Rant: Fidelity Managed Portfolio

[bestillandknow313]

I’m getting a bit irritated. I have Fidelity managing my retirement nest egg and I’m not at all getting what I expected.

They have me in a bunch of funds and a lot of emerging markets and international where I’ve been losing my shirt. They finally started pulling out and I’ve bitched and bitched about it to them repeatedly and the defended their strategy.

The fees are really high. On top of the management fees, these funds probably average .45.

I’m thinking of telling them to pound sand and simplifying. I currently have a little under $700k in the account and that should be a lot higher.

My one-year return is 12.20%

My YTD return is 6.93%

I’m considering switching it into mostly ETFs, like VOO and VTI and putting maybe 20% into dividends like SCHD and possibly O.

Can someone talk me out of this?

 

[zacatak98]

@bestillandknow313 You’re losing your ass and you have a 12% return in the past year?

 

[blessinginatweet]

@zacatak98 This mentality will be challenged over the next few years. Folks don’t understand what higher for longer will do.

 

[brock_lee]

@bestillandknow313 Save their employees the grief and just leave if you dont get what theyre doing

 

[brock_lee]

If you don’t trust them or like the strategy it’s only a matter of time before this ends badly and you puke up at a bottom or something

 

[arobro]

@bestillandknow313 So you are saying you want a portfolio manager that changes his strategy because one of his clients bitches about returns?

 

[parentingpod]

@arobro While being up 12%

 

[bugznelson]

@bestillandknow313 Get out and day trade leveraged options

 

[shofargod]

@bugznelson Options on leveraged funds using margin. OH YEAHHHH

 

[thepaintedbeat]

@bestillandknow313 You’re up 12% in this market and complaining? Hopefully they just let you go, too much of a headache.

 

[dimples3130]

@thepaintedbeat S&P is up 12.5 ytd.... So, almost 7 ytd sounds about right with a nonUS component and maybe a little bond exposire which has come out flat for 9 months

 

[resjudicata]

@bestillandknow313 OP this sounds like a you problem. Sounds like they're doing their job and recommending a reasonable well diversified portfolio and you're freaking out because you didn't double your money in a single year.

 

[resjudicata]

@bestillandknow313 OP this sounds like a you problem. Sounds like they're doing their job and recommending a reasonable well diversified portfolio and you're freaking out because you didn't double your money in a single year.

 

[fidesetratio]

@resjudicata This is what happens when you have a generation of "investors" who only know an up market. They become spoiled and arrogant.

 

[louid]

@fidesetratio Honestly explains a lot of the rally in certain stocks this year

 

[resjudicata]

@bestillandknow313 12% over 12 months is good. Are you mad that they have you diversified and that a diversified portfolio didn't keep up with the best performing market in the world?

For 15 years, American retail investors have piled solely into passive S&P ETFs and patted themselves on the back for beating the money managers. That won't last forever.

 

[resjudicata]

I mean, passive ETFs are great, but yeah balance is needed. Total US, international, bonds, etc. Not just s&p.

 

[bernard05]

@resjudicata Please explain the crap out of this??? I am new to investing and I have no idea why I shouldn’t do s and p and call it a day. Right now my portfolio is 70% sp500 15%sp400 and 15%international

 

[resjudicata]

@bernard05 First, if you do nothing else, don't do s&p 500 and s&p 400 together. Unless your goal is to be deliberately overweight higher cap us stocks, you're doubling up there.

So the other commenter who criticizes diversification is a moron.

Diversification is spreading your investments across different assets to decrease volatility. That's a fancy way of saying you reduce your risk of losses, but you're also reducing your potential for gains as well. If you are a stock picking genius, you can have an un-diversified portfolio and do amazingly well. However, the overwhelming majority of people are not stock picking geniuses, and attempting to do so would risk disaster. That's why we diversify.

The massive success of the high and mega cap us stocks is a recent phenomenon going back only about 15 years. There is no guarantee it will continue.

Now, having the s&p 500 gives you better diversification than just holding a bag of apple/Tesla/Nvidia/etc. Go back and look at the best performing stocks over time, they ALWAYS change. The leader becomes the looser, it's guaranteed eventually. None of us can predict when that will happen. The s&p 500 at least handles these kind of leadership adjustments automatically. It's a solid choice, I'm not arguing against it.

However, you are then loosing out on other opportunities. For example, there are analyses that small cap value stocks outperform large caps over longer periods of time. Holding the s&p means that you are not exposed at all to those smaller stocks. Then there's international, which I do see you have. Historically us and ex-us indices have traded off periods of over and under performance. The degree of dominance the us has had over the past 15 years is not the historical norm. Not having exposure internationally would deny you those opportunities as well.

These are all reasons why diversification is good. It exposes you to a wide range of opportunities. It will reduce your overall returns in the short term compared to someone who is all in on some successful bets, but long term a non-diversified strategy is far harder to maintain than a diversified one.

 

[bernard05]

@resjudicata Wow that is an incredible explanation, thank you so much! If I were to create a more future proofed portfolio, what would you suggest would be the percentages in each category?