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.
You would have to call a fund company directly, or invest through a brokerage firm, such as Fidelity or E*trade or Schwab.
On purchasing the Kip 25, for starters you wouldn't buy all 25. A good place to start is with our 3 recommended portfolios, which are designed for people with different time horizons and levels of risk tolerance. For example, you can replicate the "for college" portfolio, the one designed for people 6 to 10 years from their goal, for as little as $25K in a regular account, $20K in an IRA. And I see Robert has posted the portfolios
Investing in the entire group of 25 funds would require a large sum of money, which probably isn't feasible for a new investor. Read about the funds in the May issue, or go online to Kiplinger.com. Start with a diversified large-company fund and buy shares.
Bingo. We must be reading each other's minds
Or as Manny and Robert suggest, choose one of the portfolios.
Yes--but some funds you have to buy directly in order to avoid a transaction fee. Osterweis Strategic Income for instance, is sold free on E*Trade, but Fidelity will charge you $75. You can avoid the $75 fee by buying directly from Osterweis.
Opening up a brokerage account with a firm with a large collection of no-transaction-fee no-load funds is a good way to start a portfolio. Be forewarned, though, that not every fund in the Kip 25 is available in NTF programs. If that's the case, you need to look for a substitute funds or be willing to swallow the transaction fee when you and sell a fund
There you go again, Nellie -- helping folks to cut down on investing fees!
Clearly, we're not planning our answers in advance :)
Kiplinger's Personal Finance revealed the updated Kip 25 list in its May issue, now on newsstands. Senior associate editor Nellie Huang's article about the Kip 25 is online here -- www.kiplinger.com
