Re : teds Comment/Post on re-Balancing - Looking for advice Hi
@newgirl,
I probably not the best on the board to walk you through how to start a due diligence process. I think most retail investors need the guidance of a financial advisor and you might do well to seek one out.
There are a lot of things that are unknown about you and with that suggestions are hard to make concerning your investments. That is why I responded in a way as to what I favored about the Sun America Dividend Strategy Fund ... not is so much that it might be right for you.
Some things you might wish to do if not already done is to perform an investment risk tolerance analysis to help determine what type of investments and asset allocation might be of a fit for you. Another thing that I have found beneficial is to do a Morningstar Instant Xray on each of my funds. This is a quick and easy way to see how they are positioned and allocated. Then do an Xray on your portfolio as a whole. In this way you can see how it is positioned and allocated and how the investments owned combine into a portfolio. Then you can change holdings and amounts to see how this bubbles before making rebalance changes. Knowing your risk tolerance level is important because it will help you with finding the right asset allocation and investments. Before tweaking know what you have first and how it fits together into a portfolio and Instant Xray can help determine this.
Once you have done this then you can get down to a review of your funds and comparing them to others that you might find of investment interest. Before, I kick a fund to the curb I've got to have found a better one with strategies that I am comfortable with. Strategies that I favor might not be right for you as I am in the distribution phase in investing while you might be in the accumulation phase.
As you know many made some good and sage comments. Remember, just because a fund has performed well does not mean it will continue to do so and that is why I consider looking at its strategy to see if it is a right fit for me in the first place and that I understand it. A dividend strategy fund simply might not be right for you while it is for me. And, only you can determine that.
Even today after more than fifty years of investment experience and being considered a seasoned retail investor my advisor will ask me to justify why I am making changes within my portfolio. Sometimes they will ask me to revisit and to rethink this including tax considerations as well. Most times, they follow my first thinking.
Wishing you the very best as you continue your due diligence process.
Old_Skeet
Additional comment. Linked below is a post I made back in 20
16 about my portfolio and how I have things organized. Although, somethings have changed within the portfolio itself the process has not.
https://www.mutualfundobserver.com/discuss/discussion/24926/old-skeet-s-new-portfolio-asset-allocations-2016#latest
New Details About Wilbur Ross’ Business Point To Pattern Of Grifting - Invesco
Re : teds Comment/Post on re-Balancing - Looking for advice So you have read and studied the fact sheet along with understanding that it is a dividend strategy fund? It seeks to invest in the highest dividend companies and employees the Dogs of the Dow strategy for about one third of invested assets ... and, the other two thirds is invested choosing high yielding stocks from the broader market. Below is what Sun America states as to the funds objective.
Fund Objective: Seeks total return (including capital appreciation and current income) by employing a “buy and hold” strategy involving the annual selection of up to 30 high dividend yielding common stocks from the Dow Jones Industrial Average (DJIA) and broader market.
In addition, Morningstar rates its sustainability to be in the top two percent of its category. My own experience is that it has performed well, in the past, during market downdrafts. Will it continue to do that? Most likely; but, there are no guarantees when it comes to investing.
In checking the funds holdings (again at Morningstar) I am finding its two largest holdings one being Macy's is up ytd 61.35% and the other Darden Restruants is up 16.53%. You might wish to view the Morningstar report on the fund's portfolio holdings while performing your due diligence as it will give you a list of its top holdings along with their year to date returns.
I am not going to debate the attributes of the fund or defend it. It one of three funds that I hold in my domestic equity sleeve found in the growth and income area of my portfolio. The other two funds held within this sleeve are American Funds Fundamental Investor (ANCFX) and Federated Strategic Value Dividend (SVAAX).
Again, I wish you well in doing your due diligence.
I'm thinking if you have great concerns with the fund then perhaps it might not be for you. But, again I'm happy with it for it has generated a good income stream since I have owned it (and now being in retirement that is important to me) paying out last year about $2.00 per share in dividends and capital gains distributions combined. That computes to better than a 10% distribution yield. Plus its ten year (full market cycle) rolling total return is 12.82% putting it in the top one percent for its category.
And again, if you are not happy with it perhaps you will find something more to your liking.
New Details About Wilbur Ross’ Business Point To Pattern Of Grifting - Invesco
Re : teds Comment/Post on re-Balancing - Looking for advice I missed where they said it is annual rebalancing - i read that the holdings changed monthly. The position in Macy's is a bit worrisome - retail in general, and Macy's in particular - their 10.41% in retail/apparel Plus 4.9% in regional department stores.
Re : teds Comment/Post on re-Balancing - Looking for advice While FDSWX isn't my cup of tea, it doesn't look to be an especially bad fund. As you noted, its performance this year has been particularly poor.
If you exclude this year, its five year return (i.e. from Jan 2013 to Dec 2017) is very good. Total return of 111.6%, vs. 108.1% for the S&P 500 and 84.4% for large cap value (all data from M*). So current numbers showing poor long term performance are somewhat deceptive.
If you feel that this seven month swoon is not just a part of the routine ups and downs that a fund has, then do consider liquidating. If you think it might be temporary (e.g. because of annual reconstitution) but want to lighten your exposure, you could sell your highest cost shares.
Based on the numbers alone, I'd be inclined to take that second path if I were to sell. But I'm not that familiar with the fund. Skeet seems to have a better sense of where it's heading, though I might not give so much weight to performance within the past three months. For example, its one month performance, while reassuring (1.88%), nevertheless underperformed its peers by 1.26%.
Value has been underperforming growth for some time. So one would expect value funds to have negative alphas relative to the market (S&P 500). It's got a nice alpha relative to value funds: 1.05 vs. the Russell 1000 Value. Though with just mediocre correlation (R² around 0.7), the figures may not be all that meaningful.
Another alternative peer to consider is VEIRX.
Re : teds Comment/Post on re-Balancing - Looking for advice If you don't mind continuing the conversation ( it is a learning process for me ) Macy's and Darden are the two top holdings - not likely to perform well in a market downturn.
(this whole exercise is an effort to be a bit more defensive for fear of brewing trouble)
The -1.42 Alpha /.77 sharpe ratio is not worrisome ?
Re : teds Comment/Post on re-Balancing - Looking for advice @newgirl,
Below is a link that will take you to information on Sun America Dividend Strategy.
https://www-1012.aig.com/Products/MutualFunds/JU68/JU68_FundDetails_Overview.aspxThis will be the overview summary. On the right side of the summary page you will find a link to its fact sheet. Click on the fact sheet and read some more about the fund. Once you know the strategy then you are better prepared to form a due diligence.
Like bee said ... Why sell? I'm thinking it is one of the better dividend strategy funds around. But, whether it is right for you ... only you can decide that.
Re : teds Comment/Post on re-Balancing - Looking for advice @newgirl,
I own the A shares of AIG Focused Dividend Strategy (FDSAX) while you have another share class of the same fund with symbol FDSWX. Of late this fund has started to come on pretty strong with it's rolling one week return being listed by Morningstar at
1.2
1%, one month at
1.88% and 3 month at 9.
12%. In addition, Moringstar list its five year rolling total return at 9.43%. AIG Focused Dividend Strategy is a value fund and value has been out of favor for the past couple of years while growth has been the place to be. My position was built over the past ten years, or so, thus it is a long term position for me, held in a taxable account, and has sizeable capital gains exposure (much like you) which would be taxable if I sold. One of the things that I like about the fund is that it usually kicks off a good bit of income annually (dividends and capital gains). Another one is about a third of its equity is positioned in the Dogs of the Dow strategy.
In comparing FDSAX to some other dividend type funds (INUTX, IDIVX, LCEAX & PQIAX) I decided, for me, it was still a keeper.
Wishing you the very best as you perform your own due diligence.
