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Participant ○○

Why PRWCX and not USMV?

I too had preferred PRWCX over USMV, but when I look at their relative performance over the life of USMV (8 years), which includes two stock market corrections, USMV is not shabby and is more tax efficient.

It can be very misleading to see USMV's three year performance at 3 stars and PRWCX's performance at 5 stars.  

Are they too different to compare against each other, not withstanding how similar their stock charts look?

I would like Acamus, Yogi, etc. to comment.

96 Replies
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Participant ○

Re: Why PRWCX and not USMV?

 

You didn't ask for my comments specifically, but the key difference is that PRWCX has a large slug of bonds in it ... USMV is all-equity.  So I do think comparing PRWCX to USMV is apples-to-oranges.   (PRWCX is an allocation fund, which by definition includes more than just stocks, obviously)

But I agree, it doesn't look too shabby.   I looked at USMV but ultimately went with VMVFX to compliment my PRWCX b/c it had more of a world-stock feel to it.

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Participant ○○

Re: Why PRWCX and not USMV?

I think of PRWCX as basically a 70% LC growth stock and 30% ST junk bond mix. USMV is 100% stocks selected for low volatility.  Apples and oranges - similar size and shape, sometimes even color. Either could suit your taste, but they are not the same thing.

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Participant ○○

Re: Why PRWCX and not USMV?

Like rforno, I went with Vanguard's Global Minimum Volatility Fund rather than USMV, for the global flavor.

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Contributor ○○○

Re: Why PRWCX and not USMV?

From what I can quickly glean from M*, PRWCX is more actively managed, more growthy, holds less equity, has better up/down stats, better 'risk' stats.  Because of the 'active' part, these aspects can/will vary.  For example, PRWCX has become more risk-averse recently (imo).  For a long-term, blendy, sedate, all-equity hold, USMV is fine.  ME, if I want all-equity, I want to be better compensated for it.

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Frequent Contributor

Re: Why PRWCX and not USMV?

It is not fair to compare moderate-allocation fund with 100% equity, even min volatility, fund.

Be aware that global min volatility VMVFX hedges currencies, so it has benefited from strong dollar. But I do like it in international/global area.

YBB
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Frequent Contributor

Re: Why PRWCX and not USMV?

NOT like the others, I don't see a problem comparing different categories.  3 Examples: I can easily compare multisector funds to conservative allocation funds and I find that Multi is a better choice because they can have the same performance but have better risk attributes.  I can also compare FI CEFs to stocks. 

Let me also say that PRWCX is the only allocation I would buy myself, for any other choice I would go with stocks index + managed bond fund instead of allocation.  PRWCX is the exception to the rule and where the manager adds tremendous value.

So let's compare USMV to PRWCX to SPY (just for reference).  PV shows(link) that it's a close call.

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
USMV14.12% 8.62%25.09%1.36%-7.56% 1.532.84
PRWCX12.48% 6.96%22.43%0.62%-6.37% 1.663.2
SPY14.31% 10.69%32.31%-4.56%-13.52% 1.272.1

 

1) USMV beats SPY hands down with similar performance but much better risk attributes

2) USMV vs PRWCX. USMV has better performance but worse SD, Max Draw, Sharp, Sortino...suprisegly USMV has a better worse year. Sharp is the defining factor and as you can see it's pretty close 1.53 vs 1.66.

3) Looking at one year chart, we can see that when SPY was down -20% top to bottom, PRWCX lost 9.2%   USMV lost -11.2%, pretty similar to what expected based on the table above

Bottom line: when you own PRWCX you depends solely on manager calls, he had great ones over the years, PRWCX is a unique flexible fund that can go anywhere.  USMV is an index based on a formula which is more of a LT KISS, is it going to work in every market, we don't know. I call it a tie.

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Explorer ○○○

Re: Why PRWCX and not USMV?

PRWCX, VMVFX, USMV.  Not much overlap is there?  I own quite a bit of the three.  

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Explorer ○○○

Re: Why PRWCX and not USMV?

 USMV has done great thus far, but I want to see how it performs thru a full business cycle. In the last two recessions (at some point), everything gets sold.  Assets are pouring into this sector since 2012 Min Vol inception. PRWCX's record reflects numerous cycles. You are comparng two different M* categories. 

USMV is on my watch list. PRWCX has checked all the boxes IMHO. 

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Employee
Employee

Re: Why PRWCX and not USMV?

As other commenters have suggested, it's a challenge to compare these side by side. 

If we compare each fund to its respective peer group, using a few metrics to represent the price, performance, process, people, and parent, we might be able to learn more about their strengths and weaknesses. 

#ManagerResearch #Scorecard 

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Contributor ○○

Re: Why PRWCX and not USMV?

For those of us who don't have access to PRWCX, USMV is a fund with an excellent risk/reward profile and is a superb choice for conservative/retired investors.

VMVFX is also a very good fund with excellent risk/reward characteristics, but in the current uncertain trade/tariff environment, i.e., China, Mexico, Brexit, etc., I prefer to invest in US domiciled companies.

Good luck,

Fred 

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Explorer ○○

Re: Why PRWCX and not USMV?

I think this is the fund that 'bartab' on the old boards came up with this comparison?

PRWCX vs 75 USMV + 25 PIMIX.

link

 

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Frequent Contributor

Re: Why PRWCX and not USMV?


@michaellaske wrote:

As other commenters have suggested, it's a challenge to compare these side by side. 

If we compare each fund to its respective peer group, using a few metrics to represent the price, performance, process, people, and parent, we might be able to learn more about their strengths and weaknesses. 

#ManagerResearch #Scorecard 


If this is a challenge then how can you compare any funds?  just because M* put a fund in a category doesn't mean it's easy, after all, a managed fund where the manager doesn't follow an index + change AA would be a difficult task.

Examples:

Can you compare PRWCX to VWELX or VBINX

Can you compare PIMIX,PTIAX,VCFAX,SEMMX to other a generic Multisector bond funds

USMV AA of stocks are as follows giant 39% large 49% Medium 27% while VFINX(SP500) has giant 56% large 34% Medium 10%.  I say they are not equal.

M* says CPOAX is a large growth but is a multi-sector stock fund, it ranks 1 in M* Large growth for 1-3-5-10 years. It has over 43% in Medium+smal companies.  Is it a large growth? 

My point is that flexible funds can't be compared.

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Contributor ○○○

Re: Why PRWCX and not USMV?


@shipwreckdalone wrote:

 USMV has done great thus far, but I want to see how it performs thru a full business cycle. In the last two recessions (at some point), everything gets sold.  Assets are pouring into this sector since 2012 Min Vol inception. PRWCX's record reflects numerous cycles. You are comparng two different M* categories. 

USMV is on my watch list. PRWCX has checked all the boxes IMHO. 


I agree with you regarding USMV.
The fund's past performance has been very good.
However, USMV hasn't been through a full business cycle since its inception.
I'd wait to see what happens before jumping in...

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Participant ○

Re: Why PRWCX and not USMV?

 

Owned Cap Apprec since 1986.   It is flexible and sui generis.

It has 3 goals:    strong risk-adjusted annual returns;  preserve shareholder capital over intermed term (3 yrs); equity-like returns w/ less risk than the overall mkt over a 5-year cycle  (Annual Report , Dec 31, p 6).

 

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Frequent Contributor

Re: Why PRWCX and not USMV?


@rila3400 wrote:

@shipwreckdalone wrote:

 USMV has done great thus far, but I want to see how it performs thru a full business cycle. In the last two recessions (at some point), everything gets sold.  Assets are pouring into this sector since 2012 Min Vol inception. PRWCX's record reflects numerous cycles. You are comparng two different M* categories. 

USMV is on my watch list. PRWCX has checked all the boxes IMHO. 


I agree with you regarding USMV.
The fund's past performance has been very good.
However, USMV hasn't been through a full business cycle since its inception.
I'd wait to see what happens before jumping in...


Many investors lost great opportunities in the name of 1) let's wait for at least 5 years of history  2) let's wait for a full cycle that may take 10-15 years.

Some of these investors are still waiting for PRWCX(close now),first several years of PIMIX,USMV,VMVFX,DSEEX...just to name several good risk/reward funds.

I admit it's not an easy task and over the years I avoided most of the funds that look for higher income or value.  For decades my style is to find funds with competitive performance with lower volatility which IMO have an advantage. 

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Participant ○○

Re: Why PRWCX and not USMV?

Thanks everybody for your thoughtful and sometimes thoughtful and analytical support replies.

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Explorer ○○○

Re: Why PRWCX and not USMV?

Hi Anitya,

"I too had preferred PRWCX over USMV, but when I look at their relative performance over the life of USMV (8 years), which includes two stock market corrections, USMV is not shabby and is more tax efficient."

Since you brought up tax efficiency... is this post question for funds you have in taxable accounts or in tax sheltered accounts?

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Explorer ○○○

Re: Why PRWCX and not USMV?

Since The Vanguard Fund you mentioned is classified as a Mid-cap World Stock Fund, May it be considered as complimentary to possessing USMV without significant overlap, rather then considering them as Either/Or Decisions, or Am I intellectually off-kilter here ?

Signed,

NoFriends1

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Frequent Contributor

Re: Why PRWCX and not USMV?

It is fine to compare funds in the context of asset allocation/construction, but it doesn't make sense to do so as either-or. Chart toppers in the last 3-6 month without any constraints can mislead.

So, moderate-allocation PRWCX, US-min-volatility USMV, global-min-volatility-currency-hedged VMVFX are fine funds and have place in a portfolio. But to go with just one of the three is crazy.

YBB
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