Poll:How much of an indexer are you?

[NW-Bound]

Looking at various indices and comparing them, I see that if I could trade between them at the right time, I would be so rich.

[Cheesehead]

I personally am only in index funds but lately had an interesting eye opener. I happened to have done assignments for two different mutual fund families, specifically working with their stock picking departments (dual PMs). What I learned is that they do better "during volatility", meaning they position themselves "for the downside", they use the word "defensive" a lot. In fact, they were hoping Greece would go down the toilet and start a "contagion", perhaps Spain and Italy would domino, so they could buy at the low. Both have large positions in cash hoping for a big correction they think will come soon.

So I came home and told the wife we were going to move our AA which is 50% equities (58 & 62 yo) into CDs, but really I'm too lazy, however, they scared me.

I have about 10% of my stock AA in Fidelity Small Cap Index and was NOT happy about its performance in 2014. One of the portfolio managers told me there were "4 corrections" in 2014 which is why my SC index did poorly and his was great, because they could "manage" during short crisis periods. They monitored and moved, or I guess you'd say "managed".

Oh well, I'm too cheap to pay the management fee!

[Major Tom]

I have 95% in index funds. The rest is in cash, and a small amount in individual stocks.

[dtbach]

Majority of my money is in Wellesely and Wellington. I like the idea of just a bit of guidance vs index.

[nash031]

Index funds and active funds have several things in common, the most important of which is the fact that I can't control the returns of either of them. Therefore, I elect to have the vast majority of my investments in the funds that cost me less to own.

[utrecht]

There are some really good, low cost, actively managed funds like Fidelity ContraFund.
It has a 10 yr return of 9.6% and an expense ratio of 0.64%.

Compare that to VFINX at a 10 yr return of 7.5% and an expense ratio of 0.17%.

ContraFund after expenses..9% over 10 yrs
Vanguard SP500 after exp...7.3% over 10 yrs.

That's a big difference over a long enough time period to be significant.

If you want to go back further, how about 20 yrs?

FCNTX after exp...9.85%
VFINX after exp...8.42%

[RunningBum]

Quote:

Originally Posted by utrecht There are some really good, low cost, actively managed funds like Fidelity ContraFund. It has a 10 yr return of 9.6% and an expense ratio of 0.64%. Compare that to VFINX at a 10 yr return of 7.5% and an expense ratio of 0.17%. ContraFund after expenses..9% over 10 yrs Vanguard SP500 after exp...7.3% over 10 yrs. That's a big difference over a long enough time period to be significant. If you want to go back further, how about 20 yrs? FCNTX after exp...9.85% VFINX after exp...8.42%

For me, that fund is VG PRIMECAP.

1 yr VFINX 7.28 VPMCX 8.80
3 yr VFINX 17.13 VPMCX 21.82
5 yr VFINX 17.17 VPMCX 18.97
10 yr VFINX 7.77 VPMCX 10.50

YTD, however, it's lagging. VFINX 1.17, VPMCX 0.70.

Unfortunately it's a closed fund now, but since I'm already in I can add $25K/yr. 0.44% expense ratio, 0.35% with admiral shares.

Most of what else I have invested is in index funds.

[DEC-1982]

About managed funds, two comments:

At some point their streak may run out. Bill Miller had an S&P 500 beating streak for 15 years (every single year) and then he went down hard. I hear he is doing better recently.

The second problem is how does one know in advance that we have a winner (e.g. a Warren Buffett or a Peter Lynch)? And that really is the crux of the problem. There are several market beating funds over the short run AND over the long run but one has to be lucky to know this in advance. I was lucky NOT to put money into Magellan around the time when Lynch left.

Mind you, I use VG Healthcare fund (my only non-index fund), but I don't have the bulk of my funds there.

[mickeyd]

I've been all in for passive investing for 10+ years.

Simplicity rules my life.

[nash031]

Quote:

Originally Posted by utrecht There are some really good, low cost, actively managed funds like Fidelity ContraFund. It has a 10 yr return of 9.6% and an expense ratio of 0.64%. Compare that to VFINX at a 10 yr return of 7.5% and an expense ratio of 0.17%. ContraFund after expenses..9% over 10 yrs Vanguard SP500 after exp...7.3% over 10 yrs. That's a big difference over a long enough time period to be significant. If you want to go back further, how about 20 yrs? FCNTX after exp...9.85% VFINX after exp...8.42%

Did someone say managed funds never beat indexed funds? I don't recall that. It's just that whenever Contra's fund manager changes over (I think it's had the same dude for 25 years), the fund will probably change. You have the option to move your money then, of course, but as I mentioned before one commonality is that with both types of funds, you don't personally have control over the return. Thus, I try to control that which I can: fees and taxes. I own one fund with an ER of .17 or higher (0.2, in fact) and I only owe that because I see no reason to cause a taxable event to move it right now. My overall portfolio ER is 0.04 thanks to Admiral shares and TSP. Actively managed funds may beat me by .5% (assuming you're in those with a 0.56 ER and not those that charge 1 or 1.5), and I'm fine with that. I know that I won't move my money around and I'll be achieving very good returns. YMMV.

[utrecht]

I understand all of that and I do have about 40% of my money in index funds. My point was that there are some managed funds that are worth looking into. Especially if you are limited to what funds are available to you in a 401k.

[nash031]

No worries! Interestingly, VTSAX (total stock market) takes that 10-yr "indexed" return up to 8.3%, which closes the return gap you noted by 50% and reduces the expenses by 60% compared to VFINX. So, as you know, not all index funds are created equal either. I suspect as I get older and assets continue to accumulate, I'll look at some actively managed funds. Right now, I'm happy plugging along on autopilot!

[RunningBum]

Yes, I'm actually in VTSAX. VPMAX (Primecap admiral) is a holdover from when I had a more scattershot approach with a lot of managed funds. I've closed the rest of those into VTSAX and VTIAX (Total International) but I have a very nice profit on VPMAX so I'm not inclined to sell it off especially while it's doing so well.

[hnzw_rui]

Roth IRA: Vanguard Target Retirement 2040 (VFORX)

Yup, I'm that lazy. Once I have sufficient funds in the Roth for Admiral shares, though, I'll probably switch to VTSAX, VTIAX and VBTLX.

The 457b is mostly Schwab Index ETFs.

[easysurfer]

I selected 85% or higher as not including Wellington for my HSA or Money Market, I'm all in indexes of one class or another.

[HFWR]

Many of these index v. active v. something else arguments seem to miss the point.

With low-cost index funds, and buy/hold/rebalance, you get 1) low fees, 2) broad diversification, and 3) a mechanism that requires minimal upkeep, and removes much of the angst of guessing picking which funds/stocks will "outperform". Nothing magic about it...

[NW-Bound]

On another concurrent thread, Fermion mentioned that someone who shorts the S&P via a leveraged bear ETF can still call himself an indexer. His weight relative to the index is simply -3X instead of 1X.

So, shouldn't the poll allow for a number lower than the 0-to-15% bracket? As low as -300%? What if an audacious guy buys the bearish ETF on margin? Or its option?

Oh là là! We can be talking -1000% indexing here. Conversely, one can go +1000% indexing.

[Rustic23]

I am an indexer, even between four funds one not an index because USAA did not offer one.

S&P 500
Nasdaq
Total Market
World Fund *non index

Not a lot of money involved, so I just keep it simple.

[FUEGO]

90% index funds. The other 10% would be in index funds if there were a significantly cheaper index fund alternative to Vanguard's international value actively managed fund for that slice of my asset allocation (I could save 0.04% by moving to ishares EFV but not worth the trading costs or hassle).

[Readyforachange]

I did not think of myself as an indexer, but I just looked and I have 67% in index funds and another 10% in quasi index funds (not technically index funds, but low cost Vanguard funds that very much behave like index funds - VWITX for example).


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