time to get out of growth company fund?
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time to get out of growth company fund?
I have nearly 80% of my retirement funds in Fidelity's growth company fund, which has out performed the S&P index over the past 20 years, but is getting hammered now. I am thinking of getting out of the fidelity growth fund and into an S&P index fund instead -- mainly because the fees are lower, but also because I have no idea if the growth fund will recover. I know "buying high and selling low" is not a good plan, but since the growth fund is down so much now, and so is the S&P, maybe now would be a good time to make a change. Any thoughts?
Re: time to get out of growth company fund?
I think that a lot of people who have been heavily tilted to growth are regretting it right now.
Ask yourself why you have had nearly 80% of your retirement funds in a growth fund.
- Is it because you expected the long-term return of growth stocks to be higher than that of the total US market? If so, why? Does that reasoning still hold? If it doesn't still hold, why not?
- Is it because they were returning more than the total US market at the time you decided to invest in them? If so, that's performance chasing. Switching to a S&P 500 or total US market fund right now because it has gone down "less bad" would also be performance chasing.
It is okay to performance chase in this particular situation as long as you can adequately justify it by saying you have seen the light and will adhere to diversified, low cost, passive index investing from now on. But will you, really? How about if you see that growth fund recover later on? Or see some other "area" outperforming "the market"? What will you do then?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: time to get out of growth company fund?
Hello, and welcome to the forum!
It is difficult to advise you without knowing more about your situation--your age, your asset allocation, etc.
Here's a link to the format for posting if you want substantive advice:
viewtopic.php?f=1&t=6212
It is difficult to advise you without knowing more about your situation--your age, your asset allocation, etc.
Here's a link to the format for posting if you want substantive advice:
viewtopic.php?f=1&t=6212
- burritoLover
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Re: time to get out of growth company fund?
If you get out of it now and then the growth fund goes on a tear for the next 3 years, far exceeding the S&P 500, what are you likely to do?
Re: time to get out of growth company fund?
+1LilyFleur wrote: ↑Tue Jul 05, 2022 1:32 pm Hello, and welcome to the forum!
It is difficult to advise you without knowing more about your situation--your age, your asset allocation, etc.
Here's a link to the format for posting if you want substantive advice:
viewtopic.php?f=1&t=6212
"I started with nothing and I still have most of it left."
Re: time to get out of growth company fund?
Yes, this! In addition there will be plenty of folks asking and wondering the same thing and that is; why would anyone have 80% of their retirement assets in just one fund?Wiggums wrote: ↑Tue Jul 05, 2022 1:43 pm+1LilyFleur wrote: ↑Tue Jul 05, 2022 1:32 pm Hello, and welcome to the forum!
It is difficult to advise you without knowing more about your situation--your age, your asset allocation, etc.
Here's a link to the format for posting if you want substantive advice:
viewtopic.php?f=1&t=6212
Re: time to get out of growth company fund?
Buy more. I have a some growth company too. I bought more a few months ago and it has gone down, but it will come back.
Re: time to get out of growth company fund?
p.s. It has outperformed the S&P 500 since at least 1985 says portfolio visualizer. I've been in it since 1994.
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Re: time to get out of growth company fund?
agree. most 'growth' funds have been crushed YTD in this rising interest rate environment. but every dog has his day.
now's the time to buy more if your finances allow. buy low / sell high and all that.
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Re: time to get out of growth company fund?
Compare the two funds here.. The growth fund has outperformed, but it also carries higher risk. Moving from the growth fund to TSM won't accomplish much. If the volatility is more than you want, you probably should get something less aggressive and less volatile.
https://www.morningstar.com/funds/xnas/fdgrx/risk
https://www.morningstar.com/funds/xnas/vtsax/quote
You say you are 80% growth fund, what is the other 20%?
Paul
https://www.morningstar.com/funds/xnas/fdgrx/risk
https://www.morningstar.com/funds/xnas/vtsax/quote
You say you are 80% growth fund, what is the other 20%?
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: time to get out of growth company fund?
I have ~20% of my portfolio in a growth fund at Fidelity. Sure it is getting hit this year (6 months), but It has been on a tear since the 2009 lows. When the smoke clears, I suspect growth will once again lead, so just hold and wait it out if you have time.
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Re: time to get out of growth company fund?
First, this was my first post -- THANKS for all of the great replies! Lot's for me to think about. Sadly, I was in fact performance chasing (for about 20 years now), that is why I am so heavily in the growth fund. I'm 58 and retiring soon, so I'm giving my portfolio more thought now . . .like I should have been doing all along. The other 20% of my portfolio is basically all over the place (I'll tackle that -- or not -- next).
Re: time to get out of growth company fund?
Read this stuff:fishes123! wrote: ↑Wed Jul 06, 2022 10:13 am I'm 58 and retiring soon, so I'm giving my portfolio more thought now
https://www.bogleheads.org/wiki/Risk_an ... troduction
https://www.bogleheads.org/wiki/Risk_tolerance
https://www.bogleheads.org/wiki/Asset_allocation
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: time to get out of growth company fund?
you got lucky. I think there is definitely reason to evaluate whether at this stage of life it belongs in your portfolio, but even with its significant drop you are still way ahead of where you would of been had you sold the sp500 at its high last year and held.fishes123! wrote: ↑Wed Jul 06, 2022 10:13 am First, this was my first post -- THANKS for all of the great replies! Lot's for me to think about. Sadly, I was in fact performance chasing (for about 20 years now), that is why I am so heavily in the growth fund. I'm 58 and retiring soon, so I'm giving my portfolio more thought now . . .like I should have been doing all along. The other 20% of my portfolio is basically all over the place (I'll tackle that -- or not -- next).
I think the reason teh this fund has done so well is that its controlled its fund flows. this has allowed it to maintain a 25% share of midcap/small cap stocks which I believe give it more risk but have resulted in greater returns over most of its existance. if it had not closed to new investors (outside of access with like 401k's) in like 2006 or whenever it did it would not have been able to maintain a 75% R-squared and would of became a closet index fund like the other popular growth funds of the mid 00's did (Growth Fund of America, Various Blue Chip funds, etc) and barely beat or barely lose to the large cap growth index with higher fees over that time.
Re: time to get out of growth company fund?
When we retired at age 56, we moved 3 years of expenses to cash and reduced our asset allocation to 65/35. When you retire, your first priority is your ability to pay bills regardless of what the market is doing.fishes123! wrote: ↑Wed Jul 06, 2022 10:13 am First, this was my first post -- THANKS for all of the great replies! Lot's for me to think about. Sadly, I was in fact performance chasing (for about 20 years now), that is why I am so heavily in the growth fund. I'm 58 and retiring soon, so I'm giving my portfolio more thought now . . .like I should have been doing all along. The other 20% of my portfolio is basically all over the place (I'll tackle that -- or not -- next).
"I started with nothing and I still have most of it left."
Re: time to get out of growth company fund?
Welcome to the forum.fishes123! wrote: ↑Wed Jul 06, 2022 10:13 am First, this was my first post -- THANKS for all of the great replies! Lot's for me to think about. Sadly, I was in fact performance chasing (for about 20 years now), that is why I am so heavily in the growth fund. I'm 58 and retiring soon, so I'm giving my portfolio more thought now . . .like I should have been doing all along. The other 20% of my portfolio is basically all over the place (I'll tackle that -- or not -- next).
I found putting together an Investment Policy Statement a very useful exercise to formalize our approach. Putting thoughts on paper always helps me clarify my thinking....and has helped me stick to a long-term strategy and Stay the course.
Sounds like you are moving in that direction.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
Re: time to get out of growth company fund?
You have 80% in a growth fund, and 20% in what--stocks or bonds?fishes123! wrote: ↑Wed Jul 06, 2022 10:13 am First, this was my first post -- THANKS for all of the great replies! Lot's for me to think about. Sadly, I was in fact performance chasing (for about 20 years now), that is why I am so heavily in the growth fund. I'm 58 and retiring soon, so I'm giving my portfolio more thought now . . .like I should have been doing all along. The other 20% of my portfolio is basically all over the place (I'll tackle that -- or not -- next).
Consider risk vs AA (asset allocation) and also consider the "safe" withdrawal rate is 4%
https://investor.vanguard.com/investor- ... allocation
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: time to get out of growth company fund?
thanks for these links, I am going to study this carefully before doing anything.
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Re: time to get out of growth company fund?
I wouldn’t change my asset allocation based on a bad six month period.
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Re: time to get out of growth company fund?
I would recommend holding on the investment. 10 yr bond is pulling back from 3.5%, a strong top. This matters because growth stocks are more sensitive to rates than value stocks. Additionally, if we really go into a recession, growth is a rare find and should have a higher premium. I would be careful for companies without earnings that predict to be profitable in 2025.
Full disclosure: I am a believer in s&p 500 index with only a small portion in growth (10%).
Full disclosure: I am a believer in s&p 500 index with only a small portion in growth (10%).