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Most of my portfolio consists of passive index funds that are doing poorly, either negative YTD or close to it... of course they are just tracking the broader indices... but I have one active fund in my 401k FCNTX which is really shining, relatively speaking of course...
FCNTX has a YTD return of +3.06% with an expense ratio of .74%. Even factoring that in it has performance over twice as good as the S&P500.
I do notice that they are shuffling things around a lot because I have quite a bit of capital gains and the dividend payout is not great but this is in my tax exempt so I don't care too much. The turnover rate is listed as 29%, holy crap! But whatever it is they are doing seems to be beating the market which is clearly impressive in this challenging market.
Most of my portfolio consists of passive index funds that are doing poorly, either negative YTD or close to it... of course they are just tracking the broader indices... but I have one active fund in my 401k FCNTX which is really shining, relatively speaking of course...
FCNTX has a YTD return of +3.06% with an expense ratio of .74%. Even factoring that in it has performance over twice as good as the S&P500.
I do notice that they are shuffling things around a lot because I have quite a bit of capital gains and the dividend payout is not great but this is in my tax exempt so I don't care too much. The turnover rate is listed as 29%, holy crap! But whatever it is they are doing seems to be beating the market which is clearly impressive in this challenging market.
Any fans of active funds here?
I wouldn't quite say I'm a fan of active funds. But I would say I think the index fund worship, while mostly a good thing, is a little overdone.
If you pick active funds with below average costs, your chances of beating the relevant index fund are reasonably good.
And besides all that, the bigger problem with returns isn't active vs. passive. It's investor behavior. People still tend to buy high and sell low whether they're in active funds or passive ones.
29% turnover is well below average for an active fund, by the way.
I've listed active funds that I like on these boards many times. I'm a big fan of balanced funds, in particular, such as:
--Vanguard Wellington (almost as cheap as an index fund).
--Mairs & Power Balanced
--Fidelity Balanced
--Dodge & Cox Balanced
--Oakmark Equity & Income
everyone pretty much knows my stance . i much prefer active and always did .
just stick to the 20% largest funds and odds are well in your favor you will beat some index . morningstar numbers crunching showed if you stick to the largest funds the equation shifts towards actively managed
I'm an investor in both. There is no right answer. Many studies have been done to show that with fees index funds outperform managed funds in the majority of cases. But there are always managed funds who beat their indexes as well. You can't go wrong with index funds, you may do better with managed funds but that's not a given.
The problem with managed funds is that the fund managers' hand can turn cold and most suffer low returns for several years waiting for the manager to get their mojo back before bailing into some other investment. The plus with index funds is you do not have to worry about a fund manager loosing his luck- the negative is that an active fund at times will outperform- back to having a keen eye on your portfolio and potential timing issues.
I'm a huge fan of passive funds. Interestingly enough many people will consider themselves "passive" investors, but then when market goes south they start moving things around and trying to "manage" their portfolio. Markets provide plenty of historical evidence they do fine, but it is investor behavior that hurts returns.
except for 10% in an s&p index fund i have never been a passive investor, invested in passive funds, as my mainstay investing . following the newsletter has always had our portfolio's dynamic .
we don't wait for fund managers to get hot , we use the funds through their sweet spots and then on to others that may better fit the times . it has done very well doing that for 30 years . .
Most of my portfolio consists of passive index funds that are doing poorly, either negative YTD or close to it... of course they are just tracking the broader indices... but I have one active fund in my 401k FCNTX which is really shining, relatively speaking of course...
FCNTX has a YTD return of +3.06% with an expense ratio of .74%. Even factoring that in it has performance over twice as good as the S&P500.
I do notice that they are shuffling things around a lot because I have quite a bit of capital gains and the dividend payout is not great but this is in my tax exempt so I don't care too much. The turnover rate is listed as 29%, holy crap! But whatever it is they are doing seems to be beating the market which is clearly impressive in this challenging market.
Any fans of active funds here?
I am in a unique position at the moment to comment on your question. Immediately proceeding coming into this discussion I just rebalanced my Fidelity portfolio based on recommendations from Fidelity Monitor/Insight. I have several of their model portfolios with a sizable holding of Contrafund in each. I also hold Total Market Index and did a comparison of the active portfolio performances and compared to my Total Market performance YTD, MTD and WTD.
First of all you are mixing apples and oranges. Contra Fund is a actively managed fund capturing a segment of the market basically Giant and large cap growth funds with a tad of mid cap. It is not a overall balanced index portfolio and for many of us is part of a balanced portfolio of equity funds. A number of us use a newsletter driven portfolio which includes Contrafund in several of the model portfolios. Contra is the star of those portfolios. With the overall portfolio not performing as well.
For YTD one of the larger recommended fund holdings in several of the portfolios was underperforming and dragging down the YTD for several portfolios. The changes in the portfolio had us selling all of that fund and buying 100% of a new replacement. Time will tell how that works out. Could be a jump start and in three months the active portfolios will be blowing Total Market away with the equity focused modesl with Contrafund.
Mystical mentions several great balanced funds which you can't in anyway compare with Contrafund as they contain significant non equity holdings.
You may well be in a good place with your current portfolio if you have a balanced holding of index funds and Contrafund to jump start it. Broad diversification along with a historically market beating equity fund to give it greater Alpha. There are plenty of folks holding just what you are.
I know you're probably not looking at bond funds, but as far as bond funds go, despite its low expenses, the total bond market index hasn't done particularly well over the last 10-15 years. 65th percentile for trailing 10 year returns and 52nd for trailing 15 year returns.
This really surprised me because expenses should matter even more with a low return category like bonds, but it hasn't been all that hard to find an actively managed bond fund that's beaten the index. Of course, you should still go for bond funds with below average costs. If you do you, you shouldn't have too hard a time beating the index. Some of my favorites for core bond funds would be:
Dodge & Cox Income
Harbor Bond
Baird Core Plus Bond
Most of my portfolio consists of passive index funds that are doing poorly, either negative YTD or close to it... of course they are just tracking the broader indices... but I have one active fund in my 401k FCNTX which is really shining, relatively speaking of course...
FCNTX has a YTD return of +3.06% with an expense ratio of .74%. Even factoring that in it has performance over twice as good as the S&P500.
I do notice that they are shuffling things around a lot because I have quite a bit of capital gains and the dividend payout is not great but this is in my tax exempt so I don't care too much. The turnover rate is listed as 29%, holy crap! But whatever it is they are doing seems to be beating the market which is clearly impressive in this challenging market.
Any fans of active funds here?
Alpha in steady bull markets will always favor passive funds. I mean it's pretty common sense really. If the overall markets are positive there's not a lot to really do to pick a winner. Alpha becomes a premium in choppy/frothy markets where there is significant moves on both sides and yet a gradual consolidation or sideways movement within a 120 day range. That type of market is where active fund management makes their money, and shows how valuable they can be...where they can create "alpha".
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