Managed Fund Risks

[brewer12345]

Yeah, Az needs counseling, all right.

[FinanceDude]

Quote:

Originally Posted by brewer12345 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]

Quote:

Originally Posted by mathjak107 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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by F M All 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]

Quote:

Originally Posted by F M All 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]

Quote:

Originally Posted by bosco 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.

[renferme]

Quote:

Originally Posted by ats5g 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

My info. came from Morningstar and Vanguard. I compare both funds because one is managed and one is an index fund - that was the topic of this thread.

[mickeyd]

Quote:

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.

You may be correct. Now name me 10 managers of active funds that beat the S&P 500 over the last 15 years?

Here, I'll start you out with the first one:

1. Bill Miller

2.

[unclemick]

Miller's a short term rookie:

Davis New York Venture
Fidelity Contrafund
Franklin Mutual Shares

35 yrs 1970 - 2005 per Bogle - 3 out of 335 at the 1970 start.

For those with strong hormonal urges, and do ya feel lucky Clint Eastwood types a read of Bogle's entire keynote speech at the May 15 Las Vegas Money Show might enable one to practice safe sex er managed fund picking going forward.

He starts with a plug for the Vanguard Diehards book - the managed fund stuff is toward the end.

heh heh heh heh - if one can forgo pure hot rod performance - a managed fund selected for Norwegian reason's - aka psst Wellesley - or like the Marines a few good fund's can provide current yield (income) with some inflation fighting power for an entire retirement.

Soooo - the winner's for the next 35 yrs are ??
Safe sex is easier

[brewer12345]

I tend to cleave to index funds for a simple reason: if there is any stock picking to be done, I'll do it for myself.

[FinanceDude]

Quote:

Originally Posted by brewer12345 I tend to cleave to index funds for a simple reason: if there is any stock picking to be done, I'll do it for myself.

Most don't have your knowledge about equities out there.........

[Nords]

Quote:

Originally Posted by FinanceDude Most don't have your knowledge about equities out there.........

But apparently they're better at picking active fund managers?

[lswswein]

Quote:

Originally Posted by Nords But apparently they're better at picking active fund managers?

Come on Nords people need to be good at something : Picking fund managers is earier because there is more of them. probability of hitting a one when my pet monkey[MpM] throws darts is more because they sheets are twice as big. When MPM throws at stocks, it hits outside the board too often :P

[mathjak107]

i think that to some extent the statistics quoted for index vs managed funds is flawed . its flawed in the sence that a portfolio if done right consists of not just one fund but many funds and many asset classes.

having said that i also think that a major percentage of funds are funds that none of us would buy as they are poor performers , high fees or crappy mgmt. once you weed out all the crappy stuff the percentage of funds that on and off beat the indexes i imagine increases drastically.


now with many funds and asset classes in a well designed portfolio the chances of a better fund or manager beating its index becomes greater in at least one or more catagories..

throw in the fact that some managers may get lucky and not drop even half as much in a down turn as its index and you have a winning formula for a nice return. most index funds and indexers havent been indexing long enough to get caught in a real prolonged downturn with the fury of that fund being 100% invested.

[Alex]

I read this qoute somewhere, not sure who said it, but it sure is a good one!

If you gave a thousand monkeys a coin to toss ten times, odds are at least 10 or more would have all heads or all tails ten times in a row. When the monkey does it , we call it luck. When a mutual fund manager does it we call it skill......

[mathjak107]

the other thing that dosnt add up either to the statistics toughted is this.

fidelity has very few funds that are really really top shelf , they have quite a few that are middle range to upper range in performance..

yet look at how the big 3 newsletters that work with fidelity funds have done.

fidelity monitor actually beat even fidelity insight and fidelity adviser is right in there within a point or so long term too. its obvious that something happens when all these mid range to upper range active managed funds are molded into a diversified portfolio with different asset classes . the results all seem excellent and all use different funds . all 3 have probley beat the indexes according to the info on dfa's site and the risk adjustment is less.

remember statistics can show anything the writer choses . ultimately we all need a portfolio that meets our needs and lets us sleep at night. its all a means to an end.