American Funds
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I don't think it very relavent. I did notice that the only point you addressed was the one I conceded to you. Which doesn't make for a very interesting conversation.
Ok, I didn’t want to rain on your parade, but the fund in question hasn’t done 30% in over a decade. Back to back returns over 30% in '98 and '99 but not much else. The best 3 year return over 30% was back in 1943-1945. The closest it has gotten in recent history was in 2003 and it underperfomed it’s category average by 2%.
I said a 30% gain in 1 year is possible, I don't doubt that unusual and spectacular things happen upon occasion. It is just not statistically likely. Is that better fodder for the conversation? By the way, it is incredibly relavent. It has been proven by a Wharton study that funds with higher manager ownership perform significantly better than funds with lower ownership.Maxstud:
I addressed your other points to "make it a more interesting conversation" and you never responded. Is it possible I have changed your mind?
Sorry New, I was busy the weekend we had this conversation and forgot about. In a nutshell I see that ICA has returned over 30% more often then it has lost 10% in a calender year so I’m not going to alter my strategy just because an A share investor might invest right before a downturn. I believe if your unlucky enough for that to happen then a recovering in a year or so is reasonable.
I have never even considered the amount of money a manager may have in his own fund as a consideration to invest in a fund or not, although I'm sure the Wharton study is most likely valid. A very succesful fund manager may have already won the race and now only buys T-Bills and munis, like many ultra wealthy people do, in that case a stock fund may not have much interest for him. I did have one other point but cannot remember what the heck it was.Tying on to what maxstud said. It is reasonable to believe that PM’s of bond or money market funds may want to have more money in stocks and not in what they are managing.
OK working with that theory for the sake of arguement, if you limited your selections to balance funds only, with reasonable exposure to the bond market, why should any PM not have his full wealth invested in his own fund. After all, isn’t he there watching it and supposedly doing as well for his customers has he theoretically doing for himself. Please realize that this is a hypothetical arguement. I do however, truly believe PM’s should be required to show what percentage of their wealth really is in the funds they manage. I would more heavily trust a PM with a lot of his own skin in the game then the guy who just invest the minimum.
Max: I'm not saying change your strategy, I'm saying expand your time horizon. 1 year is not long enough to recoup 30% on an average (and it really is average) G&I mfd.Since nobody seemed to answer Pratos’s question about overlap I will. Run the morningstar overlap on American and it is very ugly. So many of the top holdings are held by multiple funds I don’t use them at all for asset allocation. A company 401 (k) plan is the only possibility. Yes long term results of the funds are respectable but when you look at the overlap I don’t think you are getting true diversification. No doubt the Jones brokers will disagress since I know you sell a ton of them but that is my little opinion on this matter.
Which is exactly why I dont use them anymore. Thank you.Since nobody seemed to answer Pratos’s question about overlap I will. Run the morningstar overlap on American and it is very ugly. So many of the top holdings are held by multiple funds I don’t use them at all for asset allocation. A company 401 (k) plan is the only possibility. Yes long term results of the funds are respectable but when you look at the overlap I don’t think you are getting true diversification. No doubt the Jones brokers will disagress since I know you sell a ton of them but that is my little opinion on this matter.