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cute fuzzy bunny 09-18-2008 03:22 PM

4 Attachment(s)
Oh dear, I got tired of the pointless sand kicking so I pulled up four american funds I imagined people would be interested in as core portfolio elements and charted them against their vanguard equivalents, at least as far as I could ascertain. I'm sure I'll be told I picked the wrong ones, but if thats the case I'd ask whoever asserts my incorrectness will supply a corrected chart and the reason why the ones I picked were wrong...

Short answer is the vanguard version is as good or better over the last ten years, and I'm guessing since they arent actively managed, they have less turnover, fewer taxable events, and lower internal trading costs. Plus of course no loads and lower expenses. Since this time period includes two bull and two bear markets, and all sorts of other financial events, I'd imagine it'd be a great showcase for active vs passive management. What it says is that active management, by these allegedly superior examples, does one pretty much no good whatsoever.

I picked the american balanced vs vanguard balanced, american euro/pacific vs vanguard total international, american AMCAP vs vanguard total stock market, and both companies target retirement 2025 funds.

Voila:

harley 09-18-2008 03:31 PM

You're no fun. If you are going to ruin a good round of bitchiness with facts, we're just going to have to ask you to leave.

cute fuzzy bunny 09-18-2008 03:49 PM

:2funny:

Yeah, I'm a stick in the mud.

I'm sure I picked the wrong funds to compare, but american didnt seem to offer anything obviously clear like "US large cap value". Lots of multi-cap funds with options to purchase foreign stocks, bonds, popsicle stick collections, etc.

kitty_37 09-18-2008 07:51 PM

Re: TRAK
Don't do it. DH and I bought some with a windfall when young, and I have always regretted it.
Fees from constant rebalancing, throws capital gains, and it's a SB proprietary fund and can't be transfered out of SB without selling all. I felt stuck and eventually liquidated a bit at a time in order to get it out and stop the bleeding.

Go to Fidelity or Vanguard.

cute fuzzy bunny 09-19-2008 08:27 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716542)
I'm sure I'll be told I picked the wrong ones

But maybe not.

sailor 09-19-2008 08:37 AM

Quote:

Originally Posted by Art G (Post 716452)
I doubt his 401k offers ETF's.

Don't be too sure, for example mine does.
Administered through Schwab, in addition to 'plain vanilla' mutual funds also has something called Personal Choice Retirement Account and it's basically a brokerage account inside 401k.

Art G 09-19-2008 08:41 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716891)
But maybe not.


I'll let FD deal with this if he wants to. You make my head tired. Every statistic I have shows American Funds outperforming the indexes AND it has been posted on this board often enough that either you don't want to see it or......well you just don't want to see it.
BTW, they have some of the lowest expenses in the business, they trade very, very rarely as they have to go before a board and give good reason why they want to sell a stock before a year, and before they buy any company, they spend weeks on site. They also use a multi managed system so they're not tied to one manager.
Your charts are very pretty though, wrong, but very pretty. Sleep well knowing you're managed in a mutual fund by no one.:)

cute fuzzy bunny 09-19-2008 09:11 AM

Sorry about the actual facts. I havent seen a dang thing posted about American funds and their matching indexes comparative performance. If its been so exhaustively posted that you're bored with it, could you please point me to a thread?

I chose the highest returning funds with my best effort given their nebulous descriptions and paired them with boring broad indexes that seemed to match. Americans flagship multicap fund doesnt compare well with the boring old total stock market index. Its that simple.

I could see where there are places where I could have started the comparison to favor either fund...for example the AMCAP fund didnt take a big beating from the 2000-2001 downturn, but it performer poorly before and after that. So I could have cherry picked a "winning range".

I just took a straight ten year run full of bulls and bears. No chicanery. At most periods the funds were comparable and moved the same way at the same time.

Can you also explain why the charts are 'wrong' and offer an alternative chart? You are correct in one sense...these charts dont include the 5.75% front load the AMCAP fund charges at time of purchase. That'd make their numbers look even worse. My bad.

Oh, and by the way the turnover on AMCAP is 29%. Total stock market is 4%. So much for the 'rare trading'.

Marquette 09-19-2008 09:18 AM

4 Attachment(s)
Quote:

Originally Posted by Art G (Post 716897)
Every statistic I have shows American Funds outperforming the indexes AND it has been posted on this board often enough that either you don't want to see it or......

I recall a lot of discussions about American Funds but nothing ever compelling... either a statement that Bogle likes them too (but the latest statement I could find said that he didn't, with no other evidence to the contrary but FD's recollection that he must have at some point), or cries that people are picking the wrong funds to compare, etc etc etc.

Maybe you can tell me what I'm doing wrong, I went to Google and compared AMCPX against SPY since that seems to be what you're considering a comparable index (correct me if I'm wrong).

5 year:
Attachment 4684

The max it would let me compare:
Attachment 4685

Things look a bit better for AMCPX at Morningstar if you look at the full range:
Attachment 4687

But not the 4 year (the amount of time I've been investing)
Attachment 4686

So, instead of whatever it is you're doing, why don't you show off your stats too. I'd love to learn more, I'm pretty new to this stuff.

Art G 09-19-2008 09:39 AM

I've got books right in front of me, and in looking at EVERY A (all 15)share stock fund (including balanced and income) that they have, have outperformed the S&P over the last 10 years, and only AMCAP, Balanced fund and Washington Mutual have underperformed it slightly over the last five years. Over a one year period (as of the end of 2nd quarter) only AMCAP, New Economy, Smallcap World, and Washington Mutual have slightly underperformed the index.
They only have 15 funds that fall into the stock category, so bunny's claims of making it sound like they're fund loaded is wrong. They do have various share classes.
BTW, choosing AMCAP sure seems like cherry picking, seeing that it's their worst performer. However, it still wins out over a 10 year period by doubling the return of the S&P, so go figure.
Again, FD has posted actual statistics countless times, but it seems on this board, when shown facts, the topic just moves on elsewhere. I don't have the patience he possesses.
BTW, expense ratio on AMCAP is .65%. OUTRAGEOUS! And a turnover ratio of 29% is incredibly low for an actively managed fund, although they have some lower and some higher. Who wants a zero turnover?? You'd be better off with an ETF or UIT then.
One more note, over the fund life of AMCAP (5/1/67), it has earned 11.66% average annual rate of return vs. the S&P in the same time frame's 10.01%. If facts mean anything of course.

FinanceDude 09-19-2008 09:43 AM

All I have to add is I am glad my mutual funds are not fully invested right now. Most American Funds are running 8-12% cash.....what a bunch of wusses.........:)

Art G 09-19-2008 09:46 AM

;)All except Washington Mutual which must be fully invested, just like those index funds.

FinanceDude 09-19-2008 09:48 AM

Quote:

Originally Posted by Art G (Post 716931)
;)All except Washington Mutual which must be fully invested, just like those index funds.

It totally sucks having betas under 1.0 in my portfolio.......:p:D

Art G 09-19-2008 09:54 AM

Quote:

Originally Posted by FinanceDude (Post 716933)
It totally sucks having betas under 1.0 in my portfolio.......:p:D


Hey, risk and return has no place here! All that matters is cost! :coolsmiley:

Art G 09-19-2008 10:30 AM

Just as I suspected, post some actual stats and the critics disappear. This is why I don't bother. At least the third time this has happened on a thread.

cute fuzzy bunny 09-19-2008 11:02 AM

Sorry, I had to take my kid to school.

What a bunch of empty platitudes! I thought you guys were supposed to be pro's!

So let me summarize...

- The performance of these funds as reported by a major public financial web source is demonstrably worse than cheaper, lower turnover alternatives, but since you guys have so frequently produced facts to the contrary in the past (which nobody can find or point out) you feel its unnecessary to do so at this time.

- Turnover is good for you, even though it generates trading costs and taxable events and appears to have not been beneficial towards returns. An expense of .65% (with a 5.75% front end load) isnt that high, so a .15% expense rate with no front end load isnt worth considering.

- Art has "books" that tell him information that appears to be different from publicly available performance information.

- AMCAP should be compared with the S&P 500, a large cap blend fund, even though American says it is a diversified multi cap fund.

- AMCAP is "their worst performer", although in looking at Americans web site, it seems that AMCAP's returns are substantially similar to most of the other American stock funds. I see several dozen "equity income", "growth" and "growth and income" funds but they dont specifically say where I'd use one vs another. Perhaps one of the experts can tell me which one they recommend as a core equity portfolio holding? By the way, my "cherry picking" consisted of taking the very first fund on their list, their registered trademarked flagship fund. Generally when I see a fund family with lots of funds that appear to have the same information, its because they want to make sure a handful of them that perform well can be used in advertising while the losers can be whisked away and ignored as "cherry picking".

- When you hand over your money to a fund for them to invest it for you, its preferable that they keep a large percentage of this money in cash. Because thats definitely what I want my investment professionals to do...take my investing money and put it in a money market account. Is that really their best idea?

Dont worry Art, I'll be here all day. But having read all the worthy responses chock full of...absolutely no actual data and some ridiculous statements, I think the points been made.

But do go on. I hope for a pearl of investing wisdom that rivals your prior statement that bank cd's and debt in companies about to go out of business are roughly equal on the risk scale.

cute fuzzy bunny 09-19-2008 11:14 AM

1 Attachment(s)
Well, I have to say that I felt bad about any inadvertent cherry picking, so I made up a chart of the vanguard total stock market vs ALL of the american funds that invest primarily in US stocks, charted for total returns over the last 10 calendar years.

Note that this does not include any front end loads, soft costs from trading (which are substantial in actively managed funds) or any other costs.

Every one of them underperformed the Total Stock Market, excepting the "Growth Fund Of America (TM)", which holds ~20% in foreign stocks and is heavily weighted in oil companies. And that barely eked out an advantage up until recently when it came back to the same level as the TSM.

So pay a lot up front, pay more every year, enjoy lots of soft costs and taxable events, and end up with worse performance. Sounds good.

cute fuzzy bunny 09-19-2008 11:18 AM

1 Attachment(s)
Here's the 5 year chart. Same results.

cute fuzzy bunny 09-19-2008 11:19 AM

1 Attachment(s)
Three year chart, same results

Nords 09-19-2008 11:21 AM

Quote:

Originally Posted by cute fuzzy bunny (Post 716989)
So pay a lot up front, pay more every year, enjoy lots of soft costs and taxable events, and end up with worse performance. Sounds good.

I think you're wrestling with someone who should be on your "Ignore Poster" list has made up their mind not to be confused with a bunch of distracting facts.


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