Oakmark’s+Bill+Nygren+Likes+Financials+and+Techs&amp;gs_l=serp.3...15215.27183.0.28344.18.11.0.0.0.8.79.700.10.10.0....0...1c.1.58.serp..18.0.0.RUqQCPJVpE8

@JohnChisum, thanks!
It seems to me that Horrocks didn't make the best judgment not only from a return perspective but from a tax perspective as well. The 3 year returns for the fund are now below the category average and although I don't normally pay a lot of attention to 3 years, I've been considering my allocation for next year and MAPIX is going to be reduced.
Interestingly, I wrote a note to Horrocks a few days ago about the article he wrote for Asia Insight on Asia's Deepening Capital Markets. In it he said that Asia Pacific equity markets compose roughly 32% of the world's free-floating market capitalization and that it represents $20 trillion in market capitalization. When I look at MSCI's ACWI + Frontier Markets IMI index, they say 99% of the global investable equity opportunity set is a bit less than $43 trillion, and I calculate Asia's portion of that somewhere around 25%. I wrote to him because I was hoping he could help me understand the $17 trillion of global market cap that I'm missing, more than half of which is apparently in Asia. I don't have any response yet, which isn't that surprising given the holiday and all, but I'm wondering if his mistakes are growing in number.

I commend max for voting with his feet. We must in the world of investing trust our instincts honed by years of experience and after serious introspection make valid, for us, decisions.
Maxl's action is proper. For the 56 million a year they collect from MAPIX fund's expense ratio, it is incumbent on them to be obsequious to Maxl and courteous in their response. Maxl pays Tito's salary and is justified in being irate. In a tax sheltered account his immediate response to rudeness is correct and my hat is tipped to him.

FYI: Friday’s oil crash laid waste to energy shares, but the gold miners were similarly trampled: the Market Vectors Gold Miners (GDX) just quietly suffered its biggest one-day decline in nearly 1 1/2 years.
GDX, the biggest exchange-traded fund holding precious-metal miner stocks, dropped 8.7% on to close at $18.36 on Friday. Miner stocks, which tend to act like spring-loaded vehicles for trading gold or silver themselves, have been hugely volatile in recent weeks as gold has flirted with multiyear lows
Regards,
Ted
http://blogs.barrons.com/focusonfunds/2014/11/28/gold-miner-etf-suffers-biggest-one-day-loss-in-over-a-year/tab/print/

What does uncle Jeffrey say about this? DLFNX is holding 16.53% in cash. DBLTX holds 13.56% cash. (If we can trust that number from Morningstar.) I do think JG knows what he's doing. I remember an interview on Bloomberg tv a few years back. He simply said that he was "exploiting inefficiencies in the Market..... I wish I could teach it." With that latter phrase, he sounds like me, but I don't claim to know the Markets the way he does, though! I'm what you might call a RANK AMATEUR.

Hi LLJB,
Thanks for the link to J P Morgan’s 4th Quarter 2014 Guide to the Markets. Indeed good and useful information is to be found here. I plan to save the link.
I like your idea and it seems very sound to me. As a matter of fact my late father favored dividend paying stocks over traditional fixed income investments. He did carry some bonds for diversification purposes but felt a good dividend stock the better choice as it would over the years, most often, grow its dividend over time plus, in most cases, provide capital appreciation. And, I have not moved away form this concept either as my spiff is paying me a good dividend while I carry it and more so than a short term bond fund would but not what a high yield bond fund would pay.
One of his favorite strategies was taking advantage of the traditional fall and winter stock market rally which I now have now put in play, during the recent October swoon, and have named this special investment position “spiff.”
Putting this spiff into play has tilted my asset allocation somewhat along with the fact that many of my hybrid funds found in the growth & income area of my portfolio are also a little light in bonds and combined has made me light in bonds within my overall portfolio’s asset allocation ranges that I generally follow. My neutral allocation to bonds is about 30% and with me currently managing bonds at the 25% range has already put me at about 5% light. Now, I am at about 22% to 23% in bonds and wanting to work back towards the 25% allocation which I’ll do over the next few months, or so.
According to my quick review of the “Guide” it seems equities are the place to be.
Old_Skeet

I'm crestfallen, but I'm not going to sell it. Along with JohnChisum, it's my own core Asia fund, too. I certainly will be looking for the next Fund Managers' commentary! That fund is my biggest holding, so getting no 4Q pay-out sucks big. Thanks, everyone, for getting this information to me and to everyone else..... I have noticed through 2014 that the Morningstar ratings for that fund have been reduced from 4 stars to 3, and the risk/reward profile now looks like MACSX--- LOW risk, and (merely) AVERAGE returns. Yet Morningstar's little thumbnail note about the fund on its "quote" page says: don't be distressed. The sub-par performance recently is due to some of its sector overweightings under its new co-lead managers... Bah. .....The fund has done very well for me over the last several years, and I actually DID take an 18% chunk of it a few months ago and put it into MEASX--- which is pleasing me so far, too. But this ZERO 4th Q pay-out is a big pile of nothing. :(
http://quotes.morningstar.com/fund/f?t=MAPIX&region=USA
@InformalEconomist:
I just saw that Morningstar thread. The fellow summarized the reply he got this way: "Reason for the "nothing coming to us" at year-end is, according to their (admitted) talking points, is the tax treatment of passive foreign investment company holdings for US citizens."
Can someone tell me what that means? Thanks.

Hi Guys,
The central theme of the referenced article emphasizes a false choice. When assembling a portfolio, it is never, or more appropriately never should be, a toggle switch either/or singular decision.
Most folks accept that diversification is the key to a reasonable portfolio that will generate respectable returns. As many market wizards have highlighted, diversification may be the only free lunch on Wall Street.
For many investors that diversified portfolio is filled with both Index products and actively managed holdings, all contributing in different ways. The spectrum of options is wide and frequently exploited by informed investors.
Certainly owning a single stock or a single mutual fund is a risky proposition. With a single position, rewards are potentially magnified, but so are painful loss possibilities. There are no free lunches here. Many investors abandon ship because of unacceptable portfolio volatility. Multiple asset class holdings act to dampen that volatility, and thus encourage longer holding periods. This enables compound interest to work its magic.
Besides the emotional harm that portfolio volatility promotes, it also has a real damaging impact on compound return over the years. It is a spoiler to end wealth.
Recall that compound return is reduced below annual return levels by the square of the portfolio’s standard deviation (one measure of volatility). A simple algebraic equation captures that degradation. So a portfolio’s long term return is enhanced when the portfolio is constructed in a way to minimize its overall standard deviation.
You can test the validity of this statement by exploring possibilities for your portfolio on the Portfolio Visualizer website. Here is a Link to that excellent tool:
http://www.portfoliovisualizer.com/
I encourage you to explore various options and outcomes historically by running various “what-if” scenarios. The toolkit is easy to use. Compare your positions against an equivalent all Index portfolio or against an all actively managed portfolio. The tool handles both individual stocks and mutual funds. You can select your historical timeframe for comparative purposes. Have some fun and perhaps even profit from the exercise.
In my own situation, I have a mix of Index funds, ETFs, and actively managed mutual funds. That mix has served me well; it has changed over time. I especially use Index products as my default option when I find no compelling actively managed products.
Safety has different meanings for different folks. Nowhere is it written in stone that it is an either/or, digital Zero or One, world. It is not!
Best Regards.

The nice thing is that if you had purchased pretty much any of these funds 15 years ago you'd be very happy today even if you hadn't chosen the absolute best one. Likewise, if you think you can tell me which one will have done the best 15 years from now, please tell me so I can, well, think about it. :) I own both HQL and PRHSX, have been very happy for a while now and expect to continue investing when there are dips. The one thing I prefer about PRHSX over PJP or IBB, and actually I prefer it over HQL as well but I like the venture capital, is that for a very small increase in expenses you get someone to work for you. Of course that doesn't mean they'll do better, but at least there's some thought to the process, and its cheap management compared to what you have to pay most fund managers compared to a passive alternative.

FYI: Stocks can keep climbing next year, tacking even more gains onto their phenomenal run of the last five-plus years. Just don't expect them to be as big -- or to come with as little heartburn -- as before.
Regards,
Ted
http://bigstory.ap.org/article/daf4168d2e074966bfd5bb898da2cb3e/2015-stock-outlook-good-not-great-and-bumpy

Dear Mark,
Thanks a lot for this reply, it is an interesting explanation. Can you also plot HQH and HQL versus PJP and IBB which you can trade instantaneously? Of course, past performance does not guarantee much, but during the last 5 and 10 years PJP (pharma) and IBB (biotech) performed better than HQL and HQH. Both IBB and PJP are very tax efficient. How about HQL and HQH? I would really like to know it, I could not find this information in M*. Usually closed end funds are very tax inefficient, but maybe this rule does not apply to these funds?

Here I charted FAIRX's performance over the last 12 years along with the equities his presently owns and when he approximately first owned (using green arrows) these equities according to M* data:

The Matthews website does show distribution history for 2013 and foreign tax credits going back several years. A 4Q distribution was paid out last year.
I guess the best thing is to give them a call.