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What if the manager of the funds change? Megellen Fund (fidelity) tanked after Peter Lynch left. Index funds do not have that risk.
Magellan was the very first mutual fund I ever purchased (literally a week or 2 before the '87 crash). I kept it going for some number of years and eventually sold it. I don't remember what I put those monies into after that but I do remember Magellan was the hot diggity at the time.
What if the manager of the funds change? Megellen Fund (fidelity) tanked after Peter Lynch left. Index funds do not have that risk.
That's why I like Dodge & Cox and American Funds (if you can avoid paying the load and get a reasonably priced share class). These funds are team managed and the turnover on their teams is typically low.
Some fair points. I think just screening out the average or above average cost funds weeds out most of the bad funds. Actively managed funds with low expenses have a decent chance of beating the index.
I'm thinking of "A" or cheaper share classes of American Funds.
Dodge & Cox Funds (second cheapest after Vangaurd)
Several different Vanguard funds.
I think the best bet at positive alpha is to invest with DFA funds. They've successfully implemented factor & smart beta funds both domestically and internationally. The problem is DFA won't take on an individual investor; their channel is via financial advisors, who will take a piece of the action.
Of the funds mere mortals can get into, I like the AQR funds -- they approximate DFA and you can buy them retail. Plus, Cliff Asness is one of the brightest quants around.
What if the manager of the funds change? Megellen Fund (fidelity) tanked after Peter Lynch left. Index funds do not have that risk.
why does one insist you have to buy and die with one fund ? in 30 years i never ever saw any reason to hold one fund for life nor have i ever .
why should one of the most important aspects of our financial lives have to be so simplified that all you can buy is a fund and keep it forever . it makes no sense .
i wouldn't even do that indexing for best results .
Last edited by mathjak107; 06-07-2017 at 03:16 AM..
What if the manager of the funds change? Megellen Fund (fidelity) tanked after Peter Lynch left. Index funds do not have that risk.
Life is filled with risks and evaluating and adjusting is part of the deal. What if one of your favorite financial gurus at AQR funds dies tomorrow? All investors take risks.
One can certainly do an all-index portfolio and quite successfully, but my point is that categorically rejecting managed funds from consideration as part of a mix seems short-sighted to me. IF a managed fund is doing well isn't that something to consider?
Life is filled with risks and evaluating and adjusting is part of the deal. What if one of your favorite financial gurus at AQR funds dies tomorrow? All investors take risks.
One can certainly do an all-index portfolio and quite successfully, but my point is that categorically rejecting managed funds from consideration as part of a mix seems short-sighted to me. IF a managed fund is doing well isn't that something to consider?
Why? If index investing yields rewards equal to managed fund with less risk and cost why mess with it?
Because some managed funds can exceed the index's with less risk .
Contra as my own example has a lower beta than the s&p 500 and has beaten it for years .
Managed funds let you weight your portfolio differently at times taking less risk while improving gains portfolio wise even if that fund does not beat its index since you may not hold it beyond its usefulness .
20% of the stock budget in fidelity high yield returned 19% with 1/2 the volatility of the s&p 500 fund . so swapping funds can definitely pay off . so there was definitely value added not just sitting in a total market fund in that case just because that is what you own .
especially bond funds where over overwhelmingly managed beads indexing .
In my opinion managed funds work best in managed portfolio's that are dynamic not buy and die.
as i showed above compared to buying a total market fund the dynamic insight model was more than 300k ahead over the last 30 years ..
there are so many newsletters that have done this for decades successfully . it is nothing you have to even do yourself .
fidelity investor , fidelity insight ,fidelity monitor .. now fidelity monitor and insight merged ..... there are vanguard ones too but i don't follow them .
i do keep about 25% of my growth model in ivv and vxf . everything else is managed fidelity funds . but i do run 3 different models based on time frame so over all index funds are about 10-12% of assets.
45/40 /15 overall
Last edited by mathjak107; 06-07-2017 at 11:43 AM..
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