Mutual Funds - General Discussion
- mitelo
- Normxxx
- Normxxx
- allancoleman
- axolotl
- allancoleman
- Normxxx
- be6
- bob90245
- SteveT
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» mitelo - Re: Value Investing
In response to Re: Re: Value Investing posted by Normxxx:It sounds like I have two choices. 1. Stay the course. 2. Go nuts.
I'll pick the first.
As I look back to the gloom and doom of 1974, 1987, 2002, and almost every other year, I see opportunities missed.
This year won't be any different.
-- posted by mitelo
» Normxxx - Re: Re: Value Investing
In response to Re: Value Investing posted by mitelo:Join the rest of us! Stay the course or not and go nuts!
-- posted by Normxxx
» allancoleman - Re: Value Investing
In response to Re: Re: Value Investing posted by Normxxx:
so far my losses are less than 3% year to date so i'm staying the course AND going nuts . 
.
-- posted by allancoleman
» axolotl - Re: Re: Value Investing
2005 is like someone changed the channel. I was down 6% real quick and now have recovered to down 3%. I don't recall anyone predicting this downdraft. It is maybe due to big money managers selling to raise cash or change investment emphasis to other sectors. Greenspan is "Mr. Candy Man" who turned the money valves wide open for Y2K - it was an insurance policy that turned out to be not needed and it caused the big NASDAQ run up or bubble. He knows which side to err on for people to love him.-- posted by axolotl
» allancoleman - Re: Value Investing
In response to Re: Re: Value Investing posted by axolotl:
hi axolot1 ,
i was beginning to panic after the first week of losses but then really looked at my own exact numbers and realized that even though the dollar amount was enough for heartburn that the percentages were small - less than 3% so far . needless to say , i've been following suite101 alittle more lately and Kirk's technical analysis charts of the S & P are wonderful to see the next level of support to be watchful .
as for those that were predicting this downdraft , Sy Harding did say to , " beware " after year's end and going into january . Normxxx always , although usually bearish , shows us good articles from people who see things as not so rosy , which i appreciate . and now kirk started a forum on John Murphy who doesn't forsee good things in the future . bob brinker , for what it's worth , is still bullish .
since i've always been my own money manager , and i do not want to sell out at the bottom . i'll stay the course in here and continue to read and listen to everybody . i will be ever more watchful if we get to Sy Harding's " unfavorable season " without a recovery . hopefully the channel will switch back shortly and allow me to go back to my usual " capital preservation " method of investing . i've got all year to make up for this month's losses .
-- posted by allancoleman
» Normxxx - Re: Re: Re: Value Investing
In response to Re: Re: Value Investing posted by axolotl:I don't recall anyone predicting this downdraft.
How about someone predicting it to the day, some 8 years ago!
-- posted by Normxxx
» be6 - Re: Re: Re: Re: Value Investing
In response to Re: Re: Re: Value Investing posted by Normxxx:I remember that Norm! Emailed it to friends, tho I didn't get rich on it I did lighten up a little, and put my buying on hold for a while (still).
-- posted by be6
» bob90245 - ADVDX
I have no recommendation on this fund. As always, do your own due diligence. - Bob
www.sfgate.com
New fund reaps dividends
- Kathleen Pender
Sunday, January 23, 2005
Since Congress passed the dividend tax cut in 2003, more than a dozen funds with dividend in their names have been created, joining a small group of older ones. Most are as sexy as a pair of socks.
I'm not knocking socks. They keep your feet warm and won't get you in much trouble.
But if you're looking for something racier, check out the Alpine Dynamic Dividend Fund, which premiered in September 2003.
This no-load fund has an active -- some might say hyperactive -- approach to capturing dividends that qualify for the new lower rate, which is 15 percent for higher-income taxpayers and 5 percent for those in the 15 percent or lower federal tax bracket.
The fund's 12-month yield -- the dividends paid out in 2004 divided by its year-end share price -- was 8.8 percent.
The next highest-yielding dividend fund, according to Morningstar, was Eaton Vance Tax Managed Dividend Income, with 4.5 percent. The average yield for 35 dividend funds was 1.9 percent. (These figures exclude closed-end, exchange-traded and real estate funds.)
The Alpine fund's total return -- including dividends plus capital appreciation (increase in share price) -- was 23.3 percent last year, beating the Standard & Poor's 500 index by 12.4 percentage points.
Some dividend funds buy securities whose dividends may not qualify for the favorable tax treatment. Some dividends from preferred stocks, foreign stocks and real estate investment trusts do not qualify.
For the fiscal year ended Oct. 31, almost 96.5 percent of the Alpine fund's dividends qualified for the lower rate.
Manager Jill Evans buys stocks for one of three buckets and aims to have one third of the fund in each.
-- First bucket: "In one bucket we run the dividend capture strategy," Evans say. This bucket contains high-yielding stocks (4 to 5 percent on average) bought mainly for income. Some are held for the long term, some just long enough to qualify for the lower tax.
To qualify, a stock must be held for at least 61 calendar days around the ex-dividend date.
Most companies pay dividends four times a year, but on different schedules. Evans moves a portion of the fund from company to company to capture the dividend.
"If you divide 365 days in the year by 61, you get almost six," she says. "If we perfectly rotated a portion of the portfolio, we would get six payments instead of four."
This bucket also includes companies that pay (or might pay) large one- time dividends, like Microsoft's $3-per-share payout.
When a company pays a dividend, its stock should theoretically drop by the amount of the dividend because no wealth has been created or lost. The company has simply transferred its cash to shareholders.
To make money on special dividends, Evans figures out what the company should be worth after the dividend, then tries to buy it at a price that will produce a profit.
Also, many companies are undervalued before the payment of a one-time dividend because investors don't give them full credit for their cash. So when the dividend is paid, the stock may not drop by the full amount of the dividend. For example, Microsoft dropped by only $2.58, not $3, the day it went ex-dividend in November.
Evans bought Microsoft just before the dividend and hasn't decided what she will do when her 61-day holding period expires.
Two companies in the first bucket she plans to hold are Iowa Telecommunications and Citizens Communications, which is yielding more than 7 percent.
Another favorite is Regal Entertainment, which paid a $5 special dividend last year and pays a 6 percent ongoing dividend.
-- Bucket No. 2: The second bucket holds traditional growth and income stocks, which offer good growth potential but moderate dividend yield, more in line with the 1.8 percent yield on the S&P 500.
Examples include Citigroup, Caterpillar, Abbott Laboratories, and General Electric.
-- Bucket No. 3: The third bucket holds turnaround situations. These troubled companies offer above-average yields, but she buys them mainly for their capital appreciation potential.
If they cut their dividends or file for bankruptcy, Evans could lose a bundle. But if they get their acts together, they offer not only high income but also high capital appreciation. "You get the double bang for your buck," she says.
Evans' big winners in this bucket last year include Dow Chemical and Lyondell Chemical, both of which she still holds.
Companies she hopes will turn around this year include Basset Furniture (yielding 4.4 percent) and teddy-bear-maker Russ Berrie (yielding 5.3 percent.)
Last week she starting nibbling at General Motors (5.45 percent).
Her fund has not owned Fannie Mae, which sliced its dividend in half his week.
-- The risks. When you see a fund performing much better than its peers, you have to ask why.
Some high-yielding funds use options or borrow money to supercharge their income, but Evans does none of that.
"If you look at our holdings as of Sept. 30, our average yield was 4 percent," she says.
"If we just held those stocks and never traded, never got a special dividend, the portfolio would yield 4 percent. We enhance that yield by a number of strategies. Number one is looking for opportunities in the special dividend world. Number two, we actively trade a portion of the portfolio and try to capture more than four dividends a year," Evans says.
She also has up to 20 percent of the fund overseas, where yields tend to be higher, and seeks out smaller and midsize companies, which have higher capital appreciation potential than the large-cap names that dominate most dividend funds.
-- The downside: So what's not to like about this fund?
Its turnover rate was almost 200 percent last year, about twice the average for mutual funds.
Heavy turnover increases trading costs and can result in capital- gains distributions, which investors don't like if they're trying to defer taxes.
Evans says the turnover criticism is overblown. "People are paying us to manage the fund," she says. Besides, trading has gotten very cheap, and her performance numbers are stated after transaction costs.
For the year ended Oct. 31, "we paid out a total of 28 cents in capital gains, 24 cents short-term, 4 cents long-term. That was only 2.2 percent of our share price, which we think is respectable."
The fund's expense ratio is 1.35 percent of assets, a bit lower than average for stock funds.
Investors who want to minimize expenses, turnover and capital gains can buy any number of dividend-oriented index funds.
Two examples -- both exchange-traded funds -- are the iShares Dow Jones Select Dividend Index (symbol DVY), which is yielding 3.7 percent and has a 0.4 percent expense ratio; and PowerShares High-Yield Dividend Achievers (PEY ), yielding 3.8 percent with 0.5 percent expense ratio.
My biggest concern with the Alpine fund is its youth. It's good to see a three-year track record before buying a fund. Alpine is not yet 18 months.
Evans is 38 and runs the fund with one associate. Before joining Alpine, she worked at JPMorgan for 15 years, 11 years as an analyst covering basic industries and transportation.
But her bosses have decades of experience and solid track records. Alpine is a small fund group run by Sam and Steve Lieber, who previously ran the Evergreen group of funds before they sold it to First Union in 1995.
Alpine's U.S. Real Estate and Dynamic Balance funds get top five-star ratings from Morningstar.
Perhaps what the investing world needs is someone with a fresh perspective on dividends.
"When I was at JP Morgan, we certainly never thought of dividend funds as dynamic," Evans says.
###
This LINK has the ariticle and table of similar funds.
-- posted by bob90245
» SteveT - Fidelity Makes Lower Index Fees Permanent
http://www.funddirections.com/default.as...
Fidelity Makes Lower Index Fees Permanent
March 2, 2005
Fidelity Investments made permanent yesterday the lower index-fund fees it unveiled in August. The fund contracts have also been amended to require fund shareholder approval for fee increases.
Last year, Fidelity cut the fees on five of its domestic equity index funds — Fidelity Spartan 500 Index Fund, Fidelity Spartan U.S. Equity Index Fund, Fidelity Spartan Total Market Index Fund and Fidelity Spartan Extended Market Index Fund — to 0.1% of assets. The 10 basis point expense cap is being extended to the VIP Index 500 Portfolio, and a 0.2% fee cap instituted for its Spartan International Index Fund.
In a release, Fidelity said the lower fees had attracted some $2 billion in new assets under management.
-- posted by SteveT
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