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utrecht · 06-29-2008, 11:44 AM

"7 years is hardly long-term. It is expected that in the wide array of funds that someone whose fund should not be compared against the s&p500 will beat it. If on the other hand you look at the holdings of these so-called index killers, you'll see they are holding foreign funds, emerging markets, etc. The comparison is false, and the performance is all but guaranteed to not persist.

I know that 7 years isnt that long, that was just an example. Let me rephrase my question. My 457k has 5 funds avail to me in the "large cap" section. Fidelity ContraFund and Fidelity Spartan US Equity Fund (Sp500 index fund) are among them.

For the portion of my 457k account that is allocated to large caps, isnt it time to get away from the SP500 index fund? Contrafund has proven it can beat the index over the short and long term.

Its beaten it in every time period. YTD, 1 yr, 3 yr, 5 yr, 10 yr and since inception (more than 40 years ago). Yes I know that the fund doesnt only hold Sp500 stocks. It is allowed to hold some international stocks and a small percentage of other things like cash, slightly smaller cap stocks or whatever, but the point is that the manager (s) obviously know what they are doing and know when to move small portions of the portfolio at the right times, overweight certain stocks ect, to get better returns than the Sp500 index even though it still covers the large cap portion of your AA.

You could theoretically beat a well-diversified index portfolio (note that I didn't say the s&p500) by constantly switching from one hot fund to another over your 20-year period, but that would require you to be lucky dozens of times. Fat chance."

I know that. Im not talking about switching back and forth to chase the hot fund. As I said, I only have 5 large cap funds avail to me within my 457k and I wouldnt touch the other 3 not mentioned here. I have only 3 "mid cap" funds avail and dont even have a mid cap index fund avail so FLPSX is the obv choice there.

I do have about 15% of my total portfolio in VFINX and another 18% in SPY in a taxable account and Im thinking of selling it to diversify to other asset classes. In the past if I was going to diversify further, I wouldve sold something else. Thats all Im saying.

06-29-2008, 11:44 AM	#16
utrecht Recycles dryer sheets Join Date: Nov 2006 Posts: 353	"7 years is hardly long-term. It is expected that in the wide array of funds that someone whose fund should not be compared against the s&p500 will beat it. If on the other hand you look at the holdings of these so-called index killers, you'll see they are holding foreign funds, emerging markets, etc. The comparison is false, and the performance is all but guaranteed to not persist. I know that 7 years isnt that long, that was just an example. Let me rephrase my question. My 457k has 5 funds avail to me in the "large cap" section. Fidelity ContraFund and Fidelity Spartan US Equity Fund (Sp500 index fund) are among them. For the portion of my 457k account that is allocated to large caps, isnt it time to get away from the SP500 index fund? Contrafund has proven it can beat the index over the short and long term. Its beaten it in every time period. YTD, 1 yr, 3 yr, 5 yr, 10 yr and since inception (more than 40 years ago). Yes I know that the fund doesnt only hold Sp500 stocks. It is allowed to hold some international stocks and a small percentage of other things like cash, slightly smaller cap stocks or whatever, but the point is that the manager (s) obviously know what they are doing and know when to move small portions of the portfolio at the right times, overweight certain stocks ect, to get better returns than the Sp500 index even though it still covers the large cap portion of your AA. You could theoretically beat a well-diversified index portfolio (note that I didn't say the s&p500) by constantly switching from one hot fund to another over your 20-year period, but that would require you to be lucky dozens of times. Fat chance." I know that. Im not talking about switching back and forth to chase the hot fund. As I said, I only have 5 large cap funds avail to me within my 457k and I wouldnt touch the other 3 not mentioned here. I have only 3 "mid cap" funds avail and dont even have a mid cap index fund avail so FLPSX is the obv choice there. I do have about 15% of my total portfolio in VFINX and another 18% in SPY in a taxable account and Im thinking of selling it to diversify to other asset classes. In the past if I was going to diversify further, I wouldve sold something else. Thats all Im saying.