Author Topic: Worst fund in Vanguard  (Read 1662 times)

MoneyGoatee

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Worst fund in Vanguard
« on: June 16, 2019, 06:10:22 PM »
Vanguard is great company for investing but it also has one of the worst funds I've ever seen: Vanguard Global Capital Cycles Fund (VGPMX).  It used to be called Precious Metals Fund, which led you to believe it had things like gold, but it didn't.  It had mainly stocks, just like it does now.  After 2008, it hasn't really recovered.  We have had a few bullish years since then, but this thing has shown no signs of life at all.  I'm wondering if they purposefully picked the worst assets to invest in.  I have about 2-3% of this in my portfolio and am mainly selling it to lower my taxes.

Telecaster

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Re: Worst fund in Vanguard
« Reply #1 on: June 16, 2019, 06:13:01 PM »
Vanguard is great company for investing but it also has one of the worst funds I've ever seen: Vanguard Global Capital Cycles Fund (VGPMX).  It used to be called Precious Metals Fund, which led you to believe it had things like gold, but it didn't.  It had mainly stocks, just like it does now.  After 2008, it hasn't really recovered.  We have had a few bullish years since then, but this thing has shown no signs of life at all.  I'm wondering if they purposefully picked the worst assets to invest in.  I have about 2-3% of this in my portfolio and am mainly selling it to lower my taxes.

Hopefully you learned a lesson about trying to outsmart the market by chasing sectors. 

FIREstache

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Re: Worst fund in Vanguard
« Reply #2 on: June 16, 2019, 06:24:38 PM »
Vanguard is great company for investing but it also has one of the worst funds I've ever seen: Vanguard Global Capital Cycles Fund (VGPMX).  It used to be called Precious Metals Fund, which led you to believe it had things like gold, but it didn't.  It had mainly stocks, just like it does now.  After 2008, it hasn't really recovered.  We have had a few bullish years since then, but this thing has shown no signs of life at all.  I'm wondering if they purposefully picked the worst assets to invest in.  I have about 2-3% of this in my portfolio and am mainly selling it to lower my taxes.

Yeah, I invested in the Precious Metals fund over 10 years ago among quite a few funds for diversification.  Early on, things looked good, made some good gains, but then things went downhill, and it's been a loser.  Switching to VGPMX just made it worse.  I'll wait until I FIRE next year to sell it at a loss to help manage my MAGI for ACA, assuming it's still around.

flipboard

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Re: Worst fund in Vanguard
« Reply #3 on: June 16, 2019, 11:28:46 PM »
Vanguard is great company for investing but it also has one of the worst funds I've ever seen: Vanguard Global Capital Cycles Fund (VGPMX).  It used to be called Precious Metals Fund, which led you to believe it had things like gold, but it didn't.  It had mainly stocks, just like it does now.  After 2008, it hasn't really recovered.  We have had a few bullish years since then, but this thing has shown no signs of life at all.  I'm wondering if they purposefully picked the worst assets to invest in.  I have about 2-3% of this in my portfolio and am mainly selling it to lower my taxes.

Yeah, I invested in the Precious Metals fund over 10 years ago among quite a few funds for diversification.  Early on, things looked good, made some good gains, but then things went downhill, and it's been a loser.  Switching to VGPMX just made it worse.  I'll wait until I FIRE next year to sell it at a loss to help manage my MAGI for ACA, assuming it's still around.

10 years is a mere blip in the cycles of the market. If you give up on your allocation because of 10 years of underperformance, you probably didn't understand what you were choosing.

(That said: I have no idea about these funds - but there are similar complaints about things like "international" and SCV all the time, because people have zero clue how these things work.)

FIREstache

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Re: Worst fund in Vanguard
« Reply #4 on: June 17, 2019, 01:07:37 AM »
Vanguard is great company for investing but it also has one of the worst funds I've ever seen: Vanguard Global Capital Cycles Fund (VGPMX).  It used to be called Precious Metals Fund, which led you to believe it had things like gold, but it didn't.  It had mainly stocks, just like it does now.  After 2008, it hasn't really recovered.  We have had a few bullish years since then, but this thing has shown no signs of life at all.  I'm wondering if they purposefully picked the worst assets to invest in.  I have about 2-3% of this in my portfolio and am mainly selling it to lower my taxes.

Yeah, I invested in the Precious Metals fund over 10 years ago among quite a few funds for diversification.  Early on, things looked good, made some good gains, but then things went downhill, and it's been a loser.  Switching to VGPMX just made it worse.  I'll wait until I FIRE next year to sell it at a loss to help manage my MAGI for ACA, assuming it's still around.

10 years is a mere blip in the cycles of the market. If you give up on your allocation because of 10 years of underperformance, you probably didn't understand what you were choosing.

@flipboard

10 years is not a blip, plus I said it was OVER 10 years ago.  I understood exactly what I was choosing, but that fund is no longer the same fund I chose.  The fund was completely changed and renamed by Vanguard as mentioned, not by my choice, so it's no longer close to the Precious Metals and Minding Fund that I originally invested in.  It's a completely different fund now, as stated above.  For example, the fundís exposure to mining stocks has dropped from 80% to 25% because of its restructuring.

I'm not giving up, I'm using it to my advantage when I FIRE, as mentioned.
« Last Edit: June 17, 2019, 01:27:02 AM by FIREstache »

vand

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Re: Worst fund in Vanguard
« Reply #5 on: June 17, 2019, 03:14:18 AM »
Well it's a mining fund.  It serves a purpose for people who want exposure to the sector.. the world of investing does not stop at VTSAX and it is arrogant to think people should only buy total stock indexes.

FWIW I have been invested in a similar fund with Blackrock since Nov 2018 and it has been my best performing fund in that period.

terran

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Re: Worst fund in Vanguard
« Reply #6 on: June 17, 2019, 08:58:29 AM »
It seems to me a fund investing in mining stocks and "companies with scarce, high-quality infrastructure assets" is essentially designed to do well when the overall market is scaring the crap out of people and they start running to precious metals and "safe" companies (like the utilities the fund says it invests in). In times when the rest of the market is flying high (as it has since 2008) and people aren't scared it will not do great. So it's doing exactly what one should expect it to do given what has happened in the last 10 years.

MoneyGoatee

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Re: Worst fund in Vanguard
« Reply #7 on: June 17, 2019, 01:35:51 PM »
I remember that at this fund's highest point, Vanguard actually didn't allow any more purchases.  I don't recall the exact reason, but it had something to do with the "stability" of the fund.

FIREstache

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Re: Worst fund in Vanguard
« Reply #8 on: June 17, 2019, 04:25:43 PM »
Like I mentioned, the fund changed significantly, not just its name.

It's not much of mining fund anymore.  The fundís exposure to mining stocks dropped from 80% to 25%.

vand

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Re: Worst fund in Vanguard
« Reply #9 on: June 18, 2019, 02:30:15 AM »
Looking at the individual holdings it looks like it still has significantly more than just 25% in the mining sector:

https://investor.vanguard.com/mutual-funds/profile/overview/VGPMX/portfolio-holdings

As stated, the changes were made in order to:

- Lower its risk and volatility by adding more diversification.
- Improve the consistency of its long-term performance, as compared with its benchmark.

Quote
"Invest at least 25% of its assets in the precious metals and mining industry, similar to the fund's previous strategy.

Invest up to 75% of its assets in industries that:

Follow cyclical patterns, looking for companies that are in a period of low demand and offer stocks that are therefore available at lower prices, with the potential for growth as demand rebounds. This is expected to include commodity-oriented companies in the materials, natural resources, and other related sectors."

https://investor.vanguard.com/mutual-funds/precious-metals-changes

So it's essentially changed from a pure mining fund to a cyclical fund.

It makes sense... investors with Vanguard tend to be a fairly unadventurous types unlikely to go "stock picking" on mining, which itself is a notoriously volatile sector.

smoghat

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Re: Worst fund in Vanguard
« Reply #10 on: June 18, 2019, 07:13:51 AM »
Itís definitely risky to engage in sector chasing. I put a little money in VOX, a telecom sector fund, which promptly went down and then was converted into a FANG fund (minus the A) right when Facebook was at a high it hasnít (and wonít ever) recovered from. This was a sector level reorganization based on changes to the MSCI US Investable Market Index (IMI)/Communication Services 25/50. The result is that the high dividend, low grown telecom stocks became low dividend, low growth (because theyíd peaked) stocks. Iíve sold about 1/3 of it at a loss to balance out my taxes. Again, no big deal. Would have been much better to invest in VTI, but if I canít take a $30,000 loss in my portfolio I shouldnít be FIREíing.

Conversely, I had invested a bit more in VCSAX, the consumer staples fund, which was dragging for the last few years. When I started with it in 2016, I expected the economy had run the cycle and, given that bonds were no safe haven, Iíd do well with all the good things people need to stay alive, potato chips, soda, and cigarettes, etc. By this point bond funds were a real loser so I didnít want to diversify that way. I hadnít banked on Trump giving the economy a sugar high by lowering taxes on corporations. But now that the Trump economy is having its senior moment, itís really started to pick up, so Iím happy with it.

FIREstache

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Re: Worst fund in Vanguard
« Reply #11 on: June 18, 2019, 11:03:57 AM »
I wouldn't call it sector chasing in my case.  I just diversified among some various funds over a decade ago, way before I heard of FIRE.  I just calculated the percentile of my investment in this particular fund at 0.6% of my portfolio.  It was a little higher years back under the Precious Metals and Mining name, when its investment goals were very different, with 80% investments in mining, while that has been decreasing, and they plan to maintain as little as 25% in mining stocks going forward per the portfolio description.  Anyway, while I would have preferred the fund stay as it was, the new fund is a pretty insignificant part of my portfolio.

edit: corrected two typos
« Last Edit: June 18, 2019, 08:50:30 PM by FIREstache »

BicycleB

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Re: Worst fund in Vanguard
« Reply #12 on: June 18, 2019, 04:57:03 PM »
This is a fund that might do well in periods of high inflation and / or scarce resources. Both the old and new versions would have some of that effect. We've had to opposite of that for more than 10 years, therefore its performance sucked.

Which is what sector funds do when their sectors aren't hot. If inflation ever heats up, it might do great.