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Document 6556662
D4 Business | 2R | SUNDAY, OCTOBER 12, 2014 MutualFunds FANTASY FUND LEAGUE WILL HONE YOUR SKILLS Your Funds Chuck Jaffe Syndicated columnist Let’s face it, most people spend more time playing fantasy football, reading gossipy stories or watching cute cat videos than they do picking and managing their mutual funds. That may not be entirely a bad thing, as overthinking a portfolio tends to lead to making too many moves, most of them bad ones. But if mutualfund invest ing could be as much fun as those other things, investors might spend more time making better choices. So when you get frustrat ed by the actions of your fantasy football team — which for most people hap pens just a few weeks into the season — or when those cat videos all start to look the same, try to devote some time to playing fanta sy mutual funds. It may not seem like much fun, but it’s more productive than fantasy sports leagues because your chances of actually running a pro team are slim and the money to be made in most fantasy leagues is small. By comparison, you will oversee investments for years, and the financial benefits of running a good portfolio versus a perennial loser are significant. The idea is simple: Run an imaginary fund portfolio — or several portfolios — aiming for specific perfor mance goals, tracking re sults to develop comfort that extends to real invest ments. There are plenty of web sites where you can estab lish and track multiple port folios. Pick your favorite free site. No one has invented a fantasyfunds rule book and scorekeeping system, so here are things to consider when setting up your own league: Play on your own or with friends? This is about learn ing to be a better investor, and while you can certainly do that on your own, don’t be shy about spreading the game to friends, cowork ers, children or relatives who would benefit from using imaginary money to better manage real dollars. Let the group try different investment ideas. If playing with coworkers, for exam ple, have everyone pick a portfolio of only funds avail able in your retirement plan, and then a portfolio of what they’d use if they left the employer and could roll the money into a selfdirect ed IRA. That will help you all better learn the retire ment plan, while also pre paring you to trust your picking ability if you leave the company and can up grade the portfolio. What target are you aim ing for? Playing for maxi mum returns encourages risktaking beyond what the normal investor can stand in real life (moves like using leveraged funds to juice returns, which can also blow up a portfolio). You’ll get the most from this game if your team only includes funds you might actually want to own in real life. If you play solo, use your own objectives as a goal. If you need a 12 percent an nual return to comfortably reach your goals, make that your target. In a fantasyfunds league with friends, make the target a common goal, with risk or volatility factored in. If you spread money through six funds in differ ent asset classes, you might shoot for a 2.5 percent quar terly return, awarding points for coming close to the target and subtracting points for falling below it. How long does your sea son run? Investing season never ends, but mutual fund portfolios don’t require constant attention and upkeep, so you can run a league for, say, a threeyear stretch without having players checking results constantly. Set up interim rewards for quarterly or annual performance and consisten cy, but try to make this something that fits your investment style, meaning that you shouldn’t be look ing at or managing your fantasy portfolio any more than you do your reallife investments. What are the rules? Try to build assetallocation skills; studies show that how you spread money around is the biggest determinant of performance, larger even than which funds actually get picked. Don’t make your fantasy fund portfolio any more complicated than what you’d want to run in real life, or you will have a hard time turning your makebe lieve into a future reality. To hone your selection skills, limit your choices to one fund per asset class. A fantasy “team,” therefore, might include six or seven picks, say one aggressive growth fund, a largecap, a smallcap, a bond fund, an international and/or emergingmarket fund, and maybe a sector fund or some other wild card. List three reasons for picking each fund; as the game progresses, this will show how your logic stands the test of time. Make the amount of play money you are investing realistic, a sum you either have to manage now or could see yourself running in the future. That will make wins, losses and un derperformance that much more meaningful. Track all costs associated with transactions, including all expenses that come with changing your mind. If you sell a fund that has made money, deduct applicable capitalgains taxes before reinvesting the proceeds. What are the prizes? Decide if there’s a small pot or if laggards buy lunch at predetermined time check ins, but remember that the real prize here is that play ing will make you a better investor, which means this is the rare game where everyone really can be a winner just for participat ing. Chuck Jaffe is senior columnist for MarketWatch. He can be reached at [email protected] or at P.O. Box 70, Cohasset, MA 020250070. Copyright 2014, MarketWatch Money follows Gross to Janus fund. The shares have since declined. Bill Gross’ Janus Global Gross, who cofounded Unconstrained Bond Fund Pimco in 1971 and ran the received $66.4 million in world’s largest bond mutual deposits in September, the fund, left the firm after his month Gross announced he deputies threatened to quit was leaving Pacific Invest and management debated ment Management Co. his ouster, according to (Pimco) to join Janus Capi people familiar with the tal Group. matter. The client cash brought Gross’ $201.6 billion assets at the fund, which Pimco Total Return Fund Gross started managing this had a record $23.5 billion in past week, to $79.1 million, redemptions in September, according to fund research Pimco has said. Two other er Morningstar. large funds that Gross man Janus shares soared 43 aged, the $18.3 billion percent Sept. 26, the day Pimco Unconstrained Fund Gross announced he would and the $20 billion Pimco work for the firm, on the Low Duration Fund, also expectation that he would experienced withdrawals, attract a considerable according to Morningstar amount of money to his new estimates. By CHARLES STEIN Bloomberg News Fund Tracker Weekly spotlight on mutual fund performance Winners and losers: A mutualfund scorecard Fund Wkly % YTD % obj return return Biggest funds American Funds A AmcpA p American Funds A AMutlA p American Funds A BalA p American Funds A BondA p American Funds A CapIBA p American Funds A CapWGA p American Funds A FdInvA p American Funds A GwthA p American Funds A HI TrA p American Funds A IncoA p American Funds A ICAA p American Funds A N PerA p American Funds A SmCpA p American Funds A WshA p BlackRock Instl StrIncoOpp BlackRock Instl EquityDv BlackRock Instl GlbAlloc r Dimensional Fds EmMCrEq Dimensional Fds EmMktV Dimensional Fds USLgVa Dodge&Cox Balanced Dodge&Cox Income Dodge&Cox IntlStk Dodge&Cox Stock DoubleLine Funds TRBd I FPA Funds FPACres Fidelity Freedom FF2020K Fidelity Freedom FF2030K Fidelity Invest Balanc x Fidelity Invest Contra Fidelity Invest GroCo Fidelity Invest LowP r Fidelity Invest Puritn x Fidelity Invest TotalBd e Fidelity Spart Adv 500IdxAdv Fidelity Spart Adv TotMktAd r Frank/Temp Frnk A IncomA p Frank/Tmp Frnk Adv GlbBdAdv Harbor Funds CapApInst Harbor Funds Intl r Loomis Sayles LSBondI Metro West Fds TotRtBdI Oakmark Funds I EqtyInc r Oakmark Funds I Intl Oakmark Funds I Oakmark Oppenheimer Y DevMktY PIMCO Instl PIMS AlAsetAut r PIMCO Instl PIMS AllAsset PIMCO Instl PIMS TotRt PIMCO Funds Instl Income Price Funds BlChip Price Funds CapApp Price Funds EqInc Price Funds EqIndex Price Funds Growth Price Funds MidCap Price Funds N Horiz Price Funds N Inc Price Funds Ret2020 Price Funds Ret2030 Price Funds Value Schwab Funds S&P Sel Vanguard Admiral 500Adml Vanguard Admiral GNMA Ad Vanguard Admiral HlthCr Vanguard Admiral ITAdml Vanguard Admiral ITGrAdm Vanguard Admiral LtdTrAd Vanguard Admiral MCpAdml Vanguard Admiral PrmCap r Vanguard Admiral STIGrAd Vanguard Admiral SmCAdm Vanguard Admiral TtlBAdml Vanguard Admiral WellslAdm Vanguard Admiral WelltnAdm Vanguard Admiral WdsrIIAd Vanguard Fds TotIntBInv Vanguard Fds DivdGro Vanguard Fds STAR Vanguard Fds TgtRe2015 Vanguard Fds TgRe2020 Vanguard Fds TgtRe2025 Vanguard Fds TgRe2030 Vanguard Fds TgtRe2035 Vanguard Fds TgtRe2040 Vanguard Fds TgtRe2045 Vanguard Idx Fds TotlIntl XC LV BL IB BL GL LC LG HC BL LC GL GL LC GT EI MP EM EM LV BL IB IL LV MT MP MP MP BL LG XG MC BL IB SP XC BL WB LG IL GT IB BL IL LC EM MP MP IB GT LG BL EI SP LG MG SG IB MP MP LV SP SP MT HB IM IB SM MC LC SB SC IB BL BL LV WB EI BL MP MP MP MP MP MP MP IL XC SP XC Vanguard Idx Fds TotStk Vanguard Instl Fds InstIdx Vanguard Instl Fds InsTStPlus 5yr % return 3.5 +4.2 +14.6 2.7 +3.3 +13.1 2.0 +3.2 +11.9 +0.7 +5.0 +4.7 1.7 +2.6 +8.8 2.9 0.1 +8.9 3.7 +1.3 +12.8 4.2 +1.3 +12.8 1.1 +1.2 +8.7 2.2 +3.5 +11.2 3.3 +5.1 +13.1 4.1 3.7 +9.9 3.8 5.2 +10.4 2.9 +3.9 +14.7 0.3 +3.1 +6.3 2.8 +1.6 +12.4 2.1 0.4 +6.5 NA NA NA NA NA NA NA NA NA 2.7 +3.6 +12.4 +0.4 +5.3 +5.5 3.5 0.8 +7.8 4.3 +2.6 +14.7 NA NA NS 2.0 +1.7 +10.4 2.0 +1.2 +8.1 3.0 +0.1 +8.9 2.6 +4.3 +11.0 3.8 +2.0 +14.4 4.5 +2.1 +16.5 2.7 0.0 +14.7 2.7 +4.6 +11.2 +0.6 +5.2 +5.6 3.1 +4.7 +14.5 3.4 +3.0 +14.6 2.0 +3.3 +10.4 0.5 +3.1 +6.6 4.0 +2.1 +14.3 3.3 8.4 +6.1 0.5 +4.4 +9.3 +0.5 +5.2 +7.3 2.6 +0.6 +9.2 2.3 9.9 +9.3 3.9 +3.0 +15.6 1.4 +0.1 +8.0 NA NA NA NA NA NA +0.5 +4.2 +5.3 NA NA NA 4.1 +0.7 +16.1 1.8 +5.2 +12.5 3.4 +0.2 +12.6 3.1 +4.6 +14.3 4.2 0.0 +15.6 4.1 +0.3 +15.4 5.2 5.4 +19.5 +0.6 +5.3 +4.6 NA NA NA NA NA NA 4.5 +2.9 +14.6 3.1 +4.7 +14.5 3.1 +4.7 +14.6 +0.3 +5.6 +4.2 2.4 +16.7 +19.4 +0.6 +7.0 +4.6 +0.8 +5.7 +6.6 +0.2 +2.0 +2.2 4.1 +2.0 +15.6 4.6 +7.0 +15.5 +0.4 +2.1 +3.3 4.7 4.2 +14.8 +0.7 +5.2 +4.3 0.6 +5.1 +9.6 1.7 +4.5 +11.0 3.1 +3.6 +13.6 +0.2 +6.6 NS 2.2 +3.4 +14.2 2.1 +2.4 +9.7 1.4 +2.8 +8.7 1.8 +2.6 +9.3 2.1 +2.3 +9.8 2.4 +1.9 +10.3 2.7 +1.5 +10.8 2.9 +1.1 +11.0 3.0 +1.1 +11.0 3.1 4.9 +4.5 Best performers +3.0 +14.5 +4.7 +14.6 +3.2 +14.7 Fund Wkly % YTD % obj return return SQ SQ SQ SQ SQ SQ SQ AU SQ SQ LU GT SE AU AU SQ SQ LU AU LU AU LU RE LU RE RE RE SQ RE RE 36.5 36.4 30.8 31.3 16.2 15.3 18.0 6.8 15.9 16.4 +11.3 +10.3 NS 9.3 11.1 11.5 6.4 +9.1 10.7 +7.9 11.8 +8.0 +16.3 +7.4 NS +15.6 +14.8 +19.3 NS +15.6 Fund Wkly % YTD % obj return return 5yr % return Rydex Investor ElectInv Direxion Fds NatRBull2X Fidelity Selects Electr Baron Funds Energy ProFunds Inv Cl InternetUlt ProFunds Inv Cl UltMidCap Oberweis Funds MicroCap Oberweis Funds EmergGr Waddell & Reed Adv ScTechA Integrity Viking WillBasA p ProFunds Inv Cl Oil&Gas Turner Funds EmgGrwth Columbia Class A SelComm A HodgesFd Ivy Funds SciTchA p Jacob Funds USSmCG I BlackRock A Eng&ResA Rydex Dynamic NasdStrH Vanguard Fds CapValue Fidelity Selects NtGas Columbia Class A GlobTech Fidelity Selects EngSv Fidelity Selects ComEquip ProFunds Inv Cl BasicMatls Turner Funds SmlCpGr Firsthand Funds TechOppt r Fidelity Selects Trans Saratoga Adv Tr LgCpVlI r Waddell & Reed Adv EnergyA t RS Funds TechnolA TK SE TK NR SQ SQ SG SG TK NR SQ SG TK XG TK SG NR SQ XC NR TK NR TK SQ SG TK SE XC NR TK +7.7 +7.7 +6.1 +6.1 +5.4 +4.2 +3.4 +3.1 +3.1 +2.9 +2.7 +2.7 +2.6 +2.6 +2.6 +2.5 +2.2 +2.1 +2.1 +2.0 +2.0 +1.9 +1.9 +1.8 +1.8 +1.8 +1.8 +1.7 +1.7 +1.7 5yr % return 20.1 19.8 12.2 12.3 2.3 5.7 8.2 +8.9 6.2 6.4 +33.7 +27.1 +3.7 +4.3 +8.0 6.3 1.6 +23.8 +3.6 +19.4 5.8 +19.3 +17.6 +18.2 +17.2 +15.9 +15.9 +21.2 +16.7 +15.7 ProFunds Inv Cl UltShNq100 Rydex Dynamic InvNasdSt H Rydex Dynamic InvSP5St H ProFunds Inv Cl UltBear Leuthold Funds GrizzlyShrt Federated A PrudBear p Comstock Partners CapVlA Tocqueville Fds Gold t Rydex Investor InvS&P5St ProFunds Inv Cl Bear Vanguard Instl Fds ExDurTreas Rydex Investor GovBdStrat Invest Managers MgdFutSt I Invesco Funds A GoldPrec p GAMCO Funds GoldAAA Direxion Fds LatAmBull GAMCO Funds MathrAAA Wasatch USTryFd Wells Fargo Adv A PrecMtlA Vanguard Admiral LTsyAdml Oppenheimer A Gold p Fidelity Spartan SpLTTrAd r John Hancock Cl 1 RE Sec Price Funds USTLg Fidelity Spart Adv REIdx Adv Oppenheimer A RealEstA Ivy Funds RealEstA p ProFunds Inv Cl RealEst Fidelity Invest REEq F Frank/Temp Frnk A ReEScA p Worst performers 3.4 3.1 3.4 12.0 11.9 9.5 8.9 8.8 8.7 8.7 8.5 8.4 8.3 8.2 8.1 8.1 8.0 8.0 7.9 7.9 7.8 7.8 7.6 7.6 7.6 7.6 7.5 7.5 7.4 7.3 7.2 7.2 7.1 +1.7 12.3 +10.9 3.5 8.4 6.5 17.2 18.8 8.5 3.2 8.4 15.0 +6.7 +1.6 6.6 8.8 11.8 +14.5 2.7 1.8 +6.0 8.1 0.4 3.4 10.8 +3.3 +8.0 0.4 2.1 9.6 +6.3 +3.2 +13.3 NS +26.7 +23.9 +9.9 +10.3 +15.2 +15.6 +10.5 +12.7 +10.8 +14.9 +14.9 1.3 +0.1 +33.9 +13.4 +3.5 +10.7 +6.1 +7.9 +9.7 +12.4 +14.3 +20.8 +12.8 +7.1 +12.9 Footnotes: e: Ex capitalgains distribution. f: Previous day{rsquo}s quote. n or nl: No upfront sales charge. p: Fund assets are used to pay for distribution costs. r: redemption fee or contingent deferred sales load may apply. s: Stock dividend or split. t: Both p and r. x: Ex cash dividend. NE: Data in question. NS: Fund did not exist at the start date. NA: No information available. Key to abbreviations and footnotes: Fund objectives: AB: Longterm topgrade corporate and govern ment bonds. AU: Gold oriented. BL: Balanced. EI: Equity income. EM: Emerging markets. EU: European region. GL: Global (includes U.S.). GM: General municipal bond. GT: General taxable bond. HB: Health and biotech. HC: Highyield taxable bond. HM: Highyield municipal bond. IB: Intermediateterm investmentgrade corporate bond. IG: Intermediateterm Treasury/government debt. IL: International (outside U.S.). IM: Intermediateterm municipal bond. LC: Largecap core. LG: Largecap growth. LT: Latin American. LU: Longterm Treasury/government debt. LV: Largecap value. MC: Midcap core. MG: Midcap growth. MP: Mixed portfolio (stocks and bonds). MT: Mortgage. MV: Midcap value. NM: Insured municipal bond. NR: Natural resources. PR: Pacific region. SB: Shortterm investmentgrade corporate bond. SC: Smallcap core. SE: Sector (specific industries). SG: Smallcap growth. SM: Shortterm munici pal debt. SP: S&P 500. SQ: Specialty diversified equity. SS: Single state municipal debt. SU: Shortterm Treasury/government debt. SV: Smallcap value. TK: Science and technology. UN: Unclassified. UT: Utility. WB: World bond. XC: Multicap core. XG: Multicap growth. XV: Multicap value 5year % return: Annualized performance over the past five years. Top 5 mutual funds by objective, yeartodate % return YTD % return Midcap core InstAXfd r +16.7 AME Fd +15.9 EmgMkts I +7.0 EmMktI +6.6 EmMktSC p +6.6 Stewart Capital Longleaf Partners Columbia Class Z Lazard Open Dreyfus Emerging markets Price Funds Price Funds Westwood Funds Virtus Funds I Templeton Adv YTD % return Equity income Federated Instl Paydenfunds Invesco Funds A Touchstone Family Amer Century Inv StrValDvIS ValLdrs Utilities p PrYldEq Y EqInc Health | biotech Health HlthCrA r GlblWell HlthCr GlblHlthA Fidelity Selects Fidelity Adv Foc A Allianz Funds D Vanguard Admiral Putnam Funds A Global Lazard Instl Brookfield Fds Cohen & Steers Virtus Funds A Vanguard Fds GblInfra I GblLstInf Y GblInfra I GlbInfraA p GblMnV Inv IntlOppt r WldEqIncA Canada Intl I r IntlMgdVol Vanguard Admiral BMO Funds Vanguard Fds Fidelity Invest Vanguard Instl Fds PrmCap r LowVolEq I PrmcpCor StrDvIn StlCPlus SmallC p USSmMid I SmlCpA p SmCapV SmCapI Invesco Funds A Lazard Instl Fidelity Advisor A Wasatch Diamond Hill Fds +19.8 +19.5 +16.8 +16.7 +16.3 Invest Managers Invest Managers Oppenheimer A Oppenheimer Y Center Coast YTD % return Pacific region +8.3 +7.4 +6.7 +5.5 +5.0 +4.8 +1.8 +1.7 +0.6 0.1 +7.0 +6.7 +6.7 +6.5 +6.3 +6.0 +4.7 +3.2 +2.8 +2.7 YTD % return Smallcap core Natural resources YTD % return Largecap core Mid Cap SmCap MdCpVlZ p USMidC O ActMidA YTD % return YTD % return International Wasatch GuggenheimFunds Fidelity Invest IVA Funds Allianz Fds Instl +8.0 +8.0 +7.5 +6.0 +5.5 YTD % return +1.2 0.5 1.6 1.6 1.9 YTD % return MLP&Engy +13.7 MLP&EnI I +13.1 StlpthAlpha +12.2 Alpha Y +9.7 MLPFoc I +8.7 YTD % return Matthews Asian IndiaInv r +49.1 Frank/TempFrnkA IndiaGrA p +33.6 Eaton Vance A GrIndia t +32.0 EuroPac Funds AsiaSmCoA +6.9 Neubrgr&BermFds GtChinEq I +6.6 Science | technology Price Funds Fidelity Selects USAA Group ColumbiaClass A ColumbiaClass A GlbTech Electr SciTech SelComm A GlobTech Gold oriented Tocqueville Fds GAMCO Funds OCM Funds First Eagle Invesco Funds A Gold t GoldAAA GoldInv t SGenGld p GoldPrec p YTD % return Sector ConStap Trans ConsStapl MgdFutSt I Air Fidelity Selects Fidelity Selects ICON Fds Invest Managers Fidelity Selects YTD % return Balanced IdxAstAll A GrTxStr MnSkAd p Balan RetInc Wells Fargo Adv A USAA Group Federated A St FarmAssoc Advance Capital I Intermediate bond CutwSelInc CorPlsFxI CorpInco I USIntrBdA CorePlus I Invest Managers MorganStanleyInst BMO Funds Guggenheim Funds Western Asset Longterm bond LTBnd LTGrAdml ExtDrGS4 ExtDurI CorpInc Vanguard Idx Fds Vanguard Admiral GuideStone Funds Del Inv Instl Price Funds YTD % return Longterm U.S. +13.5 +10.9 +6.8 +6.7 +6.0 VanguardInstlFds Wasatch Vanguard Admiral Fidelity Spartan Price Funds YTD % return Mortgage +8.9 +8.0 +4.7 +4.7 +4.3 Managed Acct Srs Legg Mason A Deutsche Trust Vanguard Admiral SEI Portfolios +8.3 +8.0 +5.0 +3.7 +2.6 ExDurTreas USTryFd LTsyAdml SpLTTrAd r USTLg +9.1 +6.1 +6.0 +5.8 +5.6 YTD % return +7.9 +7.3 +7.2 +7.1 +7.0 YTD % return +16.6 +15.4 +14.8 +14.5 +8.2 YTD % return +33.7 +23.8 +19.4 +19.3 +18.2 YTD % return US MrtgInst WAMtgBkA GNMA S GNMA Ad GNMA A +6.7 +6.0 +5.7 +5.6 +5.6 BEARING DOWN ON MANAGED FUNDS Investing Scott Burns Syndicated columnist Q: While meeting with my financial advisers recently, I raised this question: Why do we have a significant portion of my equity allotment in managed mutual funds when index funds outper form actively managed funds 80 percent of the time? The answer I received is that in rising bull markets, index funds indeed trump actively managed funds. But when markets are flat or declining, actively managed funds are superi or. What does the research show? A: The answer you re ceived is interesting, but it isn’t useful. Index funds are fully invested at all times. Man aged funds tend to carry cash balances to meet redemption needs. Holding cash tends to reduce losses in bear mar kets. It also dilutes gains in bull markets compared to a fully invested benchmark index. We can see some of this in the performance of managed funds over time periods out to 10 years. Over the 12 months end ing Aug. 31, Morningstar data show that the average performance of all man aged largeblend funds trailed the S&P 500 by 2.16 percentage points. They trailed the index by 1.72 percent annually over the last three years and 1.61 percent annually over the last five years. Since these periods include most of the recov ery since mid2009, that’s a good indication that managed equity funds are likely to trail fully invested index funds during bull markets. Over the last 10 years — a period that includes the crash of 2008 and early 2009 — the same group of funds trailed the S&P 500 Index by only 0.44 percent a year. Over the last 15 years, a period that includes two major market crashes, the average managed fund actually beat the index by 0.62 percent. This suggests that managed funds are at a smaller disadvantage during bear markets. All of this is interesting, but not very actionable. If your adviser was so convinced of the index fund advantage during bull markets, you might ask him why wasn’t he committed to index funds over the last five years? My bet is that he will be a bit tonguetied. This kind of information has no value unless your adviser happens to know when bull and bear mar kets begin and end. Lots of people make claims about doing that, but the claims don’t hold up to close ex amination. Mark Hulbert, editor of the Hulbert Fi nancial Digest, demon strates this on a regular basis in his newsletter. He has done it for decades. The most fundamental question we face is how much we are willing to pay for a chance to beat the market. If you know that, on average, only 30 percent of managed funds can beat their benchmark and the cost of management over an index fund is 1 percent (really, it is a good deal more), then we need a good shot at getting an additional 3.33 percent annualized gain (1.00/0.30) to avoid the experience of buying bad lottery tickets. Basically, managed funds are a los ing bet. Questions: [email protected] Copyright 2014, Universal Press Syndicate
