Looking for an example of a fund which has beat its index for 30 years

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jalbert
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by jalbert » Wed Mar 07, 2018 5:56 pm

anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
While I am used to hearing statements declaring how few active funds beat their index (presumably over a year) I am interested in examples of funds which have beat a major index over prolonged intervals.

If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.

I am looking for examples of active funds whose returns (after considering costs) have beat a major index for decades. Better yet, funds which have beat a relevant index fund over decades.

What's your best contender?
This is surprisingly difficult to answer because actively managed mutual funds rarely restrict themselves to securities in the reference index.

Here is an example of the difficulty. An international equity fund allocates 90% to a diversified portfolio of developed markets stocks and 10% to a diversified portfolio of emerging market stocks. Should it be benchmarked with a DM index or total int'l index? Either will fit the overall portfolio equally well. In periods where DM beats EM the fund will beat the total intl index, but when EM overperforms, the fund will beat the DM index. There are fund companies that use this strategy and cherry-pick the index to claim overperformance of the fund.
Last edited by jalbert on Thu Mar 08, 2018 1:14 pm, edited 1 time in total.
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thegoodlife
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by thegoodlife » Wed Mar 07, 2018 7:18 pm

Just to add it to the mix:
TSP C Fund beat the S&P500 for the 1, 3, 5, 10, and since inception (1988).
The S and I (smallcap and International) did the same, but inception was 2001.
The F (bonds) did beat the index for the 1,3,5 and 10, but not since inception (1988).

JBTX
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by JBTX » Wed Mar 07, 2018 7:24 pm

MnD wrote:
Wed Mar 07, 2018 5:28 pm
JBTX wrote:
Wed Mar 07, 2018 4:25 pm
MnD wrote:
Wed Mar 07, 2018 3:45 pm
JBTX wrote:
Wed Mar 07, 2018 12:35 pm
Look at dodge and cox over 10 years. It hasn't beat indexes.
Dodge and Cox Income (DODIX) and International Stock (DODFX) have also outperformed the total bond aggregate and MSCI ACWI ex-US indices respectively for the past 10 years, in addition to the longer term out-performance I showed earlier. Here's the 10-year growth of $10K data
DODIX: $16,146.48 BBgBarc US Agg Bond TR $14,439.16
DODFX: $15,529.64 MSCI ACWI Ex USA NR: $13,109.87


Dodge and Cox Stock DODGX (a large cap value fund) has slightly lagged the S&P 500 index for the past 10 years but has slightly outperformed the Vanguard Value Fund (admiral shares) which tracks the CRSP large cap value stock index.
DODGX:$24,212.54 VVIAX:$23,648.97

So your blanket statement, " Look at dodge and cox over 10 years. It hasn't beat indexes", appears to be a materially false one.

Besides, basing investment decisions on the past 10-year performance is a great way to invest in whatever was hot in the most recent business cycle. I've been investing for 32 years now and if the joint life expectancy table in any guide at least one of us may have another 35 to go. Relative to a 67 year investing horizon, 10 years is kind of day-tradingesque. Some Dodge and Cox investors do have a tendency to pile in following periods of significant outperformance, and like you did "after 2008", tend to run off following periods of underperformance due to "mojo" concerns or whatever you call buy high sell low.
You seem to want to create your own self affirming narrative here that has nothing to do with what I actually posted and nothing to do with reality or the truth. You cherry picked one or two sentences and ignored the rest and created a buy high sell low boogey man to frown upon.


The reason I dumped dodge and cox is upon the realization that they had piled up in in more risky financial Stocks prior to the 2008 crash, and that changed my perception of really what they really were and decided that they didn’t do anything for me.
Dodge and Cox investment committees are not a closest indexers. Their funds have substantially outperformed and underperformed common indices over various market cycles. The level of portfolio divergence in 2008/09 that hurt Dodge and Cox Stock then was an enormous benefit to Dodge and Cox Stock holders in 2000-02. Per answering the OP's question on 30-year out-performance, the core Dodge and Cox funds (stock, income, international stock) have clearly outperformed for 30 years or from inception and clearly for 10 years for Income and International Stock while Stock was mixed, slightly under S&P 500 and slightly better than a large cap value index which is the fund category. Its unfortunate that you sold Dodge and Cox Stock "after 2008" due to its lack of mojo, but that isn't a credible argument against the fund. Likewise with stating "Look at dodge and cox over 10 years. It hasn't beat indexes" when that statement is mostly false.
OK, I don't really want it to get contentious. My point in bringing up the last 10 years, is that I am not sure the peformance premium that they once had is really continuing. Over 10 years, it lagged the index and value benchmark. But, change the beginning point to a year later, March 2009, its absolute bottom, it has outperformed during from that point forward.

I think a more accurate description of the situation is Dodge and Cox is a riskier than average fund, both in terms of risk and returns (see Morningstar Risk measures). All of its risk measures have been higher than both value funds and the S&P, but its return has as well.

After the market crash one of my goals was to reduce risk, as the market went back up. And as such, I felt that Dodge and Cox did not necessarily fit as well into what I wanted as I originally thought.

The conversation made me curious - so I went back. I first bought some in Beginning 2004, then added some in 2005, and added again in late 2008 (which I didn't remember doing - in a 401k). I then sold some in 2010 and the rest in 2011.

I never said ( I don't think) it is a bad fund. My parents have had stakes in it for decades, and it has done very well for them. Also, I have held on to the Dodge and Cox international, which I bought on 1/1/2004, and only sold partial stake later around 2014

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by aristotelian » Wed Mar 07, 2018 7:50 pm

T. Rowe Price Blue Chip Stock (TRBCX) - 10.96% average total return since inception 1993. Only 25 years but pretty impressive. I just cashed out with about 20 years in the fund.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by MnD » Thu Mar 08, 2018 12:10 pm

JBTX wrote:
Wed Mar 07, 2018 7:24 pm

My point in bringing up the last 10 years, is that I am not sure the peformance premium that they once had is really continuing. Over 10 years, it lagged the index and value benchmark. But, change the beginning point to a year later, March 2009, its absolute bottom, it has outperformed during from that point forward.

I think a more accurate description of the situation is Dodge and Cox is a riskier than average fund, both in terms of risk and returns (see Morningstar Risk measures). All of its risk measures have been higher than both value funds and the S&P, but its return has as well.
If shallow risk is your concern and of the type to "bail" when the past X years don't seem to be confirming the reason for an investment in a given fund, you definitely should not invest in Dodge and Cox funds. i read an article that on average, Dodge and Cox fund investors do quite a bit worse than the D&C funds themselves. They pile in _after_ prolonged periods of D&C out-performance and bail out _after_ periods of significant under-performance.

I'm also not sure what "index" and "value benchmark" you contend Dodge and Cox has lagged for the past 10 years as you don't provide any specifics or data. Here's Dodge and Cox Stock fund in blue for the past 10 years compared to in orange the Morningstar large cap value style box, green the Vanguard Value Index Fund admiral class VVIAX and yellow the Morningstar Large Cap Value stock index. 2008/09 was not a fun ride for large cap value, but I'm not sure DODGX deserves any special concern, especially since it has significantly outperformed for 30 years as well as for shorter periods like the past 10 years in the value category.

Image

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by JBTX » Thu Mar 08, 2018 1:49 pm

MnD wrote:
Thu Mar 08, 2018 12:10 pm
JBTX wrote:
Wed Mar 07, 2018 7:24 pm

My point in bringing up the last 10 years, is that I am not sure the peformance premium that they once had is really continuing. Over 10 years, it lagged the index and value benchmark. But, change the beginning point to a year later, March 2009, its absolute bottom, it has outperformed during from that point forward.

I think a more accurate description of the situation is Dodge and Cox is a riskier than average fund, both in terms of risk and returns (see Morningstar Risk measures). All of its risk measures have been higher than both value funds and the S&P, but its return has as well.
If shallow risk is your concern and of the type to "bail" when the past X years don't seem to be confirming the reason for an investment in a given fund, you definitely should not invest in Dodge and Cox funds. i read an article that on average, Dodge and Cox fund investors do quite a bit worse than the D&C funds themselves. They pile in _after_ prolonged periods of D&C out-performance and bail out _after_ periods of significant under-performance.

I'm also not sure what "index" and "value benchmark" you contend Dodge and Cox has lagged for the past 10 years as you don't provide any specifics or data. Here's Dodge and Cox Stock fund in blue for the past 10 years compared to in orange the Morningstar large cap value style box, green the Vanguard Value Index Fund admiral class VVIAX and yellow the Morningstar Large Cap Value stock index. 2008/09 was not a fun ride for large cap value, but I'm not sure DODGX deserves any special concern, especially since it has significantly outperformed for 30 years as well as for shorter periods like the past 10 years in the value category.

Image
My attempts to find common ground here seem to be a feckless endeavor.

I just looked at Morningstar 10 yr quote. Yes DC lagged sightly S&P 500 but you are right it actually has edged the large value benchmark. My point is that by just about any way you want to measure risk - whether it is volatility or performance during 2009 downturn it is more risky. It is higher risk, and higher returns. As I am into my mid 50s I decided I wanted to demphasize higher risk funds - such as DC that lost 63% if it’s value from high in 2007 to low in 2009 mainly because it was piled up in the financial Sector before the crash. That’s really all there is to it.

Your repeated attempts to characterize me as some buy high sell low intelligence investor is getting tiresome.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by dkturner » Thu Mar 08, 2018 4:14 pm

JBTX wrote:
Thu Mar 08, 2018 1:49 pm
MnD wrote:
Thu Mar 08, 2018 12:10 pm
JBTX wrote:
Wed Mar 07, 2018 7:24 pm

My point in bringing up the last 10 years, is that I am not sure the peformance premium that they once had is really continuing. Over 10 years, it lagged the index and value benchmark. But, change the beginning point to a year later, March 2009, its absolute bottom, it has outperformed during from that point forward.

I think a more accurate description of the situation is Dodge and Cox is a riskier than average fund, both in terms of risk and returns (see Morningstar Risk measures). All of its risk measures have been higher than both value funds and the S&P, but its return has as well.
If shallow risk is your concern and of the type to "bail" when the past X years don't seem to be confirming the reason for an investment in a given fund, you definitely should not invest in Dodge and Cox funds. i read an article that on average, Dodge and Cox fund investors do quite a bit worse than the D&C funds themselves. They pile in _after_ prolonged periods of D&C out-performance and bail out _after_ periods of significant under-performance.

I'm also not sure what "index" and "value benchmark" you contend Dodge and Cox has lagged for the past 10 years as you don't provide any specifics or data. Here's Dodge and Cox Stock fund in blue for the past 10 years compared to in orange the Morningstar large cap value style box, green the Vanguard Value Index Fund admiral class VVIAX and yellow the Morningstar Large Cap Value stock index. 2008/09 was not a fun ride for large cap value, but I'm not sure DODGX deserves any special concern, especially since it has significantly outperformed for 30 years as well as for shorter periods like the past 10 years in the value category.

Image
My attempts to find common ground here seem to be a feckless endeavor.

I just looked at Morningstar 10 yr quote. Yes DC lagged sightly S&P 500 but you are right it actually has edged the large value benchmark. My point is that by just about any way you want to measure risk - whether it is volatility or performance during 2009 downturn it is more risky. It is higher risk, and higher returns. As I am into my mid 50s I decided I wanted to demphasize higher risk funds - such as DC that lost 63% if it’s value from high in 2007 to low in 2009 mainly because it was piled up in the financial Sector before the crash. That’s really all there is to it.

Your repeated attempts to characterize me as some buy high sell low intelligence investor is getting tiresome.
I think Mr. Bogle summed things up quite nicely when, referring to investors with a long-term horizon, he said (paraphrased): “One additional percentage point of returns is priceless, one additional percentage point of the standard deviation of those returns is meaningless”.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by JBTX » Thu Mar 08, 2018 4:21 pm

dkturner wrote:
Thu Mar 08, 2018 4:14 pm
JBTX wrote:
Thu Mar 08, 2018 1:49 pm
MnD wrote:
Thu Mar 08, 2018 12:10 pm
JBTX wrote:
Wed Mar 07, 2018 7:24 pm

My point in bringing up the last 10 years, is that I am not sure the peformance premium that they once had is really continuing. Over 10 years, it lagged the index and value benchmark. But, change the beginning point to a year later, March 2009, its absolute bottom, it has outperformed during from that point forward.

I think a more accurate description of the situation is Dodge and Cox is a riskier than average fund, both in terms of risk and returns (see Morningstar Risk measures). All of its risk measures have been higher than both value funds and the S&P, but its return has as well.
If shallow risk is your concern and of the type to "bail" when the past X years don't seem to be confirming the reason for an investment in a given fund, you definitely should not invest in Dodge and Cox funds. i read an article that on average, Dodge and Cox fund investors do quite a bit worse than the D&C funds themselves. They pile in _after_ prolonged periods of D&C out-performance and bail out _after_ periods of significant under-performance.

I'm also not sure what "index" and "value benchmark" you contend Dodge and Cox has lagged for the past 10 years as you don't provide any specifics or data. Here's Dodge and Cox Stock fund in blue for the past 10 years compared to in orange the Morningstar large cap value style box, green the Vanguard Value Index Fund admiral class VVIAX and yellow the Morningstar Large Cap Value stock index. 2008/09 was not a fun ride for large cap value, but I'm not sure DODGX deserves any special concern, especially since it has significantly outperformed for 30 years as well as for shorter periods like the past 10 years in the value category.

Image
My attempts to find common ground here seem to be a feckless endeavor.

I just looked at Morningstar 10 yr quote. Yes DC lagged sightly S&P 500 but you are right it actually has edged the large value benchmark. My point is that by just about any way you want to measure risk - whether it is volatility or performance during 2009 downturn it is more risky. It is higher risk, and higher returns. As I am into my mid 50s I decided I wanted to demphasize higher risk funds - such as DC that lost 63% if it’s value from high in 2007 to low in 2009 mainly because it was piled up in the financial Sector before the crash. That’s really all there is to it.

Your repeated attempts to characterize me as some buy high sell low intelligence investor is getting tiresome.
I think Mr. Bogle summed things up quite nicely when, referring to investors with a long-term horizon, he said (paraphrased): “One additional percentage point of returns is priceless, one additional percentage point of the standard deviation of those returns is meaningless”.
Well yes, but that is simplistic. It is common practice to try to lower risk as one approaches retirement, typically through asset allocation. But you could argue that lowering your equity portfolio risk is another way to accomplish that, at least by minimizing slices/tilts that are generally riskier than the broad market. Mr Bogle would have never advocated investing in an active fund like DC in the first place

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by MnD » Thu Mar 08, 2018 5:21 pm

JBTX wrote:
Thu Mar 08, 2018 4:21 pm
Mr Bogle would have never advocated investing in an active fund like DC in the first place
https://www.aol.com/article/finance/201 ... /20848774/

Jack Bogle: Well, I'm not sure "above average" is quite the standard, and that's a really tough standard to meet -- but you can do a perfectly good job. The managers I like -- and I don't hesitate to say who they are -- you can look at Dodge & Cox, and you can look at Longleaf, and there are probably a number of other small firms.

What's so good about them? They are in the business of investment management, and not in the business of marketing. This has become a great, big marketing business, and they stick to their guns and they manage money.

They slip. They stumble. They err. They make mistakes. This is a business, for all that. But in the long run, I would bet on someone whose business is trying to be a professional investor -- not a trader -- someone whose business is trying to serve you, rather than serve the marketplace.

There aren't a lot of them -- and I don't want to put a curse on them -- because they'll get too big, and they won't be able to do it anymore. That's one of the great secrets of this business -- and that is, if you're really good for a long-enough time, you draw an awful amount of money, and then you can't be good anymore.

Gardner: Too big to succeed.

Bogle: Too big to succeed, or, as Warren Buffett says, "A fat wallet is the enemy of superior returns." And of course it is.

If you can get someone who can give an index a good run for its money, I wouldn't say you're going to do a lot better. I don't think they would say you're going to do a lot better. But it's a good alternative, because you don't know it all; there's an infinite number of choices. I think Longleaf probably runs four or five funds. Dodge & Cox runs five, I think. The rest of us: Fidelity runs 260 funds; Vanguard runs, I think, around 170. I'm not sure anybody really knows, and that's tough on a whole lot of levels.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by JBTX » Thu Mar 08, 2018 5:26 pm

MnD wrote:
Thu Mar 08, 2018 5:21 pm
JBTX wrote:
Thu Mar 08, 2018 4:21 pm
Mr Bogle would have never advocated investing in an active fund like DC in the first place
https://www.aol.com/article/finance/201 ... /20848774/

Jack Bogle: Well, I'm not sure "above average" is quite the standard, and that's a really tough standard to meet -- but you can do a perfectly good job. The managers I like -- and I don't hesitate to say who they are -- you can look at Dodge & Cox, and you can look at Longleaf, and there are probably a number of other small firms.

What's so good about them? They are in the business of investment management, and not in the business of marketing. This has become a great, big marketing business, and they stick to their guns and they manage money.

They slip. They stumble. They err. They make mistakes. This is a business, for all that. But in the long run, I would bet on someone whose business is trying to be a professional investor -- not a trader -- someone whose business is trying to serve you, rather than serve the marketplace.

There aren't a lot of them -- and I don't want to put a curse on them -- because they'll get too big, and they won't be able to do it anymore. That's one of the great secrets of this business -- and that is, if you're really good for a long-enough time, you draw an awful amount of money, and then you can't be good anymore.

Gardner: Too big to succeed.

Bogle: Too big to succeed, or, as Warren Buffett says, "A fat wallet is the enemy of superior returns." And of course it is.

If you can get someone who can give an index a good run for its money, I wouldn't say you're going to do a lot better. I don't think they would say you're going to do a lot better. But it's a good alternative, because you don't know it all; there's an infinite number of choices. I think Longleaf probably runs four or five funds. Dodge & Cox runs five, I think. The rest of us: Fidelity runs 260 funds; Vanguard runs, I think, around 170. I'm not sure anybody really knows, and that's tough on a whole lot of levels.
Well alrighty then!

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by cfs » Thu Mar 08, 2018 5:48 pm

So, what is the purpose of this exercise?

To build a [future] index-beating "Active Three-Fund Portfolio" [?]

Look to the [future], forget the past, look at the future 30 years with this triumvir which is still open to new investors:

Vanguard Equity Income
Vanguard International Growth
Vanguard Core Bond Fund

See, that was easy!

My signature applies, y muchas gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by michaeljc70 » Thu Mar 08, 2018 7:57 pm

The benchmark does not necessarily have the same risk as the fund. Given your criteria of 30 years, I would venture to say that most funds aren't 30 years old and many that were around 30 years ago are gone.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by grabiner » Thu Mar 08, 2018 11:21 pm

dbr wrote:
Wed Mar 07, 2018 10:03 am
The question is ill-formed. A fund that has an index is an index fund and if by some quirk it has beat its index then the fund management has screwed up. Correct performance would be to lag the index by the costs of the fund.
It's common for index funds to beat the index before expenses by efficient trading and securities lending. In fact, Vanguard Institutional Index Institutional Plus (VIIIX) has beaten the S&P index since inception in 1990, by two basis points, and I would expect it to keep that up. Someone else mentioned that the TSP C Fund has beaten the S&P index since 1988. I believe Vanguard Small-Cap Index has beaten its benchmark since it became an index fund, because it used to track the Russell 2000 when the Russell was easy to front-run.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by dbr » Fri Mar 09, 2018 8:54 am

grabiner wrote:
Thu Mar 08, 2018 11:21 pm
dbr wrote:
Wed Mar 07, 2018 10:03 am
The question is ill-formed. A fund that has an index is an index fund and if by some quirk it has beat its index then the fund management has screwed up. Correct performance would be to lag the index by the costs of the fund.
It's common for index funds to beat the index before expenses by efficient trading and securities lending. In fact, Vanguard Institutional Index Institutional Plus (VIIIX) has beaten the S&P index since inception in 1990, by two basis points, and I would expect it to keep that up. Someone else mentioned that the TSP C Fund has beaten the S&P index since 1988. I believe Vanguard Small-Cap Index has beaten its benchmark since it became an index fund, because it used to track the Russell 2000 when the Russell was easy to front-run.
When the net costs are negative the lag is negative meaning the fund has higher return than the index. These numbers are algebraic. I should have used more words to cover all the possibilities. But then my posts are always too wordy because nothing is ever quite as simple as it seems. I am aware of the possibility that funds have sources of income. I hadn't hear that a fund could beat an index due to front running but that would in my mind fall in the category of tracking error as the objective of the fund is to track the index rather than be managed to beat the index by using a management tactic.

In any case the real point, to which I hold adamantly, is that only index funds have a meaningful index and the rest is marketing.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by nisiprius » Fri Mar 09, 2018 3:00 pm

I'm going to try to answer your question without editorializing. I would put up the PIMCO Total Return Bond Fund, PTTRX (blue) as an example of a fund which has beaten its index for just over thirty years, if we agree that "its index" is the Lehman/Barclay's/Bloomberg Aggregate Index (orange). And it also has beaten the Vanguard Total Bond Market Index Fund (green).

Source
Image

According to Portfolio Visualizer, the volatility of PTTRX was slightly greater than that of Total Bond, 4.17% versus 3.79%, but it was more than justified by the higher return, and thus has a Sharpe ratio of 0.98 versus 0.77 for Total Bond.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by El Greco » Fri Mar 09, 2018 11:53 pm

Well, I've got good news and bad news.

The good news: Vanguard Primecap has been handily beating it's index, S&P 500, since it's inception in 1984. It also has very low expenses. Admiral shares, I believe are in the neighborhood of .25% ER.

The bad news: Primecap has been closed to new investors for many years.

Possible good news, The same group that manages Primecap has newer funds that invest very similarly and are still open.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by pondering » Sat Mar 10, 2018 12:01 am

I would like to see a fund that has lower risk than its index for 30 years.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by 02nz » Sat Mar 10, 2018 12:15 am

Vanguard PRIMECAP has pretty consistently outperformed its benchmark. It (along with PRIMECAP Core and Capital Opportunity, also managed by PRIMECAP) is closed to new investors unless you're Flagship, in which case you can invest up to 25K/yr. PRIMECAP also has its own family of funds under the Odyssey name. There are three funds (one of which is closed to new investors), each matching in style one of the three PRIMECAP-managed Vanguard funds. PRIMECAP Odyssey Growth (open to new investors) is most similar to Vanguard PRIMECAP.

EDIT - I see someone already posted much the same info; somehow "PRIMECAP" didn't come up in my initial text search.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by Shikoku » Sat Mar 10, 2018 12:33 am

According to morningstar, $10K investment from 03/09/1988 to 03/09/2018 (i.e., 30 years), Fidelity Growth Company (FDGRX) resulted in $452K while Large Growth and S&P 500 resulted in $148K and $201K, respectively. I do not know if Large Growth and S&P 500 are correct index for FDGRX but morningstar show them by default.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by nisiprius » Sat Mar 10, 2018 6:51 am

pondering wrote:
Sat Mar 10, 2018 12:01 am
I would like to see a fund that has lower risk than its index for 30 years.
As noted, PIMCO Total Return has had only slightly higher return than Vanguard Total Bond Market Index fund, 4.17% versus 3.79%, and it has had a considerably higher Sharpe ratio. So while we can't say it's had lower risk than it's index, we can say this:

Suppose we had started with $10,000 at the 5/1/1987 and put 3.79%/4.17% of our money = 90.88% or $9,088 of it into PIMCO Total Return, and $912 into physical currency earning nothing at all. That portfolio, $9,088 PTRXX and $912 cash would have had the same standard deviation (volatility, risk) as Total Bond.

At the end of the time period on the chart, instead of the $85,813 shown, we would have had only 90.88% of that or $77,986... plus the $912 we put aside in cash... or $78,898. That would still have been meaningfully more than the $64,768 we'd have had if we could have invested cost-free in the index, or $60,694 in Total Bond itself. And of course if we'd put the $912 into something reasonable like Treasury bills or an interest-earning bank account, the PTTRX-plus-cash investment would have done even better. That's what it means to have a higher Sharpe ratio.

No, PTTRX really did it. It's a really impressive achievement. It doesn't change my personal views about indexing, I don't own any PTTRX, I wouldn't even if had it available in a 401(k) fund and had a choice between PTTRX and Total Bond, but the facts are the facts.

What do I think about it? I don't know for sure, but my beliefs are that it was a combination of a) hidden risks, that only someone with a hundred times my bond knowledge could understand, that never showed up, i.e. luck; b) another form of luck in the sense that with 11,000 mutual funds in existence, quite a few will outperform by luck alone.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by fennewaldaj » Sat Mar 10, 2018 7:06 am

pondering wrote:
Sat Mar 10, 2018 12:01 am
I would like to see a fund that has lower risk than its index for 30 years.
I would expect a decent amount of active funds to actually have lower risk simply due to their 5-10% cash allocations. Now both lower risk and higher return that is another thing.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by pondering » Sat Mar 10, 2018 9:26 am

Agree on the fact that cash lowers risk (unless inflation is high).

Most investment managers I know evaluate the risks they are taking at least as much as the alpha they are generating.
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by Shikoku » Sat Mar 10, 2018 9:53 am

May like to look at Voya Corporate Leaders Trust B (LEXCX). It has a slightly higher Sharpe Ratio than VFINX.
Link: https://www.portfoliovisualizer.com/bac ... ion2_2=100
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by Taylor Larimore » Sat Mar 10, 2018 2:33 pm

Looking for an example of a fund which has beat its index for 30 years
jalbert:

What experts say about "Past Performance."

Best wishes.
Taylor
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by ANC » Sat Mar 10, 2018 7:19 pm

pondering wrote:
Sat Mar 10, 2018 12:01 am
I would like to see a fund that has lower risk than its index for 30 years.
One example is listed above: Capital Appreciation (PRWCX). Its objective is to achieve equity-like returns over a business cycle at lower risk. To measure performance, the fund benchmarks against the S&P 500 using multi-year returns, standard deviation, and the Sharpe ratio. If I compare 30 years of history vs. the VFINX S&P 500 index fund, using Portfolio Visualizer, I find moderately better returns (11.43% vs 10.57%) but a much better standard deviation (9.41 vs 14.05) and Sharpe ratio (0.88 vs 0.57).

Other areas are asset classes where it pays well to eliminate the most volatile holdings, such as small cap growth and high-yield bonds. History of 30 years is a little hard to come by, but in the high-yield space if I compare 10 years of history for Vanguard’s actively managed VWEHX vs I-Shares’s HYG index ETF, I get similar results—mild over-performance on returns coupled with great superiority on the two risk measures.

If you look around this site on the topic of low volatility investing you should be able to find more. However, this approach (and PRWCX) could have been aided by the falling bond yields over the last 30 years.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by long_gamma » Sat Mar 10, 2018 7:54 pm

Many trend following funds have beaten both Barclay hedge and S&P over long periods.

Dunn from 70's
Chesapeake from 88
Winton from late 90's
http://www.chesapeakecapital.com/wp-con ... y-2018.pdf
https://www.trendfollowing.com/performance/
https://www.winton.com/programs/winton-futures-program
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by cfs » Sat Mar 10, 2018 8:12 pm

Is using Past Performance a bad thing? Well, it depends. Some investors use "passive funds" because [in the past] "active funds" have failed [and failed miserably] at beating their benchmark [index]. Are these investors using "Past Performance" when they decide to invest in passive funds? Good luck with your investments, y gracias por leer ~cfs~
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Re: Looking for an example of a fund which has beat its index for 30 years

Post by jts » Sun Mar 11, 2018 8:38 am

cfs wrote:
Sat Mar 10, 2018 8:12 pm
Is using Past Performance a bad thing? Well, it depends. Some investors use "passive funds" because [in the past] "active funds" have failed [and failed miserably] at beating their benchmark [index]. Are these investors using "Past Performance" when they decide to invest in passive funds? Good luck with your investments, y gracias por leer ~cfs~
[/quote


This is a very interesting topic for all to look inside and decide. I believe we are all made up of our life experiences and are unable to make any decision without considering history. The degree of influence history has on our decisions is the question, if one focuses on limited experiences too much it can be very damaging. My view is that Bogleheads make a concerted attempt to engage in educated decisions most likely to deliver a good outcome but absolutely consider history in that decision.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by jts » Sun Mar 11, 2018 8:47 am

OOps, sorry, bad job of using the quote tool, I will learn.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by cfs » Sun Mar 11, 2018 2:13 pm

jts wrote:
Sun Mar 11, 2018 8:47 am
OOps, sorry, bad job of using the quote tool, I will learn.
No problems, we are able to read your previous post. Thanks for your inputs, good luck with your investments, y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by Shikoku » Sun Mar 11, 2018 3:45 pm

cfs wrote:
Sat Mar 10, 2018 8:12 pm
Is using Past Performance a bad thing? Well, it depends. Some investors use "passive funds" because [in the past] "active funds" have failed [and failed miserably] at beating their benchmark [index]. Are these investors using "Past Performance" when they decide to invest in passive funds? Good luck with your investments, y gracias por leer ~cfs~
I also have the same question. If past performance is not important, I wonder why we use Portfolio Visualizer to backtest asset allocation or use morningstar data to compare historical performance? I understand past does not guarantee future.
"I don't worry too much about pointing fingers at the past. I operate on the theory that every saint has a past, every sinner has a future." -- Warren Buffett

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by F150HD » Sun Mar 11, 2018 5:55 pm

fennewaldaj wrote:
Wed Mar 07, 2018 4:53 am
It seems like you can find a decent amount of funds that look something like this (Fidelity Low Priced Stock)

Since inception
http://quotes.morningstar.com/chart/fun ... ture=en-US

Out performance early then more normal performance more recently
Active U.S. Equity Funds Are Slowly Getting the Message on Fees
Kevin McDevitt, CFA
22 Feb 2018


Some funds saw their fees fall because of performance adjustments. That's especially true in Fidelity's case, which cuts the fees on many of its actively managed funds when their rolling three-year returns lag their benchmarks. That was the case with Fidelity Low-Priced Stock (FLPSX) in 2017, which saw its expense ratio fall 21 basis points to 0.67%.

I still find the performance chart interesting over time compared to say the S&P.....

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by zaboomafoozarg » Sun Mar 11, 2018 8:41 pm

Sequoia Fund (SEQUX) had beat the S&P 500 handily from 1970 to 2015 ($10k to $4.1M for SEQUX, $10k to $1.1M for SP500).

After Sequoia's big bad bet on Valeant, they took a large drop in 2015-2016 and lagged the S&P 500. But they're still ahead from 1970 to 2018.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by chatbotte » Mon Mar 12, 2018 2:03 am

jalbert wrote:
Wed Mar 07, 2018 5:56 pm
anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
While I am used to hearing statements declaring how few active funds beat their index (presumably over a year) I am interested in examples of funds which have beat a major index over prolonged intervals.

If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.

I am looking for examples of active funds whose returns (after considering costs) have beat a major index for decades. Better yet, funds which have beat a relevant index fund over decades.

What's your best contender?
Should it be benchmarked with a DM index or total int'l index?
If anything, it should be benchmarked with the universe of investable assets from which it's picking its assets. No point in comparing fund performance to a narrower set of assets.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by chatbotte » Mon Mar 12, 2018 2:42 am

anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.
Some active investors (not necessarily funds) will beat the market over any period, and others will lose by the same amount, before costs. Some active investors may beat the market after costs, over any period, but active investors as a group will collectively lose by the amount of their extra expenses, over any period.

That means no active investor needs to beat the market after costs, but at least one active investor must beat the market before costs, over any period.

I don't think the length of the interval under consideration makes any difference. The average actively managed dollar will lose by the amount of extra expenses associated with active management.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by tennisplyr » Mon Mar 12, 2018 6:42 am

My guess is many tech funds and even some healthcare funds have shown above average growth.
Those who move forward with a happy spirit will find that things always work out.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by rjbraun » Mon Mar 12, 2018 1:16 pm

anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
While I am used to hearing statements declaring how few active funds beat their index (presumably over a year) I am interested in examples of funds which have beat a major index over prolonged intervals.

If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.

I am looking for examples of active funds whose returns (after considering costs) have beat a major index for decades. Better yet, funds which have beat a relevant index fund over decades.

What's your best contender?
Have only skimmed the responses, but I'm kind of surprised not to have seen PRIMECAP mentioned.

Vanguard PRIMECAP (Investor shares) has consistently outperformed its stated benchmark of the S&P 500 Index since inception (11/01/1984) by almost 250 bp on an annualized net basis. The fund has also beat the S&P 500 over the past 1, 3, 5, and 10 years, ending 12/31/17.

Vanguard Capital Opportunities Fund (Investor shares), another fund run by the same manager, has also consistently outperformed its stated benchmark of Russell Midcap Growth Index since inception (8/14/1995) by almost 325 bp on an annualized net basis. As with PRIMECAP, the fund has also beat its benchmark over the past 1, 3, 5, and 10 years, also as of 12/31/17.

I believe both funds are closed to new investors, though it's possible that the manager itself (PRIMECAP) may have some comparable funds that are open.

https://personal.vanguard.com/us/funds/ ... irect=true

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by chatbotte » Mon Mar 12, 2018 2:03 pm

rjbraun wrote:
Mon Mar 12, 2018 1:16 pm
anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
While I am used to hearing statements declaring how few active funds beat their index (presumably over a year) I am interested in examples of funds which have beat a major index over prolonged intervals.

If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.

I am looking for examples of active funds whose returns (after considering costs) have beat a major index for decades. Better yet, funds which have beat a relevant index fund over decades.

What's your best contender?
Have only skimmed the responses, but I'm kind of surprised not to have seen PRIMECAP mentioned.

Vanguard PRIMECAP (Investor shares) has consistently outperformed its stated benchmark of the S&P 500 Index since inception (11/01/1984) by almost 250 bp on an annualized net basis. The fund has also beat the S&P 500 over the past 1, 3, 5, and 10 years, ending 12/31/17.

Vanguard Capital Opportunities Fund (Investor shares), another fund run by the same manager, has also consistently outperformed its stated benchmark of Russell Midcap Growth Index since inception (8/14/1995) by almost 325 bp on an annualized net basis. As with PRIMECAP, the fund has also beat its benchmark over the past 1, 3, 5, and 10 years, also as of 12/31/17.

I believe both funds are closed to new investors, though it's possible that the manager itself (PRIMECAP) may have some comparable funds that are open.

https://personal.vanguard.com/us/funds/ ... irect=true
rjbraun,

Vanguard PRIMECAP contains lots of foreign assets that are not constituents of the S&P 500. So no point in comparing the fund's performance to S&P 500 to show it is managed in a way that provides abnormal returns.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by david1082b » Mon Mar 12, 2018 2:54 pm

rjbraun wrote:
Mon Mar 12, 2018 1:16 pm
Have only skimmed the responses, but I'm kind of surprised not to have seen PRIMECAP mentioned.

Vanguard PRIMECAP (Investor shares) has consistently outperformed its stated benchmark of the S&P 500 Index since inception (11/01/1984) by almost 250 bp on an annualized net basis. The fund has also beat the S&P 500 over the past 1, 3, 5, and 10 years, ending 12/31/17.
Using Firefox's search function (ctrl+f or Edit --> find), I see that PRIMECAP was mentioned a couple of times.

PRIMECAP gets mentioned a lot on Bogleheads, as do other legendary funds with historical outperformance. If only we could know what would outperform in future. :moneybag

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by david1082b » Mon Mar 12, 2018 3:10 pm

Looking at the performance chart, PRIMECAP performed pretty much same as the S&P 500 from 1984 to September 1998. All the major outperformance has happened since that month. http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So when people say that PRIMECAP has "consistently outperformed" the S&P 500, what they really mean is that it performed almost the same for 14 years (and occasionally underperformed), then for the next 20 years it outperformed. Weird kind of "consistency".

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by GibsonL6s » Mon Mar 12, 2018 5:39 pm

Unfortunately closed to new investors through Schwab at least, but Oakmark International OAKIX has outperformed its stated benchmark for 1, 3, 5, 10 and SI and by a significant amount. It has 4 years to go to make 30 years of outperformance, but looks like it will.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by rjbraun » Tue Mar 13, 2018 11:32 am

chatbotte wrote:
Mon Mar 12, 2018 2:03 pm
rjbraun wrote:
Mon Mar 12, 2018 1:16 pm
anonyvestor wrote:
Wed Mar 07, 2018 2:43 am
While I am used to hearing statements declaring how few active funds beat their index (presumably over a year) I am interested in examples of funds which have beat a major index over prolonged intervals.

If the interval is sufficiently brief (e.g. one day,) I imagine nearly 50% of funds would beat the index. But as the interval extends, I would suspect virtually no active funds beat their index.

I am looking for examples of active funds whose returns (after considering costs) have beat a major index for decades. Better yet, funds which have beat a relevant index fund over decades.

What's your best contender?
Have only skimmed the responses, but I'm kind of surprised not to have seen PRIMECAP mentioned.

Vanguard PRIMECAP (Investor shares) has consistently outperformed its stated benchmark of the S&P 500 Index since inception (11/01/1984) by almost 250 bp on an annualized net basis. The fund has also beat the S&P 500 over the past 1, 3, 5, and 10 years, ending 12/31/17.

Vanguard Capital Opportunities Fund (Investor shares), another fund run by the same manager, has also consistently outperformed its stated benchmark of Russell Midcap Growth Index since inception (8/14/1995) by almost 325 bp on an annualized net basis. As with PRIMECAP, the fund has also beat its benchmark over the past 1, 3, 5, and 10 years, also as of 12/31/17.

I believe both funds are closed to new investors, though it's possible that the manager itself (PRIMECAP) may have some comparable funds that are open.

https://personal.vanguard.com/us/funds/ ... irect=true
rjbraun,

Vanguard PRIMECAP contains lots of foreign assets that are not constituents of the S&P 500. So no point in comparing the fund's performance to S&P 500 to show it is managed in a way that provides abnormal returns.
chatbotte,

The most recent portfolio information shown on the Vanguard site (presumably as of 12/31/17, maybe 9/30/17) shows ~10% in foreign assets. I think that is about in line with what I have seen historically. Personally, I wouldn't characterize 10% as a lot though I agree, it's not exclusively domestic.

My sense is that the non-US holdings are largely in healthcare and tech, both sectors that the manager has overweighted for the past number of years. So, I would say that these were "industry sector bets" by the manager, which have turned out to be good calls, though likely with commensurately higher return volatility as a result.

I think historical data would show that non-US equities have lagged the US, so, if anything, holding non-US stocks, in general, would have served as a drag on returns.

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by rjbraun » Tue Mar 13, 2018 11:36 am

david1082b wrote:
Mon Mar 12, 2018 3:10 pm
Looking at the performance chart, PRIMECAP performed pretty much same as the S&P 500 from 1984 to September 1998. All the major outperformance has happened since that month. http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So when people say that PRIMECAP has "consistently outperformed" the S&P 500, what they really mean is that it performed almost the same for 14 years (and occasionally underperformed), then for the next 20 years it outperformed. Weird kind of "consistency".
Interesting. When I wrote "consistent outperformance" I meant that over the past 1, 3, 5, etc. years the fund has "consistently" outperformed (actually, I think my text did not correspond to those return streams but to the longer full period, which was not my intent :shock: ).

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Re: Looking for an example of a fund which has beat its index for 30 years

Post by rjbraun » Tue Mar 13, 2018 11:41 am

david1082b wrote:
Mon Mar 12, 2018 2:54 pm
rjbraun wrote:
Mon Mar 12, 2018 1:16 pm
Have only skimmed the responses, but I'm kind of surprised not to have seen PRIMECAP mentioned.

Vanguard PRIMECAP (Investor shares) has consistently outperformed its stated benchmark of the S&P 500 Index since inception (11/01/1984) by almost 250 bp on an annualized net basis. The fund has also beat the S&P 500 over the past 1, 3, 5, and 10 years, ending 12/31/17.
Using Firefox's search function (ctrl+f or Edit --> find), I see that PRIMECAP was mentioned a couple of times.

PRIMECAP gets mentioned a lot on Bogleheads, as do other legendary funds with historical outperformance. If only we could know what would outperform in future. :moneybag
I originally invested in PRIMECAP in the early 1990s. I knew (even) less then than I do now, so it was just sheer luck that the fund has worked out, so far. I guess I can take credit for not having sold along the way and for also investing "new money", in addition to going into Capital Opportunities.

Just noticed the 47% drop in 2/1990. Whoa, if I had seen that prior to investing I probably wouldn't have. Better lucky than smart, as the saying goes. :greedy

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