Author Topic: Can't let go of this active fund--  (Read 1563 times)

MountainTown

  • Bristles
  • ***
  • Posts: 252
Can't let go of this active fund--
« on: June 10, 2017, 02:51:34 PM »
OK I have this one active fund I have kept around for awhile. I know I know. Actives are bad...you can't beat the market and all that. I had a Windsor fund that I got out of a couple years ago and I am glad for it. My total stock market has handily beat it. But then it was obvious...while it had performed well over the years, it wasn't doing as great anymore so I switched to Total Stock Market.

I would say in total I have about 10% of my net worth invested in International. Most of that is the TSP I Fund which is really under-weighted in developing countries and doesn't even have Canada in the mix. The topic of the i fund is a whole other topic but needless to say I had decided to find a good international fund that took a little more foreign risk. I have about $5000 invested in the Vanguard International Growth Fund(VWIGX). It is .46 expense ratio. But I have to say...over the horizon and even over recent years it has always out performed the total international fund, by well over the expense ratio difference.

Part of me wants to keep it almost as a "gambling" fund but I know the wisdom is to be in all passive. I can't help but look at this fund and think that yes it is beating the market so why wouldn't I stick with it?

I am partly re-evaluating this because International in general is up right now so this would be a good time to sell. After many down years I would finally get out of it with 6 to 8% return(which is more than if I had done the total stock market index). I should mention it is in a Vanguard traditional IRA. I could move the funds to my Total Stock Market index, get in the Admiral and also save another .1 on expenses(by getting over 10k in total stock market fund)

Thoughts?

Fund average annual returns (fee-adjusted)
    VWIGX   Benchmark
YTD   23.45%   13.74%
1 year   25.80%   18.24%
3 year   5.18%   1.26%
5 year   11.66%   8.39%
10 year   3.50%   0.16%
Since inception 09/30/1981   10.53%   8.82%

kayvent

  • Pencil Stache
  • ****
  • Posts: 637
  • Location: Canada
Re: Can't let go of this active fund--
« Reply #1 on: June 10, 2017, 03:49:07 PM »
Part of me wants to keep it almost as a "gambling" fund but I know the wisdom is to be in all passive. I can't help but look at this fund and think that yes it is beating the market so why wouldn't I stick with it?

I would disagree that the wisdom is to go passive all the time. I believe this is a corruption of Boogle's philosophy which isn't to go passive but instead to stay steady. I'd not throw rocks through your window for having an active fund; however, I'd rebuke you if you had an investing strategy that pivoted every few years or had a super active fund (the fund holds things short-term and/or truly has no selection strategy other than what the managers feel like).

Buffet and his company are an active manager, but they have a consistent strategy over the last many decades.

MountainTown

  • Bristles
  • ***
  • Posts: 252
Re: Can't let go of this active fund--
« Reply #2 on: June 10, 2017, 04:10:05 PM »
Thanks for your input Kayv. Yes I have held this fund for about 7 years and like most internationals in the last decade, it's just starting to do good. But...like I said it's doing 1-2 points better than the passive option(total market)

chasesfish

  • Magnum Stache
  • ******
  • Posts: 3209
  • Age: 37
  • Location: Texas
Re: Can't let go of this active fund--
« Reply #3 on: June 10, 2017, 04:42:54 PM »
You're splitting hairs on costs whether you use this or VXUS.  There's a case to be made on active management in international funds, who really wants their index fund to own Venezuela right now...

I still own 10%+ of my portfolio in Vangauard Wellington Fund, .30ish expense ratio and it gives me my only bond exposure.  Same theory, sure I could swap it out but we're really splitting hairs

MountainTown

  • Bristles
  • ***
  • Posts: 252
Re: Can't let go of this active fund--
« Reply #4 on: June 10, 2017, 11:58:00 PM »
hmmm...ok thanks. Maybe I'll let it ride while the gettin' is good.

BlueMR2

  • Handlebar Stache
  • *****
  • Posts: 2008
Re: Can't let go of this active fund--
« Reply #5 on: June 11, 2017, 10:05:14 AM »
I'm not afraid of active funds either.  I'm not putting my new money there as I prefer the "less waste" model of passives, but my old active funds are doing fine.  With costs included they still basically track the indexes as a whole (some underperform and some overperform).

MountainTown

  • Bristles
  • ***
  • Posts: 252
Re: Can't let go of this active fund--
« Reply #6 on: June 11, 2017, 12:12:37 PM »
Thanks for your input Blue. Yea I had a windsor fund that when I first bought it...the inception date beat the index pretty well. What I have learned since is it was stupid of me to compare a 1982 inception date to another s&P that maybe started in the 90's. I held it for a few years and it just didn't over perform...or if it did, it didn't over perform that much after expenses counted in.

I just looked again at my Active International fund and I think it does beat the international index pretty handily:

Average annual performance—quarter end
    Vanguard International Growth Inv   Vanguard Total Intl Stock Ix Inv           
    YTD   12.65%   8.41%   —   —   —
YTD as-of date   03/31/2017   03/31/2017   —   —   —
1-year   16.95%   13.65%   —   —   —
3-year   2.67%   1.02%   —   —   —
5-year   6.82%   4.75%   —   —   —
10-year   3.35%   1.32%   —   —   —
1-, 3-, 5-, 10-year as-of date   03/31/2017   03/31/2017   —   —   —
Since inception   10.30%   4.51%   —   —   —
Inception date   09/30/1981   04/29/1996   —

The inception date isn't a fair comparison but the 10 year is a clear 2 points ahead which after expenses is an easy 1.5 points. When I go down to 1, 3, and 5 year it's about the same. YTD has been way better in the active fund.

Ok well I just wanted to do a sanity check and make sure I wasn't totally being stupid here. I am also interested in the idea that perhaps Active funds are better for International. I hadn't heard this before but maybe makes some sense. I should also note that this is a pretty small part of my portfolio. I also have another 3-7% in I Fund(TSP) and other total stock market index funds(vanguard).