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Owning the Same Fund in Different Accounts?
Old 12-05-2019, 08:56 AM   #1
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Owning the Same Fund in Different Accounts?

I own TRowe Capital Appreciation (PRWCX), a closed 70/30 Allocation Fund, both in an TIRA and in a non retirement account. I've been satisfied with its performance over the years and feel like I can stay with it for the long term.

But is this flawed thinking to own the same account twice? I ask because I was considering buying another TIRA fund I own and am quite happy with, Vanguard Wellesley (30/70 Allocation), in a non retirement account, where I have a large amount of cash I want to invest. If I did, it would fit in with my overall 50/50 allocation strategy.

If any you own the the same account twice, which one is it and why?
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Old 12-05-2019, 08:59 AM   #2
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I generally don't use balanced funds because of their tax inefficiency... instead I buy domestic and international equity index funds and CDs or bond funds.

https://www.bogleheads.org/wiki/Tax-...fund_placement

So in your case I would have bonds in the tIRA and stocks in the tIRA only if the tIRA exceeds my total bond allocation.
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Old 12-05-2019, 10:28 AM   #3
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Quote:
Originally Posted by Fleur58 View Post
... If any you own the the same account twice, which one is it and why?
Sure. Large amounts of VTWAX in several accounts. The question for you, though, is "Do you want to be concentrated in large US growth stocks and does the amount you have invested in this fund give you too much of that tilt?" In answering that question, it doesn't matter where/how you hold it.

PRWCX is not a fund I would hold. All blended funds have the same problem: You can't benchmark the equity portion to see how it is doing. Once the red Kool-Ade and the green are mixed in the glass you don't know which one contributed to the color. My only exception might be funds where the equity portion was indexed to a total market or total world index. Then I can just sit back and not worry about whatever small tracking error might exist.
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Old 12-05-2019, 11:14 AM   #4
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Old Shooter, Good point. I don't need a lot of US equity if it would skew my asset allocation; I agree more world equity would be more prudent for my situation. Is there a Fido equivalent to VTWAX? l I think I paid more attention to Morningstar ratings. Allocation funds represented my tendency to hedge my bets with 5 star funds that were not as volatile as straight up equity or bonds. Yet the mixture of objectives also make for a lower overall performance. Overall I'm at about 13% for the year. I felt I didn't need to be so aggressive at my age (61). In depth analysis is out of my league, but I can always use Fidelity's tools and Free Advisor. All the free advisor cares about is that I leave my funds at Fidelity and not move them to Vanguard, he does not specifically automatically advocate for the use of Fido funds.

I suppose the same argument holds true for Retirement Series Funds that invest in various Index or Mutual Funds--you cannot adequately analyze them. I'm about to leave retirement and start a job with retirement benefits. Of the low cost offerings, I can pick from a Vanguard Target Fund, and several individual Vanguard Index funds with SP 500, Mid, Small, INTL, Bond, MM objectives. I've decided I 'm going for a Roth IRA and Roth 401K. I've been struggling with my allocation since I already have a sizeable TIRA I won't need to access until required to do so at 70.
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Old 12-05-2019, 11:55 AM   #5
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Quote:
Originally Posted by Fleur58 View Post
I own TRowe Capital Appreciation (PRWCX), a closed 70/30 Allocation Fund, both in an TIRA and in a non retirement account. I've been satisfied with its performance over the years and feel like I can stay with it for the long term.

But is this flawed thinking to own the same account twice? I ask because I was considering buying another TIRA fund I own and am quite happy with, Vanguard Wellesley (30/70 Allocation), in a non retirement account, where I have a large amount of cash I want to invest. If I did, it would fit in with my overall 50/50 allocation strategy.

If any you own the the same account twice, which one is it and why?
I do not currently, but I have owned bond funds such as DODIX, Dodge and Cox Income in more than one account. I do that because I have a bond allocation in more than one account, and have identified the same few funds to meet that portion of it.

On the equity side, I once owned Dodge & Cox stock fund in more than one account (taxable IRA/401K), just because it met my objectives for both. Now that I have consolidated accounts, I do not find i need to do this.

I see nothing wrong with it.
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Old 12-05-2019, 11:57 AM   #6
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But isn't the real topic about holding balanced funds (mix of stocks and bonds) in different accounts? Rather than equity funds or bond funds.
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Old 12-05-2019, 12:26 PM   #7
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Originally Posted by Fleur58 View Post
Old Shooter, Good point. I don't need a lot of US equity if it would skew my asset allocation; I agree more world equity would be more prudent for my situation. Is there a Fido equivalent to VTWAX?
Last time I checked Fido did not have an equivalent. But I have read that Abigail Johnson, who runs daddy's company, thinks passive investment is just a fad, so that's no big surprise that there is no total world market fund. You can get the same thing, though, with 45%/55% combination of a total US market fund and a total international market fund. You'll just have to rebalance every year or three. But AFIK you can also just buy VTWAX into a Fido account.

Quote:
Originally Posted by Fleur58 View Post
I think I paid more attention to Morningstar ratings. Allocation funds represented my tendency to hedge my bets with 5 star funds that were not as volatile as straight up equity or bonds.
"Star"ratings are widely misunderstood, partially because M* chose to let that happen. They tell you nothing about a fund except how it compared with similar funds in the past. The worst performing sector and the best performing sector in M*'s list have one thing in common: 10% of the funds have 5 stars. There was a furor a year or so ago because WSJ published a study showing that the stars have no predictive value at all. M* somewhat reluctantly admitted this. You might find some of that material interesting if you can Google it up or stop at a library to get behind the WSJ paywall.
Quote:
Originally Posted by Fleur58 View Post
Yet the mixture of objectives also make for a lower overall performance. Overall I'm at about 13% for the year. I felt I didn't need to be so aggressive at my age (61). In depth analysis is out of my league, but I can always use Fidelity's tools and Free Advisor. All the free advisor cares about is that I leave my funds at Fidelity and not move them to Vanguard, he does not specifically automatically advocate for the use of Fido funds.
Nothing wrong with lower performance if your objective leads to you to it and you understand why you're there. There are some happy people here who hold no equities at all.

Re the Fido guy: One of you is the customer and one is not the customer. Which one do you think you are? ... ... Right!

You should ignore what the advisor cares about. It is your money not his. And if this creates a problem ask the branch manager for a different advisor who does understand that he/she is not the customer.

Quote:
Originally Posted by Fleur58 View Post
I suppose the same argument holds true for Retirement Series Funds that invest in various Index or Mutual Funds--you cannot adequately analyze them. I'm about to leave retirement and start a job with retirement benefits. Of the low cost offerings, I can pick from a Vanguard Target Fund, and several individual Vanguard Index funds with SP 500, Mid, Small, INTL, Bond, MM objectives. I've decided I 'm going for a Roth IRA and Roth 401K. I've been struggling with my allocation since I already have a sizeable TIRA I won't need to access until required to do so at 70.
IMO, with a fairly complex portfolio any blended fund just adds complexity without adding value. Target date funds were invented to serve the needs of naive young investors. You are not naive and, probably, not young either.

Always look at your allocation in total without regards to which piece is in which account. If all your funds are at Fido they should have a tool to do this for you. That said, as @pb4 points out, there is some useful fine tuning between accounts for tax reasons.
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Old 12-05-2019, 12:33 PM   #8
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Actually it was about owning 2 of the same fund, whatever kind of fund it is. I only mentioned my allocation strategy in case it was necessary context in order to provide a response.
In the past, I have also owned 2 positions in both Fidelity Contrafund; and FMIHX. Its more of if you like the performance in one type of account, do you buy it in another account if you want a similar type of fund.
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Old 12-05-2019, 02:01 PM   #9
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I actually own PRWCX in both my IRA and after tax accounts. It really boils down to 'one' fund/amount being treated differently tax-wise and so I consider it one amount for AA purposes.

I do like the fund in general but hold PRFDX (Equity Income) in greater esteem which I also hold in both areas.
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Old 12-05-2019, 02:40 PM   #10
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I own Fidelity Total Bond in several different accounts. It does what I want for each AA so I don't see why it matters.
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Owning the Same Fund in Different Accounts?
Old 12-06-2019, 01:12 PM   #11
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Owning the Same Fund in Different Accounts?

Quote:
Originally Posted by Fleur58 View Post
I own TRowe Capital Appreciation (PRWCX), a closed 70/30 Allocation Fund, both in an TIRA and in a non retirement account. I've been satisfied with its performance over the years and feel like I can stay with it for the long term.



But is this flawed thinking to own the same account twice? I ask because I was considering buying another TIRA fund I own and am quite happy with, Vanguard Wellesley (30/70 Allocation), in a non retirement account, where I have a large amount of cash I want to invest. If I did, it would fit in with my overall 50/50 allocation strategy.



If any you own the the same account twice, which one is it and why?


Vanguard Wellesley is an active managed fund and has an very good long term record. It canít be exactly matched by using passive index funds. It is not tax efficient and therefore is best held in tax deferred. I would have no problem owning it except it would need to be in tax deferred.
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Old 12-06-2019, 02:32 PM   #12
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We started purchasing the Vanguard Healthcare Fund in a taxable account back in 1998 as a hedge against rising healthcare costs, around 5% of total portfolio. It has grown, a lot. After we purchased an ACA plan in 2015 and realized how much the declared capital gains were reducing our Roth conversion ability while staying within the 400% FPL, we started selling the fund in taxable and repurchasing in my Roth. Any time a rebalance healthcare flag is hit, all sales are from the taxable account and all purchases are in the Roth account. The fund amounts are currently about 50% taxable and 50% Roth. Works for us. YMMV.
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