Down 9.9% Today???

[buddtholomew]

Keep in mind that the distribution is a taxable event if PRPFX is held in a taxable account.

[portart]

The smaller portion is in the taxable account. The majority is in my retirement account. Still waiting for the new shares to appear. I guess at the close.

[dualstow]

I'm glad I didn't see this thread until today, and I'm glad I didn't look at my PRPFX until I saw this thread.
I bought in the fall of 2010 and it was kind of weird to see my holdings' value go back to where it started.

[AdamA]

"One potential issue we noticed was with regard to taxes and the potential capital gains exposure (PCGE). This is typically the case with many mutual funds but during a year like 2013 when the markets are breaking records yet this fund is not performing well….

That's interesting.  Any idea what causes this?

[annieB]

I took a 100k haircut today...

Hope you lived thru this.
That's like heart attack city !

[ngcpa]

I am sorry if this comes off as nasty, as that is not my intention; but if you don't understand how this works, perhaps you shouldn't be investing.

[AdamA]

I am sorry if this comes off as nasty, as that is not my intention; but if you don't understand how this works, perhaps you shouldn't be investing.

It's okay.  No offense taken.  I'm just curious as to why a stock market rally would cause a lagging fund to have a distribution like this. 

As an aside, the nice thing about the PP is that you can, in fact, invest without understanding this type of thing.  Just follow HB's very simple instructions, or buy the mutual fund. 

[Reub]

I know that when I was younger I didn't understand some of this stuff either. Happy to help.

[Tyler]

Any idea what causes this?

An educated guess:

Mutual funds and ETFs generally avoid internal capital gains by rebalancing through buying lagging assets with cash inflows to the funds rather than selling the winners.  Since the Permanent Portfolio had a down year and lost popularity, PRPFX probably had a net outflow that was too large to offset the capital gains from the huge stock gains this year. 

[AdamA]

Thanks, Tyler.  That makes sense.

Any idea why there hasn't been a distribution this large before? 

[MediumTex]

It looks like PRPFX had a gigantic outflow during 2013 of 25-35% of its assets, which isn't surprising when you consider that the PP had an unimpressive year in 2013.

When you are having to sell assets to honor those redemption requests after many years of net inflows, you are liquidating many assets for large gains.

Part of what has made PRPFX so tax efficient in recent years is the large amount of money that has gone into the fund, and it has probably made it so that Cuggino has rarely needed to sell much of anything.  I think that we're seeing that process work in reverse now.

[MediumTex]

Thanks, Tyler.  That makes sense.

Any idea why there hasn't been a distribution this large before?

If you look at the price history of PRPFX, I think that there have been several large distributions like this one in previous years during periods when the PP wasn't performing well relative to the stock market.

I think that in the fund's first 10-12 years distributions like this happened at least a couple of times (though they weren't quite as large).

[Ad Orientem]

I may be missing something, but I don't see any reason to own PRPFX.  Why not just hold 4 ETF's?

For the vast majority of people on this forum you are correct. But there are some people for whom PRPFX might make good sense. I know more than a few whose eyes glaze over at the mere mention of stocks, bonds, yield, dividends, ETFs etc. For those who by choice or necessity are conservative investors, and who are either unable or unwilling to take charge of their own investments in even a minimal way, PRPFX is a very good choice.

It's really one of only two funds I have felt comfortable recommending for one stop shoppers. (The other being VWINX.)

[dualstow]

This thread could definitely use a motivational image from frugal. Where are you, buddy?

[MediumTex]

This thread could definitely use a motivational image from frugal. Where are you, buddy?

[dualstow]

[Bjrnet]

What's up with PRPFX today?

It's down 9.9%.

Regarding PRPFX:  OK, I think I understand what is going on after reading through this forum.  However, it is now Jan 1 (a holiday I know) and the dividend ($0.25) and capital gains ($4.35) that we all expect still have not showed up in my account.  When will these gains show up in my account?  Will they be tax reportable in 2013 or 2014?

[number5858]

It depends on your broker, but should be 1-3 business days from the 31st. It should be taxable for 2013 if held in a non-IRA, 401K type account.

[number5858]

I may be missing something, but I don't see any reason to own PRPFX.  Why not just hold 4 ETF's?

If you are managing your funds all the time, then that is true, but what about if something happens to you? You might want something like this for a spouse or other who is not very knowledgeable with finance that is simple enough that they can understand and manage if you can't.

[portart]

My account is up to speed. The price has stayed lower with the additional shares. I am now trying to find out about the shares I sold on the close of the day it dropped it somehow it was added in. I hate to think I lost 10% on the shares I sold. The price of the sale was the lower price. They added back shares on the amount of shares I am still holding.

[Bjrnet]

It depends on your broker, but should be 1-3 business days from the 31st. It should be taxable for 2013 if held in a non-IRA, 401K type account.

So, although I don't actually realize the gain until 2014, I have to report it on my 2013 tax return.  Just doesn't seem right!

[Reub]

I might actually use my remaining PRPFX shares to rebalance my HBPP.

[dualstow]

Jan 3: Nothing in Vanguard yet, but they're never the quickest. Maybe that's how they keep costs low.

[Reub]

Same here, dualstow.

[dualstow]

Same here, dualstow.

Vanguard doesn't even have December statements ready for download, yet, which is also unsurprising. Fidelity usually has them the first business day of the new month.