Let me confess that I only have one foot in the index fund "Boglehead" approach. The other foot is in conservatively managed funds. I freely acknowledge that I have no confidence that one or the other approach will be better. If one cites a period of time that a fund overperforms, then that is either historical evidence or cherry-picking, depending on the point of view being expressed. Image may be NSFW.
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I think some management teams are better than others, over decades. One may explain that this is coincidental luck and does not reflect skill. I disagree.
For managed funds, I think the results are a combination of fund size, skill (decisions about buying and selling and also organizational processes for those decisions) and luck (industry, country, and global events). The decisions for this fund are not made by one extraordinary manager, but by a team with disciplined processes. These processes include top management succession so that there is not a radical change to the fund approach with a new top manager. Not all managed funds have these good decision-making processes, especially with PRWCX's relatively low ER.
An example of good management decision-making: closing the fund years ago, and so controlling the size of the fund. PRWCX is now about half the size of Wellington. It continues to perform better than Wellington. Not continually, but overall.
I have owned PRWCX for many years. Last year, I re-examined our total investment goals (65 stocks, 25 bonds & G fund, 10 cash) and researched more recent information about the management team, fund size, and fund goals. I was especially struck by interviews of Mr. Giroux in which he explained his and his team's approach. I increased our allocation. We are retired, are not rich, and don't have much appetite for risk.
Clik here to view.
I think some management teams are better than others, over decades. One may explain that this is coincidental luck and does not reflect skill. I disagree.
For managed funds, I think the results are a combination of fund size, skill (decisions about buying and selling and also organizational processes for those decisions) and luck (industry, country, and global events). The decisions for this fund are not made by one extraordinary manager, but by a team with disciplined processes. These processes include top management succession so that there is not a radical change to the fund approach with a new top manager. Not all managed funds have these good decision-making processes, especially with PRWCX's relatively low ER.
An example of good management decision-making: closing the fund years ago, and so controlling the size of the fund. PRWCX is now about half the size of Wellington. It continues to perform better than Wellington. Not continually, but overall.
I have owned PRWCX for many years. Last year, I re-examined our total investment goals (65 stocks, 25 bonds & G fund, 10 cash) and researched more recent information about the management team, fund size, and fund goals. I was especially struck by interviews of Mr. Giroux in which he explained his and his team's approach. I increased our allocation. We are retired, are not rich, and don't have much appetite for risk.
Statistics: Posted by AzWDC — Sat Aug 31, 2024 3:47 pm — Replies 19 — Views 2088
