Vanguard Precious Metals and Mining?

[casey2012]

Would the Vanguard Precious Metals and Mining fund be a good fund to purchase to spice up a three fund Portfolio?

It's most recent one year performance is -32.35...

Your thoughts are appreciated.

[Taylor Larimore]

Casey:

The Three Fund Portfolio already holds the market weight in gold and precious metal mining stocks.

Strive for simplicity--not complexity.

Bogleheads invest -- not speculate.

Best wishes.
Taylor

[momar]

Buy some ghost chilis if you need more spice in your life.

[The Wizard]

OP is betting on reversion to the mean if he does this.
Not sure this is a good bet...

[tc101]

It's down 50% in the last 2 years, while total stock mkt is up 20%. We tell people to buy the REIT fund because it behaves differently than the total market, and there is a rebalancing bonus. Why is precious metals and mining different than REIT for this purpose?

[casey2012]

Of all the Vanguard funds, it appears that Precious Metals performance has been the poorest over the last couple years so wouldn't this be an opportunity to buy low?

[jginseattle]

The fund seems too watered down to be a proxy for gold.

[momar]

Of all the Vanguard funds, it appears that Precious Metals performance has been the poorest over the last couple years so wouldn't this be an opportunity to buy low?

This fund can stay down for a long, long time. And how do you know it is "low" now? What if it's still high?

[casey2012]

It's average annual return since inception (1984) is 5.63%. It's most recent one year performance is -32.35%.

Just wondering if it might be an opportunity for a small portion of portfolio...

[bottomfisher]

Of all the Vanguard funds, it appears that Precious Metals performance has been the poorest over the last couple years so wouldn't this be an opportunity to buy low?

"Buy low" is a relative term. The fund is composed of 87.6% foreign stocks. So a essentially an international stock fund. A couple of valuation measures reveal - P/e 17.3x, P/b 1.4x. Vg Total International Stock - P/e 17.2x, P/b 1.6 x. Similiar valuations despite a 5 yr annualized return of -12.94% for Precious Metals and Mining fund. So is the price low or did the valuations and performance revert to mean from a previously exceedingly high level? I'm thinking they've reverted to the mean. But Vg Precious Metals and Mining has a reasonably optimistic earnings growth rate of 16.4%. So if the world wide economic slump turns the corner, these stocks may return to their days of outperformance! Or they may not anytime soon. A M* graph of the funds performance over time reveals protracted periods of underperformance and outperformance. So how patient are you willing to be?

I actually own an increasingly smaller amount. I'm in the process of liquidating this fund and Vg Energy in effort for a more simplified portfolio. I'm waiting for another burst then I'll exchange for one of my simple core funds.

[baw703916]

See this recent thread: http://www.bogleheads.org/forum/viewtop ... 1&t=115796

I posted my thoughts there, and promptly killed the thread. So I won't repeat them here.

[steve roy]

The wife and I exited Precious Metals a while ago. Taylor Larimore is right, I think. Many over think investing and get way too tricky for their own good.

[hafius500]

Morningstar, VPMX Chart:
Growth of 10,000 USD from 5/23/84 to 5/16/13:
47,512 USD Vanguard Precious Metals and Mining Fund
37,093 USD Equity Precius Metals
135,102 USD MSCI World NR

http://quote.morningstar.com/fund/chart ... ture=en-US

If you want to bet on mean reversion (and if you know the mean!), rebalance (buy).
If you want to bet on momentum, wait.

[z3r0c00l]

Of all the Vanguard funds, it appears that Precious Metals performance has been the poorest over the last couple years so wouldn't this be an opportunity to buy low?

Maybe... consider the fact that this fund once paid out a 15% dividend... the share price right now is not the only thing to look at.

[ruralavalon]

We own some at 05% of portfolio. Will probably get out of it as I get older and lazier.

Its extremely volatile, and you have to be disciplined enough to rebalance back to target whenever it does very well or very poorly vs total market.

Its not a proxy for gold, its a fund of stocks of companies in the mining industry.

Its over 90% international companies, so if you buy it count it as part of your international allocation.

[PacNorWest]

Current conditions seem to indicate that it might be a good time to "bet" on VPMM
And the fund is down. . .you may have to hold it for a few months or years.

I agree with you but I would wait awhile longer before placing that bet.
If/when I read that Caterpillar is getting more orders then I would revisit VPMM

[tc101]

Its over 90% international companies, so if you buy it count it as part of your international allocation.

Does that mean you should have it in taxable account because of the foreign tax credit?

[bottomfisher]

...I agree with you but I would wait awhile longer before placing that bet.
If/when I read that Caterpillar is getting more orders then I would revisit VPMM

I agree Catepillar may be a good indicator for the sector outlook. CNCB - April 22, '13 "Caterpillar posted earnings and revenue that missed Wall Street expectations on Monday and cut its full-year outlook for 2013 to reflect a drop in demand for heavy equipment from its mining customers."

[rkhusky]

Its over 90% international companies, so if you buy it count it as part of your international allocation.

Does that mean you should have it in taxable account because of the foreign tax credit?

You would also need to check out the percent of qualified dividends to make that determination.

[casey2012]

Thanks to all for your insights and advice!

[ruralavalon]

Its over 90% international companies, so if you buy it count it as part of your international allocation.

Does that mean you should have it in taxable account because of the foreign tax credit?

I have no idea, our taxable account is already almost all in Total International.