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Post by steelpony10 on Feb 14, 2023 2:36:53 GMT
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Post by yakers on Feb 14, 2023 19:38:42 GMT
Sounds right to me, for me I've found I can beat the S&P500 but not by much and if you count the value of my time and effort then probably not at all. Investing has been a bit of a hobby, now I'm getting too old (old 72?) and simple is loooking better & better.
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Post by Mustang on Feb 14, 2023 20:51:52 GMT
A young new investor during the acquisition phase. There are very few studies indexes for retirees during the withdrawal phase. I remember only one done by Morningstar using a simplified bucket strategy (a cash bucket with a balanced index fund). They said they preferred the multi-fund approach because it had a better ending balance. I thought the analysis odd because it used an 18-year payout and started just after a downturn. A reader point out that if Wellesley Income had been used it would have beaten both. That comment was not confirmed by others and I do not know it that is true or not.
I compared Vanguard Wellesley Income to Vanguard Balanced Index. The Balanced Index's 15 year return is 7.1%. Wellesley's is 6.4%. But this isn't an apple to apple comparison. Balanced Index is 60/40. Wellesley is 40/60. A more accurate comparison would be to Wellington. It's 15-year return is 7.6%.
There is still another variable not accounted for. 15-year returns do not consider withdrawals. Balanced income lost money 6 times in the last 30 years. The worst single year was 2008 when it lost 22.2%. Second worst was 2022 when it lost 17.0%. It's worst period was 2000-2002 when it lost money three years in a row: -2.0%, -3.0%, and -9.5%
On the other hand Wellington's 2000-2002 performance was +10.4%, +4.2% and -6.9%. Its worst one year return was also 2008 when it lost 22.3%. It second worst was 2022 when it lost 14.3%.
Sorry but I do not believe that all index funds beat all managed funds.
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Post by saratoga on Feb 14, 2023 22:31:41 GMT
prwcx beat vfinx comfortably after 1985. $10000 invested in PRWCX in 1985 grew to $445,805 while VFINX grew it to $352,571 (Portfolio Visualizer). Of course, PRWCX had much less volatility as well.
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Post by johntaylor on Feb 14, 2023 23:24:52 GMT
PRWCX inception June 1986, and I started with it in August.
Added new money every month since.
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hondo
Commander
Posts: 145
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Post by hondo on Feb 14, 2023 23:33:10 GMT
Mustang: I would agree with you that Wellington beats Balanced Index in a tax-deferred account, but if you compare them in a taxable account I think Balanced Index will do better.
Just another point of view.
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Post by marpro on Feb 14, 2023 23:37:22 GMT
PRWCX inception June 1986, and I started with it in August. Added new money every month since. PRWCX has underperformed S&P 500 by a mile during the past 10-year period, according to M* graph in Fido. I will stay in my lane. Thank you very much.
Here are the numbers from Portfolio Visualizer.
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Post by saratoga on Feb 14, 2023 23:47:46 GMT
PRWCX inception June 1986, and I started with it in August. Added new money every month since. Right. On closer inspection, the Portfolio Visualizer comparison started on December 1986. I am DCAing into my investment in PRWCX until its share in my tax deferred accounts exceeds 2/3 of it. I hope to reach that level this year. PRWCX plus pension plus SS is my retirement plan. |
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Post by marpro on Feb 14, 2023 23:53:38 GMT
PRWCX inception June 1986, and I started with it in August. Added new money every month since. Right. On closer inspection, the Portfolio Visualizer comparison started on December 1986. I am DCAing into my investment in PRWCX until its share in my tax deferred accounts exceeds 2/3 of it. I hope to reach that level this year. PRWCX plus pension plus SS is my retirement plan. No. I used only 10 years in my simulation with annual rebalancing. But, since each is 100%, there is not any rebalancing. In any case, I am staying where I am. I have nothing against TR. M* gives PRWCX 5 stars, while VOO and SCHB get only 4. So, I do not go by M*. |
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vl
Ensign
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Post by vl on Feb 15, 2023 4:24:26 GMT
what are some index funds that I can encourage my children to invest in and also some for 70 year olds.
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Post by Karen on Feb 15, 2023 11:52:09 GMT
Right. On closer inspection, the Portfolio Visualizer comparison started on December 1986. I am DCAing into my investment in PRWCX until its share in my tax deferred accounts exceeds 2/3 of it. I hope to reach that level this year. PRWCX plus pension plus SS is my retirement plan. No. I used only 10 years in my simulation with annual rebalancing. But, since each is 100%, there is not any rebalancing. In any case, I am staying where I am. I have nothing against TR. M* gives PRWCX 5 stars, while VOO and SCHB get only 4. So, I do not go by M*. In reply to this and your prior post on this thread: PRWCX is a 50%-70% Allocation fund that usually runs about 70% stocks including a smallish allocation to Foreign stocks. Any comparison of PRWCX to an S&P or Broad Market Index fund (all 100% US stock funds) should take that into account, and is usually done by grossing up PRWCX's TR and/or calculating its risk adjusted TR. Those calc's will provide more appropriate comparisons and should provide more accurate conclusions about their respective performances. Additionally, PRWCX's 5* M* rating is versus other 50%-70% Allocation funds while VOO's and SCHB's 4* ratings are versus their respective bogeys. Apples. Oranges. |
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Post by Mustang on Feb 15, 2023 12:47:56 GMT
Mustang: I would agree with you that Wellington beats Balanced Index in a tax-deferred account, but if you compare them in a taxable account I think Balanced Index will do better. Just another point of view. Why do you say that? |
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Post by Fearchar on Feb 15, 2023 15:17:35 GMT
Comparing correlations of individual stocks to the s&p500, I have found that brk is the most closely correlated. Currently, not a buy.
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hondo
Commander
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Post by hondo on Feb 15, 2023 15:21:37 GMT
Mustang: I would agree with you that Wellington beats Balanced Index in a tax-deferred account, but if you compare them in a taxable account I think Balanced Index will do better. Just another point of view. Why do you say that? I believe that Balanced Index is a little more tax efficient. |
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Post by saratoga on Feb 15, 2023 16:35:50 GMT
No. I used only 10 years in my simulation with annual rebalancing. But, since each is 100%, there is not any rebalancing. In any case, I am staying where I am. I have nothing against TR. M* gives PRWCX 5 stars, while VOO and SCHB get only 4. So, I do not go by M*. In reply to this and your prior post on this thread: PRWCX is a 50%-70% Allocation fund that usually runs about 70% stocks including a smallish allocation to Foreign stocks. Any comparison of PRWCX to an S&P or Broad Market Index fund (all 100% US stock funds) should take that into account, and is usually done by grossing up PRWCX's TR and/or calculating its risk adjusted TR. Those calc's will provide more appropriate comparisons and should provide more accurate conclusions about their respective performances. Additionally, PRWCX's 5* M* rating is versus other 50%-70% Allocation funds while VOO's and SCHB's 4* ratings are versus their respective bogeys. Apples. Oranges. Karen: Of course it is apples vs oranges. But there comes a time when you have to choose which fruit to eat for your purpose. I have VTI in my taxable account, by the way. |
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Post by johntaylor on Feb 15, 2023 16:38:31 GMT
Nothing against index funds (own them in TSP), but PRWCX -- and the class of it I have (TRAIX) -- seek equity-like returns with less risk.
From 2022, go back to encompass the Crash of 2008 and it still delivered 102% of mkt return while taking on 69% of mkt risk (Semi-Annual Report, pp 5-6).
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Post by marpro on Feb 15, 2023 17:04:18 GMT
In reply to this and your prior post on this thread: PRWCX is a 50%-70% Allocation fund that usually runs about 70% stocks including a smallish allocation to Foreign stocks. Any comparison of PRWCX to an S&P or Broad Market Index fund (all 100% US stock funds) should take that into account, and is usually done by grossing up PRWCX's TR and/or calculating its risk adjusted TR. Those calc's will provide more appropriate comparisons and should provide more accurate conclusions about their respective performances. Additionally, PRWCX's 5* M* rating is versus other 50%-70% Allocation funds while VOO's and SCHB's 4* ratings are versus their respective bogeys. Apples. Oranges. Karen: Of course it is apples vs oranges. But there comes a time when you have to choose which fruit to eat for your purpose. I have VTI in my taxable account, by the way. Besides, PRWCX is a managed fund, but the OP, by steelpony10 , is on indexing. I am not trolling anyone, but I just wanted to point out the OP. On the top, I wanted to point out the superiority of VOO over PRWCX in the recent past of growth. I bought VTI back in 2010 for $54/sh (I still hold them) and it is almost 4-times.
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Post by steelpony10 on Feb 15, 2023 17:08:38 GMT
When posters do these comparisons of OEF’s to indexes do these numbers factor in the great differences in expense ratios and tax efficiency?
I understand less volatility in bad markets is important to spend down investors but my experience is this is often accompanied by lesser long term returns. Maybe greater returns would cancel out short term volatility because down markets only occur 30% of the time historically. An investor might be giving up too much return for a 30% problem.
We hold VTI and I see how PRWCX has outperformed it on return and volatility over time at about 20+ times the cost but it also has a bond component which also affects tax efficiency. But it seems to be clearly better to date.
The big difference I found is you have to manually invest in an index.That makes DCA tough for my wife and heirs. We only use OEF’s that demonstrate quality management to auto invest excess income to needs.
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Post by johntaylor on Feb 16, 2023 15:12:03 GMT
TRAIX isn't a new fund, but just a class of Cap Apprec with 500k minimum investment and lower cost.
Go back to encompass even the Crash of 2008 and Cap Apprec delivered 102% of mkt return while taking on 69% of mkt risk.
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Post by Chahta on Feb 16, 2023 16:06:24 GMT
Funny; I didn't realize I was out to "beat" anything. I thought it was about using my portfolio to provide for me, at whatever level I want or need. The less I start with and the more I need or want then the more risk/volatility I must take on to achieve higher results.
A "spend-down" investor is or should be no different than an income investor. The income investor has things he relies on to give him monthly money. Another method is to have ready "cash" to use when needed. I see no difference whether it comes from something paying 8% or 4% or 2%,
I have no criticism of any method that works. But to collect income from a declining asset (PTY in 2022), then put it into another declining asset (PONAX in 2022) seems counterproductive.
Yet I own PTY. And I mainly am an indexer. I also own a managed fund because it fits the bill to be very tax efficient in my taxable account.
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Post by steadyeddy on Feb 23, 2023 12:36:28 GMT
I index stocks; and I use a blend of index/active for bonds. In fact I think I am more diversified in bonds.
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Post by Chahta on Feb 23, 2023 13:12:45 GMT
what are some index funds that I can encourage my children to invest in and also some for 70 year olds. SCHX, VTI, SCHD (close to index), VOO, VEU. I prefer ETFs. Brokers should reinvest distributions. |
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Post by steadyeddy on Feb 23, 2023 13:27:04 GMT
what are some index funds that I can encourage my children to invest in and also some for 70 year olds. SCHX, VTI, SCHD (close to index), VOO, VEU. I prefer ETFs. Brokers should reinvest distributions. SCHX/VOO/VTI are virtually identical in performance - so pick one. VEU gives developed xUS exposure; SCHD is dividend focused broad ETF of 100 stocks. Thanks Chahta for this list. |
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Post by Chahta on Feb 23, 2023 14:22:00 GMT
They are close but gave choices for different brokers. I use SCHX because it has no SC. However I own SC value now on it's own.
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Post by marpro on Feb 23, 2023 14:55:44 GMT
They are close but gave choices for different brokers. I use SCHX because it has no SC. However I own SC value now on it's own. I sold SCHX last week and reopened my VOO again for a broader version last week. SCHX was fine, but I preferred VOO. But, I still hold SCHD and increased the shares last week by reinvesting some distributions from the CEFs. I also dumped HDV to simplify the portfolio and added more shares both in VOO and SCHD. |
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Post by FD1000 on Feb 26, 2023 23:22:19 GMT
The idea that you can't compare funds with different allocation/internals is not a good one IMO. These are just excuses for underperformance and/or lower risk-adjusted performance which should the main goal of any investor. If you can't compare, then many managed funds can't be compared to an index, especially flexible funds/managers (examples: PRWCX,PIMIX). Another big problem is the fact that many investors diversified too much in order to invest in unnecessary categories that lead to underperformance. We can also discuss bond funds. There are certain times I don't want to be in high-rated bonds, especially treasuries. So, instead of avoiding it, embrace it. A classic example, already mentioned, is PRWCX LT risk-adjusted performance. Suppose you knew that PRWCX performance in the next 15 years will match SPY with lower SD, would you claim you can't compare them? I have seen over the years several posters that claim, you can't compare PRWCX to VBIAX/VWELX, because PRWCX is flexible and the others are not. Seriously? BTW, I claim that if you own fund X with better risk-adjusted performance than fund Y, it is a FREE lunch. Below you can see one of the best case for it. 3 years(2010-3) performance of PIMIX VS SPY. Do you want to have a much better risk-adjusted performance or claim you can't compare these. Attachments:
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