Q. I am 32 years old and make monthly contributions to Davis New York Venture. What’s your opinion of this fund?
–T.M., via the Internet
A. This respected fund hasn’t been much to write home about lately.
The $10 billion Davis New York Venture “A” (NYVTX) is down 11 percent over the past 12 months to rank in the lowest one-third of all large value funds. Its three-year annualized gain of three-quarters of a percent places it in the upper half of its peers.
One reason for recent weak performance is that Christopher Davis, who has run the fund since 1995, is patient and holds his larger stock positions quite a while.
He has a few more growth-oriented stocks than many other value funds do. This fund has also suffered a few mishaps with underachieving individual stocks such as Tyco International, which it sold earlier this year.
“This fund is a good core holding emphasizing patient value investing and you could pair with a growth fund,” said Russel Kinnel, director of fund analysis for the Morningstar Inc. research firm, who notes that its long-term performance has been quite good. “The last few years the Davis funds have hired a number of smart analysts, a positive sign.”
The strength of this group of funds has traditionally been its stock picking. Furthermore, the Davis families and the board of directors have large sums of their own money invested in the fund.
Davis New York Venture “A” requires a 4.75 percent “load” (sales charge) and a $1,000 minimum initial investment.
Q. I am a 24-year-old single dad paying child support. I have $9,000 in certificates of deposit, $1,500 in a savings account and no credit card debt. I earn $29,00 a year and max out my contributions to my 401(k) retirement plan. I’d like to buy a house in five years. Where should I start?
–D.P., via the Internet
A. Keep in mind insurance and property tax costs when figuring how much of a monthly payment you can make. There will also be closing costs to contend with.
While circumstances vary, the traditional rule of thumb for how much you can afford is 2 1/2 times your annual salary, said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc. in Bloomfield Hills, Mich.
“You’ll want to come up with a 20 percent down payment because anything less requires private mortgage insurance, which is expensive,” advised Capelli Dimitroff. “Save by using something very secure, such as a money-market fund or short-term CD, since you shouldn’t be in the stock market if you’re trying to meet a goal of five years or less.”
It is best to stay in a house at least two years to make it worthwhile in terms of selling costs, moving and sale preparation, she added. Total costs in the range of 8 percent or more come right off the top of your sale price, she said.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at [email protected].