Favorite Active Funds?

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blindpuppy
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Joined: Tue Jun 13, 2017 6:28 pm

Favorite Active Funds?

Post by blindpuppy » Tue Jun 13, 2017 7:05 pm

Hello all,

First time poster, long time lurker. I, like many of you, have a tax-efficient 3-fund portfolio with a tilt. However, some of you are investing in active funds and I'm curious which funds you like and why. Recognizing that many bond funds benefit from some degree of active management, I'm more interested in equity, balanced, and/or specialty funds.

From previous posts and recent online articles, it seems the following funds might be popular choices. Note for anyone reading this post-June 2017, managers of these active funds are subject to change which likely influences fund performance.

Vanguard PRIMECAP (closed to new investors)
Vanguard Dividend Growth (closed to new investors)
Vanguard US Value
Vanguard Selected Value
Vanguard Windsor
Vanguard Windsor II
Vanguard Morgan Growth
Vanguard Health Care
Vanguard Tax-Managed Balanced

Feel free to add your own fund(s) preference into the discussion. Which active funds do you like and why?

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jhfenton
Posts: 3386
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Location: Ohio

Re: Favorite Active Funds?

Post by jhfenton » Tue Jun 13, 2017 7:55 pm

The only active funds I currently own are Vanguard Ohio Long-Term Tax Exempt (VOHIX) and a tiny bit of Vanguard Limited Term Tax Exempt Investor Shares (VMLTX). And since I own more VOHIX, I guess that makes it my favorite.

I consider all of Vanguard's active bond funds to be good funds, as is Vanguard Tax-Managed Balanced, which is essentially an active muni fund (managed by the Vanguard Fixed Income group) married with a U.S. index equity fund (managed by the Vanguard Equity Index group).

There's nothing wrong with the others you list, but I have no interest in them.

swguy
Posts: 55
Joined: Thu May 14, 2015 5:27 pm

Re: Favorite Active Funds?

Post by swguy » Tue Jun 13, 2017 9:10 pm

I like Wellesley (VWIAX) for its low ER and consistent preformance. Ditto Wellington (VWENX) for the same reasons.

NibbanaBanana
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Re: Favorite Active Funds?

Post by NibbanaBanana » Tue Jun 13, 2017 9:24 pm

I really like the STAR fund. It's their balanced fund of active funds. And it's not just a balanced mutual fund but is an entire investment portfolio all rolled into one. It's trailed some of the other Vanguard balanced funds recently, probably because it has an international component. That may not always be the case though. A little higher ER than the three fund portfolio I think but simpler. A single fund. I think all of Vanguards active funds are good because the Vanguard board of directors has only the shareholder's interest to look out for. No conflicts of interest like other fund families. They negotiate the lowest fees and hold the managers to the highest standards.

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badbreath
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Re: Favorite Active Funds?

Post by badbreath » Tue Jun 13, 2017 9:26 pm

It is Vanguard Health Care and may still be. I have not decided if I want to sell or not due to the need for more bonds in my portfolio.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

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TD2626
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Re: Favorite Active Funds?

Post by TD2626 » Tue Jun 13, 2017 10:46 pm

Wellington is often suggested. It is ancient - going back to the 1920s. Others like STAR or Wellesley are also reasonable. Sector funds are by nature speculative as they are essentially a bet on specific market segments.

Vanguard active management is low-cost, which is good as the cost hurdle is a big part of active's under performance.

Recognizing that active fund purchases come with added risk and generally has an expectation of underperformance in many cases is important. A small allocation to well-diversified, low-cost active funds may be reasonable as part of an otherwise indexed portfolio, though. They represent a different way to invest than indexing.


Anyone have any ideas on non-Vanguard low-cost active? Dodge and Cox, places like that?

Dead Man Walking
Posts: 720
Joined: Wed Nov 07, 2007 6:51 pm

Re: Favorite Active Funds?

Post by Dead Man Walking » Tue Jun 13, 2017 11:24 pm

I own Primecap Core in my IRA. It's a large cap blend fund that I hold as a supplement to TSM. About half of its 153 holdings are in technology and healthcare; consequently, it's not well diversified. The fund has consistently outperformed the S&P 500 Fund by a couple of percentage points.

My wife owns Wellington Fund in her IRA. We also own actively managed Vanguard investment grade bond funds.

DMW

iamlucky13
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Location: Western Washington

Re: Favorite Active Funds?

Post by iamlucky13 » Wed Jun 14, 2017 3:11 am

I have access to PrimeCap in a 401k. Sometimes I'm tempted when I look at how well it seems to fairly consistently do versus total stock market. I'm very impressed.

But every time, I always come back to, "past performance is not an indicator of future returns," and when I look for ways to decide if I'm comfortable with the risk, I see their heavy weightings of tech and healthcare stocks and shy away.

Swansea
Posts: 576
Joined: Sat Feb 13, 2016 5:16 am

Re: Favorite Active Funds?

Post by Swansea » Wed Jun 14, 2017 5:33 am

Harbor Capital Appreciation is the one active fund I own, the rest are index funds.
I like its tilt to large cap, growth tech stocks. It is about 8% of my portfolio.

racy
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Location: Nebraska

Re: Favorite Active Funds?

Post by racy » Wed Jun 14, 2017 6:06 am

Wellesley - a small tilt towards value.
Int'l Explorer - my international stock exposure, thinking managers might select better countries, sectors, etc. (although I admit I may be delusional!)
Healthcare - 6% of my stock exposure; I want to participate in the breakthroughs & advances in health coming.

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djpeteski
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Re: Favorite Active Funds?

Post by djpeteski » Wed Jun 14, 2017 7:06 am

I am a Fidelity Guy

T ROWE PRICE GLOBAL TECHNOLOGY (PRGTX) .9% Expense ratio, 3 year avg return: 23.88%
FIDELITY SELECT MEDICAL EQUIP&SYSTEM (FSMEX) .8%, 3 year avg return: 18.47%
FIDELITY OTC PORT (FOCPX) .91%, 3 year avg return: 16.98%

Oh and TSLA. :o

During this time, my S&P500 fund returned about 10.1% with a .045% expense ratio

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teacher
Posts: 996
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Location: California

Re: Favorite Active Funds?

Post by teacher » Wed Jun 14, 2017 11:11 am

We have held Vanguard Health Care fund – Admiral and Vanguard Capital Opportunity fund – Admiral for decades. Capital Opportunity is closed and has a $25,000 annual contribution limit. The Health Care fund requires $50,000 initial contribution with no annual contribution limit.

Vanguard Health Care Index Admiral (VHCIX)
http://www.morningstar.com/funds/XNAS/VHCIX/quote.html

Vanguard Capital Opportunity Fund Admiral Shares (VHCAX)
http://performance.morningstar.com/fund ... ture=en-US

aristotelian
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Joined: Wed Jan 11, 2017 8:05 pm

Re: Favorite Active Funds?

Post by aristotelian » Wed Jun 14, 2017 11:43 am

T Rowe Price Mid Cap Value (TRMCX) has been very kind to me...but I sold it in March to lock in the profits from my good luck.

silvercertificate
Posts: 30
Joined: Sat Dec 10, 2016 8:13 pm

Re: Favorite Active Funds?

Post by silvercertificate » Wed Jun 14, 2017 9:43 pm

blindpuppy wrote:Hello all,

First time poster, long time lurker. I, like many of you, have a tax-efficient 3-fund portfolio with a tilt. However, some of you are investing in active funds and I'm curious which funds you like and why. Recognizing that many bond funds benefit from some degree of active management, I'm more interested in equity, balanced, and/or specialty funds.

From previous posts and recent online articles, it seems the following funds might be popular choices. Note for anyone reading this post-June 2017, managers of these active funds are subject to change which likely influences fund performance.

Vanguard PRIMECAP (closed to new investors)
Vanguard Dividend Growth (closed to new investors)
Vanguard US Value
Vanguard Selected Value
Vanguard Windsor
Vanguard Windsor II
Vanguard Morgan Growth
Vanguard Health Care
Vanguard Tax-Managed Balanced

Feel free to add your own fund(s) preference into the discussion. Which active funds do you like and why?
I use low ER active funds for about 15% of my portfolio. I own Vanguard Dividend Growth as it has outperformed the S&P over the long term and I like the tilt toward companies that consistently grow their dividends. I would certainly buy PRIMECAP if I had access to it. Wellington and Wellesley are both good choices, in my view, for balanced active funds. I have access to American Funds Growth Fund of America at a low ER (about 30 basis points) in my 401k and have been recently rewarded by using that to tilt towards growth. Some might argue that I would be better off with 100% in index funds and if you run the numbers over the long term that might be true. For me, these high quality low ER active funds I feel are a low risk way to spice up my portfolio.

deeppizza
Posts: 49
Joined: Wed Mar 16, 2016 11:16 pm

Re: Favorite Active Funds?

Post by deeppizza » Wed Jun 14, 2017 10:19 pm

Primecap Odyssey Growth
Dodge & Cox Stock
Dodge & Cox International Stock

Vanguard Fan 1367
Posts: 758
Joined: Wed Feb 08, 2017 3:09 pm

Re: Favorite Active Funds?

Post by Vanguard Fan 1367 » Wed Jun 14, 2017 10:28 pm

swguy wrote:I like Wellesley (VWIAX) for its low ER and consistent preformance. Ditto Wellington (VWENX) for the same reasons.
I have a little of some of the other actively managed Vanguard funds. I don't have the above two but I like them.

nova1968
Posts: 227
Joined: Wed May 18, 2016 12:00 pm

Re: Favorite Active Funds?

Post by nova1968 » Thu Jun 15, 2017 8:32 am

I was active in T Rowe Price Small cap and Small Cap Value for several years with pretty good returns. I sold out a few years ago and paid off my mortgage.

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Taylor Larimore
Advisory Board
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Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Two links

Post by Taylor Larimore » Thu Jun 15, 2017 8:49 am

blindpuppy:

Welcome to the Bogleheads Forum!

I no longer try to beat the market using past performance to select managed funds with higher costs, managers that leave, and less tax-efficiency. Read these two links:

Indexing

The Three-Fund Portfolio

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

alex_686
Posts: 3947
Joined: Mon Feb 09, 2015 2:39 pm

Re: Two links

Post by alex_686 » Thu Jun 15, 2017 8:58 am

Taylor Larimore wrote:I no longer try to beat the market using past performance to select managed funds with higher costs, managers that leave, and less tax-efficiency.
I am a bit kinder towards actively managed fund. The question that Taylor is asking is why do you think a manager can beat the index? It is a good question to ask and a hard one to answer. I use actively managed funds when there are defects in the index.
 
Bond indexes have exploitable flaws. Most indexes only cover 10% of the market. Semi-active is there way to go here. The high yield junk bond indexes are worse than average. So my favorite actively managed fund is Vanguard High-Yield Corporate Fund.

jay22
Posts: 705
Joined: Thu Aug 23, 2012 8:56 am
Location: Sacramento, CA

Re: Favorite Active Funds?

Post by jay22 » Thu Jun 15, 2017 9:49 am

I like the 4 active funds that we invest in:

VG Health Care
Primecap Odyssey Growth
TRW Cap Opportunity
VG Wellesley

These make around 1/4th of our portfolio.

asif408
Posts: 1478
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Favorite Active Funds?

Post by asif408 » Thu Jun 15, 2017 10:28 am

All but one of my funds are passive, and that is the Vanguard Precious Metals & Mining fund. If Vanguard had an equivalent index fund I would own that, but since most of my assets are at Vanguard, I don't want to open a new account just for one fund, and I think a small amount adds some diversification benefit, I decided to go with the Vanguard fund.

I own it primarily for the potential rebalancing bonus that Bill Bernstein periodically talks about. I've been happy with it so far. It's volatile, but in a good way. Most of the other active funds I've seen at Vanguard have a similar index fund that is cheaper, so I'm only willing to increase my costs and go with an active fund if I think it brings something unique to the table and the extra cost is outweighed by the potential benefits. I considered their active energy fund, but since they have an index energy fund that is cheaper, I went with the index.

mongstradamus
Posts: 106
Joined: Mon Nov 04, 2013 11:46 pm

Re: Favorite Active Funds?

Post by mongstradamus » Thu Jun 15, 2017 7:35 pm

I personally don't use any Active funds, but I did set up Vanguard wellington fund for my mother in her IRA. She seems to like it.

Jags4186
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Joined: Wed Jun 18, 2014 7:12 pm

Re: Favorite Active Funds?

Post by Jags4186 » Thu Jun 15, 2017 7:51 pm

I own Wellesley (home downpayment savings) and Primecap Odyssey Growth in my 401k.

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