Mutual Fund Question

[preach4bass]

I'm currently invest in American Funds for my retirement account (Roth IRA).  However, I've been looking at the Dodge & Cox funds lately, and really like their no-load funds, and cheaper maintenance fees, compared to AFs 5.75 loads and higher fees.  Do any of you guys know enough about this stuff to offer my wife and I any advice on whether or not we should make a change or stay with AF.

Thanks!

[Root beer]

No-load funds and low maintenance fees will keep your return rate higher. Let me take a look at two funds and compare contrast on what each funds invest in. I don't hold any mutual funds, but I've been shopping around.

Edit: Which Dodge and Cox? I found four of them.

[preach4bass]

No-load funds and low maintenance fees will keep your return rate higher. Let me take a look at two funds and compare contrast on what each funds invest in. I don't hold any mutual funds, but I've been shopping around.

Edit: Which Dodge and Cox? I found four of them.

I'm currently invested evenly in three American Funds (EuroPacific Growth Fund-A; Growth Fund of America-A; SmallCap World Fund-A).

I'm looking at spreading my investments through four of Dodge and Cox's funds (Stock Fund; Golbal Stock Fund; International Stock Fund; Balanced Fund).  D&C also has an Income Fund, but I'm young enough I think I'll leave that one alone for a while and focus on the more aggressive stuff.

Thanks, and good luck in your looking too.

[Root beer]

I looked at Dodge & Cox stock fund, ticker DODGX and I like it. Only thing I wonder is, the fund has more stocks in health-care industry. I'm not sure what to think of health-care right now, because the government is proposing few excise tax on the health-care industry. Which could potentially lower their profits which then lowers rate of return on investment. I looked at one American Fund ticker ANEFX, but I didn't spend a lot of time on it. One of things you should know that I noticed at first glance from each fund was that Dodge has higher risk, which means the rate of return will be greater, but your loss can be greater than a less riskier investment. The standard deviation and beta was slightly higher for Dodge than AF. I personally believe you can make more money off Dodge because of cheap fees and potential high rate of return. It just that health-care industry got me pondering on its return this decade.

Since Dodge has a lower fund fee, and higher risk, you can potentially make higher rate of return. But like I said above, I'm not sure how the health-care industry is going perform this decade.Maybe some experience guys on here can predict it.

Here a professional analysis on Dodge stock fund:

https://research.ameritrade.com/wwws/common/pdf.asp?feed=604&docTag=USA_DODGX

I'm running out of energy. I look at the rest of Dodge other mutual funds tomorrow if I have time. (I still got that paper to write. :-/)

Edit: I just saw your post above, I might have looked at wrong American Fund, there was several of them and I just made an educated guess on which one it would be. I look at it tomorrow I'm out of energy.

[SirSnookalot]

Been investing stocks and mutual funds for about 30 years, at present I have over 60 funds, being 65 I have gone to managed accounts rather than spending the time to do it myself.

I would not give anyone advice on any individual stock or funds for 2 reasons, 1. I'm not a licensed professional and 2. I only gamble with my own money and would feel terrible over a recommendation that didn't pan out for someone else.

Load vs no load, only thing that really matters is the net gain/loss, no loads can look more appealing but I would never pass up a good fund just because of the front end load, your paying fees and maintenance whether you realize it or not.

Only real advice I would give is to have a strategy and do lots of homework( and hope you understand all that you are reading), better yet get professional help. A good broker is putting in more than 40 hours at the office, reading everything and they aren't always right.

[Root beer]

Only real advice I would give is to have a strategy and do lots of homework( and hope you understand all that you are reading), better yet get professional help. A good broker is putting in more than 40 hours at the office, reading everything and they aren't always right.

That is called "The Random Walk Theory." Scary.

Anyway, Remember when I said above I've been shopping for mutual fund? Reason I haven't bought any is simply because they are too large and requires lot of time analyzing each stocks or assets the fund is holding. When I do quick analysis of funds I just look at its risk rating and where majority of its allocation is. For instance, since the Dodge stock fund has majority allocation in health-care, thus, I research how I think health-care will perform over next 1-5 years. It obviously wherever the majority of allocation is will make or break a return of a mutual fund.

I personally find it easier to research individual stocks than funds. I use a mix of technical and fundamental analysis in deciding to purchase or not. I learn lot of my stuff from a personal friend of mine who is now retired. He spent his lifetime working as a main street businessman and investing in the market. Learned a lot from his stories and past business ventures.

Good luck, got any question(s) PM me. I won't give any recommendation on what to buy, but I can give you more insight and reality of the market.

[South FLA]

I manage money for a living and can simply tell you that.......there is no magic recipe.  I would agree though that if you have the time, enough experience, and information resources you can usually do better than mutual funds and/or indexs picking well analyzed stocks, but.....most people DON'T!!

As far as mutual funds or managed accounts I recommend them to most people when they ask.  Picking a hot stock is great if people don't get too greedy and realize when to cash out, most DON'T.  If you are a positional traded in today's market you can do very very well, but again most people don't have the time. 

So when looking for a mutual fund or managed account look for the following.

1. Performance relative to other family of funds and its relative index.  How does it compare to other funds within the same family.  For example if looking at a fund such as a small cap value fund, look at not only to top performers in the past year, but the last 3 to 5 years. 

2. Once you do that narrow your list down to top 25% percentile. 

3.  Then look for a manager tenure.  If the manager has been with the company less the 3 years, then a track record hasn't been built yet in my opinion to consider that fund.  I like funds that have managers with at least 5 years under their belts.

4. Then look at expense ratios, turnover and load/no-load. Usually high expense ratios are a result of high turnover and actively trading manager.  Point being is what good is it to have a top returning fund if you lose a significant percentage to expense.  This is why some finance experts suggest that index funds can on average outperform mutual funds, but usually you'll find funds that beat the index even after subtracting expenses. These are the ones you want in your portfolio.  Load vs. no load, I am fan of NO LOAD, because right off the bat you lose principal in a LOAD fund, but if the other previously mentioned aspects still have a particular fund coming out on top after the load then don't count it out, but in my book it must be a significant enough % return over no-loads for me to choose it.

5.  Lastly, make sure you brush up on modern portfolio "theory" so you can figure out what type of asset allocation suits you and your investment style. Remember a diverse portfolio keeps you losing too much principal, but it also restricts you from beating all your high risk friends portfolios when the market is hot. ( http://www.investopedia.com/articles/pf/05/061505.asp )

If you really want to save yourself some time hire a CFP that is not affiliated with any brokerage and has a flat fee or a % of principal fee.  Have her review your entire portfolio and see what she recommends.

 

[Marty]

I certainly would recommend no-load funds. Last I knew there was nothing that indicated load funds outperformed no-loads. Those loads and management fees can cost you big-time over the course of many years.

I know nothing about American Funds, but if you planned to stay in the funds you already own, then the load obviously is no longer a factor since it's already been paid. I'd be willing to switch for lower annual fees with the proviso that you feel a high degree of confidence that the replacement funds will perform as well from here on out.

Also, I agree with the recommendation of consulting a fee-only CFP if you feel you could benefit from some professional advice.

Good luck, there's nothing easy about this stuff.

[SirSnookalot]

Need to read everything, some no load funds are back loaded when you sell within a designated period.

I know I might do better with stocks now but being retired I choose a bit less risk and do not want to take the time to do research...I'd rather fish.

I've done the low cost on line trading before and it's fine, but I went back to a full service brokerage, I like a final sounding board from a professional before I pull the trigger.  One has to know their own comfort level.

[tyrius.]

I'm currently invest in American Funds for my retirement account (Roth IRA). However, I've been looking at the Dodge & Cox funds lately, and really like their no-load funds, and cheaper maintenance fees, compared to AFs 5.75 loads and higher fees. Do any of you guys know enough about this stuff to offer my wife and I any advice on whether or not we should make a change or stay with AF.

Thanks!

If you already paid the load on the American Funds then do not factor that into the decision to move your money to Dodge and Cox.  That load has already been paid will not have to be paid again (provided that it is a front load as it seems from your post).

Other than that, mutual funds are just like stocks - some will do well and some won't.  If you're picking Euro funds, Latin American funds, etc then you're going to want to try and pay attention to the events that are happening there so that you can make the appropriate moves when necessary.

I've got a big portion of my retirement in an S&P 500 index fund.

[preach4bass]

I'm currently invest in American Funds for my retirement account (Roth IRA). However, I've been looking at the Dodge & Cox funds lately, and really like their no-load funds, and cheaper maintenance fees, compared to AFs 5.75 loads and higher fees. Do any of you guys know enough about this stuff to offer my wife and I any advice on whether or not we should make a change or stay with AF.

Thanks!

If you already paid the load on the American Funds then do not factor that into the decision to move your money to Dodge and Cox. That load has already been paid will not have to be paid again (provided that it is a front load as it seems from your post).

Other than that, mutual funds are just like stocks - some will do well and some won't. If you're picking Euro funds, Latin American funds, etc then you're going to want to try and pay attention to the events that are happening there so that you can make the appropriate moves when necessary.

I've got a big portion of my retirement in an S&P 500 index fund.

Tyrus,

I'm kind of in both situations.  I've already paid the front load for the AF for the past several years, but I'm planning on continuing to invest for the next few decades as well.  So, the load does concern me, but only about what I will invest in the future, not what I have already invested.

However, would ya'll suggest moving all of my investments into the Dodge and Cox funds if I decide to go that route, or leave what I've already invested in the AF?

Thanks for all of the advice!

[NOVA Angler]

My wife and I invest our Roth IRA's and Rollover 401k's with Vanguard.  For Roth IRA's I'm in one of the Target Retirment Funds.  Vanguard has a great reputation and excellent customer service.  As a copmany policy, they won't tell you where to put your money, they only make suggestions based on your personal goals to help you decide.  The great thing about the Target Retirment Funds is that they rebalance automatically.  So if you want to be in 90% stocks and 10% bonds, you don't have to rebalance it yourself every year.  I would recommend going to the Morningstar.com forums and start asking for advice there.  http://socialize.morningstar.com/NewSocialize/forums/default.aspx