401k Choice Help Please DODGX, TISCX, RGAFX, TASX, FLPSX

[SVHoper]

Hi,

I plan to change future 401k allocations from 100% VGSIX as I think we have accumulated sufficient REIT for now (currently ~ 6% Net Worth) to an even mix of TISCX (TIAA-CREF Social Choice Equity), RGAFX (American Funds Growth Fund), TASCX (Third Avenue Small Cap Value), FLPSX (Fidelity Low Price Stock) and DODGX (Dodge and Cox Stock).

Performance is my main concern. I don't mind volatility - I didn't sell anything over recent crash and accidentally bought more REIT as that was the unchanged allocation. I have looked at past performance over various time periods... but cannot conclude from this why I should prefer any one of these funds over the others. I noticed that DODGX has not performed as well recently, and I thought that might be a reason for overweight. I understand they have differences e.g. FLPSX more foreign and TISCX zero foreign, but I don't have a desired asset allocation and will likely want to allocate funds before I can describe my asset allocation. I intend to correct any misallocation with new funds.

I was wondering if anyone might be willing to share reasons for underweighting or overweighting any of these funds.


Thanks again.

[aaronc879]

Before the crash, one of the largest holdings for DODGX was Citibank. Citabank has lost over 90% of it's value since then. I know this because DODGX was my largest holding 3 years ago
I expect DODGX to be a solid fund going forward but will take many years to reach it's levels of 3-4 years ago.

[ronocnikral]

i suggest you read boglehead's guide to investing or bogle's book on mutual funds. there is more to consider than just performance and fund type (foreign, blend etc). questions i would have is, what are your allocation targets? what type of account is the money stashed away in (will want to avoid high turnover)? should you pick actively managed fund? or passive? what are the fees?

i'm sure there are more questions, but it is difficult to answer - what should i invest in? as it is very individual.

[braumeister]

I would never want a single investment (stock, MF, or anything else) to be more than 5% of my total net worth.
That's just asking for trouble, IMHO.

[SVHoper]

ronocnikral: Thanks for replying. These choices are for next years 401k contributions and I was generally aiming to stop accumulating REIT and boost the domestic stock portion of the portfolio with perhaps a small value emphasis, which I think is supported by Fama and French.

The domestic index choices available were VIEIX and VINIX and I didn't think they would have small value weighting.

In case your questions weren't rhetorical - here is a rambling attempt to answer. Sorry, I haven't got an asset allocation because I am still confused and can't get to an asset allocation until I read/learn a lot more. I haven't read Bogle's book, but the last book I read was The Investor's Manifesto (because it was recommended on this forum) and I have read a fair bit of efficientfrontier.com and bogleheads.org wiki.

I think I understand what they say and certainly agree (see in my own experience) with the portion that says I cannot predict what will happen and that I shouldn't try.... also most fund managers can't continuously beat an index. I understand the benefits of an asset allocation and rebalancing, but I am still stuck on one some of the most basic premises:

Risk = Std Deviation. The risk I have experienced and am certain I don't want any more of, is buying Tech stocks that go to zero and then I get to list them on my tax return. However, it seems that while I am still in the accumulation phase - if "risk=std deviation" is rewarded then I want it I know I have only been "investing" for 10 years, but seen that the more volatile performers return the highest. I understand that there is a rebalancing premium for stocks and bonds... but in my reading the expected return seems to be lower than all stocks... so can't even wrap my head around why have significant bonds (other than lower volatility).

If most of the fund managers cannot beat the index... and it is a zero sum game... then I thought a strategy of finding the fund who can beat the index w costs included may be worth it... and then use rebalancing to ensure that one buys lower and sells higher... so I looked at the funds available and those funds seem to beat the index for at least chunks of time (as far back as Google Finance graphs).... I understand for this to work I would then need to find something non-correlated for rebalancing to work (poss REIT), at worst I would hope to not do much worse than the index due to the mix of 5 funds with decent historical performance since inception.

[I have real estate bias so I think 50% of networth (inc value of own home) will be in real estate until retirement.]

I didn't expect anyone to be able to unscramble my brain... just wondered if board members had any bias to or from the funds listed... maybe the bias is toward to VIEIX and VINIX and that is my answer

Thanks if you had to patience to get this far :-)

[ziggy29]

Quote:

Originally Posted by braumeister I would never want a single investment (stock, MF, or anything else) to be more than 5% of my total net worth. That's just asking for trouble, IMHO.

Not even an index fund? IMHO, using 20+ mutual funds is probably "diversification overkill," not to mention that not many 401K plans have 20 or more investment options. I'd agree with not much more than 5% in any single company stock, though.