PERM vs. PRPFX - which is best?

[Tortoise]

FWIW, Tom, I too wanted to put my medium-term house savings in an HBPP. The thin trading volume on PERM made me too nervous, so I ended up just setting up my own 4x25.

KevinW made a good point that it's simplest just to consider your house savings part of your overall PP's cash allocation if it's less than 25% of your liquid assets. But my own opinion is that sometimes, there's more than just simplicity to consider. In my own case, I wanted my medium-term house savings to grow--to work for me--as I accumulate it over the next few years.

House savings held as cash for more than a couple of years will hardly grow at all, and in fact it will steadily shrink in purchasing power due to inflation.

[MediumTex]

PRPFX has been drifting sideways for 18 months now, which is the longest period of sideways movement in over a decade (including 2008-2009).

That's not good. 

The Swiss franc is obsolete.

The miners haven't been strong.

Silver is way off its highs.

Its lack of LT treasury exposure is really being felt.

I wonder if Cuggino understands these things.

[Tom]

Hm - a lot to think about.  Thanks everyone for all the input.  I had already made up my mind to avoid PERM before revisiting this thread due the lack of volume and the risk that it could close and find it liquidating.  That got re-affirmed here so I feel confident about that.

I was going to go with PRPFX - but what MediumTex just said makes me question that approach.  Unfortunately my house savings is more than my total HBPP total, which is for retirement so I can't just park it in cash.  I'm a bit nervous about dumping that much money into the HBPP since I will need to withdraw in a short period of time - not as simple as just selling a fund and it's a big step into gold at high prices (though I get just going all in for diversification - it's the fact that I may need to withdraw in a period of a few years that makes me nervous, wouldn't care if it were longer term).  Since my current HBPP is for retirement, I hold my treasuries and cash in roth and traditional iras.  For medium term, I wouldn't want to get hit with penalties for withdrawing, so the tax efficiency of it could suffer if I went with the traditional HBPP approach.  Selling a lot of gold at once and to get my cash back for a house also makes me worry about the tax situation on that.

Guess I need to mull it over even more.  One thing is sure, I'm gonna leave it in cash until at least end of January and think on it until all this fiscal cliff stuff is over - perhaps the markets will drop and offer a good buying opportunity.

[Peak2Trough]

Interesting tidbid from this Schwab article:

While there's no guarantee that any ETF (or any other investment, for that matter) will continue operating indefinitely, a good rule of thumb is to stick with ETFs with more than $100 million in assets. The vast majority (89%) of ETFs that have closed had less than $20 million in assets. Bigger ETFs do close from time to time, but the only ETFs with more than $100 million in assets that closed have done so either to re-launch as new funds or for regulatory reasons. Investing in larger ETFs means that your fund is more likely to survive.

Total assets in PERM:  14 million. 

[Pointedstick]

Given that I have some money in PERM, what would happen to it if PERM were hypothetically to close? Would I just get a check in the mail? Would the sum still be subject to capital gains taxes?

[annieB]

Aren't trading volumes reported in lots of 100,so the 2108 noted above is actually 210,800 shares?
Not sure...

[clacy]

Annie, I'm pretty sure it's actual volume, but I could be wrong.  This thing looks like it might not make it, IMO.

[Gofish]

Every time I read PERM it conjures images of curlers and hairspray.

I used PRPFX until I got more comfortable with the HBPP and now I'm all in (gold bullion, long bonds through brokerage, cash in bank/mm/safe in basement, and a dozen Blue Chip company stocks with a little S&P 500 ETF for rebalancing).  My annual ER is approximately ~0.05 BP and there is basically total transparency in my investments as well as sound leadership. 

PERM if you have to, but nothing compares to the real thing.

Sounds like if you have all that going on you don't have to worry too much about your investments. I should think it would be difficult to rebalance your bullion in any sizeable amount, but maybe that is what your SPY is for. Again, if you use SPY to rebalance your bullion you are probably in a different league.

[GT]

Hi All

Perm is going on a year... what do you guys think? Is it safe to purchase yet?

If you have the Fund, how did the taxes work out?

I have an e trade account and like the thought of just purchasing one ETF for a small taxable account (2k to 4k at most with small adds monthly).

[Ad Orientem]

I have been ill and have spent very little time on the internet for over a month but I too would be interested if anyone has some observations on PERM's performance.

[sophie]

BTW, PRPFX is up 7% YTD.

Take a look at the past year's returns.  The YTD number is misleading, because the fund happened to be down quite a bit at the end of the year.

However...I go with MT's analysis on this one.  You're paying someone a pretty hefty expense ratio to save the trouble of buying 4 ETFs and rebalancing every couple of years.  Compared to most "slice & dice" portfolios, the traditional PP is not so difficult to implement.  I do own a chunk of 90% PRPFX/10% EDV mainly for historical reasons - it's how I got introduced to the PP - but I'm debating between keeping it as a separate intermediate-savings fund, and just selling it and sticking with a pure 4x25 PP.

[GT]

Hey Sophie,

Perm trades for free at e trade and I wanted to make small contributions each month.

If I set up a 4x25 using eft's i would have to pay a 9.00 trade fee each time i wanted to add the planned 50 bucks a month.

I was thinking of using perm as a super savings account. I got the ides from reading Pointedsticks post in a different thread.

The trade fees are what I was really trying to get around by using perm but I did not want to invest until you guys give it your blessing... I am new to the HBPP concept so I really don't know if it's a good fund or not...

[Pointedstick]

I actually sold all my PERM for a large purchase that I didn't end up making, and it seemed silly to re-buy what I just sold, so I ended up putting the cash in a 4x25 PP. But while I held that PERM, I'll say that it performed exactly as I expected it to.

That said, if the only thing that's holding you back from using a 4x25 PP are the fees, there are many brokerages such as Vanguard, TDAmeritrade, and Schwab that have commission-free ETFs for everything you need but gold. Although it's true that you really can't beat the convenience of just buying shares of a single commission-free ETF like PERM.

[sophie]

Perm trades for free at e trade and I wanted to make small contributions each month.

If I set up a 4x25 using eft's i would have to pay a 9.00 trade fee each time i wanted to add the planned 50 bucks a month.

Not a bad way to get started, if that works better for you.  E-trade doesn't sound like such a good deal for you though.  If you don't mind setting up 4 automated contributions at, say, Vanguard, you could accomplish the same thing for 40 fewer basis points and and no transaction costs (not 100% sure if there is a no-fee gold fund though). 

If you have small amounts to invest, an alternative is to put the money into a cash account, wait for it to accumulate and then buy the other assets periodically.

[Reub]

I have been ill and have spent very little time on the internet for over a month but I too would be interested if anyone has some observations on PERM's performance.

I hope that you're feeling better these days!

[GT]

If I set up a 4x25 PP at Vanguard, I would get 25 trades for $7 to purchase the gold ETF. After the 25 trades the price goes up to $20 per trade. The Vanguard ETF's do not have a trade fee.... I guess I could over purshase gold on my first $2k to 3k portfolio start up, up to the 35% band, and then add the monthly $50 amount to the Vanguard ETF's to balance out the portfolio. That would get around the trade fees but increase the risk.  .....Might be more trouble than it's worth but I like the idea of a super savings account.

[Dieter]

I have PERM in a small Roth IRA. Does what I expect.

[JonathanH]

After all this Cyprus stuff, PERM is up and PRPFX is down! Perhaps a correlation with long term treasuries going up at this time as well?

[clacy]

After all this Cyprus stuff, PERM is up and PRPFX is down! Perhaps a correlation with long term treasuries going up at this time as well?

I think you're seeing the bears and the inflationists have thrown in the towel and accepted that QE is happening.  Therefore money has rotated into stocks, and out of gold, PRPFX, and cash in recent months.

[jediclampet]

After all this Cyprus stuff, PERM is up and PRPFX is down! Perhaps a correlation with long term treasuries going up at this time as well?

Yes, and PRPFX's 10% Swiss Franc assets are not helping.

[smurff]

After all this Cyprus stuff, PERM is up and PRPFX is down! Perhaps a correlation with long term treasuries going up at this time as well?

Yes, and PRPFX's 10% Swiss Franc assets are not helping.

Swiss francs that are now tied to the Euro.

[Tom]

Some may recall me debating endlessly what to do with my medium term savings - PERM, PRPFX or 4x25 PP.  I went with a 4x25 PP.  I put the money in just a few weeks ago.  So far I'm up and can't complain!

I feel good about the decision overall and would recommend it.  I need to stop checking it so often, but you really can see the asset classes working their magic as a whole from day to day.  I feel good knowing I have some institutional diversification and not plunking it all in the hands of one fund/set of managers.  It's also easy to do.  I agree with others that said if you're making small monthly contributions and don;t want to pay transaction fees, just dump it into cash until it accumulates, then buy the other assets.  Could be a good way of buying other assets when they're low too.