Need Some Insight on This Fund

[marko]

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"

 

[HarveyS]

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.

 

[Al18]

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/fund-performance?s=y&sl=0fkDzvqEZZtxaqpTfjX60

 

[marko]

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/fund-performance?s=y&sl=0fkDzvqEZZtxaqpTfjX60

Thanks so much! It does note that reipx has out performed schd ytd. Regardless, need to do a bit more digging

 

[Lsbcal]

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.

 

[marko]

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?)

 

[DrRoy]

pass

 

[Onda]

All value oriented funds performed poorly this year. I would rather own value oriented index fund without 0.67% in fees.

 

[VanWinkle]

If you own the market, growth and value, you won't be guessing or changing gears when one out performs the other.

 

[marko]

pass

? What does that mean?

 

[marko]

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.

 

[MichaelB]

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?

 

[marko]

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.

 

[VanWinkle]

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

 

[marko]

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.

 

[Phroig]

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)

 

[Lsbcal]

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.

 

[Al18]

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.

 

[marko]

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.

I have the I class fund equivalent with .56% fee but point taken

 

[SunGuy]

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.

 

[dobig]

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.

I see a yield of 2.21% for NOBL?

 

[rsingh6675]

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"

I have PRWCX, slightly better than PRFDX

 

[Al18]

I see a yield of 2.21% for NOBL?

You seem to be correct.

 

[GhostofTomJoad]

I'm newer to this fund PRFDX. I write this on 12 Dec, '23, just before it's due to pay out for the year-end. Of course, there are divs. through the year. 4X, total, including Dec.

I tell myself that it is "giving away" some of its performance with those dividends. Morningstar is hardly reliable anymore, but it's handy, so I use it. M* shows PRFDX + YTD by 5.8 percent. Not fabulous, considering what my BONDS are giving me. (And last year was the worst for bonds, ever. Perspective!)

Look at the long-term: 15-year performance is anything but shabby, +10.8%. But I understand there's been a Manager change.

Is it quarterly income you're after? Or growth, out of a VALUE fund?
Wife's IRA is in BRUFX, another laggard, this year.

PRFDX portfolio's overall dividend yield is 3.07%, just above my minimum requirement of 3% for dividend-payers. That's the standard I employ with my single stocks, too.

 

[marko]

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. "

OP here. Wouldn't ya know! When I first posted this, the fund's YTD was -0.23%.

Now, just thirteen days later, it's YTD is 7.79%. Almost in line with its 3 and 5 year average.

Last night, year-end dividends came in just a tad under 2022's and 10% higher than 2021.

FWIW, I hadn't made any changes yet as I was waiting for the first of the year, but now that it's beginning to behave itself again I may just hold on a bit longer.