Check out this Mutual Fund for last 35 years - amazing!

hold the phone on this thread till we can check in with Flagpole guys.

Paula Struthers wrote:

I challenge you to find another mutual fund that has returned 18.90 per cent annually over last 35 years

According to Morningstar, that annualized returns over the last 10 years are 10.65%, which is slightly higher than the S&P 500 at 9.47%.

T. Rowe Price's Latin American and Emerging Market funds are averaging 22.20% and 14.72% over the same time.

I know it isn't for 35 years, but it doesn't look too difficult to find better funds. Yes, I do own those two funds that I listed.

Ok then wrote:

Absolutely. That's why I questioned your assertion the chart showing poor relative performance against the S&P 500 was meaningless.

Is it a common occurrence for a large-cap fund paying decent dividends to change its style to one focused on small cap growth stocks?

If you look at the historical NAVs on the fund on a monthly basis, you can quickly look back and see the size of historical distributions. Mutual funds are required to distribute 100% of dividends and capital gains to their shareholders every year. These distributions usually occur in late December, so the current yield is not an adequate measure of the size of this year's distribution. Look back historically at this data:

You will see that the size of distributions in many of the historical years are on the magnitude of 10-20% of the fund's NAV. Thus, the reason the Yahoo chart originally shown is not relevant to the comparison is that it leaves out a large portion of the fund's return that was distributed.

The same thing happens with the S&P 500 index since it is also not dividend adjusted. Of course, the impact is larger with mutual funds because of the capital gains distributions, which one does not experience with an index

The best way to measure the returns for this fund over the historical time period is to use the ADJUSTED CLOSE on the historical Yahoo data. This makes it a much more compelling story that this fund has performed very well.

Second question: Is it common for funds to change their investment style? Unfortunately, among active managers, this is very common. Many active managers are "closet indexers." They will also change their style throughout the year depending on whether they are beating or lagging the market for that period. One study, Kim, Shukla, and Tomas (2000) found that over HALF of stated mutual fund objectives are misclassified given the attributes of fund performance and holdings. Thus, just because a mutual fund says it is large-cap value does not mean that it truly is. At one point about 10 years ago, the Fidelity Blue Chip Growth Fund was investing in currency options. Not exactly what one would call "blue chip" equities.

Mcgato - you mention 22.20% and 14.72% for 10 years ... Penn has does almost 19% for 35 years! I again challenge anyone to find a fund that has done that over that timer period.

Paula Struthers wrote:

Mcgato - you mention 22.20% and 14.72% for 10 years ... Penn has does almost 19% for 35 years! I again challenge anyone to find a fund that has done that over that timer period.

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What a fund did last year, for the last five years, for the last 35 years don't mean spit.

Buy your own stocks. Why hand over 1% per year to some fund mangagers? They win, you lose

Paula Struthers wrote:Mcgato - you mention 22.20% and 14.72% for 10 years ... Penn has does almost 19% for 35 years! I again challenge anyone to find a fund that has done that over that timer period.

You dope, you can't take the simple average of all of the years and expect that to be a realistic measure of anything.

For instance, say a fund has returns of -50%, -50%, and +100% for an average of 0%. How did your $1000 do over those three years? First year it dropped to $500, second year to $250, third year back up to $500, for a net of -50% over three years or an average of -17%.

I also like the fact that you conveniently start your time line after two consecutive years of -40+ percent drops.

Most of my funds are Vanguard - which charge like .20 per cent or so

uncleb - who are you a fan of? who do you really admire? You seem to get so much pleasure insulting and cutting down and accusing.

Seriously - name a person you really admire.

hat in hand wrote:

uncleb - who are you a fan of? who do you really admire? You seem to get so much pleasure insulting and cutting down and accusing.

Seriously - name a person you really admire.

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What are you talking about? Do you not realize mutual funds are a scam? Do you think that the members of the Johnson family (Fidelity) all got to be billionaires because they are just smart investors? Well if you do, you are wrong. They got to be billionaires by getting millions of investors/suckers to hand over fees to them.

Who do I currently find admirable? Check out Glenn Greenwald

Uncle B - if you have well-diversified portfolio of mutual funds that have returned annually 10 per cent we will say and paying .35 per cent to Vanguard family - that is not wise investing? You nuts? Stock-picking doesn't work - you need diversification dude

Paula Struthers wrote:

Uncle B - if you have well-diversified portfolio of mutual funds that have returned annually 10 per cent we will say and paying .35 per cent to Vanguard family - that is not wise investing? You nuts? Stock-picking doesn't work - you need diversification dude

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Why is diversification necessarily good?

Basically, of you are looking to diverify, you are only looking to float with the market. What do you need to pay fund managers for if that is what you are doing? You can buy and sell stocks at %5.95 per transaction and save yourself tens of thousands of dollars that would otherwise go to fund managers.

Most mutual fund underperform the market -- due to the fees they charge. Over time, the House in Las Vegas alwasy wins. In the case of mutual funds, the fund managers always win all the time -- no over time requirement.

I only want to match the market return. I pay tiny amount to Vanguard and Wells Fargo gives me 200 free trades a year - mutual funds included? A famous research study determined that 96 per cent of a portfolio's performance is based on how well diversified and 4 per cent is based on stock-picking and market-timing. So you really can't beat the market unless you get a small company stock like Dell in its infancy and returned 3000% over 3 years. Stock picking just not going to do trick. I am contented with the market return.

Paula Struthers wrote:

I only want to match the market return. I pay tiny amount to Vanguard and Wells Fargo gives me 200 free trades a year - mutual funds included? A famous research study determined that 96 per cent of a portfolio's performance is based on how well diversified and 4 per cent is based on stock-picking and market-timing. So you really can't beat the market unless you get a small company stock like Dell in its infancy and returned 3000% over 3 years. Stock picking just not going to do trick. I am contented with the market return.

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You don't pay a tiny amount to Vanguard and Wells Fargo. They don't work that way. At a minimum, you pay 1/2 of 1% of your investment every year (it is well hidden as an offset to the actual returns on the stocks within your fund -- but is is there). If you have $500k in your 401(k), you are out $2,500 per year -- that would pay for a lot of $5.95 trades

smart move.

People who talk poorly of index funds are the 90% of the population who think they are smarter than average.

You factor in tax consequences and fees it is hard to beat the index even if you find a good fund manager.

bobtheslob wrote:

smart move.

People who talk poorly of index funds are the 90% of the population who think they are smarter than average.

You factor in tax consequences and fees it is hard to beat the index even if you find a good fund manager.

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Keep paying thousands of dollars to fund managers so they can get you net returns that are, on average, less than the market (they are less due to the fees they deduct). Is that smarter than average?

uncleb is right in one small way - if you want a portfolio with just big cap US stocks, you can do it yourself for less than even Vanguard would charge. You could probably do it for free somewhere.

But who wants just big US stocks?

You can't have a do it yourself portfolio of foreign real estate, emerging market stocks, US small caps, commodities, bonds, etc. What can any of us know about korean stocks? And you would have to own dozens of stocks to hit all the major groups.

so if you want to own just one kind of stock, go ahead and do it yourself. If you want diversificaton, then you have to pay someone, and you might as well pay Vanguard because they are dirt cheap.

As for regular retail mutual funds like Fidelity - 90 percent of them are garbage - good luck finding the few gems.

I am buying this one when market opens tomorrow

[quote]agip wrote:

You can't have a do it yourself portfolio of foreign real estate, emerging market stocks, US small caps, commodities, bonds, etc. What can any of us know about korean stocks? And you would have to own dozens of stocks to hit all the major groups.

So buy dozens of stocks. You really think the people you are paying to "manage" your fund know more than you about the future price of some small stock, or some foreign stock? Of course they don't.

I'm glad your gamble paid off, but it's just a gamble. That you have a founding myth to explain how gold will continue to rise doesn't really change the fact that you are gambling.