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rforno said:As I said on Armchair, I wish more PMs were as self-aware and willing to bluntly own up to positions that didn't go according to plan as Giroux. It was a brutal and honest admission about GE ... and I respect him even more for saying what he did.
As I said on Armchair, I wish more PMs were as self-aware and willing to bluntly own up to positions that didn't go according to plan as Giroux. It was a brutal and honest admission about GE ... and I respect him even more for saying what he did.
yogibearbull said:David Giroux of PRWCX is only 47! He started with the fund when he was just 31 and for years people said that he was young and inexperienced but he showed them all.
David Giroux of PRWCX is only 47! He started with the fund when he was just 31 and for years people said that he was young and inexperienced but he showed them all.
Roy said:I noticed on the TRP website for the portfolio of PRWCX dated 8/31/22 that GE is no longer listed as a top 10 holding. Don't know if this is due to trimming the position a bit or total elimination of it.
I noticed on the TRP website for the portfolio of PRWCX dated 8/31/22 that GE is no longer listed as a top 10 holding. Don't know if this is due to trimming the position a bit or total elimination of it.
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Quote: "...overweight information technology stocks for the first time in many years. We have been able to add to, or initiate, positions in a number of very high-quality, long-term attractive companies—such as Apple, Nvidia, NXP Semiconductors, and Texas Instruments—as a result of short-term concerns around supply chains, recession, and near-term tough comps. I have often said that there is no easier way to make money in the stock market than to buy a high-quality company that is trading at an attractive valuation due solely to short-term concerns."
Still, it is a clear, candid and thorough letter. My hat is off to Giroux.
I have posed this question to myself... could a fund... or funds serve as a funding source for inflation adjusted retirement income?
If a retiree started taking a 4% safe withdrawal rate from a $100,000 investment in PRWCX, how would this fund and the income withdrawn over time fare (3, 5,10, and 15 year) later? Portfolio Visualizer can't predict future returns, but it does allow a user to look back over stressful and successful market conditions.
To stress test this scenario using PV, I add a market hurdle where by the retiree starts withdrawing from retirement savings at the end 2006. They buy $100,000 worth of PRWCX (or a portfolio of these types of funds) and began taking a 4% yearly withdrawal each year, from 2007 going forward ( 15 year time frame). Over the first two years of retirement, the "annuity portfolio" experienced a 41% loss in value as well as absorbed the required 4% income withdrawals (4% annuity payment). That's stressful.
Over those first two years of retirement (2007 - 2009), the $100,000 portfolio (stand alone portfolio of just PRWCX) would have dropped to $63,000. Could a retiree hang in there through these first two years? The retiree's withdrawal rate of 4% may have started at $4,000 (4% of $100K), but as the portfolio dropped in value, their next year's withdrawal dwindle to a little less than $3,000 (4% of $63,00) in 2008. Having a cash/ ST bond component to this portfolio might provide a buffer...especially at the start of retirement.
We have had an investment environment over the last 15 years that has included both monetary stimulus (QE and lowering interest rates) and market shocks (GFC, Covid, Supply disruptions and the rise interest rates). ISTM that a collection of well managed allocation funds could help individual investors balance the risks of the day with the rewards of the day.
PRWCX seems successful at this. VWINX and VWELX are two others that I run retirement withdrawal scenarios with. Do you have a favorite? Maybe a collection of these would be a better approach. It would help reduce manager risk and might diversify manager strategies.
Here's a link to Portfolio Visualizer where you could run some of your own scenarios:
PRWCX as an Annuity
Strategy, Ending balance, Notes
4%, $218.731K, Withdrawal amounts variable; details by @bee
4K level, $251.433K, More like an annuity
4K infl-adj, $231.433K, Infl-adj annuity is rare commercially
MFO doesn't preserve spacing.
anyhow, BRUFX ended up with the rollover money.
Just watching PRWCX almost since inception I would consider it too risky to use as the sole ingredient in a retirement / staged withdrawal plan. But I’ve been taking aim at it for couple decades now and it continues to defy my worst forebodings. Look at virtually any other fund run by T. Rowe and you’ll find periods of overperformance and underperformance. But not this one - yet. Just rambling here. Hats off to Giroux for the job he’s done. One wonders who might replace him some day.
F me to tears.
So, sure he has done well, but that drawdown in 09' of ~37%...I think you'd have to be nuts to hold on with your entire portfolio in that kind of drawdown.
Let's see how this all works when the CBs start pulling back like they are doing now...fasten your seat belts, enjoy the ride...let's see how the maestro's do, when the markets are open for big boys and girls only....
But...I know, I know, unless you have a better idea...and I don't...
Good Luck to All,
- I’m aware of PRWCX’s excellent risk adjusted performance record. I owned the fund from 1995 until July 2022 when I exited as part of a broader consolidation of holdings.
I invested with Michael Price when he was running Mutual Series funds back in the 90’s. These funds have solid return while having lower average risk. Then Price sold the Mutual Series funds to Franklin while still running the funds for several years per contract agreement. Other co-managers took over one by one of the Franklin Mutual Series funds. Some was good and some were so so, but they never reach the same. David Winter was one of the more notable manager, but he left to form Wintergreen fund and that fizzled out several years later. We sold just about all Mutual Series funds soon after the Franklin sale. So beware of a single manager risk.
So, while Giroux has final say on the portfolio, he is receiving a lot of assistance.
As many of you know from previous postings, we have most of our investments in this one fund. First moved most of our retirement funds into this fund late in 2006 when Giroux was still new, just dumb luck as the move was based on prior performance of the fund and the desire to simplify and reduce volatility. Once we retire or decide 60% + in equities is more than we are comfortable with, this could very easily change. I'm very glad Giroux is 12 years younger than I as this means he may be PM another 10-15 years, fingers crossed!
@Sven, PRWCX may fall into “group think”… I owned Pimco Income and then the winds changed… winds change so we adjust your sails.
@hank, thanks for your suggestion and comments… In 2023, with retirement looming, I have structured a portion of my portfolio to provide short term income needs. I am comfortable with a 10% loss over the short term (5 years or less) so positions in cash, ST Bonds and funds such as VWINX will hopefully meet my yearly income needs.
If I am lucky enough to not need all of my portfolio to continually fund my 5 year income needs, I will fund longer term investment in funds like PRWCX. I also feel funds in the healthcare and Tech sector (nod to @Ted) continue to be long term trends that I would also consider.
Dated 30th June, '22, from Giroux:
"So why do we continue to hold GE? First, we have a large catalyst over the next 18 months as GE will be split into three companies. The health care business will be spun off in early 2023 and we believe this security will receive an attractive valuation given its mid-single-digit organic growth rate, margin expansion opportunity, double-digit earnings growth, and strong free cash flow. Second, the power and renewables businesses will be spun off in 2024. The leader who turned around the power business is now leading the renewables business and we have high hopes that it will be a mid-single-digit operating margin business by 2025–2026 under his leadership. Today, the market is effectively capitalizing the losses in renewables forever. The renewables business does not deserve to have an 11-figure negative value just because it is currently losing money. Third, aviation is a great business that should be poised for a decade-plus of excellent growth given how young its fleet of engines is (many have yet to go through their first or second overhaul). The sooner this business is freed from the renewables business, the better. Fourth, and maybe most importantly, even using conservative assumptions we believe the upside in GE is still substantial. When I look back over the last four years of GE, the company has had some incredibly bad luck between COVID, the supply chain, Russia, and a sudden decline in wind turbines due to a lack of renewal of the wind tax credit. But these haven’t been the only problems with our investment in GE; I have also made some process errors along the way. The range of outcomes and degree of predictability of GE has always been larger than many of our other large holdings, and as such it should have been a much smaller holding. While I continued adding to GE during periods of weakness, I was less aggressive reducing the position during periods of strength..."
Date, %, #
12/31/21, 4.41%, 4
1/31/22, 4.59%, 4
2/28/22, 4.67%, 3
3/31/22, 3.79%, 3
4/30/22, 3.22%, 2
5/31/22, 3.38%, 3
6/30/22, 3.05%, 4
7/31/22, 3.01%, 4
8/31/22, Gone from Top 10
12/31/21 25,143,114 shares, 4.41% of holdings
03/31/22 21,712,776 shares, 3.80%
06/30/22 21,005,868 shares, 2.93%
GE stock is nearly unchanged since 07/31 (ignoring the 8¢ dividend on 08/25). It would have to be less than 2.19% of PRWCX assets to fall off the 08/31 top ten list. That's ~27% less than the 3.01% at the end of July, so it looks like a healthy fraction, if not all, was sold during August.
Good to see Giroux not staying stubborn. Also, good to see he is not making all or nothing bets and is only making gradual moves until a clear company ( not stock technical) related signal is seen.