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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • World Stock Funds-Are they a viable alternative?
    A couple of more to consider. Blackrock International is a foreign large blend that scores in the top 10% across most time frames for its category. Impressive fund. Grandeur Peak Global stalwarts has had a very nice couple of years in the Global Small/mid cap space. David has written a lot about this fund family. Thanks for the advice on MIEIX @Observant1. Wasn’t aware of that one. Great candidate for a taxable account too. I’m personally leaning to starting an account with WCMIX. I will be reading up more on these other funds too. BGAIX is also interesting but it’s very high PE multiple gives me pause.
  • Preparing For The Grizzly Bear
    “ There is a lot of fear mongering ….. Those are worthwhile discussions to have.”
    Nicely put. Thanks for the detailed analysis @LewisBraham
    I try to read as much of the popular financial press as I can - by no means a comprehensive amount. But what often surfaces in these analyses is: (1) Central banks (notably the Fed) do not want to tank the markets. (2) They do, however, want to curb speculation. Unfortunately, there’s emerged over the years a certain amount of conflict there. When they do attempt to tighten (slow speculation) the equity markets become turbulent and fall or threaten to fall. “Taper tantrum” is the phrase often used. (3) This conflict leads (it seems invariably) to stage #3 in which the central banks / Fed “cave” to the markets and loosen the reins again. Repeat the process. Market players understand the game.
    So now after years (decades?) of monetary stimulus we sit at near 0 short term rates with the Fed still buying bonds (albeit at a reduced rate) and talking obliquely about needing to further stimulate until “full employment” is reached. (Have you tried having your home roofed or painted lately?) Meanwhile, the markets march merrily along, The question left unanswered is - What further can the Fed and central banks do to keep the magic market money wheel churning next time the economy and / or stock market begins to shudder? What happens to those elevated asset prices when the stimulus runs out and people begin to realize the tank is empty?
    One pundit I follow expects that coming inflation will force the bond market to take control - irregardless of Fed policy. In other words, faced with growing losses of purchasing power bond investors will sell en mass, forcing rates higher and eventually toppling stocks. I don’t necessarily siubscribe to this view, But think it’s one (of many) worth considering.
  • World Stock Funds-Are they a viable alternative?
    In the Foreign Large Blend category, I like SCIEX and MIEIX*.
    The SCIEX management team also manages 30% of VWILX.
    MIEIX has below average costs, low turnover, and usually provides good downside protection.
    Mr. Ling started managing MIEIX on 10/01/2009; Mr. Webber began managing SCIEX on 03/01/2010.
    Portfolio Visualizer Results from Mar 2010 - Oct 2021
    *Morningstar fund category was Foreign Large Growth prior to 2020
  • A US Fund is Hit with a "Closet Indexing" Charge
    I don't care if an active fund tracks an index on the upside, but I do care if it tracks an index on the downside. The SPY lost like 38% in the GFC while PRBLX was down only 22. I'll take positioning & performance like that anyday.
    From M* PRILX Fund Analyst Report:
    "Downside protection has been a strength for this
    fund’s focused, roughly 40-stock portfolio. Since
    Ahlsten became a manager on the fund, the strategy
    has outperformed the S&P 500 in every market
    correction, including the 2007-08 financial crisis, 2018’s
    end-of-year pullback, and early 2020’s pandemic-driven
    sell-off. One reason for that is that almost all holdings
    have narrow or wide Morningstar Economic Moat
    Ratings. While the fund typically lags in the ensuing
    rallies, the managers have shown skill in picking up
    depressed names that have proved beneficial in the
    rebound."

  • A US Fund is Hit with a "Closet Indexing" Charge
    The first thought through my mind was: the IRS would never consider TWVLX "substantially identical" to whatever index one would like. For tax purposes at least that would get laughed out of court.
    The article conflates active share and correlation. The former was defined in a 2006 working paper by Martijn Cremers and Antti Petajisto as a measure of how much overlap (or lack thereof) the actual components of a fund have with the components of an index. More formally:
    Active Share = ½∑ | weight portfolio (sub i) - weight benchmark (sub i) |
    https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/leadership-series_active-share.pdf
    FWIW, ActiveShare.info reports TWVLX has an active share of 65%. Not great, but better than 31% of large cap funds. By this measure, almost a third of funds would be at risk of being sued.
    OTOH, correlation is a measure of how closely a fund's movements resemble (or can be "explained by") an index's movements.
    The way the suit is described (" plaintiff’s attorneys cited a metric that suggests more than 90% of the fund’s movements can be explained by the benchmark"), it sounds like, not surprisingly, the complaint is concerned with the fund's performance, not how closely its holdings match those of the index.
    Morningstar reports that the 3 year R² of TWVLX and the R1K value index is 96.84%. Perhaps there's an argument to be made. The problem is that just because a portfolio moves like an index doesn't mean that the portfolio is being managed for that effect. TWVLX is significantly more volatile. Its three year standard deviation is 10% above that of the index. That's reflected in magnified upside/downside capture ratios of 103/110. Likewise, its beta relative to the R1K value index is 1.09.
    For a fund with underwhelming performance, that higher level of volatility is not something especially desirable. Nevertheless, it shows that this unleveraged fund is not a mere index tracker.
  • A US Fund is Hit with a "Closet Indexing" Charge
    First of its kind? https://www.marketwatch.com/articles/american-century-investments-lawsuit-51636672247?mod=mw_latestnews
    Suit is against American Century Funds and directed to TWVLX. "American Century told Barron’s in an email that the allegations are “false and completely without merit” and that it will vigorously defend itself against the lawsuit."
    In the Large Cap thread I posted about PRBLX and how I admire its performance but I have a hard time switching from FXAIX or SPY to it because the performance is so similar. Am not implying that it's a closet indexer as I've done ZERO research on the subject on this fund but when I read the story above about closet indexing (something I wasn't familiar with) ... it made me think of my recent post. I'll have to take a closer look at several examples.
    Wonder how many other funds too closely mirror their benchmark index?
    Corrected… American Century… not American.
  • World Stock Funds-Are they a viable alternative?
    I think there may be some interest in a discussion on World and Foreign Stock funds or International as some were mentioned in @KHaw24 thread on Large Caps and @MikeW and @Observant1 weighed in with some good commentary on LC and Foreign.
    So, I asked about a few above and will repeat below. I'm interested in WCMIX and maybe more now that Observant said its going to soft close on 11/30. Most of mine is in MGGPX and now PRGSX. Are there any other favorite International funds or ETFs?
    After all, it's 20 percent or so of my port. Thanks @BenWP and @rforno for commenting as well.
    Foreign LG:
    PWJZX +22.04
    MFAIX +20.00
    BUFIX +19.94
    WCMIX +19.11
    World LG
    PRGSX +16.70
    BGAIX +15.73
    MGGPX +8.85 <-- Not great.
  • Large Cap Ideas
    Here ya go...added comments
    WCMIX (Int'l Gowth) - Great performance, Concentrated
    CIVVX (Int'l Value) - True to their Style
    PRIDX (Int'l Small/Mid) - One of my favorite funds and categories
    GQGPX (EM) - Replaced Harding Loevner 2 years ago
    In my other accounts ...I have a Roth IRA with Vanguard and own VWIGX, My 401k has DODFX, BUFIX, ARTJX and ARTYX
    Nice fund selection!
    Personally, I'm not fond of Causeway Intl Value and am unfamiliar with Buffalo Intl.
    I would have purchased PRIDX if it wasn't closed to new investors.
    For those interested in WCMIX, the fund will soft-close after 11/30/2021.
  • Preparing For The Grizzly Bear
    The article is stupid because of what it says:
    Try to imagine what would happen if stocks lost 70% and stayed down for years.
    What useful or actionable comes from such imagining? To anyone?
    And what would have been the conditions for such? Asteroid? Worse plague?
    The Nasdaq peaked at 5,048.62 on March 10, 2000.
    From that point it generated a maximum cumulative loss of ~80% until October 2002.
    I'm not aware of any major plagues or asteroid crashes during this period.
    All that was needed for this to occur was a bit of irrational exuberance!
    The Nasdaq did not climb back above 5,000 until March 2015.
  • Preparing For The Grizzly Bear
    There is a lot of fear mongering about the economy and inflation for obvious reasons, but I don't see a lot about the stock market. I think Roth is right to get people to try to conceptualize the risks even if a little ham-handed. Here's Zweig on the subject of optimism:
    In February 2020, before the pandemic had fully hit home, these [surveyed Vanguard] investors estimated the odds of such a bear market at an average of only 4%. By April, just after the S&P 500 had fallen by one third, their expectations that the market would plunge again in the coming year nearly doubled to 8%.
    Those fears swiftly faded. By last December, investors in the Vanguard survey estimated the probability of another crash in the ensuing 12 months at only 5%. That was slightly lower than their average estimate during the three years before the pandemic.
    It’s as if the speed of the recovery had erased the pain of the decline, or made a recurrence seem even more improbable. Just like that, a grizzly bear turned into what feels more like a teddy bear.
    That complacency takes a toll—even among Vanguard investors, who tend to be cautious. These people often follow the philosophy of the firm’s late founder, Jack Bogle, who preached patience and repeatedly warned that stocks are risky. If anyone should come through the sharpest market decline in decades unperturbed, it’s the people in this survey—typically about 60 years old, with about $225,000 in Vanguard investments, roughly 70% in stocks.
    Yet they didn’t all sit tight. One group in the survey stood out: those who went into early 2020 with the highest expectations for stock returns in the upcoming year. They ended up reducing their exposure to stocks much more sharply during the crash of February and March 2020 than those who had been expecting lower returns.
    They also tended to turn around and buy back much of the stock they had just sold—but not until prices had already shot above the March lows.
    Investors elsewhere seem to have concluded from the swiftness of the recovery that stocks aren’t risky at all. After last spring’s rebound, Dave Portnoy, a social-media celebrity, declared “Stocks only go up” so often that it began to seem like a magic incantation.
    And, for the past year, just about every stock has gone up.
    That’s largely because the Federal Reserve has backstopped markets by squashing interest rates toward zero and by buying more than $2.5 trillion in Treasury securities since February 2020, along with other massive interventions. Meanwhile, emergency government programs pumped trillions of dollars of stimulus into the economy.
    As for useful actions, I can think of quite a few--save more, spend less being an obvious one. But there are others. Roth's story has a table I can't reproduce here for some reason of which asset classes did well in previous bear markets. It's worth thinking about which might do well in the next one. The I-bond thread already points to an interesting avenue for saving. Options funds if you can find the right one are interesting. Are Treasuries worth it, REITs, high quality value stocks with strong balance sheets? Gold bullion? Cash? Paying down your mortgage or refinancing it? Those are worthwhile discussions to have.
  • Large Cap Ideas
    Jon raises some great points about large cap blend. If you already hold SPY then you probably have this area covered well. But it is a wonderful fund. We all have our different favorites. I'm curious what funds you have as your international holdings. International has underperformed for so long now that I find that to be much more difficult in terms of fund selection. My main fund here is MIOPX which has great performance over the long term but has lagged some this year because of China. One fund that I'm currently evaluating is WCM focused International Growth. However, I would love to find a strong international blend fund. The performance just hasn't been there though for that asset class over the past 10 years. Would be interested if anyone has found a good one.
    Here ya go...added comments
    WCMIX (Int'l Gowth) - Great performance, Concentrated
    CIVVX (Int'l Value) - True to their Style
    PRIDX (Int'l Small/Mid) - One of my favorite funds and categories
    GQGPX (EM) - Replaced Harding Loevner 2 years ago
    In my other accounts ...I have a Roth IRA with Vanguard and own VWIGX, My 401k has DODFX, BUFIX, ARTJX and ARTYX
  • Large Cap Ideas
    JonG
    Good post @KHaw24 . The OP mentioned growth, blend and value. But just focusing on Blend for the moment - I agree with @MikeW on PRBLX over PRDGX for the reasons he mentioned. I don't own the fund because every time I look closer at it - I compare it to the plain old S&P 500 or FXAIX and have a hard time justifying peeling some from FXAIX with a .015 ER vs PRBLX with a .84. The disparity in max DD, Ulcer and StdDev is not that much to me.
    There could be an entire thread about LC Growth funds (so many).
    For Value, I really like PARWX and am invested there. I think when you compare it to HCMAX, you'll find it outperforms in almost every category/time period. Worth looking at.
    PRWCX is just a great fund. Wished I owned it and might if it opens up. Until then, happy to stay with FBALX and FMSDX for now. Best to you.
    Thanks...I owned PARWX for a while in my 401k but started transitioning to cost effective OEF's and ETF's like the Fido Funds you mentioned. ISn't there a looming retirement on Endeavor's PM team? Not certain if I am correct on that...
  • Large Cap Ideas
    Jon raises some great points about large cap blend. If you already hold SPY then you probably have this area covered well. But it is a wonderful fund. We all have our different favorites. I'm curious what funds you have as your international holdings. International has underperformed for so long now that I find that to be much more difficult in terms of fund selection. My main fund here is MIOPX which has great performance over the long term but has lagged some this year because of China. One fund that I'm currently evaluating is WCM focused International Growth. However, I would love to find a strong international blend fund. The performance just hasn't been there though for that asset class over the past 10 years. Would be interested if anyone has found a good one.
  • Large Cap Ideas
    Good post @KHaw24 . The OP mentioned growth, blend and value. But just focusing on Blend for the moment - I agree with @MikeW on PRBLX over PRDGX for the reasons he mentioned. I don't own the fund because every time I look closer at it - I compare it to the plain old S&P 500 or FXAIX and have a hard time justifying peeling some from FXAIX with a .015 ER vs PRBLX with a .84. The disparity in max DD, Ulcer and StdDev is not that much to me.
    There could be an entire thread about LC Growth funds (so many).
    For Value, I really like PARWX and am invested there. I think when you compare it to HCMAX, you'll find it outperforms in almost every category/time period. Worth looking at.
    PRWCX is just a great fund. Wished I owned it and might if it opens up. Until then, happy to stay with FBALX and FMSDX for now. Best to you.
  • Preparing For The Grizzly Bear
    Hey when I look at the trailing p-e of QQQ and it’s over 40 and the trailing p-e of IVV and it’s over 33 when the long-term average for stocks is about 15, it seems surreal to me. And this isn’t off trough earnings either. This is after massive amounts of stimulus when the tech sector, the dominant one in both indexes, did quite well. How much ammo does the Fed have left to prop things up if things go wrong? And if you read Zweig’s article—not a dummy by any means—he would argue that even the 08-09 bear was short by historical standards. I think it’s important to put things in perspective and I liked the fact the article showed how different asset classes performed well in different kinds of bears. That’s very important for investors to understand—what might work depending on the kind of bear we will have. Stocks could fall 50% from here and still not be at historical norms. And it’s an important question whether such a decline lasts a few months or several years. So, I’m not sure why the article is stupid.
    From Zweig's piece:
    With the exception of a 100-day rebound after an interim drop in early 2009, [the 2020 recovery is] the fastest-ever recovery to a prior peak. The S&P 500 has fallen at least 20%—the conventional definition of a bear market—26 times in the past nine decades, according to Dow Jones Market Data. Recoveries to previous highs have typically taken almost three years, often much longer.
  • Large Cap Ideas
    My asset allocation for this portfolio - 56% Domestic Equity, 22.5% Int'l/EM, 20% Fixed Inc. I am 13 years from Retirement and all of my equity holdings are a healthy split across Style and Market Cap.
  • Large Cap Ideas
    @KHaw24 It's hard for me to comment on choosing PRWCX over PRDGX not knowing your specific situation in terms of age and how close to retirement you are, how you are currently allocated, and what your other holdings might be. They are both excellent funds. Personally, I have been wanting to add PRWCX for a number of years and plan to buy it if/when it opens up again. For me, however, if I were to select a large cap blend fund, I would probably invest in PRBLX. If you run the screen on MFO Premium you'll find that PRBLX is a Great Owl, has stronger APR over the past 5 and 10 years as well as lifetime of the funds, has less max drawdown, and has performed better in bear markets.
  • Preparing For The Grizzly Bear
    "Good"? A preposterous fright article seems more like it. Zero substance.
    (And ... teddys include 2.5y and 1.5y dips?)
    What would cause a protracted bear market? Fundamentals (overvalued) aside, if the market fell as he scarily suggests is possible but without giving reasons, the buying eventually (pretty soon) would be astonishing in its quickness, as quick as or quicker than the selling.
    Q: Who here would use a financial advisor who told you with a straight face:
    "... just recently, the Japanese stock market recovered from its 1989 high—that’s 30 years! If you think that can’t happen here, I suggest you rethink your position—and I’d do it sooner rather than later"
    "Try to imagine what would happen if stocks lost 70% and stayed down for years. It might mean things like:
    You cannot afford to send your kids and grandkids to college. In fact, you need to take back those college 529 accounts you set up for them.
    You must sell that vacation house even though the market is quite depressed.
    You must either sell your home or take out a reverse mortgage to have cash to live on.
    You must figure out how to cut your monthly expenditures in half even though you say only 20% is discretionary. Maybe one of the kids will let you live with them?
    Embrace the pain you would feel. Even if you didn’t need to cut things out, I’m pretty certain that you’d feel a lot of regret if you were heavily in stocks and lost more than half of your net worth."
    " ... protect your financial independence from a bear market that doesn’t resemble the last three. "
    ... "I’m afraid of grizzly bears—they are fierce!"

    Booga and boo!
    Worthless. Is there a point? A plan? Ah: bond ETFs? Got it. Yeah, that'll work.
    Maybe he just meant to say Don't use levered equity ETFs. That person he met in the lede made him lose his mind. I sure hope he did not get paid any folding money for writing this.