Managed Fund Risks

[azanon]

For the socially challenged, he : pays $2,000 more each year on each million in his portfolio than someone paying 0.2. He probably doesn't buy those expensive watches and other 'man jewelry', so he can probably afford it, Az...

haha. Well, that man jewelry pays its own special dividends; .... trust me on this.

To some extent, I agree with the statement, "If one can't see it, you don't have it".

I have more admiration for someone like, say, Cut-throat who has a nice car and goes on vacations, than i do someone who does and has much of nothing, but clicked "3 million" on the net worth poll.

 

[REWahoo]

I have more admiration for someone like, say, Cut-throat who has a nice car and goes on vacations, than i do someone who does and has much of nothing, but clicked "3 million" on the net worth poll.

I'm sure Cut-Throat holds your admiration in the highest regard.

 

[Corporateburnout]

Ok let's compare the S&P500 index fund with Wellington.
Beta for Wellington is .98; for the S&P500 it's 1.0
10 year returns: Wellington 9.81%; S&P500 is 8.56%
YTD returns: Wellington 13.3%; S&P500 14.0%
fees: S&P500 1.8%, Wellington 2.9%,,,,,,,
very even stats, so far.
But here's the big difference:
Since 1999, the S&P500 fund had 3 losing years: 2000 -9.1%,
2001 -12.0%, and 2002 -22.2%, ouch!
Since 1999, Wellington had only 1 losing year: 2002 -6.9%.

I'll take the managed Wellington fund over the S&P500 fund any day.
I don't like losing years, especially 3 in a row (2000 to 2002).

same analysis could be done for the Dodge&Cox Balanced and Dodge&Cox Stock funds. If you're in them that's great, if not, too bad, as they are closed to new investors.
.

Fidelity balanced fund has some good numbers

YTD return 11.03%
10 Yr return 11%
Expense .6%
Only one losing year since 1999: 2002 -8.49%

BTW is Wellington open for new investors?

 

[azanon]

I'm sure Cut-Throat holds your admiration in the highest regard.

Oh I doubt that actually. Most people dont handle criticism well, and he was on the receiving end of it from me not long ago. Take your sarcasm for instance. *This to say nothing of old guys generally thinking they have nothing to learn from someone as young as me.

* This is me venting a little bit. Did the thanksgiving family thing, and i just get frustrated at not being able to teach my dad anything. Granted, he's my dad, but I do experience age discrimination frequently even in the workplace.

 

[FinanceDude]

* This is me venting a little bit. Did the thanksgiving family thing, and i just get frustrated at not being able to teach my dad anything. Granted, he's my dad, but I do experience age discrimination frequently even in the workplace.

I have NO IDEA what you are talking about in this part of your post.......

 

[azanon]

I have NO IDEA what you are talking about in this part of your post.......

Its an addendum, so don't sweat it. My primary thought is located above that.

 

[jazz4cash]

yes i do use eric kobren, been almost 20 years now. its not as much beating the markets every year as alot of the success has been being conservative at just the right times positioning us forthe drops. 20 years of success has taught me what you dont loose is just as important as what you gain and expense ratio's.

Ahh...isn't that what's referred to around here as MARKET TIMING?? That makes you a DMT, right?.........me too! ........It sounds alot like what Bob Brinker advocates in his Marketimer newsletter........avoid the dips.

 

[Alex]

I own some actively managed funds, mainly in my 401k where I keep my most tax inneficient holdings. In my taxable account, I tend to prefer index funds. But I can't complain about my stellar returns from the 'managed' Vanguard Healthcare fund. BTW, it has an expense ration of 0.25 - lower than most (non vanguard) index funds!

 

[mathjak107]

Ahh...isn't that what's referred to around here as MARKET TIMING?? That makes you a DMT, right?.........me too! ........It sounds alot like what Bob Brinker advocates in his Marketimer newsletter........avoid the dips.

fine tuning a portfolio isnt market timing anymore than fund managers weighting a portfolio one way or another slightly key word slightly. . like steering a big ship you nudge it back in line every so ofton. rising interest rates go light on long term bonds but dont avoid bonds. thats more how eric adjusts.

trying to catch the markets near their peaks and sell out to cash hoping to get back in at the bottom, thats a dirty little market timer.

merely adjusting for the big picture or because of managment changes or fund holdings i would consider more dynamic mgmt than timing

 

[donheff]

Fidelity balanced fund has some good numbers

YTD return 11.03%
10 Yr return 11%
Expense .6%
Only one losing year since 1999: 2002 -8.49%

BTW is Wellington open for new investors?

Just to confirm this another time because the discussion confuses me. If I am looking at Morningstar that top number (11.03%) is total return after expenses, correct? So if a managed fund had the first two numbers exactly the same and the expenses were 1.2% the managed fund would have delivered the same value as the Fidelity fund but spent more to get there, correct?

 

[brewer12345]

I have NO IDEA what you are talking about in this part of your post.......

The "Ding-Dong Daddy" is complaining that his father wouldn't listen to his idle prattle in between admiring his own reflection and begging for money to get some estate planning done.

 

[ats5g]

Just to confirm this another time because the discussion confuses me. If I am looking at Morningstar that top number (11.03%) is total return after expenses, correct? So if a managed fund had the first two numbers exactly the same and the expenses were 1.2% the managed fund would have delivered the same value as the Fidelity fund but spent more to get there, correct?

Yes, usually any return data provided by Morningstar will be after fund expenses.

- Alec

 

[ats5g]

Ok let's compare the S&P500 index fund with Wellington.
Beta for Wellington is .98; for the S&P500 it's 1.0
10 year returns: Wellington 9.81%; S&P500 is 8.56%
YTD returns: Wellington 13.3%; S&P500 14.0%
fees: S&P500 1.8%, Wellington 2.9%,,,,,,,
very even stats, so far.
But here's the big difference:
Since 1999, the S&P500 fund had 3 losing years: 2000 -9.1%,
2001 -12.0%, and 2002 -22.2%, ouch!
Since 1999, Wellington had only 1 losing year: 2002 -6.9%.
.
I'll take the managed Wellington fund over the S&P500 fund any day.
I don't like losing years, especially 3 in a row (2000 to 2002).

same analysis could be done for the Dodge&Cox Balanced and Dodge&Cox Stock funds. If you're in them that's great, if not, too bad, as they are closed to new investors.
.

That was some good data mining. Where did you get your Beta from? It is certainly not 0.98 for Wellington if you're regressing Wellington against the S&P 500 or the TSM. It's more like 0.60. Why are you comparing Wellington to the S&P 500 anyway? They're totally different animals. If you compare Wellington to a better benchmark, 60% LV index and 40% corporate bonds, you'll find that Wellington didn't really produce much alpha.

- Alec

 

[bosco]

I have more admiration for someone like, say, Cut-throat who has a nice car and goes on vacations, than i do someone who does and has much of nothing, but clicked "3 million" on the net worth poll.

what's the point of a nice car if it smells like fish?

 

[FinanceDude]

The "Ding-Dong Daddy" is complaining that his father wouldn't listen to his idle prattle in between admiring his own reflection and begging for money to get some estate planning done.

I need to counsel Az a little bit...........he makes me laugh..........the last time I tried to give my dear old Dad he looked at me over his bi-focals, and said:

"Well, you're a grown man, but you'll still don't know nothin about life"..........

He's always good for a few of those..........

 

[brewer12345]

Yeah, Az needs counseling, all right.

 

[FinanceDude]

Yeah, Az needs counseling, all right.

Nice avatar!!! ROTFLMAO!!! Or is that the universal symbol for anyone using a financial advisor on this forum

 

[REWahoo]

I'm with bennevis in my preference for balanced (managed) funds. I have the bulk of my portfolio in Dodge & Cox Balanced and Wellesley and I consider the exorbitant expense ratio of the funds : well worth it when you look at performance over the past 30 years. (DODBX is currently running .53 and Wellesley Admiral is at .14 )

This is sleep well at night performance...

DODBX VWINX
2006 10.9 9.2 (YTD)
2005 6.6 5.0
2004 13.3 7.6
2003 24.4 9.7
2002 -2.9 4.6
2001 10.1 7.4
2000 15.1 16.2
1999 12.1 -4.1
1998 6.7 11.8
1997 21.2 20.2
1996 14.8 9.4
1995 28.0 28.9
1994 2.0 -4.4
1993 16.0 14.7
1992 10.6 8.7
1991 20.7 21.6
1990 0.9 3.8
1989 23.0 20.9
1988 11.6 13.6
1987 7.2 -1.9
1986 18.8 18.3
1985 32.5 27.4
1984 4.7 16.6
1983 16.9 18.6
1982 26.1 23.3
1981 -2.5 8.7
1980 21.7 11.9
1979 13.5 6.2
1978 6.0 3.6
1977 -3.3 4.3
1976 25.3 23.3
1975 29.5 17.5

 

[mathjak107]

forget that fact you made more money in a managed fund , you paid to high of an er. ha ha ha ha

 

[FinanceDude]

forget that fact you made more money in a managed fund , you paid to high of an er. ha ha ha ha

mathjak, you kill me...............

Oh no, my ING Russia Fund has an ER of 2.13% a year!!

But, I'm averaging 45% a year in it, so I guess I'll keep it a little longer......

 

[mathjak107]

thats what kills me about die hard indexers. they talk about the low er's but forget that paying for active mgmt and getting something extra in return is worth it. yes its hard to keep beating the indexes year after year for most money managers but long term the better managers and funds still out perform. the trick is finding them or a source that can help you identify who they are or will be .

are the sources right year after year?, nope but they dont need to be. remember the drops are just as important as the gains.

 

[F M All]

thats what kills me about die hard indexers. they talk about the low er's but forget that paying for active mgmt and getting something extra in return is worth it. yes its hard to keep beating the indexes year after year for most money managers but long term the better managers and funds still out perform. the trick is finding them or a source that can help you identify who they are or will be .

are the sources right year after year?, nope but they dont need to be. remember the drops are just as important as the gains.

your opinion is not supported by the facts - indexes do better over the long term against similarly held actively managed funds. If you keep switching the active fund to pick the next winner and get it right every time you can beat the index. If you can prove success at doing that please post your future picks here so that we can all benefit.

 

[bosco]

your opinion is not supported by the facts - indexes do better over the long term against similarly held actively managed funds. If you keep switching the active fund to pick the next winner and get it right every time you can beat the index. If you can prove success at doing that please post your future picks here so that we can all benefit.

as a matter of fact, he has done that. He posted the name of the newsletter he receives which selects actively managed funds and which has done very well over the years. I don't know if it has beat the S&P500 since 1987, but I'm quite sure it has beat it soundly on a risk-adjusted basis.

In reality, he's attacking a sacred cow. As a result, he can talk (or type) until he's blue in the face (or fingers), he will not be taken seriously by many on this board. It's just the nature of the beast.

Personally, I use a mixture of index and actively managed funds. I consider it part of diversification.

 

[FinanceDude]

your opinion is not supported by the facts - indexes do better over the long term against similarly held actively managed funds. If you keep switching the active fund to pick the next winner and get it right every time you can beat the index. If you can prove success at doing that please post your future picks here so that we can all benefit.

Why should he do that? It's not like you are going to buy them anyway..............

 

[Alex]

as a matter of fact, he has done that. He posted the name of the newsletter he receives which selects actively managed funds and which has done very well over the years. I don't know if it has beat the S&P500 since 1987, but I'm quite sure it has beat it soundly on a risk-adjusted basis.

In reality, he's attacking a sacred cow. As a result, he can talk (or type) until he's blue in the face (or fingers), he will not be taken seriously by many on this board. It's just the nature of the beast.

Personally, I use a mixture of index and actively managed funds. I consider it part of diversification.

I use both too. I mainly use index funds in my taxable accounts because they are so darn tax efficient with low turnover etc.. But I have some managed accounts in my tax advantaged accounts where trading in and out of the various funds has no tax consequences. I am in the 35% federal tax bracket, and 9.3% state bracket - so for me taxes are a MAJOR consideration.