mutual funds that invest in mutual funds... | TigerDroppings.com

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The Hamburglar
LSU Fan
McDonaldland
Member since Jan 2005
3030 posts

mutual funds that invest in mutual funds...


What are the opinions of this? For example, TRowePrice TRSGX is an aggressive allocation fund that invests in 85% stock...Looking closer, a large portion of this is invested in TRowePrice sector mutual funds. What is the money talks opinion on this? Does one have to pay fees for TRSGX and also for the funds that TRSGX invests in? Basically, is the company getting twice the fees/income by taking my money, which I've invested in TRowePrice, and investing it back into a TRowePrice fund?






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


Without digging into the fund too much, it doesn't seem that the expenses are unreasonable at .73, and it has a good track record of returns. I don't think you're being hit by double fees, Morningstar considers it a 4* fund.





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The Hamburglar
LSU Fan
McDonaldland
Member since Jan 2005
3030 posts

re: mutual funds that invest in mutual funds...


Right now I have money in TRSGX and PRWCX. The past few months I've really started getting my feet wet with watching these funds and what exactly they invest in. Interesting stuff, indeed! Soon, I want to start putting some $$$ in an international fund to get some exposure outside of the US. Any suggestions for a fund that may be good for this? I like TRowe so I may just stick with a fund in their family.

ETA - PSILX looks interesting...

An additional question - does anyone see a problem with investing solely in asset allocation funds?



This post was edited on 1/7 at 9:51 am


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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


T.Rowe has a subpar track record internationally, I'd look elsewhere. I currently have ANWPX, and AEPGX for my international funds. Heavy front end load, but that doesn't bother me as a long term investor.

PIMCO also has great international funds, although I don't invest with PIMCO.


As far as the second question goes, it really depends on your investment goals, age, income.

I'm younger, so I can tolerate more risk, so I only have a small percentage of mutual funds investing in bonds or cash/equivalents in my portfolio. I don't think it's wrong to invest solely in allocation funds, I just like a little more flavor in my investing.






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The Hamburglar
LSU Fan
McDonaldland
Member since Jan 2005
3030 posts

re: mutual funds that invest in mutual funds...


I'm only 31 and can tolerate risk relatively well. I just know that I don't have the time needed to really research specific sectors/holdings needed to properly invest in specific mutual funds or stocks, so the one-stop-shop of allocation funds fit what I'm looking for.





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Janky
LSU Fan
Team Primo
Member since Jun 2011
5819 posts

re: mutual funds that invest in mutual funds...


Why not an ETF for international/Global? Check out HTY or ETO. Both pay really good dividends.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

Why not an ETF for international/Global? Check out HTY or ETO. Both pay really good dividends


If he doesn't have time to analyze mutual funds, ETF's are not a good idea.






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Janky
LSU Fan
Team Primo
Member since Jun 2011
5819 posts

re: mutual funds that invest in mutual funds...


Hunh?





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

I'm only 31 and can tolerate risk relatively well. I just know that I don't have the time needed to really research specific sectors/holdings needed to properly invest in specific mutual funds or stocks, so the one-stop-shop of allocation funds fit what I'm looking for.





Nothing wrong with that at all, in that case I'd look for fund categories that are labeled "Balanced" or "Blend". My personal opinion on Target Date funds is that they eat returns away with unnecessary fees and expenses.






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

Hunh?



From what I'm hearing from this gentleman, I assume he's looking to "set it, and forget it". Maybe I'm wrong






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The Hamburglar
LSU Fan
McDonaldland
Member since Jan 2005
3030 posts

re: mutual funds that invest in mutual funds...


quote:

"set it, and forget it".


This. I want to have my $$$ in just a few funds as I don't have the time to really do the necessary research required to specifically invest in XYZ fund, or ABC business. Hence, I have my money now in one fund that is relatively conservative (80% stock, 20% bonds), one that is aggressive (95% stock), and now I'm looking for a fund to expose some of my money to the international market. I really am liking the TRowePrice Spectrum International Allocation fund. I'm thinking I'm going to go this route.






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

I really am liking the TRowePrice Spectrum International Allocation fund. I'm thinking I'm going to go this route.



Decent fund, but you can do much better. AEPGX American Funds EuroPacific is a solid horse to bet on, unless you're set on going with TRowePrice.






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Maniac979
LSU Fan
The Great State of Texas
Member since Jan 2012
400 posts

re: mutual funds that invest in mutual funds...


(no message)


This post was edited on 1/12 at 8:31 pm


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BennyAndTheInkJets
Arkansas Fan
NYC
Member since Nov 2010
3640 posts

re: mutual funds that invest in mutual funds...


quote:

I'm not understanding why you are looking at mutual funds when you can usually find an equivalent ETF which generally has a lower trading cost and lower or comparable expense ratio

Because you have a lot of decay in ETFs, especially depending on the strategy. Look at a chart of VXX versus the VIX and you will see the ultimate form of ETF decay due to option expiry. Also ETFs are much more complicated vehicles than most people really understand, the collateral posting backing ETFs can be made with securities that aren't even within the strategy. For example, there was a treasury ETF in Fall of 2011 that was collateralized with 30% Italian bonds.






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

Because you have a lot of decay in ETFs, especially depending on the strategy. Look at a chart of VXX versus the VIX and you will see the ultimate form of ETF decay due to option expiry. Also ETFs are much more complicated vehicles than most people really understand, the collateral posting backing ETFs can be made with securities that aren't even within the strategy. For example, there was a treasury ETF in Fall of 2011 that was collateralized with 30% Italian bonds.



^^^ This. He's looking at mutual funds because he's a passive investor, and passive investors are wise to stick with Index funds or Mutual funds.






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BennyAndTheInkJets
Arkansas Fan
NYC
Member since Nov 2010
3640 posts

re: mutual funds that invest in mutual funds...


quote:

What is the money talks opinion on this?

If the portfolio manager is very good and the underlying funds are good funds with good portfolio managers than it is a great strategy. However, if the funds are sub-par or the portfolio manager is sub-par than it becomes a bad strategy.
quote:

Does one have to pay fees for TRSGX and also for the funds that TRSGX invests in? Basically, is the company getting twice the fees/income by taking my money, which I've invested in TRowePrice, and investing it back into a TRowePrice fund?

You are hit twice on fees but not in a sense that you see. The fees for underlying funds are just reflected in the NAVs, same as the fund of funds.

My advice is to just make sure that the PM is good and the funds are good too. If they both are, you end up getting "layered alpha", where you have underlying funds that beat their benchmarks and the fund of funds that beats its benchmark. But this can also work in the opposite direction as well.






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Maniac979
LSU Fan
The Great State of Texas
Member since Jan 2012
400 posts

re: mutual funds that invest in mutual funds...


(no message)


This post was edited on 1/12 at 8:31 pm


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Maniac979
LSU Fan
The Great State of Texas
Member since Jan 2012
400 posts

re: mutual funds that invest in mutual funds...


(no message)


This post was edited on 1/12 at 8:31 pm


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matthew25
Ole Miss Fan
Member since Jun 2012
3287 posts

re: mutual funds that invest in mutual funds...


Benny: please define "PM" as it relates to mutual funds. I could not find the definition on Investopedia.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
8743 posts

re: mutual funds that invest in mutual funds...


quote:

Okay, I'm a rather passive investor in ETF index funds. Why should I move to mutual funds?



If you're comfortable with ETF's, stay with ETF's. I don't know many passive ETF investors though. They just seem more volatile to me, and if I'm gonna be buying and selling regularly, I'd rather just buy individual stocks.






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