As part of my Large Cap Value portion of my portfolio I have a small position in CAMAX and have noticed the extreme volatility of its NAV compared to other Large Cap Value funds such as FVALX or YACKX. Wondering if anyone employs a strategy where you pair an aggressive fund like (CAMAX) with a less aggressive fund like (FVALX or YACKX). This would not only help keep one "in" the market but, but also allow that part of one's portfolio (Large Cap Value) to be positioned more appropriately to market risks and conditions.
Charting these two funds together over the past year provides what I would call reallocation signals from one fund to the other. Using Yahoo finance's 1 year chart:http://finance.yahoo.com/echarts?s=FVALX+Interactive#chart24:symbol=fvalx;range=1y;compare=camax;indicator=dividend+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
CAMAX's Sept 2010 NAV moved steadily upward while consistently exhibiting a (+/-10%) NAV price volatility. By March 2011 CAMAX was performing 60% better than FVALX. Over that same time frame FVALX price volatility was a mere (+/-2%)...very stable. For three months (Mar-Apr 2011) CAMAX's NAV moved sideways still experiencing the same +/- 10% volatility. Changing the chart to a six month time frame shows this momentum change pretty clearly. This would have been a signal to reallocate some of CAMAX's over performance back into the stable performing LC Value fund like FVALX.
By August CAMAX had lost almost all of its over performance compared to FVALX. From August 1 - August 10th FAVLX's NAV dropped (-5%) compared to CAMAX's (-30%)...one really bad week that owners of CAMAX wished they only owned FVALX but, my point here is that both funds have a purpose in one's portfolio.
By charting these two funds together an investor could have reallocated CAMAX's over performance (gains) back into the more stable FVALX in March, April or May and would now being preparing to reverse this process...moving gains back into CAMAX at a lower NAV. Since CAMAX's August 8th low it has outperformed FVALX by as much as (+20%) and as little as (+5%).
Almost makes me want to trade in and out of these two funds to capture the trading range between the two waiting for the overall market to show a clear direction up or down.
Any comments would be appreciated.