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Need a Mutual Fund Recommendation


Myth465
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for someone with a small amount of assets. We are looking at about $1000 and the person is interested in beginning to invest. I was recommending FAIRX in a Roth IRA, but the minimal has been raised to $10k. I have a few funds in mind, but does anyone have any recommendations.

 

They would be interested in stocks as long as the Manager follows rule number 1. I think they are comfortable with a loss of 15% at any point in time. I have explained the process to them and had them listen to several FAIRX interviews and reports.

 

What do you all suggest?

 

 

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FPA's funds are not all closed and they have other managers there that have done well.

Sorry, thought you were talking about Rodriguez in particular.

Another consideration could be to think of FFH as a mutual fund. :)

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for someone with a small amount of assets. We are looking at about $1000 and the person is interested in beginning to invest. I was recommending FAIRX in a Roth IRA, but the minimal has been raised to $10k. I have a few funds in mind, but does anyone have any recommendations.

 

They would be interested in stocks as long as the Manager follows rule number 1. I think they are comfortable with a loss of 15% at any point in time. I have explained the process to them and had them listen to several FAIRX interviews and reports.

 

What do you all suggest?

 

Something like Vanguard's STAR fund (VGSTX) has a low minimum and low costs.  It's an asset allocation fund of funds, so it's returns won't be stellar ( ;)), but I think it would be conservative and somewhat consistent with rule number 1 (although it did drop 25% in 2008).  It's one of my favorites for starting small in a tax advantaged account.

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FPA Capital fund is closed, besides Rodriguez is leaving. I would recommend an S&P500 or a "Total Market" ETF for that particular person, until they have way more than $1K to invest.

 

I was thinking FPA because I really like Rodriguez.

 

The Vanguard option is another good one due to the capital being so low. I never considered the closed fund, but that's another good idea, you could potentially get a double discount that way.

 

Thanks for the quick responses guys, keep em coming if you have additional ideas. I will share them with the person and discuss all of them.

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Guest misterstockwell

Not sure about minimums, but LLPFX would be good

 

Honestly, I don't think the US is the place to be. I would be more inclined to go with something like Matthews Asia Pacific Tigers MAPTX, or even China specific MCHFX

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You might look at CET (Central Securities) it trades at a discount to NAV and it's big asset is discounted at about 20%, so you get a double discount. I've looking at it for my kids, but still on the edge- I',m not sure if Fairholme is getting too big, I have some in their accounts from some time back, but the fund seems to be making some very risky plays (to me)

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If the person is only comfortable with a loss of 15%, then I think a maximum of 40% should be in stocks. So I would first go about finding a balanced fund with that allocation.

 

That said, if the person is comfortable with say 25%-30% loss, then Vanguard STAR would be an ideal fund - low expenses, wide diversification, and it is very close to an indexed approach with very low turnover. This is an ideal fund for anyone investing in a tax advantaged account with small amounts and with little to no need for spending time on portfolio management.

 

Other options include Weitz balanced, Oakmark Equity & Income, T Rowe Price Capital Appreciation if so inclined to invest stocks with a value bent but STAR does a decent job of avoiding any bubbles while reducing manager risk via diversification.

 

Vinod

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Economic Investment trust ( EVT) A closed end investment trust trading at a 25% discount to NAV it owns a large chunck of ELF an undervalued insurance co IMO. Instant diversification in an actively managed World  value portfolio with an MER below most index products about .1/4 of 1% per annum. Perfect buy it and forget about it investment.

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I was thinking FPA because I really like Rodriguez.

 

The Vanguard option is another good one due to the capital being so low. I never considered the closed fund, but that's another good idea, you could potentially get a double discount that way.

 

Thanks for the quick responses guys, keep em coming if you have additional ideas. I will share them with the person and discuss all of them.

 

Source capital is one of the FPA funds except it is not much marketed, being a closed-end fund.  If you get on the FPA fund site, you will notice that they have several load funds and one closed-end fund, source capital. 

 

Source capital used to trade at slight premium to NAV, but today trades at ~15% discount. The discount was around 25% during the winter of 2008-2009 if memory serves. So indeed if the discount continues to shrink, there could be an additional kick on top of NAV return.

 

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Guest misterstockwell

Min. investment in LLPFX  is $10,000

 

They lost over 55% from the 2007 highs, and are still down 30% from Oct 07

 

 

They beat the S&P by 25 percentage points last year. They kill the S&P over the last 10 years(~7% annually to 0). They have a long record of success. You can focus on 2007, or you can focus on the entire track record.

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As far as small undiscovered funds, I'd look at TILDX.  They use options to earn some income but focus on fundamentals and value investing.  Only bad thing is that small size makes the fee pretty high, but their performance has more than made up for it. 

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