My portfolio

[Boho]

I figured I'd post this FWIW. The only significant bonds I have are from the international bond fund PFORX so I'm thinking of adding a domestic bond fund. Maybe something else will stand out to you as being missing. I haven't even worked out the percentages in each fund yet though.

ONEQ was the first I added just because I wanted to move away from the old securities quickly. It's possible I'll sell it eventually and just balance the others to make up for it, if possible. I don't even recall the exact justification for adding each one, but they made sense at the time. As I said, FWIW:

ONEQ - Fidelity NASDAQ Comp. Index Trk Stk(ETF)
NUMV - NuShares ESG Mid-Cap Value ETF
PRBLX - Parnassus Core Equity Fund - Investor Shares
MTRAX - MainStay Income Builder Fund Class A
PFORX - Foreign Bond (U.S. Dollar-Hedged) Fund Institutional Class

 

[Whisper66]

ONEQ - Fidelity NASDAQ Comp. Index Trk Stk(ETF) - 0.21% expenses
NUMV - NuShares ESG Mid-Cap Value ETF - 0.40% expenses
PRBLX - Parnassus Core Equity Fund - Investor Shares - 0.87% expenses
MTRAX - MainStay Income Builder Fund Class A - 1.02% expenses plus 5.5% load
PFORX - Foreign Bond (U.S. Dollar-Hedged) Fund Institutional Class - 0.5 % expenses

Far too expensive for me. Total expenses are ~0.60% each year (if have equal amounts in each). Plus one has a high load on it which knocks it out of any consideration for me.

For comparison, I have about 25% of our assets in managed funds with highest expense on a single fund of 0.32% (no loads). Our expenses for total portfolio are 0.11%. Pure indexers will beat that easily.

Also, it looks like your portfolio focuses all on mid/large cap. Small cap are likely to get the largest boost by a strong market so you may be missing out by not having some diversification into the small value area.

 

[Boho]

Small cap are likely to get the largest boost by a strong market so you may be missing out by not having some diversification into the small value area.

Yeah, I mentioned here on Sunday that I was looking at PXSCX (Pax Small Cap Fund Individual Investor Class) but I was mad that it called itself a socially conscious fund and I found no evidence of that so I put off small caps for now.

I'm pretty sure the cost ratings were all mid to low and probably low overall but I figured it would by high by some investors' standards.

 

[exnavynuke]

Yeah, I mentioned here on Sunday that I was looking at PXSCX (Pax Small Cap Fund Individual Investor Class) but I was mad that it called itself a socially conscious fund and I found no evidence of that so I put off small caps for now.

I'm pretty sure the cost ratings were all mid to low and probably low overall but I figured it would by high by some investors' standards.

If you invest $100,000 today and your fund fees are 0.3% higher than my same investment then, over 30 years, my investment (assuming the same gross returns) would be expected to be over $80,000 higher than yours due to the fees and the lost “opportunity cost” (i.e. those fees disappear and thus don’t get invested and get compounded).

If your funds are equally distributed, your portfolio average expense ratio would be ~0.6%. Mine is under 0.1%. So, if our portfolios had the same returns for the next year with a base $100K investment and no subsequent investment, 30 years from now I'd have ~$133k more than you simply because I decided to utilize lower fee funds.

I like money, so I'll keep mine in low expense funds.

 

[sengsational]

Far too expensive for me.

Thanks for doing that research.

When I saw that post, I figured those funds probably had a pretty substantial drag from fees. I wondered, but not quite enough to look-up the expense ratios.

 

[Boho]

With fund expenses, how high is too high? - Ultimate Guide to Retirement

What's reasonable? It depends on the kind of fund. Index funds should have the lowest fees, because they cost relatively little to run. You can easily find an S&P 500 index fund with an expense ratio of less than 0.2%, for example. For mutual funds that invest in large U.S. companies, look for an expense ratio of no more than 1%. And for funds that invest in small or international companies, which typically require more research, look for an expense ratio of no more than 1.25%.

https://news.morningstar.com/pdfs/2015_fee_study.pdf

The asset-weighted expense ratio across all funds was 0.64% in 2014, down from 0.65% in 2013 and 0.76% five years ago.

.6 isn't high.

 

[sengsational]

.6 isn't high.

Everything is relative. 0.6% is more than ten times higher than, say VOO.

 

[Boho]

The highest cost fund looked like this so I didn't worry.

 

[Whisper66]

The highest cost fund looked like this so I didn't worry.

This is a good topic to become more informed on. You can quickly challenge Morningstar's rating of these fees as "low" by running the calculation yourself. For example, here's a nice online calculator you can use to run some "what if" cases.

Investment Fee Calculator - See How Fees Reduce Your Returns

Run a case with your current fund using your current fees and loads. Then see how it would perform with truely low fees and no loads. (For background, it isn't unusual for index funds to have expense ratios of 0.05-0.09% ... see VFIAX as one example).

If you are happy giving up that much future potential return to fees, that's fine. Just be very aware of what you are doing and understand why so many on this board advise you to look at lower fee funds.

 

[Boho]

If you are happy giving up that much future potential return to fees

I'm giving it up to having my world fund managed. I'd like to see stats on the performance of managed world funds that are ranked so highly compared with world index funds. I'd bet on the managed funds.

 

[Whisper66]

I'm giving it up to having my world fund managed. I'd like to see stats on the performance of managed world funds that are ranked so highly compared with world index funds. I'd bet on the managed funds.

I don't take issue with you betting anywhere you wish to. Just commenting that your fund's fees appear high and that those cost you a lot of money over time, the amount is easily calculated if you wish. By the way, there is no "right" answer to what fund is absolutely the best. Some years / time periods one fund will "win", then it will lose other years / time periods. But many studies have shown that index funds outperform the equivalent mananged funds over time.

But if you want to used managed funds, some charge much lower rates. Attached chart shows one world fund (VTWSX) that is managed for 0.25% expenses (per Vanguard site...Morningstar's 0.21% appears incorrect) and no load.

Edit: Sorry, had a graph of VTWSX vs MRTAX for last 1 yr but don't know how to attach it.

 

[fosterscik]

one world fund (VTWSX) that is managed for 0.25% expenses (per Vanguard site...Morningstar's 0.21% appears incorrect) and no load.

Edit: Sorry, had a graph of VTWSX vs MRTAX for last 1 yr but don't know how to attach it.

Here's a screenshot of Morningstar's performance comparison:


VTWSX looks like a cheaper, better-performing choice.

 

[Boho]

VTWSX looks like a cheaper, better-performing choice.

I'll have to look into how that table works. The first column doesn't have equal values so I want to make sure the table works the same as the graph. The comparison below has MTRAX winning in the long run - the two longest term comparisons. Anyway, I don't have a Vanguard account but I may open one eventually.

 

[Boho]

The Vanguard fund has more than twice as much US stock. I don't know how to figure that into things, but I think even indexers tend to favor US stock, for good reason, so it's a little bit of an unfair comparison. I'm not saying it's a worse choice, just that it's a little complicated.

 

[Whisper66]

.... a little complicated.

Yup, you hit the nail on the head. One fund can look better than the other for many reasons. A big one is what time period you are looking at. Another big one is whether the analysis takes into account yearly expenses and any load fees (not sure if those are accounted for in the graphs?). Also the actual makeup of one fund verses another will never be the same so one can never find an exact comparison.

Thus people here tend to diversify their assets, stick with lower fee funds and buy to hold longer term. Of course that's not everyone here so you'll get good alternative viewpoints. Good luck with your portfolio!

 

[MooreBonds]

I'll have to look into how that table works. The first column doesn't have equal values so I want to make sure the table works the same as the graph. The comparison below has MTRAX winning in the long run - the two longest term comparisons. Anyway, I don't have a Vanguard account but I may open one eventually.

Ignoring your later admission that the funds don't have similar holdings, will MTRAX continue to outperform whatever their appropriate index is in the future? What other funds will? History shows us that a pretty large majority of funds don't beat the indexes at any given timeframe. The longer the timeframe, the far less likelihood of beating the index. Which makes one wonder how you decide which actively-managed fund to go with? No different than trying to choose between Black/Red, or 1-12/13-24/25-36 on Roulette. Some will walk away with a smile on their face, but a majority will be worse off.

 

[Boho]

History shows us that a pretty large majority of funds don't beat the indexes at any given timeframe.

I posted a link to the stats yesterday. "8.09% of funds outperformed the S&P 500". And I'm buying a top rated fund so the odds are better. Some say such funds "have done quite well beating their benchmarks over most of the time frames."

 

[DrRoy]

.6 isn't high.

It is vs. .1 or less. That's 5% over a decade and 15-20% over a career.

 

[MRG]

MTRAX has a 5.5% FE load and a .25% 12B1 fee. Who is your advisor?

 

[Boho]

MTRAX has a 5.5% FE load and a .25% 12B1 fee. Who is your advisor?

Morningstar.

 

[Boho]

Really poorly written article here:

Fund Fees Predict Future Success or Failure

Even "the answer" section doesn't give a useful answer. I assume low fees were found to be better but I wasn't able to skim the article to find it saying that. I wonder if it says it at all.

 

[samclem]

Morningstar.

You sold yourself a fund with a 5.5% load? Nobody sold it to you? That's one for the record books. Who'd a thunk it . . . A self slaughtering sheep.

Retrospective ratings on performance are not very useful.

You skim articles rather than read them, you don't read books you've bought. This is the new 20 second attention span research mode I guess.

 

[exnavynuke]

You sold yourself a fund with a 5.5% load? Nobody sold it to you? That's one for the record books. Who'd a thunk it . . . A self slaughtering sheep.

Retrospective ratings on performance are not very useful.

You skim articles rather than read them, you don't read books you've bought. This is the new 20 second attention span research mode I guess.

If Boho wishes to throw away his money and line someone else's pockets, who are we to stop 'em? He's been told why timing is bad, repeatedly. He's been told that actively managed funds rarely pay off. He's stated that he understands it. He's been told what expenses and fees do to a portfolio's growth. If he still wants to time the market and use expensive actively managed funds then that's his choice.

Of course, there's also a reasonable possibility that the posts are just trolling in the first place as it would seem unlikely that anyone coming to a board for early retirement would want to throw their money away on expensive gambles that won't likely pay off for them but hoping their they manage to be the exception instead of the rule, but ya never know.

 

[REWahoo]

Of course, there's also a reasonable possibility that the posts are just trolling ...

^ What he said.

 

[Boho]

See this post. According to CNN, "for funds that invest in small or international companies, which typically require more research, look for an expense ratio of no more than 1.25%." Mine is cheaper. I trust CNN over strangers on an internet forum. Even based on Morningstar you can't say it's too expensive.

"8.09% of funds outperformed the S&P 500." Learn where that comes from and cite it instead of using words like "rare" and realize that it's about the average fund, not the most highly rated funds. If it's your honest hunch that my fund isn't as good an Vanguard's, fine, but you're all too sure of yourselves.