Have you simplified your portfolio in retirement?

[Deleted]

For better or worse, we simplified our portfolio significantly on Friday by eliminating five funds and concentrating more in our three highest conviction funds.  Funds eliminated were VWELX, TRVLX, PRWAX, OTCFX, and PRSVX.  We used the proceeds to add more meaningfully to FXAIX, PRWCX, and VWINX.  (Note:  We maintained our same overall asset allocation of 70/30). Our primary reasons for this change was to reduce stock overlap and expenses, as well to move more money into the hands of our two favorite active management teams.  In our view, there is absolutely nothing wrong with the funds we eliminated.........just wanted a simpler lower cost portfolio as we get more seasoned and doing things we enjoy in retirement.  We don’t want to spend time monitoring a lot of active managers.  If we decide later to add another fund or two, it will certainly be an index, e.g., Extended Market, QQQ, etc.  We are curious to what extent, if any, retiree posters on this forum have simplified their portfolio in retirement.  Although our portfolio may be much more focused than most others, it would surprising to us if others haven’t done some whittling down of the number of funds since being retired.  Looking forward to reading about your thoughts and experience.  What have you done?

[rhythmmethod]

If you are keeping a similar style box in X Ray it sounds like a good idea. If not I’d want to make sure it’s a conscious decision instead of by default . JMO.

[Deleted]

Mar 27, 2021 20:01:50 GMT rhythmmethod said:

If you are keeping a similar style box in X Ray it sounds like a good idea. If not I’d want to make sure it’s a conscious decision instead of by default . JMO.

Excellent point.  We plugged everything into X-Ray before making the changes.  The only notable change was decreasing our SC to 1 from 5.  Not totally convinced SC is a must for retirees.  If we later decide to increase our SC/MC it will be by adding an Extended Market Index fund.

[Chahta]

I have complicated my portfolio in retirement. That is due to the bond AA. My equity AA has remained about the same mix, but down from 50% to about 45% temporarily. I will work on simplifying by bond AA once rates settle down (this time).

[steadyeddy]

I am in the process of simplifying.. though not retired yet.

58% of my invested assets are in 4 funds: Active Bond Fund in my 401(K) is 18% + Fidelity Agg Bond is 18% + Wellesley 12% + VG High Yield Bond 10%

I am working my way through the remaining 42% of the portfolio, but looking for natural events to simplify. Not in a hurry.

The remainder list includes LT Treasuries (I am bullish) , Wellington, and some index funds/ETFs.

Good idea to simplify.. and that is my goal too. Thanks for starting this thread and sharing.

[Chahta]

Is Wellington + Wellesley your only equity AA?

[steadyeddy]

Mar 28, 2021 12:59:02 GMT Chahta said:

Is Wellington + Wellesley your only equity AA?

Chahta , Yes. I have a few other equity funds but they are not meaningful in size. Used to hold Fido Puritan and Fido MultiAssetIncome funds but recently sold them off.

I will increase my equity stake in the next market downdraft (whenever that happens - till then being patient).

[Tibbles]

I've simplified, not for the sake of simplicity and not because I'm in retirement, but because I've learned to limit myself to high-conviction holdings. Otherwise I don't hold long enough for a significant gain---I'm scared out by a small drop or a negative opinion, or I grab a small gain. Also, it's mentally taxing to hold things you're constantly re-evaluating. Apart from long-time holdings that it would be too expensive to sell, I limit myself to a total US stock-market index, a total ex-US stock-market index, the TIAA Real Estate Account, and (as an inflation hedge), a lot of MXI (a global commodity-producers etf). No bonds.

[Mustang]

I agree completely with simplifying a portfolio. We are down to four funds going to three. In our traditional IRAs we have American Fund Balanced Fund and American Funds Mutual Fund. In our taxable accounts we have Vanguard Wellington and Vanguard Wellesley Income. I would like the asset allocation to be somewhere between 50% and 75% stock but exactly where depends entirely upon the decisions of the professional managers running the funds.

We will phase out Mutual Fund over the next couple of years and we are slowing adding more Wellesley to reduce volatility. We are retired but we do not yet need to make withdrawals so we are taking the time to set up the portfolio specifically for withdrawals.

[johntaylor]

Thoreau said "simplify" and that does make sense.

On the other hand, Munger was born in 1924, Buffett 1930, so perhaps remaining interested helps retain acuity?

Templeton in his 90s was almost 100% stock and said he was a more rational investor for charity versus when he needed it for daily bread.

[Deleted]

Apr 3, 2021 15:25:32 GMT johntaylor said:

Thoreau said "simplify" and that does make sense.

On the other hand, Munger was born in 1924, Buffett 1930, so perhaps remaining interested helps retain acuity?

Templeton in his 90s was almost 100% stock and said he was a more rational investor for charity versus when he needed it for daily bread.

Johntaylor,

I’m confused regarding your reply.  I don’t think there’s any correlation between simplifying a portfolio and mental acuteness.  Reducing the number of funds to both simplify and more heavily invest in those holdings which you have the highest conviction doesn’t mean disinterested.  Also, one could easily be 100% equities by holding only one fund.  

[johntaylor]

My post cited Thoreau, then said "on the other hand"...

[galeno]

We use a 2 fund port.

50% world stocks (VWRD) + 45% USD hedged world bonds (VAGU) + 5% cash

[FD1000]

My portfolio had up to 5 funds until a few years prior to retirement. In the last several years I own only 2-3 funds.

[steelpony10]

      Well I’m late to the game but we’re working towards a bare bones portfolio. Probably 1 growth fund to enhance (double up) a core funds’ top holdings, a muni and I’ll never concentrate too much in our 10 CEF’s. The reasoning is for a surviving spouse, this isn’t a major interest after 40+ years and for a successor helper who knows less them me not to screw things up too much for my wife.

       Of course if I’m a surviving spouse it’s all in with CEF’s and growth, a convertible, gold chains and a blond named Trixie much younger then my kids.*

        * Hey I just noticed I made Lieutenant, an officer. So make that a red head.

[FD1000]

Aug 6, 2021 15:41:17 GMT steelpony10 said:

      Well I’m late to the game but we’re working towards a bare bones portfolio. Probably 1 growth fund to enhance (double up) a core funds’ top holdings, a muni and I’ll never concentrate too much in our 10 CEF’s. The reasoning is for a surviving spouse, this isn’t a major interest after 40+ years and for a successor helper who knows less them me not to screw things up too much for my wife.

       Of course if I’m a surviving spouse it’s all in with CEF’s and growth, a convertible, gold chains and a blond named Trixie much younger then my kids.*

        * Hey I just noticed I made Lieutenant, an officer. So make that a red head.

There is always a choice, instead of all your 10 CEF's you can own one ETF=CEFS. You're probably going to say, it's not as good as what you have been doing, but it's a reasonable choice...(link).  CEFs managers have been doing all the work by using dozens of CEFs + others + trading in/out.
As of 08/2021 they own, see below(link).  Looks like they are shorting 5 year treasury.

Attachments:

[steelpony10]

       FD1000 ,
             
               Thanks for the suggestion.
       
               CEFS is in my wheelhouse as a monthly payor. Because it’s new, going on 4 years old, and with all the trading it has a pretty high expense ratio. There are funds of funds (CEF’s) that are near equal to this in yield with longer records and lower expenses.

                The major hang up at this point because of my starting point back during the bank crisis and adding another 20% last year, 2020, are the deep discounts when they were purchased. Since they are at all time highs for me right now dumping them to consolidate would leave me with about a 10% yearly pay cut. After 9,10 years I already received all my initial investment back so all the excess income as mentioned often is funding a muni and equity index fund monthly and compounding. I could consolidate these ten or reach for yield to keep income about the same though. I have no real reason to do that yet. In fact I have to fight the urge to go almost all in with CEF’s and never look back. 

                 It’s all about the income for me and it’s stability. I’m not a trader. So I need a longer record as evidence of steady cash flow only. I also need evidence that CEF’s or any income investment are invested with the best management I could research. Premiums values may mean others think so to. Your example of PCI has over 3 billion in assets and a 10% premium (one of ours currently), while CEFS being new and an ETF has 76 million in assets, so not widely known yet.

                  So I’ll say it. “It doesn’t look as good as what I have and I agree there are many reasonable other choices this being one”. 

                 


                  
                 

                

[alvinthechipmunk]

Yes, simplified. I dumped MAPOX. Threw the money into PRWCX, as I recall. I was not unhappy with MAPOX, but its regional bias (upper Midwest) always seemed like a potential detriment, rather than a positive thing. I still hold PRIDX for international exposure. Dedicated small-cap funds are too streaky for me, now. Bonds 54, stocks 42 these days. Preservation and wanting to get a bit of growth are the key goals, these days. I'm convinced that my three bond funds are the right mix for me. Satisfying dividends are hard to find without getting too fancy or stretching too far out on the Risk Scale. Including wife's IRA, we have 7 (seven) funds, now.

[galeno]

Super simple port for us.

50% TWSM + 45% TWBM + 5% CASH.

AWR = 4.0%. Relative Rebalancing Band = 10%.

[yogibearbull]

ETFs of CEFs is a good idea but in no man's land. CEF enthusiasts would rather make their own mistakes rather than paying 0.50-0.75% top-level fees, and non-CEF investors won't go near them.

LINK

"Jul 25, 2021 at 10:54pm QuoteEditlikePost OptionsPost by yogibearbull on Jul 25, 2021 at 10:54pm
fpajerski: "If I were to reinvest in CEF's, I perhaps would just do so in FOF and let someone else do the heavy lifting for me"

FOF is a CEF of CEFs, so 2 layers of high ERs and premiums/discounts. This may be overdoing it.

But the idea is sound if one looks for ETFs of CEFs, and there are several.

Hybrids/Allocation: PCEF, CEFS, FCEF

Fixed Income: RDFI

HY: YYY

Munis: XMPT, MCEF

The ERs are high because the underlying leveraged CEFs have high ERs. But look at the ETF level ER that may be reasonable. Even if one doesn't go this route, one can look at their holdings to get some ideas on CEFs. Beware that these may hold big and liquid CEFs and those may not be the best CEFs."

[alvinthechipmunk]

You guys with just 2 or 3 funds/CEFs are BRAVE!... Talk about HIGH CONVICTION!