Mutual Funds Question

[Chimera]

My 403B/IRA is through USAA, which is one of the few firms that my employer deals with. My mutual funds are doing pretty poorly right now, which is par for the course with the economy in mind, I suppose. I have investments in a Capital Growth Fund, Cornerstone Strategy Fund, and an Intermediate Bond Fund. The current QTD's on these are respectively:
-10.37%, -7.30%, and -1.54%. Dismal.

I'm debating whether to switch my money over to some other investments, or to "stick it out" in these high-rated but currently badly performing funds, since retirement investing is supposed to be for the "long haul."

I'll be posting to some fund sites to ask as well, but I know there are lots of smart people around here, so I thought I'd ask here too...

[The Central Scrutinizer]

Never, never, never base an investment's performance on the returns from a single quarter. One year should be the absolute bare minimum.

[Huh-What?]

Do not chase the market. If you feel these are good funds run by good managers then stay the course. Popping in and out of funds will get you hurt more often then not.

[Huh-What?]

Also consider that the DOW was down 7.90% for the quarter. So the fund that was only down 1.54% did well.

[Chimera]

Never, never, never base an investment's performance on the returns from a single quarter. One year should be the absolute bare minimum.

Do not chase the market. If you feel these are good funds run by good managers then stay the course. Popping in and out of funds will get you hurt more often then not.

Also consider that the DOW was down 7.90% for the quarter. So the fund that was only down 1.54% did well.

Good points. Thanks.

[bigred]

Do not chase the market. If you feel these are good funds run by good managers then stay the course. Popping in and out of funds will get you hurt more often then not.
Exactly.

[Nim Chimpsky]

The advice given above is concise and good. Don't react to a singular event such as this and don't react even if they sink further. If you are investing regularly, since they are down, you are buying shares "on sale" right now.

If you're young, in your 30's or younger, you shouldn't even worry in the slightest bit. It sounds as if you have a fairly decent asset allocation, but I would have to dig a bit deeper to give you specifics.

USAA has done a very smart thing recently and basically "outsources" their portfolio management to experts with long and positive track records.

For example, USAA Capital growth is a large blend fund that is managed by Michael McElroy who is a director and portfolio manager for Batterymarch, a very large and well respected money management firm.


It seems as if you selected 2 funds that might overlap a bit. Cap growth and Cornerstone are very similar in their investment strategies.

Off the top of my head, assuming you have 20 years or more until retirement, you should have about 50-60% allocated to large cap, 10-20% international, 10-20% small or mid cap and if you really want to, a small portion in a bond fund.

Unfortunately, the best advice that I can give you is very un-sexy and down right boring. Stay the course. Dollar cost average. Diversify. Be patient.

[The Central Scrutinizer]

Off the top of my head, assuming you have 20 years or more until retirement, you should have about 50-60% allocated to large cap, 10-20% international, 10-20% small or mid cap and if you really want to, a small portion in a bond fund.

A better allocation is: Great businesses bought at a discount, 100%

Unfortunately, the best advice that I can give you is very un-sexy and down right boring. Stay the course. Dollar cost average. Diversify. Be patient.

You really only need two: Stay the course. Be patient.