Retail fund with the highest expected return?

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Retail fund with the highest expected return?

Postby am » Mon Jul 27, 2009 10:18 pm

If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.
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Re: Retail fund with the highest expected return?

Postby NYCPete » Mon Jul 27, 2009 10:41 pm

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.


Since you did not stipulate whether it would be in a tax sheltered account or not, I will assume it would be tax sheltered. So, I would put the $1000 into the Vanguard Total World Stock Index Fund VTWSX (or ETF "VT"), and reinvest all dividends and capital gains distributions.

Best,
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Postby livesoft » Mon Jul 27, 2009 11:03 pm

A foreign small cap (value) emerging markets fund. DGS comes to mind because we own some shares in it.
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Re: Retail fund with the highest expected return?

Postby ozob » Tue Jul 28, 2009 1:20 am

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.


UYG, it's a no-brainer. Second choice would be FXI. Third choice, actually, would be a Vanguard fund, VEIEX.

Add a zero to each investment, and your heirs will be very happy.

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Postby MrMatt2532 » Tue Jul 28, 2009 1:31 am

I would invest in a small value fund:

US: RZV/VBR
Intl': DLS/GWX
Emerging: DGS/EWX

Use corresponding market value of the components.

If only one, then DGS/EWX.
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Postby caklim00 » Tue Jul 28, 2009 9:53 am

MrMatt2532 wrote:I would invest in a small value fund:

US: RZV/VBR
Intl': DLS/GWX
Emerging: DGS/EWX

Use corresponding market value of the components.

If only one, then DGS/EWX.
Ditto this... Each of these options would be high risk/high reward (especially RZV and DGS). I would bet that in 60 years some of those funds are no longer around though. RZV has low number of assets and I wouldn't even count on Rydex being around. DLS/DGS - Wisdomtree has yet to turn a profit. Can they keep going long term? EWX - very low assets. I'd bet from this list that VBR is the only fund still around in 60 years.*

* Disclosure: I own VBR, DLS, and DGS
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Postby chaz » Tue Jul 28, 2009 11:18 am

TotalStockMarket.
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Postby caklim00 » Tue Jul 28, 2009 11:29 am

chaz wrote:TotalStockMarket.
seriously?
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Postby pshonore » Tue Jul 28, 2009 12:47 pm

Mutual Shares (MUTHX) 12%+ annualized return for the past 60 yrs. Just celebrated its 60th birthday.

http://news.morningstar.com/articlenet/ ... 1247337636
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Postby TheEternalVortex » Tue Jul 28, 2009 1:18 pm

pshonore wrote:Mutual Shares (MUTHX) 12%+ annualized return for the past 60 yrs. Just celebrated its 60th birthday.

http://news.morningstar.com/articlenet/ ... 1247337636


This advice is only useful if you are going to be making the investment in 1949.
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Postby pshonore » Tue Jul 28, 2009 2:09 pm

TheEternalVortex wrote:
This advice is only useful if you are going to be making the investment in 1949.


Well, in that case people should not be congratulating Wellington on 80 years of long term performance either. Would you say Wellington was a good fund only if you invested in 1929? The truth is both funds turned in superior long term performance.
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Postby exeunt » Tue Jul 28, 2009 7:37 pm

A world stock small-cap value fund.
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Postby am » Tue Jul 28, 2009 8:23 pm

Can we get together and make our own frontier microcap deep value fund? 1K will become 10,000,000 in 60 years.
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Re: Retail fund with the highest expected return?

Postby billern » Tue Jul 28, 2009 8:33 pm

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.
I'd look at whatever is the current hot asset class today and decide to stick the money in that for 60 years. Oh, wait, other people already beat me to the punch... :roll:

Seriously though, I'd have to pick something with a low expense ratio, that will stay low, and will still be around as a fund in 60 years.
Clearly the best answer is the Ultra-Short S&P 400 MidCap 400 Citigroup Growth ETF. lol http://seekingalpha.com/article/39561-who-needs-em-the-list-of-obscure-etfs-grows
Or maybe just stick to something simple like a Vanguard total market mutual fund with automatic reinvestment of dividends (if I could avoid the additional fees for having a low account balance until it grows to the minimums for the mutual fund).
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Postby am » Tue Jul 28, 2009 9:48 pm

1K at 18% return for 60 years becomes 20,500,000!!! At 8% it becomes 100K. Need something super risky to invest in. Question is, how do you keep this money untouched for 60 years with intructions to follow? Trust?
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Postby GG » Tue Jul 28, 2009 10:13 pm

am wrote:1K at 18% return for 60 years becomes 20,500,000!!! At 8% it becomes 100K. Need something super risky to invest in. Question is, how do you keep this money untouched for 60 years with intructions to follow? Trust?


English please - speak in english and someone can respond
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Re: Retail fund with the highest expected return?

Postby Taylor Larimore » Tue Jul 28, 2009 10:30 pm

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.


Hi am:

It would probably be International Small Value or International Emerging Markets based on Rick Ferri's "Nominal Forecasts":

Thirty-Year Estimates of Bonds, Stocks, REITs, GOP, and Inflation

Of course, I would never do such a thing because these two asset classes ALSO have the greatest risk of loss.
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Re: Retail fund with the highest expected return?

Postby Risk seeker » Fri Feb 04, 2011 9:41 pm

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.


Assuming commission free trades, I suggest investing the money in the following ETFs:

Non-U.S.

VSS - international and emerging markets small cap
EWX - emerging markets small cap
DGS - emerging markets small-cap dividend
GWX - international small cap
DLS - international small-cap dividend

U.S.

VBR - U.S. small-cap value (MSCI US Small Cap Value Index)
VIOV - U.S. small-cap value (S&P SmallCap 600/Citigroup Value Index)
VTWV - U.S. small-cap value (Russell 2000 Value Index)
RZV - U.S. pure-small-cap value
IWC - microcap (Russell Microcap Index)
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Postby lazyday » Sat Feb 05, 2011 7:07 am

Roger Gibson's book Asset Allocation argues that rebalancing among risky asset classes, you may achieve a higher return than with any one fund. At reduced risk too, though that may not be the objective here.

I might try to find a fund that rebalances among aggressive asset classes. Maybe a Vanguard managed payout fund, or the most aggressive retirement fund on the market that has low costs, good execution, and is expected to last over 60 years.

If none seem appropriate, then I might choose Vanguard Ex-US Smallcap. Good execution, and fairly low cost. Trustworthy management company.

In reality, would probably depend on what the investment is for.
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Re: Retail fund with the highest expected return?

Postby Risk seeker » Mon Dec 24, 2012 10:43 pm

I did it, I did the unthinkable. I just borrowed $50,000 at 3.75% interest and invested $10,000 into each of the following five funds:

FRN - Guggenheim Frontier Markets ETF
FM - iShares MSCI Frontier Markets ETF
PMNA - PowerShares Middle-East-North-Africa Frontier Countries ETF
AFK - Van Eck Global Market Vectors Africa Index ETF
DGS - WisdomTree Emerging Markets SmallCap Dividend ETF

We'll see what happens. I suppose people have done worse things.
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Re: Retail fund with the highest expected return?

Postby pkcrafter » Mon Dec 24, 2012 11:08 pm

Risk seeker wrote:I did it, I did the unthinkable. I just borrowed $50,000 at 3.75% interest and invested $10,000 into each of the following five funds:

FRN - Guggenheim Frontier Markets ETF
FM - iShares MSCI Frontier Markets ETF
PMNA - PowerShares Middle-East-North-Africa Frontier Countries ETF
AFK - Van Eck Global Market Vectors Africa Index ETF
DGS - WisdomTree Emerging Markets SmallCap Dividend ETF

We'll see what happens. I suppose people have done worse things.

Is it April Fools or Christmas Eve? If it's Christmas Eve, then yes, you certainly did the unthinkable.
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Re: Retail fund with the highest expected return?

Postby pkcrafter » Mon Dec 24, 2012 11:15 pm

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.


Interesting Question because it moves investors from investing to gambling. No mention of having any goal, so throw it to the wind.

I'll go LS moderate and beat at least half the gamblers.

Cheers, :sharebeer


Paul
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Re: Retail fund with the highest expected return?

Postby baw703916 » Mon Dec 24, 2012 11:31 pm

I opened a small SEP IRA account in March 2009. I figured, what the heck, the market's already down by 55%. So I put 50% each in RZV and DGS. As something that's a lttle less extreme and more likely to have staying power, VSS is a good choice (in March 2009 it hadn't opened yet).

As others have pointed out, "high expected returns" means high risk, and almost certainly a >50% drop at some point in time. You have to be committed to staying the course and continuing to invest in the fund, especially after it has just suffered a stunning drop.
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Re: Retail fund with the highest expected return?

Postby Johm221122 » Tue Dec 25, 2012 2:01 am

am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.

For this to work, I would pick a goal in total return somewhere around 10-15% for 60 years and sell when it his milestone (market may tank in year 58)
Say 10% for 60 years I'll keep it in high risk stock till it hits 300k
As for stock fund I go with vanguard international explorer(in Ira)
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Re:

Postby Liquid » Tue Dec 25, 2012 12:40 pm

exeunt wrote:A world stock small-cap value fund.


+1 With low ER and other fees.

Sadly I do not think this fund exists yet.
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Re: Retail fund with the highest expected return?

Postby nisiprius » Tue Dec 25, 2012 9:09 pm

ozob wrote:
am wrote:If you had to put 1K in a fund for 60 years to maximize potential returns, what would it be? This does not have to be Vanguard.
UYG, it's a no-brainer.
UYG is the ProShares Ultra Financials ETF, which "seeks daily investment results, before fees and expenses, that correspond to two times (2x) the daily performance of the Dow Jones U.S. Financials Index." They note that ETF seeks that return "for a single day." That boldface is theirs, not mine!

It's a "no-brainer" to leave money for sixty years in a fund whose fund company says "investors should monitor their holdings consistent with their strategies, as frequently as daily?"

It's a "no-brainer" to leave money for sixty years in a leveraged ETF when there's a FINRA alert entitled "Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors?"

If you'd put $10,000 into UYG at inception, you'd have $1,081 today. Your money would literally have been decimated. Meanwhile, if you'd put it into a straight financial-sector fund, you'd still have well over half of it, $5,931.

Image

In a daily-leveraged ETF, compared to a straight, unleveraged fund, the gains made during periods when the asset values are rising do not make up for the losses during the periods when they are falling. Perhaps the best way to see this is to pick a starting and ending point at which the straight fund had almost the same value. The "straight" mutual fund investor was almost exactly back to even. The leveraged ETF investor was down over 60%.

Image
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Re: Retail fund with the highest expected return?

Postby hq38sq43 » Thu Dec 27, 2012 12:28 am

Past results do not guarantee future results, especially with a 60-year investment horizon.
Harry at Bradenton
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Re: Retail fund with the highest expected return?

Postby zaboomafoozarg » Thu Dec 27, 2012 1:38 am

Risk seeker wrote:I did it, I did the unthinkable. I just borrowed $50,000 at 3.75% interest and invested $10,000 into each of the following five funds:

FRN - Guggenheim Frontier Markets ETF
FM - iShares MSCI Frontier Markets ETF
PMNA - PowerShares Middle-East-North-Africa Frontier Countries ETF
AFK - Van Eck Global Market Vectors Africa Index ETF
DGS - WisdomTree Emerging Markets SmallCap Dividend ETF

We'll see what happens. I suppose people have done worse things.


Yes, you could always try "a different approach to asset allocation": http://www.bogleheads.org/forum/viewtopic.php?f=10&t=5934 :D
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Re: Retail fund with the highest expected return?

Postby zaboomafoozarg » Thu Dec 27, 2012 1:42 am

nisiprius wrote:It's a "no-brainer" to leave money for sixty years in a fund whose fund company says "investors should monitor their holdings consistent with their strategies, as frequently as daily?"


Yep, that's the literal kind of no-brainer!
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Re: Retail fund with the highest expected return?

Postby kenyan » Thu Dec 27, 2012 6:17 pm

I doubt that nearly any of the funds listed, except perhaps TSM, will actually be around in 60 years. That's an awfully long time.

I pondered something along these lines once. Those of you who have read Orson Scott Card's Ender series may recall that he became filthy rich due to compound interest on investments held while he did a lot of relativistic travel. I wasn't sure (under our current laws) how I would set that up - I assume with a trust of some sort. Probably not something I'll need to figure out in my lifetime.
Retirement investing is a marathon.
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I wish I had known this earlier.

Postby Taylor Larimore » Thu Dec 27, 2012 9:05 pm

Bogleheads:

I started investing in 1950 at the age of 26. The S&P 500 Index was under 20. Today it is 1418 (not including dividends).

Invest in the market and stay the course. I wish I had known this earlier.

Happy Holidays!
Taylor
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