https://www.marketwatch.com/story/think-first-before-going-gaga-on-any-us-china-trade-deal-2019-12-13
hink first before going gaga on any U.S.-China trade deal
By Nigam Arora
Published: Dec 13, 2019 4:16 p.m. ET
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Always try to understand potential motives when President Trump tweets

Hi @Mark. I think in general we are saying the same thing, I think.
My original point was a reaction to the post article statement,

"REITs are a viable alternative to retirees and other income investors who desire greater income without having to take significantly more risk."

To me it would be ridiculous to do a 1 for 1 substitution of bonds for REITs in a diversified portfolio as the author implies. That portfolio would no longer have the same risk tolerance. I see nothing wrong with using REITs in a well balanced portfolio, but if you substitute your bond portion of the portfolio for REITS (as the author states is "safe" to do to get extra yield) you are taking on the same additional risk as substituting bonds for equity funds in my opinion. Both equities and REITs have similar volatility risk. As I mentioned, Just look at what happened to REITs in the great recession. They tanked as much or more that equity.
Second, my statement, "... but buying them for their income distribution inside a tax deferred account doesn't have much meaning." By "meaning" I meant that it doesn't matter how that REIT fund or any type fund generated its total or final return to you, by yield or by growth, doesn't matter. If you sell the REIT mutual fund inside your IRA (or your Roth) you are just selling the total return that fund generated for you. Didn't matter that it yielded 5%. All that did was increase your total return 5%. Sell that REIT fund or sell an equity fund, what is the difference when it converts to cash?
I will say that if you or maybe old skeet is converting that yield distribution to cash to be used as withdrawal income, that seems to me to just be a convenient way to distribute that income for cash use. A nice idea but I don't see the difference of putting distributions back into the fund balance to let it grow and selling bits of the fund itself as needed.
What I'm not trying to say is that high yielding funds like REITs aren't part of a well diversified portfolio. I think they can be. I'm just trying to say, when you convert that fund to cash, it is only total return that mattered.

I certainly do not want to see only latest 10y, and when not too lazy set my start date to 1/1/07

Agree. However, that data (full market cycle) is not always available.

Its seems reasonable to look back to 1/1/08 or so as a start date if you want get a better sense for performance over a full market cycle.

@Old_Skeet ,
Thanks. That sounds like a perfectly sane and rational system. (I probably could have written that response for you. :))
A plan, such as you and I both adhere to, serves many purposes. Two of the most important IMHO are: (1) It instills self-discipline & structure upon what might otherwise devolve into a haphazard approach, (2) It provides a clear and easy to interpret picture of how one’s investments are structured and how well different components are performing. The second is useful in deciding how much can be safely withdrawn yearly, as well as when / how to rebalance.
Being a rather disorganized person, I’d be completely lost without a clearly written plan. The allocation model I’ve used for 20 years (with updating for age) must be a pretty good one - because anytime I’ve considered drastically altering it I’ve been drawn back to the existing plan. While many markets, IMHO, have appeared “dicey” to me for years now, I’d hate to have had everything sitting in “safe” money market instruments pulling 1-3% yearly over the past decade.
Regards
OH - The thread is about REITS. I’ve dabbled in the past in a REIT fund as one of the holdings in my “real assets” group (10% weighting). I’d prefer to buy them at depressed prices, as this asset has been through 2 or 3 nasty downtrends over the past 25 years that I’ve closely watched markets. But if you’re young and don’t mind the potential volatility they may be fine. Personally, I’ve vacated my small hold in one and moved on to some more depressed sectors.

I agree with @msf on this....10 year returns don't currently tell the whole story given there has been no major market correction during that time (unless you believe the central banks have permanently eliminated those inconvenient market corrections!). Its seems reasonable to look back to 1/1/08 or so as a start date if you want get a better sense for performance over a full market cycle.

December 13th Show:

@Simon makes an excellent point about how single years can skew figures. Regarding 2009, it would likely be more informative to include both 2008 and 2009 or neither. Volatile funds tended to crash harder in 2008 and surge higher in 2009 than other funds. These effects may have somewhat balanced themselves out.
Another year to watch out for with respect to this fund is 2019. YTD it is beating its category by 25%, even more than the 23% by which it bested its category in 2009. And because 2019 is the current year, this one year of superb performance skews not only the 10 year performance figure, but the five, three, and one year figures as well.
The growth of $10K to $101,253 (a total return of $91,253) is not the growth over 10 years, but the growth over nearly 11 years. Don't let M*'s new pages confuse you into thinking that they're presenting standardized figures.
The growth over the past ten years is shown on this M* chart. $10K grew to $58,483. This chart shows that FSELX left its peers in the dust, even excluding all but 18 days (and fewer trading days) of 2009.
The "new" M* performance page reports a 19.32% annualized 10 year rate of return as of Dec 13. That means that $10K grew to $10K x (1+ 19.32%) ^ 10 = $58,497. Give or take rounding, that's the same result as shown in the 10 year chart.
Here's the chart for the fund for the two years 2008 and 2009. It shows that FSELX crashed and burned relative to its peers, let alone the S&P 500, but it also recovered faster and higher than its peers and the S&P 500. All curves are U shaped, with this fund looking rather impressive, at least for those with strong stomachs.

Thank you @Simon for making comment about 2009 falling off from the rolling 10 year returns.
I can tell from your approach you are not the typical person that vists the board.
Please keep posting and making comment.
Old_Skeet

Going....going....almost gone.
On the main "Quote" page of every fund covered by Morningstar is a chart showing the growth of $10,000 over the last 10 years (for funds that are 10 years or older). In 18 days the return figure for 2009 will disappear. For many funds, especially in the technology and growth sectors, this will make an enormous difference to their headline 10 year total return.
For example, FSELX returned an astonishing 85% in 2009. Yet in the decade since it has frequently lagged its category. Its standout performance in 2009 clearly contributed massively to its 10 year total return of almost $102,000.
https://www.morningstar.com/funds/xnas/fselx/quote
Personally, I'll be glad to see the figures for 2009 disappear. They have distorted the performance of many, if not most, mutual funds and ETFs. Hopefully, a more accurate picture will emerge from 2020 onward.
Wishing everyone here a very happy holiday season.

Yeah I know, I wasn't able to get my order in today -- the usual end of semester chaos. :)

No big deal, but PRWCX traded ex-div today.
Group B: record date Dec 12 (yesterday), ex-div Dec 13.

No big deal, but PRWCX traded ex-div today.
Group B: record date Dec 12 (yesterday), ex-div Dec 13.

Those who've been here long enough to recall Fund Alarm will recall this turn of a phrase. Some of my own funds are paying today. PRWCX and PRDSX are among them:
PRWCX $1.82/share
PRDSX $1.635/share.
(You gonna eat that bear claw?)

@MikeM - I'm having trouble following your reasoning. First off, many of the REIT investors I know of are not consumed by TR nor do they view it as the 'be all to end all'. It's always nice if they get it but they're more interested in the income stream REIT's provide. Buying REIT's when they've been beaten up can be rewarding (however now is not that time). Bonds and bond funds are also capable of gyrations.
Second, I don't understand this statement you made at all "... but buying them for their income distribution inside a tax deferred account doesn't have much meaning." The REIT's I own are all stuffed in a Roth IRA precisely to avoid income taxes on the distributions generated. I can also sell them free of capital gains taxes when prudent. What am I missing? According to M* buying REIT's in tax deferred accounts is the best place for them.
I meant to add this section from Bees' earlier linked capital gains distribution article:
"Consider Asset Location
Ultimately, an investor's best weapon against unwanted taxable income or capital gains distributions is to pay attention to which assets you hold in tax-deferred accounts (such as 401(k)s and IRAs) versus taxable accounts (such as brokerage accounts). Certain types of investments tend to be less tax-efficient because they are more likely to pay out taxable income or gains than others. These include high-turnover actively managed funds, some types of bond funds including high-yield corporate-bond funds, and REIT funds. Such holdings are a better fit inside of a tax-advantaged account such as a 401(k), IRA, HSA, 529, and the like. By contrast, municipal-bond funds as well as many index funds and ETFs can be good choices for taxable accounts."

An alternative view:

An important aspect of this conversation is that, while REITs provide a higher level of income than most other stocks, income from investments is not, in itself, a useful goal. Rather, it’s total return that matters, because capital appreciation can be used to fund living expenses just as well as income can. For instance, in a given year, if a given mutual fund provides an 8% total return, it does not matter whether the return is 8% from income and 0% from capital appreciation, 8% capital appreciation and no income, or any other combination in between.
An important exception is that if we’re talking about a taxable account (as opposed to retirement accounts such as IRAs or 401(k) accounts), income is actually detrimental relative to capital appreciation, because it results in an immediate tax cost rather than a deferred tax cost. And as a result, it can even make sense to underweight REITs in taxable accounts.

Link to Article:
overweighting-reits-why-dont-more-experts-recommend-it

https://money.usnews.com/investing/funds/articles/best-vanguard-bond-funds-to-buy
best vanguard bond fund to buy
Investors continue to pile into bond funds as 2019 winds down and as one of the biggest fund companies by assets under management, Vanguard bond funds have likely received much of investor's savings.
We do have bnd in our portfolio for quite sometimes...very happy w it

I have owned the Fidelity Real Estate Income Fund (FRINX) for about seven years with it being a member of my hybrid income sleeve. Thus far my total return in the fund has averaged a little better than 9% per year with an income yield of a litte better than 4%. With this, I've had some capital appreciation in this position during my seven year holding period as well as the production of income in the form of dividends and capital gain distributions pusing my income distribution yield upwards and north of 5%.
According to Xray this fund's asset allocation is listed at 7% cash, 30% US stocks, 1% foreign stocks, 38% bonds and 8% other (most likely convertibles and preferreds). I'm thinking that the referenced stocks are actually reits. As I write, according to M*, it is off its 52 week high by 1.42%.
In checking this fund at MFO it carries a MFO rating of 5 (best), a risk rating of 2 (conserative) and a bear market rating of 1 (best).
For me, this is a nice income generating fund and one that I plan to add to my position over time as I grow the income area of my portfolio.

any thoughts on why some REIT's have performed so poorly this week?

The U.S. 10 Year Treasury rocketed up to 1.94% today from somewhere around 1.8% yesterday. That’s a huge one day rise. Earlier in the year it dipped briefly below 1.5%. Bonds (and REITS) tend to move in opposite direction to interest rates. To answer your question - REITS have probably been reacting to the steepening rates for a while. The REIT I sold off a month or so ago (OREAX) fell 1.64% today. I still track it and find it a pretty good bellwether for the REIT market. Generally, the 10-year bond yield has considerable impact on mortgage rates going forward.
The steep bump up in rates was obvious across the spectrum of investments today. Bonds (and many bond funds) fell. Financial stocks rose sharply. Looks like utilities fell back a bit - another area that runs with bonds - and opposite interest rates.

If you open and read this, there is an image of the guy that wrote this blog and he looks like he may have been about 15 years old when REITS crashed in 2007-2009, so I don't think he understands the pain REIT investors felt at that time. I don't know how he can make this summary statement below. If I look at the Vanguard ETF for REITS, VNQ, it lost 70%+ peak to trough during the great recession. Would that be considered a bond alternative with less risk for retirees?

REITs are a viable alternative to retirees and other income investors who desire greater income without having to take significantly more risk.

I bookmarked and checked out the cool link @LewisBraham provided. For QVOPX I was only able to pull up the same tables they included in the semi-annual report. However, they noted that it had 2 pages. Since only 1 page surfaced, I submitted their form to have the document emailed to me. After 30+ minutes nothing has arrived.
Re @BenWP - Agree with your points. D&C is one I particularly enjoy reading (DODBX, DODIX). They have a very long term perspective and teach me a lot of things about the long term trends in various assets and their rationale for buying what they do. Right on the money from what I see in linking higher interest rates with improved performance for their sizable financial holdings. I don’t always read Giroux’s commentaries (PRWCX), but that’s another that’s interesting to pick apart. PRPFX is a different story. What you get is a colorful pie-chart showing how their static allocation to half dozen asset classes is parc’d out. No narrative from what I can tell. But that’s to be expected somewhat for a static allocation fund.
Edit: I’ve moved this thread from “Off Topic” to “Fund Discussions” where I feel it better belongs.