I track a few Mod Allocation funds, though I am mostly in PRWCX. Of these funds, PRWCX has underperformed all of them YTD, which is unusual. According to M* performance page, YTD it is 39 percentile which is the lowest in 10 years. The fund has received the most inflows in the last 12 months than during any other 12 month period in the last 10 years. The PM was out promoting his other new fund launches during this past year, and that may have resulted in PRWCX inflows too.
How has the fund been positioned YTD (causing it to underperform relative to its own history)?
(I ask this to see if I want to adjust my other allocations so I compensate for what PRWCX is doing to my portfolio, provided my conviction is different from the PM's relative to his allocation decreases and increases or if he is overallocated to something. He may decrease allocation to a position if it has grown to be too big but his conviction on that may not changed. So, not all his changes are an indication of his change in conviction.)
Thanks for your thoughts on PRWCX positioning.
Comments
@Roy posted this prospectus/ manager commentary in a post early in the year. Some of the favorites listed have not come through so far, but the year is young.
Personally, I have close to a 18-20% of portfolio stake in PRWCX and I added another 10% to PRCFX, so I'm heavily indebted to David G. To be honest, the slow YTD numbers do not concern me.
https://prospectus-express.broadridge.com/summary.asp?
From Roy's post early in the year.
Giroux discusses AI and utilities.
Sees value in:
1) GARP stocks.
2) Utilities
3) High quality high yield and loans.
4) Software.
5) Healthcare.
6) Energy. (Unusual for the fund)
Does not see value in:
1) Growth & tech that does not benefit from AI.
2) Staples. He REALLY dislikes staples.
...So, just between the Yoots and Financials, yer talking about almost one-fifth of the PRWCX portfolio.
30% in Tech. That's a huge slug. He's betting heavily on AI, I suppose. 20% in healthcare. About 7% higher than the Index. So, now we're up to 77%.
Keep in mind that there was that shallow-ish April swoon. I like to track these others, for comparison:
DODBX has sunk to BRONZE, per M*. YTD it's up by +2.98, landing it just into the bottom one-third of the category.
MAPOX: up +3.41% YTD, 52nd percentile, in-group.
PRWCX = +3.63, in 39th percentile, as you noted. The YIELD is up just a bit from the last time I looked. The fund holds about one-third of AUM in fixed income. Still a long way to go, this year.
If you're going to be active and perhaps second-guess your manager, then the manager choice becomes largely irrelevant. You kind of have to make up your mind as to what your plan is and behave accordingly.
Looks like the fund has some high fliers in its equity portfolio, including Microsoft. So I’d look to the 32% in bonds for clues to any underperformance. Do its peers hold that high a percentage? Would depend on duration. But most bonds have been hammered this year - even at the relatively short end. There was some turn-around late last week, and bonds are looking good in the overnight trading with the 10-year currently near 4.5% after topping out around 4.7% before Powell’s press conference..
Folks know I’m agnostic on Mr. Giroux’s fund. But cannot dispute the performance and well deserved M* gold rating. I hope the fact I don’t own the fund doesn’t exclude my participation. I did own it for over 20 years,
Interesting thread.
Referring to the comments, the underperformance likely is not from the bond sleeve. There are floating rate funds that made 4% YTD. Fund likely outperformed FBALX on the bond sleeve, which means it likely underperformed FBALX on the equity side. XLF and XLU have returned nearly 8% YTD. It is possible the overweight in HC is weighing the fund down. The only dedicated sector funds I own are HC. So, I am overweight HC all around massively. I sold some HC OEFs because PRWCX is overweight but not enough because I am underperforming YTD in the non-trading part of my portfolio. I already did not have high conviction in HC; so, it does not make sense to double up: once thru PRWCX and then on my own. I have limitations on completely exiting HC dedicated funds because they are in taxable accounts.
Knowing the fund has helped me in the past. E.g., When I figured he was reducing GE, I bought GE on my own because my conviction was high but I understood he does not have the luxury to wait out like I could. It is one of my better buys. For the same reason, I never owned APPL, not even when it got down to $125 in 2023, because BRK owns plenty of it and I own BRK. I check BRK’s 13F every quarter.
I guess I will have to wait for a poster who takes an active interest in this fund to reply to the OP. I will go to the fund page and try to learn about it.
@hank, all are welcome to participate as long as it helps in us understanding how the fund is positioned.
Many of you know I don't care about benchmarking or keeping-up-with-the-jones relative performances when it comes to funds. If *I* can SWAN and be comfortable with its absolute performance in my view, that's all I care about. And that's still where I am with PRWCX.
I think any underperformance may come from the bond side, since I think he's pretty well-positioned on the equity side. But is he going to shoot-the-lights-out on the equity side? No -- that's not his mandate.
never fails
Obviously, I’m not concerned about the recent “underperformance.” TCAF is close to matching the returns of S&P index funds YTD, which is an extremely short time period to evaluate a fund.
GRID has being doing pretty well too.
I find it easier for me to already be there when things do rotate.