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.

Reply to @Ted:
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.

Hi Bee. Here is a statistical way to look at probable return range for each of the holdings you gave. Basically, the data is calculated by using 90% probability, or 1.5 x the 3 year standard deviation, then subtracting it from the the 3 year avg return to get the low and adding it to the 3 year avg return to get the high. There is nothing magic about 3 year data. It's just an easy extract to get from M*. If you used 5 year or even 10 year if available, the probability range would likely be more accurate.
One comment though, and this is just something I took from the last big market drop, having this many funds was (in my opinion) a mistake. They were hard to deal with. But to each her own. What I ended up with was a portfolio of 10 funds I feel good about that make up 80% of my 401k portfolio. PRPFX and FPACX are my biggest holdings. I hold this fairly conservative (50% equity) core through thick and thin. What I learned from 2008-2009 was I don't know when to get out or get back in... period. I'll leave it up to good managers that have a flexible mandate. The other 20% I use as what skeeter likes to call, ballast, which would basically be my plays, things like USAGX for pm's, PRNEX for nr/energy or MAPIX for asia, ect... or that 20% can be in cash, a GIC making 4% in my case. It's just more comfortable for me having my "core" separate from a few funds I play. But... we are all different.
Anyway, below is the probable return based on 3 years returns and standard deviations using 90% probability. I hope the copy/paste comes out okay. I'm not very good at the formatting stuff.
Ticker 90% probable return range
CAMAX -40, 61
CSRSX -54, 59
FAIRX -44, 36
GASFX -21, 31
HRVIX -34, 34
MAPIX -18, 43
MATFX -37, 46
MFCFX -22, 44
MSMLX
OAKBX -18, 20
PONDX 4, 23
PRHSX -29, 36
PRMSX -53, 53
PRMTX -31, 49
PRPFX -8, 31
PRWCX -25, 28
PTTDX 3, 16
TGBAX 0, 26
TGMNX 5, 17
USAGX -43, 95
USAIX 0, 17
VDE -41, 35
VGHCX -23, 29
VHCOX -40, 35
VWO -45, 51
WAEMX -34, 67

I have tried mapping out a "risk shift" strategy rather than a "sell" strategy with respect to the holdings in my portfolio. Would welcome comments.
This "de-risking" has required me to first assign a risk tolerance (that I am comfortable with) to all of my holdings. The categories of risk tolerance are as follows:
cash/cash equivalent...0% -3% downside risk due to currency devaluation and inflation (we'll ignore institutional financial strength...staying solvent)...I am presently using PONDX as my cash position and try to maintain 10-20% allocation with respect to my overall portfolio. This is where I look for cash when I look to buy "things on sale". I also have a small amount (5%) of Gold/Silver using CEF. Just an insurance policy on fat tail risk.
Low...3% - 10% downside risk...I place funds like PRPFX = Permanent Portfolio and TGBAX = Templeton Global Bond Fund as well as a whole host of Total Return / Income Funds like PTTDX, TGMNX, or USAIX. These are the anchors. They are added to when I look at my overall allocation. I try to maintain a 30-50% allocation in these funds
Moderate...10% - 20% downside risk...Many of my balanced/dividend/defensive funds fall into this category...MAPIX = Mathews Income, PRWCX=T Rowe Price Capital Appreciation, and OAKBX = Oakmark Fund. Also, PRHSX, VGHCX, GASFX, and CSRSX are some others I also include in this category. I consider these part of my core holdings that I add to when I have profits. In a downward trending market I try to de-risk my higher risk investments into these moderate risk funds. This keeps me somewhat in the market eliminating some of the market timing issues. I am never very good at spotting the exact bottom or top. So (risk shifting) into these moderate risk investments seems helpful when the market goes against me. This collection of funds could represent 20-40% of my portfolio.
High... 20% - 33% downside risk...These are primarily equity funds that I own to follow a trend, and add some alpha. I have owned CAMAX, HRVIX, MFCFX, USAGX, PRMSX, VWO, VDE, VIT, VHCOX, PRMTX, MATFX, MSMLX, WAEMX, etc. This is the set of investments that I am monitoring and trying to upgrade...improve upon. When they hit the negative 20% level or move upward a positive 10% they become candidates to "de-risk". Some in this category are doing very well such as USAGX and I may consider taking profits some are not and I may reduce my exposure to them temporarily. Cash elsewhere in my portfolio allows me the ability to add to these funds when they are trending upward. When these funds are out of favor they could stay out of favor for sometime. I look to shift some or all of these holdings into a Moderate or low risk investment. I am willing to monitor them from a de-risked position. This category of funds could make up 5-20% of my overall portfolio.
Extreme... 33%- or more downside risk... I have very small speculative position in RIMM (Research in Motion)...I have lost 55% so far this year with RIMM. I own FAIRX and have suffered a 29% loss in value with this fund. I planned on holding both of these 3-5 years but I will continue to monitor them closely and make regular "gut checks". In good times I would like to see 20% plus gains here before I de-risk some profits. These holdings could be represent 0 - 15% of my overall investments. They are small positions that I am willing to be patient with. I also find them to be my biggest learning experiences.
As I said earlier, I am not very good at timing the market at the tops or bottoms so periodic de-risking an investment that is trending above or below your tolerance threshold might be worth considering.
Comments welcome...
bee