Hi folks....this is somewhat of an adjunct to a thread started by Hiyield007 as he was speaking of the virtues of the healthcare sector.
This has been something which has illustrated some items quite surprising to me...but perhaps you may differ.
A. What are some of your longest held positions, why have those funds maintained their position in your portfolio, and what can you conclude from that experience?
B. Looking ahead 10 years, what in your portfolio may be included in your answer to this same question?
To start....as noted within Hiyield007's thread, VGHCX and VHCOX are my gray-beards, with just over 10 years in the portfolio. The odd thing is, in my memory, I never would have classified them as top performers within the MF world...but they indeed HAVE been some of my top performers over that span. That, to me, speaks of consistency of performance of the managers. They may never be the high fliers, but are relatively consistent in their approach and execution. I'd love to take full credit for my astute selection process, but I do need to balance this out with my clunkers.
What MAY be a long-term holding in my portfolio? That's easy (at the moment). POAGX.
Press.

Best performer life time? VGHCX. Its absolute and risk adjusted returns are extraordinary...since 1984! But again, beware, Ed Owens its skipper since inception retired late last year.

Reply to @AndyJ: Really good point Andy. VHT is an index exchange traded fund. It tracks MSCI U.S. Investable Market Health Care Index. It appears to be rather weak proxy to the actively managed VGHCX, which sports the great record under recently retired Ed Owens.
Here is comparison:

Ditto for VDE and VGENX on the energy side. The former is an index, while the latter is actively managed.
That said, both ETFs provide good sector exposure for low cost and with good liquidity.
I'm getting more interested in ETFs these days. I recently started buying BOND because it is strategic proxy to PTTRX.

I am going to devote a portion of retirement monies to the Market Leadership Strategy that Skeeter has mentioned in the past. Looks like Microcap may be the next category to move to a "buy". Buffalo Microcap(BUFOX) is my choice if I were to buy today. So I will do my research and have a few other funds picked out. Recently as part of this strategy I have added to Aston / Fairpoint Mid Cap(CHTTX) for the mid cap value and I have the small cap value covered with Allianz Small Cap Value(PCVAX).
Now that Fidelity has many LW funds available that has significantly added to my research of funds to add to my watch list of funds to buy. May need to rethink some of my existing funds for replacement.
Added Vanguard Health Care(VGHCX) to the accounts at Vanguard this year.
Anyone have thoughts on IVA Worldwide I(IVWIX)? If I want a new fund in my ROTH this is the one I would sell/reduce.
I have wondered of late what type of funds do people put in ROTH's vs IRA's or is that not a consideration for you? My thought would be to put the riskier/more potential growth, such as Wasatch EM Small Cap(WAEMX), in the ROTH due to the no tax policy on earnings.
Art
http://investwithanedge.com/leadership-strategy

VGHCX has an initial minimum of $3,000 these days. The admiral share class, VGHAX, has a $50k minimum. Neither has a redemption fee.
Bee, M* doesn't show the same result starting with the VGHCX chart: since early 2004, at VHT's inception, the $10k invested-total return chart shows VGHCX at $21,314 and VHT at $18,260. The 1y chart does show the ETF with a little better return.
If you started with the ETF chart, I think that gives you price/NAV, not total return. To get TR with M*, you have to start with the OEF chart and add the ETF to it. Yep, another weird M* thing.

Not sure if you have had the unpleasant experience of early redemption fees but one way to avoid the high minimum of VGHCX as well as the redemption issue is to purchase Vanguard's ETF health care, VHT.
Here are two charted together over the last 8 years:

Two of my longest held positions have positions in this space...VGHCX and VHCOX. I held both for just over 10 years. Plugging a $25k minimum into a fund at the time seemed pretty madcap, but was one of my best moves ever.
Come to think of it, that might be a good topic for a thread....what is your longest held fund, and why has it stayed in your portfolio?

Sweet. I've long admired VGHCX. Probably ranks as one of greatest mutual funds ever...

Why the 2+% drop in Vanguard Health Care (VGHCX) on Tuesday? No E.M. and only 22% foreign. Biggest drop for the day of the funds on my watchlist.
Art

Just in case you folks were wondering, I'm the reason Kris Jenner decided to leave the T Rowe Price Health Sciences fund. Here's how it happened...
Late last year, I was analyzing my position in the Vanguard Healthcare fund (VGHCX) against PRHSX. I decided that while VGHCX was an excellent fund with a great long-term record, PRHSX was noticeably better. And since Ed Owens announced his retirement plans, it was a good time to switch. So I sold VGHCX last September, and started establishing a position in PRHSX in January 2013.
So there you have it! My timing is spot-on once again.

Waiting for a correction to by VGHCX. I think Feb is DOWN !!!

Hi Alex.
Three lower volatility alternatives you might consider:
Vanguard Health Care Inv VGHCX
BlackRock Health Sciences Opps Instl SHSSX
PowerShares Dynamic Pharmaceuticals PJP

Reply to @Mona:
Hi Mona,
Again I hesitate, so I’ll proceed with a bit of circumspection and self-control.
One major factor in my cautious decision process is an anticipated time-consuming controversy that my innocuous, neutral revelations would promote from some MFO members. I say innocuous and neutral since I do not especially recommend my particular selections for anyone else’s portfolio. That’s forever a personal decision.
As evidence of a likely disruptive explosion, just consider the harsh and unnecessary buzz that Skeeter’s portfolio announcement made. It necessitated numerous defensive replies from Skeeter that are wasteful time-draining sinks. I choose not to enter that ruinous minefield.
A few habitual MFO contributors tend to emphasize the negative; they are whiners and nit-pickers. They’d arguably find fault with 1 % of a posting that is designed to be informative and educational. As Julius Caesar wisely remarked “ Don’t be concerned with small matters!”. Some MFO participants seem to be consumed by small matters.
But do not despair, all is not lost.
I’ll partially address your question with my generic plan of how to construct a portfolio that is mostly Index-based, but has a small fraction that is committed to nudge annual returns in the direction of excess rewards.
First, the assumption is that the portfolio is dominated by Index products that could or could not include bond holdings. It does not matter. The mix is basically designed to achieve a specific market return goal. That baseline mix depends on the financial needs and time horizon of the portfolio holder. That baseline portion of the entire portfolio should be well diversified to control volatility risk.
Since the actively managed component is a minor fraction of the portfolio, it must be aggressively constructed to potentially yield a meaningful bump to the nominal returns. Otherwise, why accept the incremental performance uncertainty?
How to assemble such a riskier portfolio sleeve? Hire an active fund manager with a superior long-term performance record over numerous market cycles, with a well funded research staff, with a low cost structure, and with a low turnover history. A fund that holds many positions is probably going to reproduce market rewards. Therefore, a highly concentrated, highly focused fund is needed to improve the odds of extra returns.
That’s a tough set of selection criteria that typically can not be satisfied by a single fund. So hire several funds that each exhibit a few of the target characteristics.
Here are a few candidates that I have used in my earlier portfolio management history. I still own a few of them, but not all. So I launch a few decoys to draw direct fire away and to protect my rules of engagement. In military terms, clutter is sometimes deployed to penetrate a staunch defensive position.
Dodge and Cox equity fund (DODGX) has established an experienced long-term management structure, low costs, and low portfolio turnover record. Academic research concludes that these features offer the prospects of a good excess returns likelihood. Never any guarantees under any circumstances.
Along the star manager and focused fund dimensions I have owned Marsico Growth (MFOCX) fund and several Masters’ Select Funds products (MSEFX, MSILX, MSSFX). These funds had modest portfolio turnover numbers and above average expense ratios, but offered access to star-caliber management and highly concentrated portfolios. The Masters group has the added advantage of constant star manager review and replacement if needed.
I also have used a variety of Fidelity and Vanguard funds for various reasons. The Fidelity research team is top tier. Vanguard preaches and practices cost control to the extreme. Examples include Fidelity Contra (FCNTX), Fidelity Low Price Stock (FLPSX), Vanguard Health Care (VGHCX), and both Vanguard Wellesley (VWINX) and Wellington (VWELX) in the balanced fund category. Each featured seasoned managers, cost containment, and disappearing low to high (bothersome) portfolio trading. In particular, the Vanguard Health Care sector play was purchased because of an aging US population. You can’t always get what you want.
As I mentioned, at one time or another, I held these funds in my portfolio; I still own a few of them. I make no claims that my current mix is anywhere near optimum, whatever that means in terms of the Markowitz Efficient Frontier. Most of my present positions are value-oriented. In this timeframe, I do very little new candidate fund screening. The best research hints that such an effort is close to futile after the very poorest prospects are easily eliminated. Superior and persistent fund performance is illusive; there is the strong pull to regression-to-mean.
I am sure that many members of the MFO community have far more insights than I do in the fund selection field. My work is somewhat dated. I propose that you seek their well informed and well intentioned advice .
As a final caution, keep in mind that every specific fund must fit into the total portfolio framework, and must work within the context of the overall portfolio objectives.
Also, please recognize that this is not the only way to assemble a fundamentally Indexed portfolio with a small supplemental actively managed component; it is merely my simple way.
I hope this helps just a little and that you persevered through the ranting.
Best Wishes.

After last discussion, A Look at Risk Adjusted Returns, I wanted to explore further the issues of under performance and substantial down years for even top ranked risk adjusted funds.
Building on a tip from MikeM:

I used to do my own risk analysis by just calculating the probability of what a fund could make or loose in any given year. Probability is just a calculation using the funds average returns and its standard deviation. Using 1x stdev would give you a probability confidence value of 68%. 2x stdev would be 95%.

Instead of standard deviation STDEV, however, I focused on the down side and draw down deviations that represent the denominators in Sortino and Martin ratios, respectively. The Sortino denominator is the annualized downside deviation DSDEV, which uses only monthly returns falling below TBill average. The Martin denominator is the Ulcer Index (UI), which is the square root of the mean of the squared percentage draw downs in value.
I imposed a threshold on these two measures to protect against substantial down year performance. The threshold assumed a simple, four fund portfolio - one fund in each broad type (equity, asset allocation or "balanced," fixed income, and money market), each holding equal share.
For pain threshold, I used 15% loss for the portfolio in a down year. Nominally, this translates to a maximum tolerable loss of 30% in the equity fund, 20% in asset allocation fund, 10% in the fixed, and zero for money market.
Accounting for a 3x deviation down side occurrence (more conservative than MikeM's example), the attendant thresholds become 10% for equity funds, 7% for asset allocation, and 4% for fixed income, in round numbers.
First off, it is extraordinary just how many equity funds fail to meet this 10% down side threshold on either DSDEV or UI! Here is a summary of funds evaluated, all oldest share class:

Once the funds were screened for down side volatility, I simply sought top returning funds for each type, relative to SP500 for equity and asset allocation, and TBill for fixed income and money market. This step protects against selecting an under performing fund that may have a very high risk-adjusted rate of return.
Below is the result, by fund inception date:











Some observations:
- Worst performing year (highlighted in red) was 2008, of course, with the 15+ age group portfolio down the most at -13.7%, but still within the -15% pain threshold.
- Overall portfolio lifetime returns (green) appear very respectable for all age groups, most even beating SP500 (blue), despite the healthy cash holding.
- Great returns are achievable without high volatility, evidenced by some seriously good funds included on this list, like Sequoia SEQUX, Vanguard Wellesley Inc Investor VWINX, Mutual Quest Z MQIFX, Oakmark Equity & Income I OAKBX, Osterweis Strategic Income OSTIX, and Yacktman Svc YACKX.
- The 25+ age portfolio produced 9.7% APR versus 8.9% for SP500. It includes stand outs Vanguard Health Care Investor VGHCX, T. Rowe Price Cap Appreciation PRWCX, and PIMCO Total Return Institutional PTTRX.
- The 5+ age portfolio produced 7% APR versus 1.7% for the SP500. It includes MainStay Marketfield I MFLDX and PIMCO Income A PONAX.
- In the 40+ age group, only one money market fund existed, so that was included by default, even though it has a negative lifetime Sharpe.
- Of the fifteen fixed income funds in the 50+ age group, none met the less the 4% down side volatility criteria.
I'm pretty impressed with the result actually. The simple approach imposed a 10-7-4 down side volatility screen, then sought top returning APR, un-adjusted. Now, if I could only figure out how to ensure it works going forward...

I think with Fido, Vanguard, TRP, etc. you have to ACCEPT your entire portfolio will be with them. From that perspective they stack up very well. When we do this we are trusting the investment house as a whole and their "way of thinking" translates across a broad spectrum of their funds. Assuming they know what they are doing, the portfolio benefits.
Having one of fund from a fund behemoth in your portfolio is IMHO not a good move. One does not need VGHCX or PRHSX only. Just go healthcare index.

Sven: You hit the nail on the head regarding Kris Jenner on his aggressive approach to investing in mid and small cap biotech companies. Over the last ten years Price's Health Sciences Fund has out performed Vanguard's Health Care Fund by as wide margin.
Regards,
Ted
PRHSX vs. VGHCX : http://www.marketwatch.com/tools/mutual-fund/compare?Tickers=VGHCX+PRHSX&Compare=Returns

No real lessons in the article, but I am certainly glad I bought VGHCX when is was $30, and wish I could have bought more at that price, rather than the ca. $146 it is today. It was one of several reasonable recommendations made by the old Money magazine.

http://www.huffingtonpost.com/huff-wires/20120913/us-mutual-fund-flows/
Dan Winer tackles strategy and fund picks
http://investorplace.com/2012/09/audio-dan-wiener-tackles-strategy-vghcx-and-fund-picks/
new vehicle: Target bond etf
http://www.mfwire.com/article.asp?template=article&storyID=41261&wire=MFWire&wireID=2&bhcp=1
getting fatter yield w/ bank loan funds
http://www.thestreet.com/story/11702076/1/getting-fatter-yields-with-bank-loan-funds.html?cm_ven=GOOGLEN
marc faber commentary about qe3 and gold
http://247wallst.com/2012/09/14/marc-faber-warns-of-bernanke-qe-warns-on-how-to-own-gold-too-gld-sgol/
oil/middle east on fire
http://www.marketwatch.com/story/oil-futures-extend-fed-inspired-gains-2012-09-13?cid=djem_sm_dailyviews_h
investing 101: What is a cef
http://news.morningstar.com/articlenet/article.aspx?id=567775
also 10 questions newbies should ask
http://www.dailyfinance.com/2012/09/14/10-questions-beginning-investors-dont-know-to-ask/

Hi MikeM. Thinking there is an easy answer and tougher answer to your question.
Easy first. You would probably enjoy the article by Steve Goldberg entitled "Goldberg's Picks: 5 Best Low-Risk Stock Funds."
Here is link: http://www.kiplinger.com/columns/value/archive/goldberg-picks-best-low-risk-stock-funds.html
The five are: Sequoia Fund (symbol SEQUX), T. Rowe Price Capital Appreciation (PRWCX), Forester Value (FVALX), FPA Crescent (FPACX), and First Eagle Global (SGENX).
All but FVALX have outperformed SP500 the past decade:

Honestly, Goldberg is not afraid to take a stand and explains why in simple terms. He has some similar articles on bond and allocations funds. I first became impressed with him after reading his article questioning Bruce Berkowitz's heavy move into financials in late 2010.
Here is link to that insightful article:
http://www.kiplinger.com/columns/value/archive/kiplinger-25-fairholme-funds-big-bet-on-financial-stocks.html?si=1
I like Bee's suggestion that you assess any gain/risk fund decision against a standard like PIMCO Income Fund PONDX. (Or, PIMIX, its institutional equivalent.)
I see Oakmark Equity & Income (OAKBX) and FPA Cresent (FPACX) suggested by several on the allocation side. Both have done great this difficult decade, although I believe are closed to new investors. I remember when Dodge & Cox Balanced Fund (DODBX) was in same category, until it got slammed in 2008. It still beats SP500 over the long haul, and I want to believe it learned from its mistake and will be stronger going forward. That said, Vanguard Wellington (VWELX) admirably did not stumble and remains a buy-and-hold choice open to new investors, as pointed out by JohnN.
In fact, all of these allocation funds have also beat SP500 this decade:

An under-the-radar equity fund is Auxier Focus (AUXFX), which I first read about on FundAlarm, has consistently done well and is just now starting to get recognized.
Note that all of Goldberg's picks and the ones I've mentioned above have less volatility than SP500. A couple, like Forester Value and Oakmark Equity, are substantially less volatile. So, it's easy to see why these are comfortable buy-and-hold picks.
OK, now for tougher part.
In 1974, Berkshire Hathaway (BRK.A) lost nearly half its value...in one year! BRK.A has more than twice the volatility of SP500. But who would not have wanted to own this stock for the last 41 years, where it has gained more than 20% annually? (Granted, not a mutual fund proper, but it represents the best in equities...let's call it a surrogate mutual fund.)
Other examples of higher volatility funds that have never lost more value in any three-year period than SP500's worst...but have made substantially more money over the long term: Vanguard Health Care (VGHCX), FMI Focus (FMIOX), Fidelity Select Consumer Staples (FDFAX), Artisan Mid Cap (ARTMX), and Vanguard Energy (VGENX). All represent excellent buy-and-hold picks, but you really gotta be willing to hold after that one really bad year.
One last thing: You list good choices. But for what it is worth, I personally do not like to own more than 4-5 funds at one time. Currently, I own: RNSIX, FAAFX, FAIRX, SFGIX, and DODBX.

Hi Ted,
Wondering what your reasons were for selling PRHSX? I own this fund as well as VGHCX.
Also, do individual bonds play a very large role in you portfolio? I recall over the years that you have been an investor who often holds individual bonds. What role do they play for you verses a bond fund and where would you suggest a small investor go to buy an individual bonds?
Thanks, it's always a privilege reading your threads.