My background was given in other posts, but to speed things up: 61 years old, retired, I have a pension that handles my normal expenses.  My wife is retired and receiving SS and will bump up to 50% of mine in a couple years.  I plan to wait until I'm 66 for SS. 

My wife and my portfolios are currently in IRAs, and I figure on not needing to touch them for ten years other than required redemptions, or redemptions for Roth conversions.  I'm willing to accept risk so long as I am likely to obtain reasonable returns on that risk.

Portfolio:

OAKBX       39.6%

FPACX        15.4%

HABDX         6.7%

LSBRX         5.9%

HIINX           5.8%

JAOSX        12.0%

JORNX          4.4%

CGMFX       11.2%

 

The small holdings in JORNX and HIINX are the result of attempts to balance certain issues in the overall portfolio, along with some limitations imposed by my wife's IRA which is exclusively with JANUS.  The only place I feel a little out on a limb is with CGMFX, but it's kind of hard to argue with Heebner's results, and it isn't a huge piece of the puzzle.

Comments? 

The M* X-ray gave:

cash 12.64%, US 34.13%, foregin 27.01%, bond 24.83%

13 24 33

8    8  10

2    1   1

US&C 60.41%, E 17.33%, J 3.38%, LAT 7.24, A 9.08, other 2.56%.

I personally like the portfolio. Since you could leave the portfolio untouched until your RMD, I would consider the following options if I were you: 

Option A:  (HABDX + LSBRX) ===> (OAKBX, FPACX)

Option B:  (HABDX + LSBDX) ===> (OAKGX, JORNX)

KM (disclaimer: I own no bond funds)

mmmmmm I would first ask? What kind of Rtns R U Looking for?

Meaning? If OAKBX and FPACX ave about 11% apy, is that enough? and if it is? Very safe harbor and alot of upside and let them take care of your $.. instead of following the guessing game..

So why bother with the others?

many pro's are adding a Reit to their Balanced Ports.. A CGMRX maybe?

own alittle CGMFX for Fun? and a Hedge to boost rtns  maybe?

and on the 'waiting till 66 to get your SS $ back? If you don't Need the Money for 10 yrs? And it can make that 11% apy? Why not take it at age 62, invest it and be farther ahead of the game..(or  Like in CGMFX/CGMRX and ave 23% apy )  and you will be depending alot less on the SS ..

The Gov't loves people who delay taking SS, since they play the % of many who won't Live long enough to collect alot of it.. let alone Medicare going all but broke in the future..and alot more dependence on one having expensive Supp. Plans.

"I personally like the portfolio. Since you could leave the portfolio untouched until your RMD, I would consider the following options if I were you: 

Option A:  (HABDX + LSBRX) ===> (OAKBX, FPACX)

Option B:  (HABDX + LSBDX) ===> (OAKGX, JORNX)

KM (disclaimer: I own no bond funds)"

 

 Doing that would reduce my bond/cash exposure by roughly 7-12% (both FPACX and HABDX are holding a lot of cash at the moment).  It is something to consider though;
thanks for the suggestion.

[quote user="Limoman"]

mmmmmm I would first ask? What kind of Rtns R U Looking for?

Meaning? If OAKBX and FPACX ave about 11% apy, is that enough? and if it is? Very safe harbor and alot of upside and let them take care of your $.. instead of following the guessing game..

So why bother with the others?

many pro's are adding a Reit to their Balanced Ports.. A CGMRX maybe?

own alittle CGMFX for Fun? and a Hedge to boost rtns  maybe?

and on the 'waiting till 66 to get your SS $ back? If you don't Need the Money for 10 yrs? And it can make that 11% apy? Why not take it at age 62, invest it and be farther ahead of the game..(or  Like in CGMFX/CGMRX and ave 23% apy )  and you will be depending alot less on the SS ..

The Gov't loves people who delay taking SS, since they play the % of many who won't Live long enough to collect alot of it.. let alone Medicare going all but broke in the future..and alot more dependence on one having expensive Supp. Plans.

[/quote]

All good questions/observations.  Yes, a dependable 11% a year would be acceptable, and at least some of the other funds ARE there to boost returns if that 11% doesn't happen every year.  I'd also hesitate to eliminate the foreign funds, since there IS a great big world outside the US, and JAOSX in particular has been very good to me over the years.  The idea of adding a REIT is also a good one, but that's a subject about which I am close to ignorant, so research would be in order before I would feel comfortable.  I will take a closer look at CGMRX, however.

SS is another whole issue.  I have given some thought to taking it at 62, for the same reasons you listed, but at least one problem comes to mind: Up until the time I start collecting SS, I fall into a 10% lower tax bracket.  I think I can take advantage of that fact to do fairly sizeable  Roth conversions each year at the lower tax rate.  If so, I save 10% in taxes and future gains on those conversions are tax free.  I haven't tried to figure out how the numbers look each way (I'm not even sure how to go about doing that at the moment), but it's certainly not the kind of calculation I can do off the top of my head!

After placing my reply and logging off, the idea of Option C came up. Limoman/Dennis answered for me. CGMRX is, though it is labaled "RE", it is not really RE IMO, is my Option C. I have no comment on bond funds since I have no experience with. In any case, your portfolio looks great IMHO, assuming you can get into all those funds or you already have them. KM

I'm impressed!  You have some of the best managers in the business and a nice equity / bond, domestic / international balance. 

I see that you have no small caps, no dedicated emerging markets, and no sector funds (such as natural resources).  But that's not a problem.  Just let your managers make the calls ...

I assume that you have run your portfolio through M* X-Ray and are satisfied with the overlap and focus.

The only real issue longer-term is that Clyde McGregor & Ken Heebner will one day retire. They are 50% of your portfolio.  IMHO, they are both one-man shows.  That might necessitate a change.  Just cross that bridge when you get to it?

[quote user="maruyamakiyoshi"]After placing my reply and logging off, the idea of Option C came up. Limoman/Dennis answered for me. CGMRX is, though it is labaled "RE", it is not really RE IMO, is my Option C. I have no comment on bond funds since I have no experience with. In any case, your portfolio looks great IMHO, assuming you can get into all those funds or you already have them. KM[/quote]

I'll have to look some more at CGMRX, but the volatility of that and CGMFX, as well as their overlap, is a concern to me.  Getting into some of the funds involves initial buying from the company itself and then transferring assets (OAKBX, FPACX) or, just leaving the assets  with the company (CGM funds).  A little time-consuming and inconvenient, but doable.  Thank you for your comments.

[quote user="norbertc"]

I'm impressed!  You have some of the best managers in the business and a nice equity / bond, domestic / international balance. 

[/quote]

Thank you; that's high praise coming from someone whose name I've seen a lot on here!  It's nice to think that I may be on the right track.

[quote user="norbertc"]

I see that you have no small caps, no dedicated emerging markets, and no sector funds (such as natural resources).  But that's not a problem.  Just let your managers make the calls ...

[/quote]

That was my thinking as well.  The funds I have on my list held up well during the EM boom, the mid-small cap boom, and the commodities boom, so I figure they'll make the adjustments as needed.  FPACX has more mid-small exposure than OAKBX, so I can shift that around a little if needed.  Royce small caps are available if needed.  JAOSX has been willing to take on EM exposure, so I can play with the ratio of HIINX to JAOSX a bit.

[quote user="norbertc"]

I assume that you have run your portfolio through M* X-Ray and are satisfied with the overlap and focus.

The only real issue longer-term is that Clyde McGregor & Ken Heebner will one day retire. They are 50% of your portfolio.  IMHO, they are both one-man shows.  That might necessitate a change.  Just cross that bridge when you get to it?

[/quote]

I've looked at the X-Ray VERY carefully and ran things through RiskGrades as well.  This is the best variation I've come up with to this point.  All the funds weathered the August 2007 to present unpleasantness in good fashion and tend to post strong returns in fair weather.

In that regard, what do you think about the idea of eliminating the bond-specific funds in favor of a REIT, for example.  Or just rolling them into additional FPACX and OAKBX?

 
And yes, I know I'm leaning pretty heavily on McGregor; that's one reason why I'm grabbing a position in FPACX while it is (very temporarily) open.  If I have to shift between those two funds, I can.  As for Heebner, may he have a long life and career!  ;^) 

[quote user="Racqueteer"]

In that regard, what do you think about the idea of eliminating the bond-specific funds in favor of a REIT, for example.  Or just rolling them into additional FPACX and OAKBX?

[/quote]

Hmmm, tough question.  

I'm not at all excited about REITs at these prices.  The PEs are sky high compared to long-term earnings (like about 4x)!  I think they might get cheaper and see no compelling reason to buy now despite the moderate yield.  But, am no expert.

On bonds, I like what McGregor said:  they are like a safety cushion for when we get downside volatility on equities.  I have a big position in individual TIPS, but they are expensive now, imho.

In fact, all treasuries seem seriously overbought.  10-year treasuries are paying under 4% interest - that's lower than year-over-year inflation!  Who in their right mind buys those things?

I do have my eye on El-Erian's coming global bond fund at PIMCO.  That fellow really knows what he's doing!  That could be an option for you.

There's always the Loomis & Sayles fund LSBDX / LSBRX if you are willing to hold some commercial paper.

I have a lot of cash and am looking at some global allocation funds - kind of a worldwide OAKBX.  Loomis & Sayles Global is a candidate (LSWWX), but I haven't decided 100%.  I may buy if if we get a good summer dip.  I do like the idea of giving the fund managers the flexibility to adjust their allocations depending on conditions.  Fuss is on the team managing LSSWX and I like the portfolio.

Would you mind taking a look at this fund and giving me your opinion?  TIA. 

[quote user="norbertc"][quote user="Racqueteer"]

In that regard, what do you think about the idea of eliminating the bond-specific funds in favor of a REIT, for example.  Or just rolling them into additional FPACX and OAKBX?

[/quote]

Hmmm, tough question.  

I'm not at all excited about REITs at these prices.  The PEs are sky high compared to long-term earnings (like about 4x)!  I think they might get cheaper and see no compelling reason to buy now despite the moderate yield.  But, am no expert.

On bonds, I like what McGregor said:  they are like a safety cushion for when we get downside volatility on equities.  I have a big position in individual TIPS, but they are expensive now, imho.

In fact, all treasuries seem seriously overbought.  10-year treasuries are paying under 4% interest - that's lower than year-over-year inflation!  Who in their right mind buys those things?

[/quote]

I'm holding HABDX and LSBRX just to keep the bond percentage higher.  What bothers me is that this seems a lousy time to be invested in bonds.  It's one thing to buy the whole package (OAKBX and FPACX) and another to intentionally seek out bonds right now.  Maybe there are better places to be?

 [quote user="norbertc"]

I do have my eye on El-Erian's coming global bond fund at PIMCO.  That fellow really knows what he's doing!  That could be an option for you.

[/quote]

Have you got symbols for it (does it have any)?

[quote user="norbertc"]

There's always the Loomis & Sayles fund LSBDX / LSBRX if you are willing to hold some commercial paper.

 [/quote]

I figured LSBRX and HABDX were the best combination of pure bond funds I could put together at this point.  The question is: Is this a good point to be buying?

[quote user="norbertc"]

I have a lot of cash and am looking at some global allocation funds - kind of a worldwide OAKBX.  Loomis & Sayles Global is a candidate (LSWWX), but I haven't decided 100%.  I may buy if if we get a good summer dip.  I do like the idea of giving the fund managers the flexibility to adjust their allocations depending on conditions.  Fuss is on the team managing LSSWX and I like the portfolio.

Would you mind taking a look at this fund and giving me your opinion?  TIA. 

[/quote]

Interesting fund.  Heavy on cyclicals, aggressive growth.  Bounced back nicely from August to now, but also took a steep hit.  Been near the head of its class right along.  Well ahead of category primarily because of a huge run-up at the end of last year (Good bet or just lucky?  Why that sharp move??).  I couldn't tell if the bond holdings were domestic, international, or a mix?  Seems like a solid enough choice, and maybe gets you some global bond exposure?

No symbol yet for the new El-Erian (Pimco) fund.  They are just going through SEC approvals now.

Personally I would not be taking new positions in bonds here; however holding a fine vehicle like LSBDX over the long term is another matter. But I do worry about inflation ... so I'm holding my TIPS collection, which dates back to 2001.  (Actually, my wife refuses to let me sell them.  It's 22% of portfolio.)

I appreciate your point - that's it's one thing to be buying an allocation fund like OAKBX or FPACX with brilliant managers in charge.  It's another to step out and buy a pure bond fund.   But, as said, I'll be waiting at the door when the El-Erian fund opens. Here's a LINK to a short article about it.

I'm in no hurry to buy anything now - in fact I just sold off a few things that I purchased cheaply on the Vix spikes in January and March.

--- 

As an aside, I have 20% in various EM funds and am also overweight natural resources via a sector fund.  Just FYI.  I'm not encouraging you (or anyone else) to invest in these areas and very much like your concentrated, carefully-built portfolio. 

There's also a very interesting long-short SC fund TFSMX which has been beating everything else in its class for the past three years.  Just some good fund management to admire.  I have a small position there.

Just wanted to share some musings on FPACX and LSWWX. 

Both funds pay attention to risk management:

• FPACX uses shorts and bonds as considered prudent;
• LSWWX does not short, but regularly uses heavy domestic & global bond exposure and will reallocate between growth and value.
  

LSWWX is a bit more growthy and volatile, while FPACX is more conservative and steady, but both succeed.

LSWWX is team managed, while FPACX has a single manager. 

What strikes me is the outperformance of one fund or the other at certain times:

• LSWWX shot out the lights in 1999 with a 60% return while FPACX stayed hedged and lost a small 6%.

• FPACX mastered the 2000 - 2002 bear market (36% gain in 2001!), while LSWWX lost small amounts each year.

• LSWWX pulled in an amazing 26% last year, while FPACX just managed 7%.

Conclusion:  both have been very successful at different times.  Neither has ever had a bad loss.  I realize that they operate in different spaces, but one could do worse than pairing two funds like these together.

Is there a load waived option for LSWWX and if so what is the symbol.  I am a Schwab Institutional client.