September 2007 Score Card — Part II: YTD Performance of My Actively Managed Funds

I have a previous post that compared my actively managed funds against Vanguard funds for a 5-year period that covered most of the time I invested in those funds. The purpose of the post was to have an idea whether actively managed funds, while costing a little more to own, indeed lagged low-cost index funds in returns. Of course, five-year isn’t long enough to draw a convincing conclusion on which one, active or passive, is superior, but the result of my comparison reaffirmed my belief that having actively manged funds in my portfolio isn’t that bad an idea.

Recently, I have posted a couple entries regarding passive and active investments. To me, there’s no clear cut on which is good and which is bad. They both have their own merits. So I use both in my investments (actively managed funds in taxable accounts and index funds in IRAs).

After a volatile summer, the stock markets are rebounding strongly, with the Dow reaching historical high early this week and the S&P several points away from its peak. So how are my actively managed funds doing in this environment? I checked the YTD performances of my funds last night and compared them with the respective benchmarks (mostly S&P 500).

Symbol ER (%) YTD return (%) +/- S&P 500 (%)
ADVDX 1.18 11.01 0.70
BUFSX 1.01 10.10 -0.21
CGMFX 1.02 59.01 49.97
DODFX 0.66 13.79 -0.34(MSCI EAFE)
DODGX 0.52 6.47 -3.84
OAKBX 0.86 11.01 6.15 (DJ Moderate)
PRNEX 0.66 33.42 23.12
PRSVX 0.83 7.33 -2.98
TAREX 1.11 -0.29 -10.02
TGLDX 1.50 12.41 -1.72(MSCI EAFE)

It’s a mixed bag.

I am not surprised by the big loss in the real estate fund (TAREX) given what we have seen in the housing market this year. I added some shares of TAREX when 2007 began and will probably do the same thing next year in hoping for a rebound in real estate.

What did surprise me was the trailing performance of two of my favorites, DODFX and DODGX, against their respective indexes, especially DODGX. However, I am not too worried about D&C. Looking at the fund’s performance in the past 7 years, the third quarter was always the weakest while the forth being the strongest. So hopefully, the fund can catch up in the last three months of the year.

One of the biggest stories recently is that gold price has climbed to nearly 28-year high and that boosted performance of precious metal mutual funds/ETFs. My investment in precious metal is TGLDX which has returned nicely so far this year despite the fund’s 1.50% expense ratio (ER).

The biggest gainer so far is CGMFX, which benefits from the fund manager’s heavy investments in oil and oil services related stocks. For a 1.0+% ER, I will take the 50% return. This is an example of what an actively managed fund looks like. Last year, the fund had a 300% turnover ratio and generated big capital gains. The fund is very volatile, but the return is exceptional.

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2 Responses to “September 2007 Score Card — Part II: YTD Performance of My Actively Managed Funds”

  1. Steve |  Oct 09, 2007 at 10:06 am

    Would you mind divulging why you put your actively managed funds in taxable accounts and passive in tax-deferred? I hadn’t really thought about it before, but my first thought would do it the other way (passive in taxable, active in retirement) to avoid possibly large and unpredictable capital gains exposure. Also, sorry if you covered this in a previous post, I am fairly new here.

  2. Sun |  Oct 09, 2007 at 2:57 pm

    It’s true that usually funds with less distributions (such as index funds) should be held in tax deferred accounts. The reason I did just the opposite was because when I started to buy mutual funds, I started with regular taxable accounts then later added IRA accounts. At that time, I didn’t know much about investing, just wanted to buy some funds and get good returns. So I only looked at actively managed funds with high returns (that was then). I bought several funds in a short period of time and the amount exceeded the IRA contribution limit (that’s one reason as well). Another reason was I didn’t know how long I will hold those funds. Also when we talked about index funds, Vanguard funds are the obvious choice. But their funds need $3000 minimum and one year contribution can only buy one fund and they have annual fees for balance below certain level. With all these reasons, I went for actively managed funds and kept them in taxable accounts for all these years.