Mutual funds - $5000

[newyorkminute]

Good day,

 

I am new to this forum so I take this first sentence to say hello to all members  :)

 

I am quite new to investing so my knowledge of investing and stocks is not good enough, so I think mutual funds is a good idea. I would like to hear some opinions on some mutual funds I would like to invest in. I can invest $5000 to $6000, which is not enough to build a diversified portfolio but good enough for most mutual funds.

 

I calculated following risk values already. Anyone can share their opinion on one of these funds?

 

http://i.imm.io/1kbgT.jpeg

[stahleyp]

Hey Newyork,

 

Welcome to the board.

 

It's great to see you are looking to do some research. You may have already checked, but can you invest in the Formula funds if you reside in Belgium?

[fareastwarriors]

Some funds I own/like:

 

SEQUX

BRUFX

GOODX

BERIX

FAIRX (or other Fairholme Funds)

Doubleline Funds

 

 

[no_free_lunch]

I would buy an ETF.

[beerbaron]

I would buy an ETF.

 

Amen, let's say you adhere to the ideology of 10 stock in a portfolio. Just buy 4500$ of index and 500$ of your best pick. As time go by and you add capital, you can have 5000$ index and 1000$ stock picks... keep increasing the ratio until the index becomes irrelevant.

 

BeerBaron

[Packer16]

You can start with an ETF like MOAT which has a value oriented moat strategy that has a pretty good track record.

 

Packer

[newyorkminute]

Thanks for the advice!

 

You can start with an ETF like MOAT which has a value oriented moat strategy that has a pretty good track record.

 

Packer

 

Can I get a ticker? Can't find the fund immediately. Thanks!

 

It's great to see you are looking to do some research. You may have already checked, but can you invest in the Formula funds if you reside in Belgium?

 

I have contacted BestInver and the FormulaInvest funds already and they made clear I could invest from my country.

 

Amen, let's say you adhere to the ideology of 10 stock in a portfolio. Just buy 4500$ of index and 500$ of your best pick. As time go by and you add capital, you can have 5000$ index and 1000$ stock picks... keep increasing the ratio until the index becomes irrelevant.

 

The minimum investment ranges from €6000 to $ 5000. So splitting my budget between ETF and a fund is not possible.µ

 

 

PS: got another question also on the risk rates.

 

Marketwatch gives me very different 3-year risk rates (alpha, beta,..)  than yahoo finance.

 

http://www.marketwatch.com/tools/mutual-fund/compare?Tickers=FAIRX+FVVAX+SEQUX&Compare=Risk

 

http://finance.yahoo.com/q/rk?s=SEQUX&ql=1

http://finance.yahoo.com/q/rk?s=FAIRX%2C+&ql=1

 

Which one is right?

[Packer16]

The US ticker is MOAT it is called the Market Vectors Wide Moat ETF.

 

Packer

[CorpRaider]

Packer is smarter than me but just for some additional feedback, I would go with the FNAAX of those you asked about.  I like FNSAX better longer term, but it has smoked its index lately and you gotta like buying the magic formula when it has underperformed.  I would also add AKREX to the names mentioned here.  The Chuck Akre owns MKL, CFX and a lot of the compounders mentioned on this site.  If you're outside of a tax advantaged account, you can make a compelling case for an ETF over a mutual fund.  If you're a Greenblatt acolyte looking for an ETF, you might be interested in CSD, RSP, PRF or PRFZ. 

[stahleyp]

Some funds I own/like:

 

SEQUX

BRUFX

GOODX

BERIX

FAIRX (or other Fairholme Funds)

Doubleline Funds

 

Good seeing another fan of the bruce fund. It'll be interesting to see what happens. It's been really, really solid the last 13 years or so. But it lagged the market big time for like 15 years.

[nodnub]

I would buy an ETF.

 

Amen, let's say you adhere to the ideology of 10 stock in a portfolio. Just buy 4500$ of index and 500$ of your best pick. As time go by and you add capital, you can have 5000$ index and 1000$ stock picks... keep increasing the ratio until the index becomes irrelevant.

 

BeerBaron

.

 

IMO, this is the best approach to get started!  Having a $500 portion in one stock helps get you thinking as a business owner instead of a mutual fund owner. You will be far more motivated to read and learn about your stock holding. I also recommend a low fee index ETF for the remaining balance as the most appropriate for starting out.  You can change it later once you've determined your personal investment philosophy.

[newyorkminute]

Packer is smarter than me but just for some additional feedback, I would go with the FNAAX of those you asked about.  I like FNSAX better longer term, but it has smoked its index lately and you gotta like buying the magic formula when it has underperformed.  I would also add AKREX to the names mentioned here.  The Chuck Akre owns MKL, CFX and a lot of the compounders mentioned on this site.  If you're outside of a tax advantaged account, you can make a compelling case for an ETF over a mutual fund.  If you're a Greenblatt acolyte looking for an ETF, you might be interested in CSD, RSP, PRF or PRFZ.

 

AKREX looks good indeed. Unfortunately, they do not allow Europeans to invest.

[bookie71]

Don't forget the Chou funds, they have done rather nicely.

[newyorkminute]

This is a "noobie-question", but I wonder the following,

 

If I decide to invest in a fund or ETF, is there a "good" moment to invest a fund or ETF? Or is any moment good?

 

In other words, does it matter how much the fund/ETF get bought or sold for the shareprice? Because a fund/ETF follows its underlying companies I would think no, but I am not sure.

 

 

[wachtwoord]

I would advise to invest in an index fund, preferably a wide one such as the S&P500.

 

If you want to with a mutual fund I would go with MOAT as well.

[ourkid8]

Don't forget the Chou funds, they have done rather nicely.

 

+1, it's a large position in my portfolio and I highly recommend Chou Associates!

[newyorkminute]

Anyone knows if the Sequoia fund allows investing from outside the US? Can't find an email on their website!

I am considering splitting a larger investment ($ 10 000) between an ETF (MOAT, PRFZ or CSD) and a fund (BESTINFOND, SEQUX, FVVAX or BRUFX)

 

Any thoughts or comments on my shortlist?

[CorpRaider]

I personally wouldn't buy both FVVAX and PRFZ for 100% of a portfolio.  Seems like that would be a lot of overlap in ~1000 small and mid cap US stocks with a value/fundamental weighting.

[newyorkminute]

Long CSD!

[el_chieh]

Instead of a mutual fund or an index ETF, perhaps you should consider a few BRK Bs...this board does take inspiration from Buffett after all.

 

Unlike mutual funds (even ones that are good value), BRK doesn't charge any sort of fees (and brokerage fees for a few BRKs will be much less than anything a mutual fund would charge).

 

Unlike mutual funds, BRK will likely be more tax efficient (will matter in the long-term).

 

Like most mutual funds, BRK is relatively well diversified.

 

Unlike S&P500 which is put together by a committee, BRK has been put together by someone who has beat the S&P 500 and most mutual funds over the very long-term.

 

Yes, you're new to investing and you don't know what you're doing...but you'll be just as ignorant buying a mutual fund as buying BRK.  Buy BRK.

 

The only leap of faith you need is that BRK is priced relatively cheaply (I think it is)...but that is no different from the leap of faith that whatever mutual fund or ETF you buy has bought names that are well priced.

 

And, once you've sunk your $5K in BRK...start reading BRK letter to shareholders and learn w/ real buy-in.

 

 

 

 

[wachtwoord]

Unlike mutual funds (even ones that are good value), BRK doesn't charge any sort of fees (and brokerage fees for a few BRKs will be much less than anything a mutual fund would charge).

 

Don't the CEOs get paid? They need extra employees to guide the conglomerate rather than just the separate companies ones would say.

 

The only leap of faith you need is that BRK is priced relatively cheaply (I think it is)...

 

Morningstar agrees (fair value $143). I probably should have investigated when they were $8X last year ;) (I passed because I couldn't find any FCF figures)

[DoddDisciple]

Both of Greenblatt's select funds are somewhat confusing to me. The US one holds 800-1000 stocks, which doesn't seem like it can really benefit from its strategy that much. The International one holds around 400, but if I recall, a decent portion (5%-10%) was in SPY, which was odd.

 

What does anyone think of the Perritt microcap funds (they have the smallest average market cap of all funds I think)? PVFIX is also the most graham-like mutual fund I can think of in terms of what they invest in. They're about 50% in cash last I checked.

[CorpRaider]

Both of Greenblatt's select funds are somewhat confusing to me. The US one holds 800-1000 stocks, which doesn't seem like it can really benefit from its strategy that much. The International one holds around 400, but if I recall, a decent portion (5%-10%) was in SPY, which was odd.

 

What does anyone think of the Perritt microcap funds (they have the smallest average market cap of all funds I think)? PVFIX is also the most graham-like mutual fund I can think of in terms of what they invest in. They're about 50% in cash last I checked.

 

The us select (FNSAX) holds more like 120 issues, which is of course many more stocks than suggested in the little book.  The other one holds the larger number the "value index" one (the big secret).  The international select fund (FNAAX) holds a lot of EFA, not SPY; but I agree it is odd (though less odd than if it held SPY).  I presumed it was because they were still working to deploy all of the assets or because they exclude financials from the international funds until they can get comfortable with computing the metrics, but it is odd.

[DoddDisciple]

I was mistaken. They both seem to hold about 100+ issues, which is more reasonable. The international one know holds about 10% EPA like you say. I recall looking at the US one earlier and it holding a similar amount of SPY or something similar.

 

The fee structure also has the potential to go up dramatically on the international one since gross is 3%, but they are provided a credit.

 

Honestly, I'd look at something like RZV which is a pure value index. It holds a similar number of domestic stocks, actually has a lower average market cap at sub 1 billion, and the expense ratio is maybe 0.3%.

 

In the morningstar database, there are only 8 funds with sub $250M average market cap. No international at all. If you expand to sub $1B, a couple funds with international focus are there, but most have loads.

 

What I'd like to see, more than anything else, is an international index or quant/mechanical fund with a small bent. Maybe one's available if I screen via the premium Morningstar stuff. I know the world's a little more complicated, with a lot of US firms generating their revenues overseas, but I don't see how the rest of the world is so ignored.

[CorpRaider]

Yeah, I think you're right about the FNSAX formerly holding SPY, I think that was the original source of my speculation about the EFA held by the international version.