I've been investing for over a decade now via my brokerage account and IRA. I've been in a bunch of mutual funds, a few small hedge funds, a handful of ETFs, and plenty of individual stocks. Currently also have an IRA from my former employer on Wealthfront.
My personal view is that actively managed equity funds (like mutual funds) can be the best path for many people to compound at above-average rates of return. It's worked well for me, but it's taken a lot of trial and error to find the right funds. Most mutual funds underperform, while only the top 10-15% outperform.
So… I've decided to give my two cents here about my favorite equity funds for long-term compounding. Some are relatively new, while one is decades old, but they all have a similar philosophy behind them which works for me.
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My Favorite Actively Managed Funds/Portfolios
All three of these have time-tested strategies and strong teams behind them, based on my diligence. Please do your own research before investing though.
Sequoia Fund (SEQUX)
Blurb: The famous mutual fund run by Ruane, Cunniff & Goldfarb. When Warren Buffett closed his partnership in 1969, he actually advised his own investors to invest in Sequoia.
Goal: Long-term growth of capital
Strategy: Own quality businesses (stocks) run by quality people, selected by Sequoia's research team, that can compound their earnings rapidly.
Annual Fee: 1.00%
Pros: Long track record of great returns, excellent quarterly investor letters, consistent investment process, blue chip reputation amongst large asset allocators.
Cons: Only quarterly views on the portfolio. Some big investment whiffs in recent years (e.g. Valeant Pharmaceuticals). Senior fund managers are pretty old & could retire soon.
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Titan
Blurb: Hedge fund for the masses. It's actually not a mutual fund; it's a high-quality portfolio of stocks, managed by software built by hedge fund vets, based on what the best hedge funds are investing in.
Goal: Long-term compounding of capital
Strategy: Follows the best hedge funds. Offers a portfolio of 20 high-quality businesses (stocks), vetted by the best hedge funds, that can compound capital rapidly.
Annual Fee: 1.00%
Pros: Its own mobile app, full hedge fund experience (e.g. explanations of every stock pick, informative videos, curated news), only $1000 min investment, intuitive UI/UX, no lock-ups.
Cons: Not a mutual fund, so you can't buy it in your brokerage account - you need to sign up for the mobile app. Only launched in 2018, though very strong backtested returns. No web app available yet.
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Gotham Index Plus (GINDX)
Blurb: Run by the legendary investor Joel Greenblatt (author the The Little Book That Beats the Market) and his team of equity analysts using analytical framework to evaluate stocks within the coverage universe on measures of absolute and relative value.
Goal: Long-term capital appreciation above the S&P 500 over a full market cycle
Strategy: Combines an index investment with an active long/short overlay (100% net long exposure by being 190% long vs. 90% short)
Annual Fee: 1.15%
Pros: Legendary investor Joel Greenblatt (special situations stock manager) at the helm; hybrid benefits of index + active investing.
Cons: $250k min investment (I realize I'm more fortunate than others in being able to afford this). Probably over-diversified (~500 stocks in his portfolio). No view into the investment theses / analytical frameworks they use to pick the stocks.
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I'd love to know what other funds / products folks are investing in, to achieve outsized long-term returns. These are my favorites based on soundness of investment process/strategy, team, track record of returns, transparency, and user experience -- but I'm sure there are many others out there. Hopefully this greases the wheels for you in your search.
Submitted July 10, 2018 at 05:45AM by curiousatlas https://ift.tt/2m81cmx
