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An index fund's downside capture ratio should be more than 100% due to fees and inflexibility is bet that's where some of the performance delta comes from.
OK, maybe. The point is most people have an easier time sticking with funds that are less volatile. You only get those index fund returns if you can stick with it in hard times. Maybe that's easy for you, but it isn't for a lot of other people. A fund like AIVSX is a reasonable alternative to an index fund for that reason.
Actually, it tells you no such thing. 20 years isn't really long enough. 40-50 is more like it.
There are so few funds that have been around 50 years that there's not much to compare. But Dodge & Cox Stock, Dodge & Cox Balanced, Mairs & Power Growth, and Mairs & Power Balanced have all been around for 50 years now and all have good to excellent track records going back that far. The problem is the managers from 50 years ago aren't there any more. Or, funds like AIVSX were around 50 years ago, but asset bloat has dimmed their prospects for the future. Dodge & Cox Stock is also asset bloated, but it has managed to perform better than AIVSX, but it has also been more volatile.
Quote:
Originally Posted by ncole1
This is a psychological trick more than anything. I guess some people need it though.
Investing and most other money matters are very much psychological. You're young. You think you're immune from the pitfalls of being human. I'm betting you're not.
Maybe. To me, the advantage of a balanced fund is in the minimization of the negative impact of badly timed withdrawals. If you plan to retire at age 55 for example, and the stock market happens to perform poorly around that time, the blow to a balanced portfolio will be softer than that to an all-stock portfolio.
the drawback of owning just a balanced fund is that if you are retiring as in your example and stocks take that hit you will have to sell the fund when it is down to raise cash.
anytime you try to use something that is one size fits all eventually it does not fit you.
while i have big positions in fidelity balanced fund i also hold not only other growth and income funds but bond funds as well.
if bonds take a hit i can keep the balanced fund intact but lighten up the rest of the portfolio's conventional bonds and move to more appropriate income funds.
i also can't season things and allocate to my needs and taste lifestyle wise when everything is a fixed allocation .
while i think balanced finds are fine do not think for one second that owning one is a substitute for having a total comprehensive portfolio.
if it was a food it would be like an energy bar. you still need food for so many reasons .
Pointless to look at any returns before the Internet came of age. The efficient market hypothesis rules these days. This fund has underperformed the S&P since 2007. Its R-squared rating is well into the 90's which means it's merely replicating it's benchmark index. And you're paying about .5% extra per year do do that. Better off with an index funds.
I'm not paying anything, as I don't own the fund. But I do own index funds, as I previously said. Merely passing on information to another poster.
There are so few funds that have been around 50 years that there's not much to compare. But Dodge & Cox Stock, Dodge & Cox Balanced, Mairs & Power Growth, and Mairs & Power Balanced have all been around for 50 years now and all have good to excellent track records going back that far. The problem is the managers from 50 years ago aren't there any more. Or, funds like AIVSX were around 50 years ago, but asset bloat has dimmed their prospects for the future. Dodge & Cox Stock is also asset bloated, but it has managed to perform better than AIVSX, but it has also been more volatile.
Investing and most other money matters are very much psychological. You're young. You think you're immune from the pitfalls of being human. I'm betting you're not.
The last time my 100% stock portfolio dropped a whole lot, not only did I NOT sell, I rushed in and bought more.
The last time my 100% stock portfolio dropped a whole lot, not only did I NOT sell, I rushed in and bought more.
Easy to do when you have a lot of cash relative to the portfolio. Once your aggressive portfolio grows to a significant size, a large drop will get you worried more about losing than trying to gain.
Easy to do when you have a lot of cash relative to the portfolio. Once your aggressive portfolio grows to a significant size, a large drop will get you worried more about losing than trying to gain.
Nope. I don't have a lot of cash relative to stock. Just a small emergency fund.
Some people panic and others don't. Is this really that tough to understand?
The last time my 100% stock portfolio dropped a whole lot, not only did I NOT sell, I rushed in and bought more.
Good for you. Most people don't do that. As your account balance grows, you may be more reluctant to do so in the future.
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