?Replacement for Oakmark

[Zoocat]

I have about 20K in Oakmark ROTH and am really bummed by its performance over the past two years
   Average Annual Total Returns (6/30/06)
10–year 8.00%
5–year 4.29%
1–year 4.16%
and thinking about moving those funds. Here's what the fund manager wrote in June, 06 about some holdings

"Pulte Homes, Home Depot and Fortune Brands were all double-digit losers due to growing fears of a hard landing for the housing market. Sun Microsystems, one of our best performers last quarter, gave back those gains as competitors’ new product introductions began to narrow Sun’s performance advantage. We remain confident in all of these holdings"

I don't know if he has changed his mind at this point, but this "confidence" seems misplaced to me. Anyone have an opinion about this? And also about a good replacement, keeping in mind that this is a ROTH IRA fund.  It constitutes about 10% of my investments and 80% of those are in mutual funds, no bonds, twenty percent cash at this point. I'm wondering too if I should have some bond exposure. These investments have a very long horizon (about 20 years.)

 

[brewer12345]

You have an overall asset allocation in mind?

 

[Zoocat]

My current allocation
73% us stocks ( 5%midcap, 4% smallcap, 64% large cap)
9% international
18% cash

Oakmark is my only value fund.

My goal allocation

55% large cap
15% small & midcap
10% international
20% fixed income & cash

 

[brewer12345]

No interest in commodities, real estate/REITs or non-USD bonds?

 

[Zoocat]

Commodities, yes! This has been a good exercise for me, as I can now see where I am overweighted and need to rebalance. Still a newbie at this 

 

[magellan_nh]

Oldbabe,

I feel your pain w.r.t. Oakmark. It's one of my last actively managed funds and if it weren't for the 100%+ gain (from 10+ years), I'd have dumped it a while ago. It used to be a stellar performing fund, and in the first few years of owning it I couldn't believe my genius for having found it. Alas, like most actively managed funds, it has since lost its luster with several years of underperformance.

For a similar fund asset class wise, Vanguard Value Index fund (VIVAX) comes close. VIVAX is a passively managed index fund. Another potential substitute that could be used along with VIVAX, to get the right average mkt cap, is the Vanguard small cap value index fund. By average market cap, I mean the average size of the companies owned by the fund.

OAKMX has an avg mkt cap of around 45 Billion (very large companies), so the VIVAX might be a pretty close replacement all by itself based on asset class.

As the other posters suggested, it ultimately comes down to what you're trying to accomplish asset allocation wise.

Jim

 

[Zoocat]

Thanks Jim, I like Vanguard and I think that's what I'll do.