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Defensive Fund Moves Pre Market Correction: WWYD?
Old 01-23-2020, 02:18 PM   #1
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Defensive Fund Moves Pre Market Correction: WWYD?

I had a talk with my free Fidelity Adviser to review my entire portfolio. Last year, I had made some reallocation moves. I was happy with my choices (50/50 Balanced). He asked me to think about what I would want to do if the market corrected this year. We are to have this discussion in April.

What would you do with these types of funds in general, to ride out a market correction? Take profits now and sell all or part, use proceeds to buy into what category or leave in cash ? Or let it ride? At this time, I know there is one fund I would want to let it ride/ buy more and that is #5 Vanguard Wellesley Income.

1. Total Market Index Fund (FZROX)
2. Value Strategy Stock Fund (DODGX)
3. Growth Strategy Stock Fund (TRBCX)
4. Allocation Fund 70/30 (FBALX)
5. Allocation Fund 30/70 (VWINX)
6. Intermediate Bond Fund (DODIX)
7. Short term Bond Fund (FJRLX)
8. International Equity Fund (DODFX)
9. Intermediate Bond Index Fund
10. Sector Healthcare and Consumer Discretionary Funds
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Old 01-23-2020, 03:00 PM   #2
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My crystal ball says stick with the asset allocation I have. At least through this year and the election, I think next year might go more conservative than current 70/30.
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Old 01-23-2020, 03:03 PM   #3
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First thought is why do you have expensive funds when you could get less expensive ones?

Second thought, more money is lost preparing for a correction than in a correction itself.

Pick your AA based on your risk tolerance and stay the course.
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Old 01-23-2020, 03:25 PM   #4
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Quote:
Originally Posted by corn18 View Post
First thought is why do you have expensive funds when you could get less expensive ones?

Second thought, more money is lost preparing for a correction than in a correction itself.

Pick your AA based on your risk tolerance and stay the course.
Let me add "why so many funds?"
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Old 01-23-2020, 03:45 PM   #5
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Let me add "why so many funds?"
Diversification across different companies. I am willing to consolidate. These funds are in 3 different accounts--Roth, TIRA, and Taxable. I actually own more funds than what I posted. I'm paying an average of .4% expense ratio across all my funds. I can live with that.
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Old 01-23-2020, 03:50 PM   #6
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If Wellesly (AA 35/65) is the one fund you want to stick with/buy more of, might that be telling you something about the AA you're most comfortable with? Just sayin'.
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Old 01-23-2020, 04:07 PM   #7
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If you like the allocation of Wellesy, then I'd sell some of your growth funds and buy bond funds to get you more to that allocation. Or as others have said, just sit tight with what you have.
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Old 01-23-2020, 04:14 PM   #8
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I have condensed down to six tickers on the equity side:

Domestic equity: VTSAX (Vanguard Total Stock), FZROX (Fidelity Zero Total Market), VFINX (Vanguard S&P 500) and VEXAX (Vanguard Extended Market Index).

International equity: VTIAX (Vanguard Total International) and VINEX (Vanguard International Explorer)

All except VINEX are index funds.

Back around 2013 I did some gains trading and sold VTSAX but could not rebuy it with Vanguard's idiotic frequent trading rules so I bought a combnation of VFINX and VEXAX which is the same thing... then the market took off and I was hesitant to swap it back once the frequent trading period was over because I had a significant STCG... so I've kept it... but if not for the capital gains cost I would reduce it down to VTSAX and FZROX.

Fixed income side are mostly credit union 5-year CDs and a portfolio of about 20 preferred stocks (mostly investment grade issuers).
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Old 01-23-2020, 04:23 PM   #9
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....At this time, I know there is one fund I would want to let it ride/ buy more and that is #5 Vanguard Wellesley Income. ...
One radical idea.

If this is all in a tax-deferred account, then you could take your 50% bond allocation divided by Wellesley's 58.32% bond allocation and buy 85.7% of your total in Wellesley and then buy domestic and international equity funds like VTSAX and VTIAX with the remainder to fill out your desired AA.

What you would be doing is essentially hiring Wellesley to manage your bond allocation and filling the rest in with equity index funds.
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