A Portfolio Review...Adjusting for the next 20 years @hank : What is it that you like about TMSRX ?
16 % in cash seems a {little } high to be.
Derf
Derf, I’ve owned it since inception. It’s the first fund I’ve ever held that sometimes sees big “up” days when equities hit the bricks, and yet can still hold its own in a rising equity market. That tells me there’s a very low correlation with equities. And I see little correlation with bonds either. It’s also been able to turn out a modest total return this year even while equities climb higher and higher. Yes, it’s lagging Price’s diversified income fund, RPSIX (
11% vs 7%) YTD as I would expect. But let’s not forget that RPSIX invests
10-
15% in an equity fund, which is benefiting from the hot equity market.
I’ve read a bit of what Price’s “brain trust” envisions for the fund. What I hear from them is that they foresee a possible scenario in which both bonds and equities are falling together. It’s not hard for one to imagine how that might happen. They believe the approach they’ve taken with this fund will allow it to avoid serious losses under such conditions. Obviously, the fund is new and untested. Time will tell whether it can hold up well during both an adverse bond and adverse equity market as they hope and expect.
As far as cash level, it can be misleading for a fund that engages in shorting equities as this fund does to an extent. Essentially, as I understand it, the cash-stash serves as a kind of
collateral against the equities it has sold short..
BTW
@Derf, Were you aware that board
Prima Donna, PRWCX, is currently holding
15% in cash? :)
A Portfolio Review...Adjusting for the next 20 years @hank : What is it that you like about TMSRX ?
16 % in cash seems a {little } high to be.
Derf
What are your favorite closed T Rowe Price funds? I've been in RPMGX in my taxable account for nearly 22 years. Yummy! I've had PRWCX first in taxable. Sold there and bought the next year in my Roth. Double yummy! I bought TRMCX around 2010. It's been ok, but not that wonderful. But I expect (or hope) it will catch up. All 3 are keepers for me.
Dave
A Portfolio Review...Adjusting for the next 20 years Kitces:“
Once ... buckets are established, the retiree then might use the following decision-rule framework for liquidations:
1) If equities are up, take the retirement spending from equities
2) If equities are down but bonds are up, take the spending from bonds instead
3) If both equities and bonds are down in the same year, take the distribution from Treasury bills ”
(or, in my case, from “Alternative” investment funds)
Thanks for the link
@msf - I’d never seen any analysis comparing the two approaches before and somewhat humbled that Kitces sees some merit in what I’ve been doing. Of course there will be other experts who disagree.
My method IMHO only works if one is
willing to sacrifice some current level of return in exchange for being
fully invested at all times (a lousy misleading term anyway). So, I carry what some would consider expensive, low performing or erratic performance funds as an offset to a severe equity sell-down. Funds like TMSRX, PRPFX, OPGSX - none of which would pass mustard based on the metrics most mutual fund investors use or receive high marks on this board. There’s also a static
15% weighting in the mix devoted to ultra-short and short term bonds. (I just recently increased that frim
10%.) And as Kitces mentions, you have to be willing to sell your winners in a downturn and hang on to your losers.
One big problem is in trying to
backtest anything. For most,
10-
15 years seems like an eternity. But in terms of really important global financial turning points
10-
15 years is little more than a drop in the bucket. And some of the alternative investment funds (like TMSRX) have only become available recently.
A Portfolio Review...Adjusting for the next 20 years @msf I am actually still trying accumulate SS credit (part time) so maybe there will be a small SS benefit when I turn 70. On my to do list for 2020...sit down with SS and crunch some numbers regarding my potential SS benefit and this WEP provision.
For others are not familiar with SS and WEP:
https://ssa.gov/policy/docs/program-explainers/windfall-elimination-provision.html@msf Fidelity's HSA option looks like a good one...on my to do list for 2020.
@Sven @msf mentioned TRP is available NTF on Fidelity's Brokerage platform...good to know.
@MikM regarding FRIFX MAXXDD of -40%...you have a very valid point...though this is a small position in my portfolio I did consider this a non-correlated US market asset (.72) it does pay a dividend that appears to remain constant even as share price fluctuates.
@hank said,
I could be wrong. But my sense is I’m somewhat protected against severe equity selloffs by the diversification I maintain. It’s probably the #1 reason I pay intense attention to different market sectors almost daily and track several funds that represent various sectors. And, if equities drop sharply, I’ll essentially “rebalance on the run” by shifting withdrawals to the fixed income holdings. To some extent this has been an ongoing process over the years. I always pull distributions from the portions that have fared the best.
...seems like a valid approach to me
A Portfolio Review...Adjusting for the next 20 years I can only wish that my retirement account had that persons' 1966 dollar amount in 2019 dollars. (inflation adjusted!!!]
Derf
Investors Favor Money Markets Over Stock and Bond Funds: Morningstar Hi
@hank OK, finished some early chores and coffee gone.
The numbers from the posted link seem large, but in the overall; may not mean much when related just to the IRA and 40
1K holdings (i didn't check 403b, but this amount is likely very large, too)
So, here's some info from
ICI.org as of mid-year, 2019:--- IRA total assets =
$9.7 TRILLION--- 40
1k total assets =
$5.9 TRILLIONSecondary info reports
total individual retirement market assets = $29.8 TRILLION, although I don't have time to chase this data breakdown.
Obviously, the numbers in the link are interesting; but not of significant value to cause me to change my ways as of today.
At least, some form of a value measuring benchmark info was available.
ADD: some of the flow to MM accounts likely can be attributed to required minimum distributions from traditional IRA accounts before Dec. 3
1Take care,
Catch
JENSX Look at the post directly above yours called 2019 Capital Gains Distributions. December is distribution season. It didn't really drop 7%. You will receive a dividend or gains payout for much or all of that amount.
Investors Favor Money Markets Over Stock and Bond Funds: Morningstar ... "who or what" does the term "investor" refer to in the linked article ...
*@Catch22 - I don’t know if this answers your question or not - but my read was that M* bases that conclusion on their tracking of U.S. mutual fund flows during 20
19. They see a lot of $$ flowing into money market funds. I’d presume that’s largely individual / personnel investing as opposed to institutional. You raise a good point, however. Most major fund groups offer “institutional” class money market funds as well which conceivably may have distorted their conclusions.
A couple other points: Equities have soared in value, so there’s a lot of rebalancing going on. And that alone causes inflows into money market funds. The other point is that for wealthy or better off investors, the
gains may be coming from individual equity holdings, while the
profits from those individual holdings may still make their way into money market funds.
Don’t know what % of investors invest through
hedge funds (likely a small %) - but there’s a very large pool of $$ sitting in those. The workings of hedge funds aren’t nearly as transparent as for mutual funds. I did check to determine whether ETFs were considered in M*s analysis of fund flows. It appears they do include ETFs in that total.
PS - Agree with
@Mark that John’s almost daily postings predicting a market crash are probably scaring investors. :)
