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Replacement for Contra Fund Needed
Old 11-30-2010, 11:45 AM   #1
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Replacement for Contra Fund Needed

I have my US equity allocation in both index funds and Fidelity Contra fund (FCNTX). I am OK with it. I like that I have a seasoned manager there and that he can beat the index consistantly. I would like to sell it primarily to harvest the gain for tax purposes. I understand that there are issues with Contra being too big to be effective.
So, I am open to replacing it with another or just ideas on what to do with the money.

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Old 11-30-2010, 12:38 PM   #2
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Will be interested in the replies. Contra fund is one of my core holdings.
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Old 11-30-2010, 12:39 PM   #3
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I understand that there are issues with Contra being too big to be effective.
Not trying to talk you out of it, and I don't put much of my self-directed investments into managed funds when I have an index option, but I'm looking at M* data and it doesn't appear "too big to be effective" yet:

FCNTX Fidelity Contrafund, mutual funds, quote, price - Morningstar

It has considerably beaten the S&P 500 year to date, for the last year, 3 years, 5 years and 10 years. So while I do get concerned about funds getting too large, with this track record I wouldn't be eager to dump it until and unless it stops outperforming the relevant benchmark (or until the management changes).
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Old 11-30-2010, 12:44 PM   #4
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This is a large-cap growth fund. If you like it, why do you want to replace it?

You may wish to compare recent after-tax performance to something like Vanguard Growth Index (VIGRX). OTOH, you can harvest the gain and immediately buy back shares of Contra without a problem.

Or maybe you no longer want large-cap growth?

(Contra's benchmark is NOT the S&P500 index nor is it US Large-cap growth since Contra contains 20% foreign equities and 6% cash.)
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Old 11-30-2010, 12:45 PM   #5
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OTOH, you can harvest the gain and immediately buy back shares of Contra without a problem.
Good point. Since there's a gain and not a loss, there's no tax reason why you can't immediately repurchase the shares; it's not like harvesting tax losses where the wash sale rules apply.
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Old 11-30-2010, 05:01 PM   #6
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Yea, I guess I would only be out of the market for a few days.

The other day I was transferring DWs IRA into Vanguard. I wanted to hang on to a certain fund that is having a very good 10 year run. The Vanguard rep asked if I would like a Vanguard replacement for this. I almost said that there is no way you have a replacement but luckily, I didn't. I learned that they have an excellent fund that is equivalent in the categories that I value. Now I have a back up fund.

You and your fund screener (like the Fido rep suggested) can miss things. It pays to ask the question and see what others have to say.

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Old 11-30-2010, 09:52 PM   #7
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Contra is good, and selling and rebuying sounds like your best move. I also have AMAGX, which is a little quirky but has a nice track record that's comparable to Contra. No financials helped it in 2008-2009, but that might not work as well next time. There's a couple of nice Vanguard funds, but they look closed to new investors.
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