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Fund I can no longer contribute to: sell some or hold all?

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pat2013
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Fund I can no longer contribute to: sell some or hold all?  Reply with quote  

My question is about retirement investments, which are in a 403(b) and IRAs (mostly Roth). Last year, my employer changed the company that manages my (self-directed) 403(b) retirement funds. After this change, I was able to move directly across my Vanguard PRIMECAP funds (which have been closed to new investors for some time) into the new system, however I was no longer able to contribute to this fund.

Vanguard PRIMECAP: "Multi-cap growth equity, emphasizing large- and mid-cap issues. Seeks long-term capital appreciation. Invests in out-of-favor growth companies at attractive valuations. Expense ratio as of 01/28/2013 - 0.45% "This is 64% lower than the average expense ratio of funds with similar holdings."

1 year 3 year 5 year 10 year SInce inception
PRIMECAP Fund Investor 23.76% 12.89% 6.78% 10.87% 13.34%
S&P 500 Index* 16.89% 12.80% 5.21% 7.88% 10.95%

It, along with the DJIA, has improved greatly since 2008. It represents 59% of my total retirement investments. I am approximately 9 years from retirement. My portfolio is weighted heavy in terms of aggressiveness, based on the typical mix used in target investment funds for my age.

MY QUESTION: Given that I cannot invest any more in this fund (which also means I am not doing dollar-cost averaging) are there any general investment best-practices related to holding onto, or selling some of the shares in such a fund, to balance my portfolio? Or is it completely a matter of looking at all my investments, my situation, how much risk I'm willing to take, market/economy analysis, etc., in terms of making such a decision?

My portfolio looks like this:

Bonds: 11%
Cash money market: 4.5%
Growth: 64%
Growth/income: 4%
International: 2.5%
Sector and industry funds: 8.2%
Target retirement: 6% (and growing, as I'm continuing to contribute to that, to slowly balance my investments).

Thank you.
Post Thu May 09, 2013 5:34 am
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coaster
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I don't think your asset allocation is particularly "heavy" toward aggressiveness; surely not with nine years to go. My opinion is that those risk classifications have not been updated in some time, and make assumptions that may not be as valid as they once were. For example, that US Treasury Bonds are a conservative, low-risk income investment. Well, they're certainly not paying much in the way of income right now, and in terms of the risk for asset value depreciation, they may be at very high risk right now.

~Tim~
Post Sat May 11, 2013 6:05 am
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pat2013
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Tim,

Thank you very much for that; it is very helpful!

Tim and/or anyone: I included a lot about the specifics of my situation, because I figured that would be useful for responses. I'm also trying to find out if moving some funds out of a fund (like Vanguard PRIMECAP) into some other investment (to rebalance, assuming that made sense) would be considered unwise, given that I can no longer contribute to it -- or if that fact really shouldn't be much of a factor in my overall strategy. thanks

Pat
Post Sun May 12, 2013 4:14 pm
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coaster
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Pat, given that you can no longer contribute, your overall strategy consists *solely* of your asset allocation, so if some other distribution suits your purposes better, then go for it. Smile

~Tim~
Post Sun May 12, 2013 5:47 pm
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pat2013
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Thank you; that is what I was trying to figure out!
Post Mon May 13, 2013 1:28 am
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