Replacement for USAGX and PRNEX

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EricBackus
Posts: 14
Joined: Wed Jul 15, 2015 10:30 am

Replacement for USAGX and PRNEX

Post by EricBackus » Fri Jul 15, 2016 2:55 pm

Hello fellow Bogleheads,

I have small investments in USAGX (USAA Precious Metals and Minerals) (ER=1.25%), and PRNEX (T. Row Price New Era Fund) (ER=0.67%). These funds are only a trivial portion of my overall portfolio, and probably I shouldn't hold them at all. But let's assume I don't want to just dump them entirely. Are there some similar funds with a better expense ratio that I could replace them with?

I'm considering VBPMX (Vanguard Precious Metals and Mining Fund), which has ER=0.35%, as a replacement for USAGX, but I don't know how to judge how similar these are. And I haven't found anything similar to PRNEX.

Are there other funds I should be considering?

Thanks for your help!

lack_ey
Posts: 6561
Joined: Wed Nov 19, 2014 11:55 pm

Re: Replacement for USAGX and PRNEX

Post by lack_ey » Fri Jul 15, 2016 3:17 pm

In general look for fund holdings breakdowns, checking US stock/international stock/cash/bond allocation, P/E and P/B and other valuation metrics, relatedly the Morningstar style box coverage, sector weightings (this can be big, especially for these two examples), and so on. Also the top holdings lists. Check a given fund's listed strategy and objective, and look at past performance (including possibly a regression for factor loadings), though keeping in mind that holdings and strategies can change over time, especially with different managers coming in.

The manager for USAA Precious Metals and Minerals (USAGX) has been there since late 2008, while T. Rowe Price New Era (PRNEX) has a manager that has only been on the fund for less than three years.

You're right that Vanguard Precious Metals and Mining (VGPMX) is at least roughly in the ballpark for the former.

T. Rowe Price New Era primarily focuses on natural resources (read: energy... read: fossil fuels). It can largely be approximated with a blend of an energy fund and something else, probably a materials fund. Or not all that much different would be a plenty of primarily energy and then others stocks generally. Do note the international holdings and the change over time, but for example see here for a comparison:
https://www.portfoliovisualizer.com/bac ... tion4_2=25
(these days you can use an energy index fund rather than the actively managed fund)

EricBackus
Posts: 14
Joined: Wed Jul 15, 2015 10:30 am

Re: Replacement for USAGX and PRNEX

Post by EricBackus » Mon Jul 18, 2016 1:38 pm

Thanks for the response! I will probably go ahead with Vanguard Precious Metals and Mining (VGPMX) as a replacement for USAA Precious Metals and Minerals (USAGX). And thanks in particular for the idea of using Vanguard Energy (VGENX) as somewhat of a replacement for T. Row Price New Era (PRNEX). It may be close enough to just use that.

beardsworth
Posts: 2062
Joined: Fri Jun 15, 2007 4:02 pm

Re: Replacement for USAGX and PRNEX

Post by beardsworth » Tue Jul 19, 2016 7:56 am

You might want to take a look at T. Rowe Price Real Assets (PRAFX).

http://www3.troweprice.com/fb2/fbkweb/e ... cker=PRAFX

With a current expense ratio of 0.83%, it's more expensive than your current Price New Era but less expensive than your USAA metals fund.

The capsule description of its "Objective" on the Price site states: "Real assets are defined broadly by the fund and are considered to include any assets that have physical properties, such as energy and natural resources, real estate, basic materials, equipment, utilities and infrastructure, and commodities." The fund is also substantially global. So it could be viewed as a knd of "one-stop shopping" for hard assets although, of course, this single-fund convenience means that the distribution of money among different types of hard assets is being delegated to the portfolio manager, as opposed to owning separate funds for energy, metals, real estate, etc., and deciding the respective allocations for yourself.

Morningstar's classification system tends not to know what to do with multi-category vehicles like this, so it's classified there as a "Natural Resources" fund, even though Morningstar's own most recent portfolio analysis shows that 42% of the fund was in real estate.

http://portfolios.morningstar.com/fund/summary?t=PRAFX

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