Mutual Funds - DODFX vs FLVCX

[ksalisbury]

Any thoughts people? I'm thinking about switching to FLVCX over DODFX, about $7,000 in my Roth IRA. I have another $13,000 in FCNTX which I plan on staying with.

Thanks,

Kyle

[ksalisbury]

or maybe CGMFX

[maat55]

or maybe CGMFX

Nice returns on this one.

[Broken Arrow]

You know, you never did answer the question as to what your preference is towards asset allocation?

Still, there are some basic tidbits we can establish. For example, we know you want to keep the Fidelity Contrafund (FCNTX).

That leaves us with 3 other fund choices and how well they may match up to the one you're keeping. (You've mentioned an additional 10k in a different thread, but since you didn't mention it here, I'll leave that out for now.) The 3 fund choices are:

1. Fidelity Leveraged Company Stock (FLVCX). Midcap blend. Ran by one fund manager since 2003. Decent 5 year average, and also with a relative low expense ratio for what you're getting. The only possible downside is that this fund appears to have a 10k minimum to buy into it, and until you say otherwise, we're only working with 7k.

2. Dodge & Cox International Stock (DODFX). Good fund from a good fund family. Lots of fund managers there though, but 4 of them have been there since 2001. Also, very low expense ratio for a large cap foreign. The 5 year average is also respectable.

This is just me, but I'm personally not big on having too many fund managers on a single fund. Too many chefs in the kitchen maybe. Might grind down from all the machination. It's a huge fund too. 53 billion is no easy amount to move around.

On the other hand, I suppose given the potential internal obstacles, it's also impressive that it can perform so well.

3. CGM Focus (CGMFX). MorningStar says it's a midcap value, but the 5 year return is really scary. I mean, with an average of 35%, they can call it whatever they want. All I want to know is WHO and HOW.

Perhaps I shouldn't be surprised that the fund is run by whom I consider as a giant amongst fund managers: Kenneth Heebner.

Oh, sure, at 1.2%, his expense ratio is the highest of the 3. Let me also emphasize that I normally look at high ERs with great disdain. However, in this case, I think it's well worth it for the ~10% in additional gains. And since he's been there since 1997, the rockstar returns are all him.


Anyway, I also took the liberty of fitting these 3 funds with FCNTX. FCNTX would put you in a more traditional model of emphasizing domestic markets, which isn't necessarily a bad thing, but in this contained scenario, it would be the "conservative" choice. DODFX doesn't change your domestic/foreign ratios much, and frankly, I'm not sure what the advantage of that combination would be.... Now, CGMFX will put you in between the first two funds at 63% domestic, 30% foreign, which isn't bad, but here's the thing: You're getting Heebner!

Am I over-emphasizing this one man? Maybe. But then, that's what you're really buying into when you buy actively-managed funds: The fund manager's stock picking ability. And I'm telling you, this man is John Rambo. I don't know if he can repeat his 2007 return of nearly 75%(!), but he can still pick stocks like Rambo can still kill. Were it my money, I would just hire Heebner, set him loose, let him do what he does best, and sleep like a baby. Either that or just buy index funds.

Only downside is that his fund is doing so well that you won't be able to buy as many NAVs for the money. Ever thought about Bill Miller?

Ok, that's enough rambling from me. As always, I'm just a guy out on the internet running his mouth, so please take what I've said for what it's worth. No matter what you decide, you're choosing from a trio of good funds anyway.

Which reminds me: From whom or where did you find out about these funds?

[ksalisbury]

I do a lot of online research, and my father owns them and has been pretty happy with the returns. He taught me a lot about saving and investing, and he's done pretty well in the market so far.

I think I'm probably gonna go ahead and switch my DODFX to CGMFX in my Roth IRA. I might end up switch some of my FCNTX as well, but I haven't made that decision yet.

I appreciate the responses!

[Broken Arrow]

No problem.

I'd just like to add that people like Heebner are the exceptions to the rule, and as a rule, most fund managers don't beat the market on a long-term, consistent basis. Therefore, while I hero-worship the likes of Heebner, I generally recommend to focus more on your asset allocation, and not simply over-weigh your portfolio towards any one man.

I also looked at CGMFX's prospectus (and I highly recommend to read them before you buy any funds), and its 1998 performance is 3.5%, 1999 is 8.5%, and 2002 is -17.8%. Yes, that's with a negative. The point is, even with someone as sharp as Heebner, he doesn't rock the returns each and every year.

But if you like a fund manager, you like the way he thinks, and you plan on sticking with him through thick and thin, then over-weighing a fund like this one would be fine....

Just some more food for thought.

[feh]

Are you considering your asset allocation? How much of your portfolio do you want dedicated toward foreign markets?

Regarding CGMFX - note that it had a simply amazing 2007, which skews the 5 year average. I don't recommend trying to chase hot funds.

I own quite a bit of FLVCX, and I'm very happy with it. Top notch returns, and quite consistent over the last few years.