Yes Loomis Sayles Bond
was far more volatile than the two new bond funds we added.
OK, questions are pouring in. Manny and Nellie, ready to address some investor queries?
That's an interesting question--we've never discussed that, have we Manny?
One thing I will say about the Kip25 is that all the fund's are actively managed--are there 25 indexes we HAVE to be invested in?
Well, maybe not a Kip 25 but we do run articles from time to time recommending ETFs, either as standalone stories or as parts of portfolios. Our columnist Steve Goldberg has written 2 pieces that you should check out. One, a few months ago, was about 7 ETFs to buy now; the other, more recently, was about 7 ETFs to hold forever.
Ram has a skeptical question about emerging markets. I'll share the ETF articles Manny just mentioned.
The thing about ETFs is that to a great extent it's a call on markets or market sectors, not on identifying great managers, which is what the regular Kip 25 is about. If you decide you want a big cap ETF, you just ID ETFs that invest in big cap stocks, then you pick the cheapest fund among them.
Ugh, I know what you mean--this year has been horrible as well. Given the rise of the middle-class consumer in those developing countries, I'd have to say yes. I spent more than a decade living in Hong Kong, which is not "developing" per se, but is close to many developing countries, and the opportunity--the potential for growth is huge.
It just may take some patience while the market bounces around
Over the long term, there are two ways to make money in stocks: Buy them at good prices (ie, cheap) or find growing companies. Emerging markets are where the growth is. They should do better than US stocks over the long term; over the short term, anything can happen
Nellie, we prefer EM stocks over EM bonds these days, yes?
Hmm, I'd say with both asset classes, caution is always good--you''ll notice in the portfolios we recommended (page 31 of the May issue), we allocate 10% to EM stocks in the aggressive growth portfolio--plus 10% in EM bonds.
I don't know that I'd put it that way. We think a portfolio should include some EM stocks. If you're looking for some extra income, then, sure, hold an EM bond fund, too.
And it's worth noting that Met West Unconstrained likes EM bonds in local currencies--
Great question from Jane about fund fees...
Personally, I own EM stocks, an EM bond fund and an EM bond ETF. Note, though, that my tolerance for risk is above-average
We don't have a hard line, but if I notice that a fund charges above-average fees (for that fund category), I won't go further with it.
Manny has a great thing he always says about fees--you can never be sure about performance--but you can always keep your fees low. something like that--something more elegant than that
Investors generally don't consider/weigh fees heavily enough, do they?
Good question re fees. Most of the funds in the K25 sport below-average expenses. I dare say that one of the reasons we hung in with Dodge & Cox Stock while it was going through a tough spell was that its ER of 0.52% is extraordinarily low for an actively run stock fund that isn't in the Vanguard family.
Studies show that over time, funds that charge low fees have better performance--but that isn't a cause and effect relationship. it's just simple math--lower fees means you keep more of your money and it grows in the fund.
did that make sense? M
anny can you edit me please if that didn't make sense?
Remember back in the mid to late 90s, when the S&P 500 was going up 20 to 35% every year and tech stocks were doing even better than that? No one gives a hoot about fees in that kind of environment. If the market returns 30%, you don't care if you earned 28.5 rather than 29.5%. But, obviously, our aspirations have been tempered by two severe bear markets. And after the S&P's 150% gain since March 09, returns going forward are unlikely to be huge. So if you postulate, say, 8% a year going forward for US stocks, you definitely don't want to give away too much for expenses. It will eat up a big chunk of your gains.
Manny, which fund(s) have remained in the Kip 25 the longest?
You're taxing my again brain, Robert
I think Loomis Sayles Bond had been in the K25 since the first time we did it, in 2004
Keeping you on your toes, Manny!
D&C Cox, Fidelity Intermediate Muni, Vanguard Short-Term Investment Grade and Harbor Bond (a clone of Pimco Total Return) have probably been in the K25 longest. Notice that 3 of those 4 are bond funds.
Anyone out there have any funds you want to ask about? Not necessarily funds in the K25? If we know about them, we could comment
Actually that's a load fund--so we would never recommend it. But I just happened to give it a look over for our 401K funds story in the April issue
While we start to answer Brett's query, I'll also post a question from Cara out there, who will lead us into a discussion about the Kip 25 portfolios we recommend building.
I included it as one of the "best" foreign stock funds in the 401K space.
Funds require a minimum to invest, generally between $2000 and $5,000.