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Why is ARVIX in a downtrend with 84% cash? Bets on precious metals or 1.17% fees chewing up assets or both? I have this fund and am at a loss to explain. Appreciate comments.
Yes, Scott is right. Eric Cinnamond's name has become synonymous with "value trap" manager. And he has been invested this way for years now. MFO has endorsed many good funds, but the endorsement on this manager turned out to be a loser over the last 4 1/2 years.
Hate to beat a dead horse, but this guy has been barking up the wrong tree with his investments. He has been over-weight in PM miners for years now. His inability to adapt or see that the market doesn't agree with his analysis is kind of Hussman-esq. Might he preserve capital in a down turn with all that cash? Sure, but how long do you give a manager to prove himself right? Personally, I got out of ARIVX a couple years ago because he was so over weight in mining stocks. Two years later, he still is.
MikeM, Cinammond sure hasn't been doing a very good job of preserving capital, even with all that cash. I know it hasn't been a downturn, but his fund is still down 4.97% YTD.
Eric Cinnamond did comparatively well in 2011, and served as good ballast for my personal portfolio. He lost his way and lagged dramatically....to the point where the common refrain of watching the performance for the "full market cycle" became a mocking cry.
Good lesson learned however. Don't fall in love with a fund or a manager, be watchful, and make sure you diversify within an allocation category to guard against a bad management call.
I think the Cinnamond ARIVX story offers two lessons: one is that a lot of seemingly great actively managed funds, especially if led by a star manager, can mean revert in a hurry; another is that it is really, really hard to time both the overall market and individual sectors, because that means getting a couple big macro calls right, and almost no one does that consistently.
Cinnamond did the latter brilliantly before and after 2008-9, but a couple home runs, even if they come at consecutive at bats, doesn't mean you're not going to strike out a lot when you always swing for the fences.
I'm increasingly thinking the way to go is team-managed funds that simply do old fashioned stock picking, are low cost and tax efficient, and are willing to be patient. Primecap and D&C are two examples. In the small cap space, it's harder to find examples, especially on the low-cost side.
For small caps I hold BRUSX and HUSIX. BRUSX fails my list of requirements in that it's high turnover, HUSIX because it's high cost and run by a star. I'm fond of BRUSX for its long-term performance and super-shareholder friendly management. HUSIX I may move into TDVFX, though I'd like to see TDVFX drop a bit more first.
Interesting thoughts. One thing I've decided for myself is on the thought of manager diversification. To me that is really no different than using an index fund, which I do.
I have 2 SCap funds also, GPGOX hopefully for management alpha, and the russell 2000 index. Same thought for LCaps. I have SEEDX and the S&P500. Simplifies things, reduces expenses and keeps multiple management from equilibrating each other's best and worst ideas - same as an index does.
Interesting thoughts. One thing I've decided for myself is on the thought of manager diversification. To me that is really no different than using an index fund, which I do.
I suppose that may be true depending on the holdings and philosophy of the individual teams. As an example, in my smallish value space in an IRA rollover I use VVPSX and SCMFX. Between the 2 funds they hold 65 names....much more concentrated than an index.
Comments
Hate to beat a dead horse, but this guy has been barking up the wrong tree with his investments. He has been over-weight in PM miners for years now. His inability to adapt or see that the market doesn't agree with his analysis is kind of Hussman-esq. Might he preserve capital in a down turn with all that cash? Sure, but how long do you give a manager to prove himself right? Personally, I got out of ARIVX a couple years ago because he was so over weight in mining stocks. Two years later, he still is.
Good lesson learned however. Don't fall in love with a fund or a manager, be watchful, and make sure you diversify within an allocation category to guard against a bad management call.
Cinnamond did the latter brilliantly before and after 2008-9, but a couple home runs, even if they come at consecutive at bats, doesn't mean you're not going to strike out a lot when you always swing for the fences.
I'm increasingly thinking the way to go is team-managed funds that simply do old fashioned stock picking, are low cost and tax efficient, and are willing to be patient. Primecap and D&C are two examples. In the small cap space, it's harder to find examples, especially on the low-cost side.
For small caps I hold BRUSX and HUSIX. BRUSX fails my list of requirements in that it's high turnover, HUSIX because it's high cost and run by a star. I'm fond of BRUSX for its long-term performance and super-shareholder friendly management. HUSIX I may move into TDVFX, though I'd like to see TDVFX drop a bit more first.
I have 2 SCap funds also, GPGOX hopefully for management alpha, and the russell 2000 index. Same thought for LCaps. I have SEEDX and the S&P500. Simplifies things, reduces expenses and keeps multiple management from equilibrating each other's best and worst ideas - same as an index does.
But I understand your point.