I had been with Vanguard until recently. I'm currently with Fidelity. My inquire today is simple. I'm looking at several different funds in and out of Fidelity. How much weight do you put on Morningstar ratings in your selection of Mutual Funds.
I disagree. If peers are other stock picking funds they will in aggregate be losers. Compare only to indexes or to index funds.Morningstar is useful. The analysis is best. But look at performance percentile compared to peers.
I had been with Vanguard until recently. I'm currently with Fidelity. My inquire today is simple. I'm looking at several different funds in and out of Fidelity. How much weight do you put on Morningstar ratings in your selection of Mutual Funds.
Morningstar is useful. The analysis is best. But look at performance percentile compared to peers.
I never look at Mornigstar. For almost all my investing in markets, I use index investing and shoot for extremely low cost.
costs certainly may be a factor but they can be largely over blown .
there are so many parameters involved that are so much more outcome determining, like portfolio construction and the day you bought and the day you sold .
i am playing around with a relatively small amount of money in a experimental portfolio i am trying .
its supposed to provide the returns of a 60/40 but with less risk and draw down .
it uses expensive 3x funds .
just went as far back with these funds as i could in portfolio visualizer. first time running it myself .
i was able to go back to jan 2020 , so almost 4 years , so i captured the covid equity drop and the hammering of bonds .
a 60/40 consisting of 60% voo (s&p fund )and 40% bnd ( total bond fund ) took 100k and turned it in to 126,130 , a cagr of 6.11%
the 60/40 carolina reaper took a 100k grew it to 136,260 ,a cagr of 8.22%
BUT GET THIS
WORST DOWN YEAR WAS MINUS 2.57% for the reaper with a worst draw down of 9.45%
the conventional 60/40 had a worst year of minus 16.16 % and a worst draw down of 20.15%
HOLY CRAP , WHAT A DIFFERENCE .
Boy this is showing a lot of promise as we went thru some awful times as well as high inflation and rising rates.
it really wants to compel one to go whole hog but i don’t have the balls yet. lol
but it certainly looked like that magical portfolio we all dream about if we don’t want 100% equities
i mean down a mere 2.57% …that’s incredible while a 60/40 was down 16.16% , yet beat it by over 2% in gains
keep in mind these returns include all expenses and these leveraged funds are not anywhere near as cheap as voo or bnd .
so like i always say , there is so much more when portfolios are involved then lowest costs of the individual components
that was vanguard marketing brainwashing investors.
here are the expenses
dbmf .85% , upro .92 tyd 1.1%
voo .03. bnd .03
yet including all expenses the reaper not only averaged more then 2% a year more but was lower risk in every respect despite much higher fees and the individual holdings being as volatile as can be .
yet how often here is the advice to buy low cost index funds as the primary criteria or only criteria … so marketing vs real life can be very different when all parameters are considered
Morningstar is a good site for research. It's not the only one. The stars are a rank, and just mean one fund ranks higher than another. That's nice to know, but many investors go a bit further in the analysis.I had been with Vanguard until recently. I'm currently with Fidelity. My inquire today is simple. I'm looking at several different funds in and out of Fidelity. How much weight do you put on Morningstar ratings in your selection of Mutual Funds.
this reminds me of the boglehead who went to buy a car .
he beat up the salesman for the lowest price , then he went to work on the finance guy getting lower financing , then he traded in his car and worked on getting a higher price for it .
on the other hand , grandma got the same car . she paid a bit higher and got a slightly higher financing rate .
grandma sold her car privately instead of wholesale .
grandma won and ended up with the best deal.
the point is don’t get to hung up on fees , they are only one of many parameters that effect an outcome.
no ones outcome is the best of everything so something not the best in one parameter can easily be made up in another one , or negated by another factor
this reminds me of the boglehead who went to buy a car .
he beat up the salesman for the lowest price , then he went to work on the finance guy getting lower financing , then he traded in his car and worked on getting a higher price for it .
on the other hand , grandma got the same car . she paid a bit higher and got a slightly higher financing rate .
grandma sold her car privately instead of wholesale .
grandma won and ended up with the best deal.
the point is don’t get to hung up on fees , they are only one of many parameters that effect an outcome.
no ones outcome is the best of everything so something not the best in one parameter can easily be made up in another one , or negated by another factor
And don't believe everything you read on the internet......
And don't believe everything you read on the internet......
But, I read this on the internet!
To clarify:Morningstar is a good site for research. It's not the only one. The stars are a rank, and just mean one fund ranks higher than another. That's nice to know, but many investors go a bit further in the analysis.
Stars are probably ok for sifting through many fund candidates. It's hard to ignore the stars.
Vanguard Wellesley gets 5 stars. Does it fit every space in your portfolio?
costs certainly may be a factor but they can be largely over blown .
there are so many parameters involved that are so much more outcome determining, like portfolio construction and the day you bought and the day you sold .
i am playing around with a relatively small amount of money in a experimental portfolio i am trying .
its supposed to provide the returns of a 60/40 but with less risk and draw down .
it uses expensive 3x funds .
just went as far back with these funds as i could in portfolio visualizer. first time running it myself .
i was able to go back to jan 2020 , so almost 4 years , so i captured the covid equity drop and the hammering of bonds .
a 60/40 consisting of 60% voo (s&p fund )and 40% bnd ( total bond fund ) took 100k and turned it in to 126,130 , a cagr of 6.11%
the 60/40 carolina reaper took a 100k grew it to 136,260 ,a cagr of 8.22%
BUT GET THIS
WORST DOWN YEAR WAS MINUS 2.57% for the reaper with a worst draw down of 9.45%
the conventional 60/40 had a worst year of minus 16.16 % and a worst draw down of 20.15%
HOLY CRAP , WHAT A DIFFERENCE .
Boy this is showing a lot of promise as we went thru some awful times as well as high inflation and rising rates.
it really wants to compel one to go whole hog but i don’t have the balls yet. lol
but it certainly looked like that magical portfolio we all dream about if we don’t want 100% equities
i mean down a mere 2.57% …that’s incredible while a 60/40 was down 16.16% , yet beat it by over 2% in gains
keep in mind these returns include all expenses and these leveraged funds are not anywhere near as cheap as voo or bnd .
so like i always say , there is so much more when portfolios are involved then lowest costs of the individual components
that was vanguard marketing brainwashing investors.
here are the expenses
dbmf .85% , upro .92 tyd 1.1%
voo .03. bnd .03
yet including all expenses the reaper not only averaged more then 2% a year more but was lower risk in every respect despite much higher fees and the individual holdings being as volatile as can be .
yet how often here is the advice to buy low cost index funds as the primary criteria or only criteria … so marketing vs real life can be very different when all parameters are considered
this reminds me of the boglehead who went to buy a car .
he beat up the salesman for the lowest price , then he went to work on the finance guy getting lower financing , then he traded in his car and worked on getting a higher price for it .
on the other hand , grandma got the same car . she paid a bit higher and got a slightly higher financing rate .
grandma sold her car privately instead of wholesale .
grandma won and ended up with the best deal.
the point is don’t get to hung up on fees , they are only one of many parameters that effect an outcome.
no ones outcome is the best of everything so something not the best in one parameter can easily be made up in another one , or negated by another factor
And don't believe everything you read on the internet......
I disagree. If peers are other stock picking funds they will in aggregate be losers. Compare only to indexes or to index funds.
I'm sure I've left money on the table with my index investing BUT I haven't left much money in the fund managers' pockets.
let me tell you , if this experiment with the carolina reaper portfolio works as expected i will gladly pay those fees over an index fund