There was much ado about the recent resumption of the Sequoia Fund (SEQUX), which had invested in the previous generation, the peak of excellence in investment funds. The fund was developed in the stock market Warren Buffett, Bill Ruane, now deceased, has started. For years, surpassing the level of gloss and exceeded the S & P500 by a factor of 3 between 1970 and today. According to legend, Morningstar can make a study of Sequoia is not as abovedefective. So the news that the fund reopened to new investors should be greeted with joy, is not it? Not so fast. I conducted an analysis of recent developments in the Sequoia Fund and why it was like open-ended funds have to be met with a yawn.
Wood!
First, because his reputation as a fund previously closed their doors open now? Depreciation? The lack of cash flow (once the capital of 5 billion dollars, are now 3.8 million U.S. dollars)? And the fund now so that theFounder spent? Based on past performance, stocks not in the background.
To provide a basis for comparison horizons, I am the same within 5 years, I received in my original post. The Fund and its supporters, often in terms of income index since 1970 in third place overall, but be realistic: the genius behind the fund is dead and in the last 5 years a greater role than the generation time of our fathers , back (remember Magellan Fund).
So,The prospectus, the fund has redefined the S & P500 scare in 3 of the last 5 years the S & P500 and the few available in 2 of the last 5 years. On average, the Sequoia Fund was 9.26% compared to 13.15% for the S & P 500. This is a net deficit of an average of almost 4% a year.
Source: http://www.sequoiafund.com/investment_return_table.htm
But wait ... there's more.
One critic has said out there that my analysis is wrong becauseConsideration for the payment of dividends by the fund Sequoia. Quote of today, the S & P500 dividend has not? Dispute resolution, among other things, I have the power of two net asset value of the fund and over, there are exactly 5 years this evening, the dividends are paid during this period (when I meet a real Stickler, that dividends are reinvested at NAV, while later in the swing, and the net asset value for each post DIV, but the exercise of an hour would be to recruitPursued efforts to reach the same conclusion by the same method to the S & P500 fund and, ultimately, the question of the dividend is comparable with the Fund. Well, actually, because the higher dividend Sequoia Fund in 2007 was linked to the fact The present value of dividends is actually responsible for the previous year 2007 compared to a balanced distribution of the S & P500, so that further argument for Sequoia Fund) showed that factoring and reduction, including the dividendPayments, the Sequoia Fund continues to be a miserable compared to the benchmark.
Note that the return is over the period of operation 5 years ago 16.48% of the Sequoia Fund against 63.24% for the S & P 500. Morningstar currently as a 3-star fund expense ratio is 1.0%. The Vanguard S & P 500 index fund or ETF may be higher with better performance and a tenth of the relationship between start-up costs. Would you be willing to pay a premium of 1% per year, the cost for this type of performance? You tell me.