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M*: 5 Great Core Funds For Contrarians

FYI: t’s often tempting for mutual fund investors to buy whatever has been doing well recently and to avoid funds that have lost money or lagged the market. Almost inevitably, funds that go on a hot streak attract lots of new assets, while investors tend to flee from funds going through a slump.
Regards,
Ted
http://www.morningstar.com/articles/867399/5-great-core-funds-for-contrarians.html

Comments

  • Contrarian fund that was not listed and my third largest fund in my portfolio is SMGIX ( retail version LCCAX is available load free and ntf at Fido). This was my substitute to the old UMBIX whose manager retired and the fund family kept bouncing around and landed at Columbia. That fund actually was merged into The contrarian fund.
  • With money market funds are yielding at 1.6%, I use cash instead of most bond funds. Otherwise balanced funds such as PRWCX and VWELX have been doing a decent job.
  • edited May 2018
    Point of Order here ...

    Wouldn’t a contrarian fund be something that hasn’t done well in recent years? I observe one mentioned in the thread as being contrarian that pulled a solid 10% over the past year and also 10% annually over the past decade. I hate to sound contrarian, but that one sounds more like an agreeable fund to me than a contrarian one. Maybe I just don’t understand contrarian.

    Let’s see ... Located a definition in Collins Dictionary ... “A person who typically acts or thinks in a way contrary to popular or accepted opinion; specif., an investor who seeks to make a profit by acting in opposition to majority opinion, prevailing wisdom, etc., as by buying a company's stock when it is out of favor with the majority of investors”. https://www.collinsdictionary.com/us/dictionary/english/contrarian

    My submission as a contrarian fund fund that I own would be OPGSX because it’s off 7.5% YTD and has lost an average of 5.5% over 10 years. Clearly the thing it invests in (gold) has been out of favor with investors over the past decade and continues to be.

    Just saying ...
  • @hank: sounds like you were referencing the Columbia Contrarian fund, and I believe it's contrarian because of how and when they buy the stocks in the portfolio despite the fact that much of their stocks may be considered growth. They tend to buy when a stock is either beaten up or is considered undervalued at the time they buy it. That's what helps it be a contrarian fund. I realize it's not a typical value fund, I do have some of those too, and they behave as more classic value funds. This one is different, thats why i like it and have a fair amount in it. Thanks for commenting..
  • My submission as a contrarian fund fund that I own would be OPGSX because it’s off 7.5% YTD and has lost an average of 5.5% over 10 years. Clearly the thing it invests in (gold) has been out of favor with investors over the past decade and continues to be.
    @Hank, YOU would be contrarian to buy a PM fund, not the fund itself. A contrarian fund I believe means the manger buys out of favor stocks - buy low. Not sure that is much different to a 'deep value' fund/manager. Just terms that identify the managers style I think.
  • edited May 2018
    Bill Miller was contrarian right? "Value Trust". No Value. No Trust. Basically opposite of what you should do.

    If you don't do what you are supposed to do, and lose investors money, you take the walk of shame. If you outperform your category taking risks outside what you are supposed to take, then all is forgiven, and you are now a Contrarian. The key is to not have the word "Contrarian" in the name of the fund. I think Janus also had a "Contrarian" fund, I haven't kept up. How well did that do?

    WTF is Yacktman contrarian? Mairs & Power? Oh...I see...these days common sense is Contrarian. Looks like M* is also paying their writers based on quota system. Absolutely worthless article.

  • Contrarian view: I'm thinking of investing in either FDFAX or going the ETF route with XLP or FSTA. Consumer Staples sector has been having a rough go of late and a number of high quality companies in this space have sold off. I don't know how much more pain is ahead. Dividend stocks seemed to have gotten ahead of themselves during the latest run up.
    I'm invested in two tech funds - FBSOX and PRGTX. I'm planning on moving some of the $$ from these funds to this sector. I think it would also help position my portfolio for the summer months.
  • edited May 2018
    Not to belabor the point, but here’s what Ted quoted in his OP:

    “FYI: t’s often tempting for mutual fund investors to buy whatever has been doing well recently and to avoid funds that have lost money or lagged the market. Almost inevitably, funds that go on a hot streak attract lots of new assets, while investors tend to flee from funds going through a slump.”

    I got the idea from @Ted’s blurb that he sees a contrarian fund as one that has been experiencing a slump - likely a prolonged one. It would seem to strain credulity to think a fund manager could be turning out 10% annual returns over a full decade while most investors were avoiding his fund or avoiding the same investments he holds. Also, why would investors avoid a fund with that fine a record? It’s better than PRWCX generated over the last decade (9.14%) And folks have been clamoring for ways to get into that one - despite Price’s having shut the door to new investors years ago.

    @MikeM, Thanks for the response. The gold fund I cited wasn’t a good example. Best I could offer up. The last real contrarian fund I owned was HSGFX. We both know how that one worked out. Yes - I’m a certified contrarian.:)

    @slick, Thanks for the thoughtful response. Good points - although I think MikeM nailed it pretty well with the term “deep value.” Sounds like a great manager and fund. Hope you continue to prosper from it.
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  • I have always believed that a "core" fund was one upon which you built the rest of your portfolio around. It would be your largest position sometimes along with one or two others of similar size. As slick noted at the beginning of this post UMBIX - Columbia Value & Restructuring was a popular forerunner in this form of contrarian investing i.e. companies that were temporarily unpopular, underperforming or unappreciated due to some internal event/stumble by management. David Williams was the manager when I first invested in UMBIX and darn good at what he did until the style fell out of favor. I would have to say that it was a core holding of mine at the time along with FCNTX - Fidelity Contrafund and PRWCX - T. Rowe Price Capital Appreciation fund.
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