Brokerage Specific Core Mutual Funds Plans: Suggestions & Opinions
Please give us feedback on our plan to phase out brokerage specific mutual plans such as Schwab OneSource Select and Fidelity Extended Fund Picks, replacing them with brokerage specific core mutual funds as discussed in our latest newsletter. See March 16, 2015: Brokerage Specific Core Mutual Fund Portfolios
Just simply reply to this question!
Thank you.
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Perhaps I am confusing plans, but I prefer the core list to use ETFsRoger · 03/17/2015 10:40:22
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The core mutual fund plans are designed for people who prefer using mutual funds instead of ETFs. We are definitely an advocate of using core ETFs for the equity part of a portfolio. See the following newsletters on using ETFs:Admin · 03/17/2015 14:59:16
- December 8, 2014: Implementing Core Asset Portfolios In a Brokerage
- September 15, 2014: Equity And Total Return Bond Fund Composite Portfolios
- #3
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That is a good ideaChanning · 03/18/2015 02:30:59
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Both Fido and Schwab plans have pimco funds, why? I thought they should be index funds.TOMY · 03/18/2015 12:56:01
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DanH111 · 03/18/2015 21:50:50
Fidelity Core Funds portfolio shows R=3 for all funds. Were the simulations run with all R=3 or did you use the correct R values?
How does using R=3 compare with R=2 or R=1 (where applicable) for FF Core vs FFPicks portfolios? Are we seeing apples and oranges?
The Fidelity Fund Picks Fidelity Funds Only portfolio shows almost comparable AR with better Sharpe's compared to FFCore.
I would like to see more testing on R values and rebalance timing for these portfolios. Testing on Monthly vs. Bimonthly vs. Quarterly rebalancing. For instance, is it better to rebalance monthly using R=2 for all funds or is it better to rebalance bimonthly with R=1 for all funds?
I tend to think that the FF Picks are just that. Funds that Fido experts think will do well in the coming months based upon their analysis. Not that they are getting a spif from the fund management. Perhaps I am naïve. I also tend to prefer funds over ETFs as I think (again, perhaps naively) that some managers can deliver better than an index, especially in international and EM. The trick is to find the best managers.
MyPlan IQ looks at a lot of funds. Fidelity has oodles of funds in their "no transaction fee" category both Fidelity brand and other brand. I would think MyPlan would be able to discern the best funds from all available and develop a core portfolio. Same for Schwab etc. The Core portfolios seem light on the number of funds per asset class. More good funds could be added. Would that help? Who knows. Let's just doing the boring thing and index.
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Dealing with fund close and disappear frequently is indeed very frustrating. I had new money every now and then and couldn't get into some funds that were recommended but closed. It is also bad for tax purpose as I bet some funds can be held for a long time if it were not deleted.jcf · 03/20/2015 14:36:38
Going for stable set of low cost funds is a middle road but based on the back testing, it is as good as those from brokerage funds. At any rate, I don't trust brokerages.
- #7
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The PIMCO funds in the plans are mostly 'enhanced' index funds: PIMCO has been very good at using futures for the equity index exposure while investing the majority of cash in a total return bond portfolios. So far, these funds have done better than plain vanilla index funds. Also, as they are 'index' funds, they tend not to close as frequently as actively managed funds.Admin · 03/20/2015 14:40:19
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adrman · 03/28/2015 14:59:56
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Sorry, for the previous blank response. Ghostery had an issue with your reply window. To the issue in question, I'm in favor of moving to the brokerage specific core funds. I think it simplify matters considerably with negligible impact on performance.adrman · 03/28/2015 15:04:02
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DanH111 · 03/31/2015 16:52:40
Appears that all these Core portfolios were constructed with R=3 for all funds. Did you run the simulations with all R=3? A number of funds can hold R=1 or R=2 if desired.
Are you now saying that R=3 is the preferred R value for funds in portfolios in general?
Is setting the R=3 a slightly different version of quarterly rebalancing...just fund by fund?
What would be the results of the original brokerage portfolios ("select list type") if all funds were set to R=3?
- #11
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Further to my comments above and to answer the question more directly, I am in favor of Core plans if they can show the same or better performance than the Select List-type Plans. One would think, given their extensive experience, MyPlanIQ would be able to create Core plans that would perform very well. However, I am not concerned that funds in the Select List-type change over time. I would be ok with staying with those as well. I just want the plans that perform the best.DanH111 · 04/01/2015 10:03:26
- #12
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terrior · 04/07/2015 06:48:17
As long as you properly vet the mutual funds to be included, initially and ongoing, I agree with you guys selecting the funds.
There are certain funds as well as ETFs that do not belong in a trend following system due to their volatility. I have also noticed that your mythology of rating funds each month seems too over weighted on short term results.
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