cancel
Showing results for 
Search instead for 
Did you mean: 
     
Highlighted
Participant ○○

Re: Why PRWCX and not USMV

From my portfolio review,

Over the past three months, PRWCX outperformed USMV meaningfully.  VDIGX, for an actively managed fund, performed not much better than USMV.   Silver lining is that SPLV performed far worse.

Since April 9, SPLV lost 7% (while SPY is up 6%) and USMV and VDIGX are approx break-even (while underperforming Vanguard Intermediate Corporate Bond fund (up 4%)).

Just showing how investments that are supposedly safer than SPY have performed.  No conclusions re future are implied.

Disclosure:  I own all of the above, except SPLV.  Added aggressively to USMV and VDIGX during the recent market swoon but just breaking even so far on these. 

 

 

0 Kudos
Highlighted
Follower ○○○

Re: Why PRWCX and not USMV

Anitya

Originally I was looking for a substitute for PRWCX for my wife’s IRA because it is closed and has been closed for a while.

One of the members of this forum (I believe his name was Fred) made an excellent recommendation of VLAAX/VLAIX which are basically the same fund except that the latter requires $100,000 minimum. Upon further analysis VLAIX did a little better thanPRWCX over the last 1 and 3 year periods thru April 30 while PRWCX did slightly better over the 5 and 10 year periods.

Belatedly I want to thank Fred for his suggestion and I bought VLAIX after doing my own analysis.

Joe H

Sent from my iPhone
0 Kudos
Highlighted
Explorer ○○○

Re: Why PRWCX and not USMV

VLAIX is available at Vanguard IRA for $1000 minimum.

0 Kudos
Highlighted
Follower ○○○

Re: Why PRWCX and not USMV


  at a very late stage in life, i'm just beginning to appreciate what you're saying.  i have held prwcx for a long time now but, being wary of its decline in 2008, which i lived through, i've also held onto way too much cash, while along the way moving into and out of various funds (berix, fpacx) that i thought would do me good.
  i would have been far far better off putting 100% into VWINX and letting it ride. PRWCX might have done better year to year over the long haul, but since i couldn't stomach being anywhere close to 100% in it, my returns suffered a great big bunch.
 probably would have done better had i put all my faith in VASIX, with even lower returns than VWINX.
 in the pic below, #1 is PRWCX, #2 is VASIX, #3 is VWINX.  looking at max draw downs, which would you choose and stick with through thick and thin?
   Firefox_Screenshot_2020-05-23T13-17-31.164Z.png

@shipwreckdalone wrote:

M* posters frequently use PortfolioVisualizer to make decisions. Most use the Backtest Portfolio Asset Allocation tab and cite CAGR, Sharpe, MaxDraw & Std Dev for the basis of their decisions. I would recommend scrolling down to Portfolio Growth graph and move yr cursor over the portfolio value over the blue, yellow red lines while doing this research. Some of these Balanced funds have good long term % or ratio numbers (CAGR/Sharpe/MD/StnDev), however it is also necessary to also look at the real $$ loss during hard recessions (real life money). Some Balanced funds are at the aggressive edge of the 50-70 equity allocation. That risk is highlighted by comparing the portfolio value high vs low (recession bottom) via Portfolio Growth graph. I am of the opinion most people with balance fund intentions cannot stomach the losses incurred historically for some of these funds. It doesn't matter how much one fund outperforms the other if the end result is an investor selling out during recessions. This is the point of this post: If the drawdown real $$ value is untolerable, it will force an investor to sell thus he becomes a market timer which is the worst result IMHO and defeats the point of investing in the first place. I am simply suggesting you also consider this tool as well  while analyzing. % can be deceiving. I am not arguing one fund over another becasue eveyone has difference risk tolerances/goals. GL to all.


 

0 Kudos
Highlighted
Participant ○○

Re: Why PRWCX and not USMV

At the risk of sounding a pitch for balanced funds, I also own VLAIX (about 3% of PV).  With 70% of FI in AAA rated bonds,  VLAIX complements my PRWCX and FBAKX holdings.  Coming out of March lows, VLAIX did not increase equities to much above 60% and held 8% in cash, while PRWCX and FBAKX were more aggressive.  However, its draw down in March was excellent which made up so far for lagging in the recovery.  On March 24, I exchanged some FBAKX for ARTTX to participate on the presumed upside (Fed programs and CARES Act) but FBAKX outperformed ARTTX so far.  This recovery in equity markets has been miscalculated by many active managers and investors.  I plan to keep the remaining FBAKX for at least a few more years.  To the question of which one allocation fund to keep, I do not have the make up to go with only one fund.   I plan to keep at least 3 funds, with no single fund exceeding 10% of PV.  I am not smart enough to make all or nothing bets - generally, I only tinker with risk at the margins.

Edits is blue font.

0 Kudos
Highlighted
Follower ○○○

Re: Why PRWCX and not USMV

I did not know that you could buy VLAIX for $1,000 minimum thru Vanguard.

I did write to Russ Kinnel of the Morningstar Fund Investor why he never shows VLAIX or VLAAX in his Morninstar  500 or even acknowledges that they exist. I speculated that Value Line might be a competitor of Morning that they don't recommend competitor's funds just like Fidelity doesn't recommend Vanguard funds. He never responded to me.

In any event my poritions are now  (1)PRWCX (2VLAIX and (3)VWINX. I also have a large position in Fidelity Balanced in their Deferred Personal Retirement Annuity Account so I only own 4 funds in total. This wasn't that different from the of the other members who indicated the same 1 and 3 positions but a different fund for his/her 2nd position. No matter what I do, I always seem to wind up 63% in equities but I have a strong stomach as Peter Lynch would suggest. All 4 of my funds are balanced fund.

 

Thank you for the valuable feedback in this forum.

 

Joe H


@Saratoga wrote:

VLAIX is available at Vanguard IRA for $1000 minimum.


 

0 Kudos
Highlighted
Explorer ○○○

Re: Why PRWCX and not USMV

To: Jhauser917:

 

Excluding VWINX [ Wells. Fund } from my Q, How does possessing three balanced 60/40 Allocation funds, avoid significant duplication and or ensure Diversification?

I own PRWCX, and for some years paired it W/American Funds Bal. Fund, because the F.I. side of PRWCX was significantly H.Y., and ABALX, was significantly AAA Investment grade on the F.I. side.

Do you find a sufficient amount of distinction between possessing PRWCX, VALIX, & FBALX, to avoid duplication and therefore  justify owning all three simultaneously?

 

Signed, 

NoFriends1

0 Kudos
Highlighted
Follower ○○

Re: Why PRWCX and not USMV

I'm gonna jump in here and suggest that may mitigates manager risk, somewhat.  
0 Kudos
Highlighted
Participant ○○

Re: Why PRWCX and not USMV


@NoFriends1 wrote:

To: Jhauser917:

 

Excluding VWINX [ Wells. Fund } from my Q, How does possessing three balanced 60/40 Allocation funds, avoid significant duplication and or ensure Diversification?

I own PRWCX, and for some years paired it W/American Funds Bal. Fund, because the F.I. side of PRWCX was significantly H.Y., and ABALX, was significantly AAA Investment grade on the F.I. side.

Do you find a sufficient amount of distinction between possessing PRWCX, VALIX, & FBALX, to avoid duplication and therefore  justify owning all three simultaneously?

 

Signed, 

NoFriends1


Yes, for me.  Diversifying manager risk is a consideration as well.  Each person needs to check the funds' webpage to see if the diversification is sufficient for them.   Also, in M*, I would check the Stock Style and Factor Profile in the Portfolio tab and not just the Investment style table in the main quote page. 

I also happen to have explore positions in VWELX + VGWLX (1% of PV in aggregate) - I have not increased them in a while because these tend to have their equity exposure in Value style but I have favored Growth.  (My attempt to tilt towards Value has not met with success.) 

P.S.: In my previous previous post, I edited some text - now in blue font.   Per M* Portfolio pages, both USMV and VDIGX have value tilt, lower quality, and lower liquidity compared to Large Blend category, which explains their under-performance during both March draw down and subsequent equity market recovery. 

0 Kudos
Highlighted
Contributor ○

Re: Why PRWCX and not USMV

IMO in makes no sense to own more than two moderate allocation funds.   Doing so so is stacking diversification on top of diversification which is worse-sification.  Remember each moderate allocation is designed to be fully diversified itself.  But before buying any fund and while holding it, read everything you can about it.  For example, read any monthly updates and certainly every quarterly/semi-annual/annual report.   Know the firm and PM; and make sure their thinking,  strategy, investment philosophy make sense to you and align with yours.  

Also, it is ridiculous how many funds most investors hold on these forums.  I’ve stopped reading posts from a few knuckleheads who post threads on a daily basis.  M* forums are a source of entertainment for them rather than a place to learn.  Most people would benefit from owning a couple moderate (or conservative) allocation funds and or index funds.  I see absolutely no reason to own more than six funds regardless of your personal wealth.  I own three.  But in all cases, know what you own and why you own it.  When I say know what you own, I mean really know it.  Become an expert on the fund.  Read past and current annual reports before buying.  Caveat emptor.

0 Kudos
Highlighted
Follower ○○○

Re: Why PRWCX and not USMV

Based on comparing the short and long-term performance of VLAIX, I sold my FBALX, FPURX and BALFX and bought more VLAIX. I now own only 4 funds which are represented by the following percentages in my portfolio:

 

PRWCX  43%

VLAIX   29%

FJBAC  18% (annuity)

VWINX  9%

 

To answer your question why I own only Balanced Allocation funds, of which 3 are moderate (PRWCX,VLAIX,FJBAC) and 1 is conservative (VWINX),  I do feel strongly that by owning funds from 4 different families I am getting the best ideas from each family. I do not think of these funds as target funds which are designed to be the only fund in a portfolio. Rather, I think of them as smart actively managed funds in which the managers make their adjustments based on market conditions just as they also decide on how much to invest internationally.

 

One further point. I just watched a video of Ric Edelman addressed to retirees who are concerned about their portfolio being less than it was in February/early March. So what if your portfolio is less than what is was at its peak. Retirees have to go from an Accumulation Stage to a Management Stage to a Distribution Stage of their portfolios. As long as you are comfortable with your asset allocation and have the cash (or ability to raise cash) to withstand market volatility, then you should be able to sleep well at night. 

 

Joe H

Highlighted
Frequent Contributor

Re: Why PRWCX and not USMV

@jhauser917 , Fido VIP funds are often clones of their regular retail funds. Fido VIP Balanced FJBAC seems similar to FBALX with several of the same managers.   

https://fundresearch.fidelity.com/annuities/summary/FJBAC

https://fundresearch.fidelity.com/mutual-funds/summary/316345206

YBB
Highlighted
Follower ○○○

Re: Why PRWCX and not USMV

Thanks for the info. That's even more reason to sell FBALX.In the Annuity account, FJBAC was my best choice. Outside of the Annuity account, I like VLAIX better.

 

Joe H

0 Kudos
Highlighted
Participant ○○○

Re: Why PRWCX and not USMV

VLAIX/VLAAX are often mentioned among allocation funds, and about as close as you can get to besting PRWCX. Interestingly though, the equity portion of VLAIX isn't a whole lot different than SPY. Not identical of course, but given the number of sectors, it is pretty close IMO. 60/40 SPY/TLT has compared favorably with most time frames (that I backtested) having lower SD, higher Sharpe, and higher returns, or at least 2 out of the 3 metrics. 

0 Kudos
Highlighted
Explorer ○○○

Re: Why PRWCX and not USMV

"Interestingly though, the equity portion of VLAIX isn't a whole lot different than SPY."

 

The average market cap of VLAIX stock holdings is 30 billion, whereas the average for SPY is 125 billion, so quite different, IMHO. 

0 Kudos
Highlighted
Participant ○○○

Re: Why PRWCX and not USMV


@Coptomist wrote:

"Interestingly though, the equity portion of VLAIX isn't a whole lot different than SPY."

 

The average market cap of VLAIX stock holdings is 30 billion, whereas the average for SPY is 125 billion, so quite different, IMHO. 


True, they are different in that regard. What or when would the the effect of that show itself? My thinking is that it is not positioned to do other than follow the SPX closely. I never have thought about market cap when looking at funds, so can't say much about it.

0 Kudos
Highlighted
Explorer ○○○

Re: Why PRWCX and not USMV

"True, they are different in that regard. What or when would the the effect of that show itself?"

The market cap difference is due to the selection of the stocks used in the VLAIX fund vs the SPY (S&P 500 ETF). Here's a comparison of the top ten holdings for each:

 

VLAIXSPY 
Danaher CorpMicrosoft Corp 
Roper Technologies IncApple Inc
Accenture PLC Class AAmazon.com Inc
Thermo Fisher Scientific IncFacebook Inc A
Ecolab IncAlphabet Inc A 
Fiserv IncAlphabet Inc Class C 
Teledyne Technologies IncJohnson & Johnson
Tyler Technologies IncBerkshire Hathaway Inc Class B
Mastercard Inc AVisa Inc Class A
Union Pacific CorpJPMorgan Chase & Co

 

 

Announcements

Morningstar is here to help you respond to the Coronavirus crisis.