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.
Support MFO
Donate through PayPal
John Waggoner: Mutual Fund Born During Great Depression Proves The Value Of Buy-And-Hold
FYI: If you want to convince your clients that doing nothing is sometimes the best thing to do, point them to Voya Corporate Leaders Trust (LEXCX).
Now in its 81st year, the fund has beaten the Standard and Poor's 500 stock index the past 15 years, according to Morningstar, the Chicago investment analyst. Voya Corporate Leaders is up an average 7.75% a year, vs. 5.58% for the S&P 500 index. Voya proudly proclaims on its website that the fund has beaten the S&P 500 and the Dow Jones Industrial Average "for over 40 years." Regards, Ted http://www.investmentnews.com/article/20160610/FREE/160619995?template=printart
While LEXCX is a very good fund, and it shows that excellent investing can be done with low expenses and very low turnover with plenty of patience, I think the picture is not quite as rosy as the blurb above hints at. While it has beaten its benchmark (which is more than most active fund managers can say) over the last 15 years, it has not done it every year. It slightly underperformed in 2012, 2013, 2014, and significantly underperformed in 2009 and 2015. The period can be summarized as "mostly outperform". But the 12 years prior (as far back as my data goes) is a "mostly underperform" period. LEXCX is better than most funds I track.
I'm likely the only one who cares about this, but LEXCX is not a mutual fund. It is a unit investment trust (albeit organized under the 1940 Investment Company Act, like mutual funds). IMHO it is much closer to a HOLDR than to a mutual fund (in the sense of portfolio construction, not legal structure).
LEXCX is unmanaged. That is an attribute of a UIT, in contrast to a mutual fund (even an index fund). The Sponsor (currently Voya Investments) has the responsibility of complying with the rules of the trust (e.g. dealing with mergers and spinoffs). The Trust is set to terminate on Nov. 30, 2100, or when its last portfolio security goes poof!
There is no table of expenses, no SAI. (The trust agreement provides that the sponsor be paid 0.40% of AUM for doing no management, just caretaking. Not even holding the securities - a separate Trustee gets a separate fee for that.)
I'm not saying this vehicle hasn't done well. Just that it isn't a mutual fund, and like HOLDRs will gradually become more and more concentrated. (It started with 30 companies, and is down to 22).
Comments
Here's a column discussing the different structures of investments (in the context of ETFs):
https://www.merrilledge.com/article/is-etf-really-a-fund-maybe-not
LEXCX is unmanaged. That is an attribute of a UIT, in contrast to a mutual fund (even an index fund). The Sponsor (currently Voya Investments) has the responsibility of complying with the rules of the trust (e.g. dealing with mergers and spinoffs). The Trust is set to terminate on Nov. 30, 2100, or when its last portfolio security goes poof!
There is no table of expenses, no SAI. (The trust agreement provides that the sponsor be paid 0.40% of AUM for doing no management, just caretaking. Not even holding the securities - a separate Trustee gets a separate fee for that.)
I'm not saying this vehicle hasn't done well. Just that it isn't a mutual fund, and like HOLDRs will gradually become more and more concentrated. (It started with 30 companies, and is down to 22).