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Need Some Insight on This Fund
Old 12-01-2023, 02:56 PM   #1
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Need Some Insight on This Fund

I can use some insight on this fund. I've owned Price's Equity Income Fund (PRFDX/REIPX) for many years. It's always delivered a nice mix of growth and income and even in years with poor growth, the income was quite good, most often in the 5% to 9% range.

This year has been quite disappointing in both categories.

Total return:
2018: -9.21
2019: +26.69
2020: +1.44
2021: +25.77
2022: -3.21
YTD: -0.23. Dividends 2.41%

It just seems like a laggard over the past 18 months. A bad year seems to follow a good year but not this year.

With it being about 15% of my portfolio, I'm tempted to start looking for greener pastures and thin down the holding but would be grateful for any insight. I just can't see any correlation to explain the "why"
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Old 12-01-2023, 03:25 PM   #2
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It's a value fund in a growth world. SP500 has beat it for the last 15 years, exception 3 yrs and 1 day (per Schwab). The fund charges 0.67% and is heavily invested in Financials (22%) and HealthCare (17%).

Look for greener pastures.
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Old 12-01-2023, 03:59 PM   #3
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I agree - not a good fund. If you want a better value fund with dividends and lower expense ratio (.06%) try SCHD. Here’s a link comparing performance over the past decade https://www.portfoliovisualizer.com/...EZZtxaqpTfjX60
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Old 12-01-2023, 04:40 PM   #4
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I agree - not a good fund. If you want a better value fund with dividends and lower expense ratio (.06%) try SCHD. Hereís a link comparing performance over the past decade https://www.portfoliovisualizer.com/...EZZtxaqpTfjX60
Thanks so much! It does note that reipx has out performed schd ytd. Regardless, need to do a bit more digging
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Old 12-02-2023, 03:13 PM   #5
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I separate equity funds from fixed income.

Maybe look at how a combo of a broad equity index and fixed income did over the last 15 years or so. That will require a bit of digging (Yahoo historal data is one source). Also what about Vanguard Wellington which is something like 65% equity last I looked. VWELX has a growth bias at the moment.

Value has been in the doghouse for quite awhile... especially small value. But now large growth is quite high in relative P/E compared to past. But unfortunately one cannot easily tell when a trend will shift.
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Old 12-03-2023, 05:37 AM   #6
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I separate equity funds from fixed income.

Maybe look at how a combo of a broad equity index and fixed income did over the last 15 years or so. That will require a bit of digging (Yahoo historal data is one source). Also what about Vanguard Wellington which is something like 65% equity last I looked. VWELX has a growth bias at the moment.

Value has been in the doghouse for quite awhile... especially small value. But now large growth is quite high in relative P/E compared to past. But unfortunately one cannot easily tell when a trend will shift.
Thanks. That's exactly where I was headed: Something like 25% in a fixed income vehicle and maybe 75% in something simple like the S&P index.

Naturally, over just the past few weeks the fund in question has dug itself out of its negative hole and might reach its 5 year average before year end.

But the new reality is that I can can get 5%+ in income so easily--at least for now--why bother with all the gyrations. Make hay while the sun is shining. (Do people still say that?)
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Old 12-03-2023, 06:03 AM   #7
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Old 12-03-2023, 06:10 AM   #8
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All value oriented funds performed poorly this year. I would rather own value oriented index fund without 0.67% in fees.
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Old 12-03-2023, 07:22 AM   #9
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If you own the market, growth and value, you won't be guessing or changing gears when one out performs the other.
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Old 12-03-2023, 07:38 AM   #10
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Old 12-03-2023, 07:43 AM   #11
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If you own the market, growth and value, you won't be guessing or changing gears when one out performs the other.
Well, I've owned the fund for almost 25 years so I wouldn't say that I was changing gears on a whim.
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Old 12-03-2023, 07:48 AM   #12
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Originally Posted by marko View Post
I can use some insight on this fund. I've owned Price's Equity Income Fund (PRFDX/REIPX) for many years. It's always delivered a nice mix of growth and income and even in years with poor growth, the income was quite good, most often in the 5% to 9% range.

This year has been quite disappointing in both categories.

Total return:
2018: -9.21
2019: +26.69
2020: +1.44
2021: +25.77
2022: -3.21
YTD: -0.23. Dividends 2.41%

It just seems like a laggard over the past 18 months. A bad year seems to follow a good year but not this year.

With it being about 15% of my portfolio, I'm tempted to start looking for greener pastures and thin down the holding but would be grateful for any insight. I just can't see any correlation to explain the "why"
Is it safe to assume these holding are in a tax-deferred account and you can sell without having to pay capital gain tax?
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Old 12-03-2023, 08:12 AM   #13
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Is it safe to assume these holding are in a tax-deferred account and you can sell without having to pay capital gain tax?
Yes. I have a similar holding in after tax but much smaller. I don't plan on dealing with that.
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Old 12-03-2023, 08:54 AM   #14
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Well, I've owned the fund for almost 25 years so I wouldn't say that I was changing gears on a whim.
Then you picked your tilt and now feel you need to change due to short term performance results? You are tilting to value with this fund but now you need to decide if that was the right choice 25 years ago? Wellesley Income also looks bad for the last 2-3 years due to the bonds(rising interest rates) but I don't know many people bailing out on it's great track record from the past. Your fund may be just as good, so unless you want to change to lower expenses in a balanced fund, I would stick with something you've been able to hold for years.

Best to you on your decision,

VW
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Old 12-03-2023, 09:27 AM   #15
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Then you picked your tilt and now feel you need to change due to short term performance results? You are tilting to value with this fund but now you need to decide if that was the right choice 25 years ago? Wellesley Income also looks bad for the last 2-3 years due to the bonds(rising interest rates) but I don't know many people bailing out on it's great track record from the past. Your fund may be just as good, so unless you want to change to lower expenses in a balanced fund, I would stick with something you've been able to hold for years.

Best to you on your decision,

VW
No. It's been the right choice for 20 of those 25 years. As noted in post #1, the fund has consistently delivered either good growth or decent dividends (and cap gains) and most often both. The past two years, the fund has delivered notably poor growth and dividends and I wonder/suspect if management has become complacent.

It happens sometimes that fund management changes (as it has with this fund) and the focus and skill does not always transfer entirely to the new management. Sometimes funds just get stale.

As noted, I have a good sized share of this fund and worry that holding so much now will limit my opportunities for growth or dividends when I could be elsewhere more profitably at this point in time.

It's not about allocation, it's about the core health of the fund.

Post #2 stated "value fund in a growth world " gave me something to consider. I'm trying to wrap my arms around how higher interest rates could be a key factor in the fund's performance.
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Old 12-03-2023, 10:13 AM   #16
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PRFDX used to be the star in the TRP lineup back in the day when Brian Rogers managed it. DW owned it in a SEP; we sold mainly to simplify and consolidate at Vanguard. As a value fund, it lags the indices when the market's doing well. However, the fund's recent performance has also been poor relative to other value funds, so it may be time to move on.
If you want to stick with TRP, a solid fund company with low expense ratios, you could look at Dividend Growth (PRDGX)
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Old 12-03-2023, 10:13 AM   #17
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What I do is put my holding together in Excel to come up with a Morningstar like style box. I use the M* data which you can see on the portfolio tab (example below). I take each holdings and collect the weighting of each little box in the 9 box method. Then I get the overall weighting. I think M* might do this for you if you enter your portfolio in their system with a login.

Example for just 1 fund:



As you can see the SP500 is unbalanced at the present. This is unusual and was balanced in the large cap row as recently as July 2020. Large growth dominance is something to wonder about. It was happening before this year's AI excitement. I recently moved equity holding around to hold more small cap value and mid cap value (VBR and VOE). They usually do better then large value in a sustained value loving market but no guarantees.
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Old 12-03-2023, 11:19 AM   #18
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There’s nothing wrong with Value funds as long as you have some Growth funds also. I wouldn’t like paying a .67% fee.

IMHO as long as interest rates remain over 4%, a lot of investors will prefer CD’s and Treasuries over Value/Dividend funds.

Even THE dividend ETF NOBL, which represents Dividend Aristocrats (at least 25 years of increasing dividends) has a yield of 3.92% and the NAV just went positive for the year in the past week.
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Old 12-03-2023, 11:23 AM   #19
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Thereís nothing wrong with Value funds as long as you have some Growth funds also. I wouldnít like paying a .67% fee.

IMHO as long as interest rates remain over 4%, a lot of investors will prefer CDís and Treasuries over Value/Dividend funds.
I have the I class fund equivalent with .56% fee but point taken
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Old 12-09-2023, 04:42 PM   #20
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One thing I like to do is lookup funds and their holdings and then research the individual stocks inside and buy the best ones to my investing criteria, fun way to whittle down the sea of options in a different way.
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