October 2016 IssueLong scroll reading

Briefly Noted . . .

By David Snowball

Herewith are notes about the month’s announced changes in the fund industry: closings, openings, name changes, liquidations and more.

Thanks, as ever, to the anonymous and indefatigable Shadow for his yeoman’s work in keeping me, and the members of MFO’s discussion board, current on a swarm of comings and goings.

Effective mid-January, 2017, the AB Wealth Appreciation Strategy (AWAAX) and AB Balanced Wealth Strategy (ABWAX) will no longer invest in other AllianceBernstein funds. Instead, they’ll invest directly in equities. Color me “confused.” The funds currently seem to hold shares of just one AB fund (Multi-manager Alternative Strategies) along with a ton of individual equities.

Right around the end of October or beginning of November, shareholders (uhhh … traders and speculators) owning a dozen different Rydex funds will see a collapse in the number of shares they own as Rydex institutes a reverse share split. The funds affected and magnitude of the reverse split are below.

  Split Ratio (New to Old Shares)
Commodities Strategy Fund 1:12
Emerging Markets Bond Strategy Fund 1:4
Energy Fund 1:4
Europe 1.25x Strategy Fund 1:6
Inverse Emerging Markets 2x Strategy Fund 1:6
Inverse High Yield Strategy Fund 1:4
Inverse NASDAQ-100® Strategy Fund 1:4
Inverse NASDAQ-100® 2x Strategy Fund 1:6
Inverse S&P 500® Strategy Fund 1:6
Inverse S&P 500® 2x Strategy Fund 1:4
Japan 2x Strategy Fund 1:4
Inverse Russell 2000® 2x Strategy Fund and 1:4
Weakening Dollar 2x Strategy Fund 1:6

The Board of Directors of iShares, sensing that they were missing the party, then authorized their own set of reverse splits to take effect on October 28 (with the note that the new split-adjusted shares begin trading on Halloween):

  Ticker Split Ratio
iShares Mortgage Real Estate Capped ETF REM 1 for 4
iShares MSCI Global Gold Miners ETF RING 1 for 2
iShares MSCI Global Metals & Mining Producers ETF PICK 1 for 2
iShares MSCI Italy Capped ETF EWI 1 for 2
iShares MSCI Malaysia ETF EWM 1 for 4
iShares MSCI Russia Capped ETF ERUS 1 for 2
iShares MSCI United Kingdom ETF EWU 1 for 2

The folks at Direxion decided to go a different route. Rather than merely renaming funds, they’d also tweak the funds’ leverage ratios then rename them:  

Current Fund Name New Fund Name
Direxion Monthly 25+ Year Treasury Bull 1.2X Fund Direxion Monthly 25+ Year Treasury Bull 1.35X Fund
Direxion Monthly 25+ Year Treasury Bear 1X Fund Direxion Monthly 25+ Year Treasury Bear 1.35X Fund


Frontier Silk Invest New Horizons Fund (FNHSX) reopened to new investments in late September. Before the party gets entirely out of hand, I’ll note that the fund launched in late May, closed in late August, underwent some sort of internal discussion about the adviser’s contract, then reopened in late September. Investors who have stuck with the fund through thick and thin (i.e., since May 27) are down 6% while investors in the average E.M. fund are up about 12%.

Effective September 30, 2016, the redemption fee for Gavekal KL Allocation Fund (GAVAX/GAVIX) will be removed.

CLOSINGS (and related inconveniences)

As of the close of business on October 24, 2016, American Century Equity Income Fund (TWEIX) will be generally closed to new investors other than those who invest directly with American Century or through “certain financial intermediaries.” The fund is worth a close look: $11.5 billion, five stars, with good performance in up-markets and excellent performance in down-markets.

Hatteras Alpha Hedged Strategies Fund (ALPHX) is liquidating its No Load share class on October 14, 2016. Current No Load investors will be moved into “A” shares, but will be able to buy load-waived shares. New investors will need to pay a sales load.

Loomis Sayles Growth Fund (LGRNX) closes to new investors …

In order to preserve the investment team’s ability to efficiently manage future cash flow, Loomis, Sayles & Company, L.P. (“Loomis Sayles”), in consultation with NGAM Distribution, L.P., has concluded that it is in the best interest of current shareholders to close the Loomis Sayles Growth Fund (the “Fund”) to new investors effective at the close of business March 31, 2017.

From November 1, 2016 through March 31, 2017, new investors coming through established intermediary programs or model relationships will be able to invest in the Fund. However, after March 31, 2017, the Fund will remain open only to advisor discretionary programs/platforms and pre-existing end investors.

Employee benefit plans may be permitted to invest in the Fund if they are approved by Loomis Sayles prior to November 1, 2016, and if the Fund is added as an investment option or funded by May 1, 2017.

Does that make more sense to you than it does to us? The timing of the decision seems to reflect the industry’s profound anxiety about turning away new money or disappointing the advisory community. It’s a $4.5 billion, five-star fund that’s decided to telegraph its decision to close six months in advance. Sort of.

On September 29, 2016, Wasatch International Opportunities Fund (WAIOX) closed to new purchases, except for existing shareholders and purchases by new shareholders purchasing directly from Wasatch Funds. I tried contacting Wasatch to ask about whether the closure reflected, in part, caution in the aftermath of Laura Geritz’s departure. They never responded, which makes me (or them) 0-3 in recent years.


Effective October 1, 2016, AMG Managers Bond Fund (MGFIX) changes names to become AMG Managers Loomis Sayles Bond Fund. Given that Loomis Sayles already sub-advises the fund, the change seems cosmetic.

Invesco International Total Return Fund (AUBAX) becomes Invesco World Bond on December 1, 2016. At that point, its investment strategies, restrictions and dividend distribution policies all change.

In mid-September, Miller/Howard resigned from the management of Miller/Howard Infrastructure Fund (FLRUX). Aaaaawkward! In parsimonious response, the Board simply removed the words “Miller/Howard,” leaving us with Infrastructure Fund (FLRUX). It’s now managed by a team from Meeder Investment Management.

Effective December 28, 2016, the billion-dollar Oppenheimer International Value Fund (QIVAX) will change its name to Oppenheimer International Equity Fund.

Effective September 30, 2016, RBC BlueBay Total Return Credit Fund (RBTRX) became RBC BlueBay Diversified Credit Fund

TCW Concentrated Value Fund (TGFVX) changed its name to TCW Focused Equities Fund on September 30, 2016.


AB Tax-Managed Conservative Wealth Strategy (ACIAX) will be liquidated on January 30, 2017. It remains open only through a few distribution channels and is waiving its sales charges for them.

The Aberdeen board just reminded us that something bad is going to happen to Aberdeen Global Natural Resources Fund. Either it’s going to be merged out of existence and into Aberdeen Global Equity (GLLAX) or, failing shareholder approval for that, it’s going to be liquidated. But “[t]he Reorganization or Liquidation of the Fund may be terminated and/or abandoned at any time before the closing date by action of the Board of Trustees of the Trust.” Stay tuned.

All Terrain Opportunity Fund (TERIX) … uhh, let’s see. They’re liquidating the fund’s “I” shares which used to be the fund’s “C” shares. They had been planning on liquidating the fund’s “A” shares but now they’re going to keep “A” but redesignate them as “Institutional.” But “institutional” in the “retail” sense of the word, since they carry a $2,500 minimum.

ASTON/Cornerstone Large Cap Value Fund (RVALX) will liquidate on October 28, 2016, a victim of tepid performance and minuscule assets.

BRC Large Cap Focus Equity Fund (BRCIX) will liquidate on October 20, 2016, because “it no longer is economically feasible to continue managing the Large Cap Fund because of [its] small size, and the difficulty encountered in attracting and maintaining assets.” As of July 2015, the fund had trounced the S&P 500 and its peers since inception, but it’s trailed its peers by 900 bps since then.  BRC Mid Cap Diversified Equity Fund (BRCMX) was liquidated in September which you might not have noticed because the fund never launched in the first place.

Brown Advisory Value Equity Fund (BIAVX) will merge into Brown Advisory Flexible Equity Fund (BIAFX) on or about December 2, 2016. That’s a pretty clear win for the Value Equity investors; they’re moving into a vaguely comparable fund with a greater asset base, lower expenses and better performance.

Century Growth Opportunities Fund (CGOIX) liquidates on October 21, 2016 after five quietly undistinguished years of operation.

CrowdInvest Wisdom ETF (WIZE) sought to capitalize on a “wisdom of the crowd” investing theory. That was, to put it gently, unwise.  The decision to liquidate was made “after careful consideration, at the recommendation of … the Fund’s investment adviser.” Apparently the decision to launch did not benefit from equal care, since the fund was terminated after five months of operation.

Davlin Philanthropic Fund (DPFDX) disappeared on September 30, 2016. The fund performed brilliantly in 2008 but had pretty consistently trailed its all-cap value periods over the succeeding seven years.

Direxion Daily FTSE Developed Markets Bull 1.25X Shares, Direxion Daily FTSE Emerging Markets Bull 1.25X Shares and the Direxion S&P 500® Volatility Response Shares are all liquidating, but I can’t quite tell when. 

Dunham Alternative Strategy Fund (DNASX) will be liquidated on or about October 28, 2016. It’s a managed futures fund and I know those aren’t “normal” investments, but still at 4800% turnover is eye-catching. 4800% turnover and a net loss since inception even more so.

ETFS Diversified-Factor Developed Europe Index Fund (SBEU) and ETFS Diversified-Factor U.S. Large Cap Index Fund (SBUS) will find little to be thankful for this Thanksgiving. They’ve been in operation about a year and a half.

The Board of Trustees of Epiphany has determined that it is in the best interests of the Fund and its shareholders to close the Epiphany FFV Latin America Fund (ELAAX) effective November 29, 2016.

Effective September 30, the Galapagos Partners Select Fund (GPSIX) has closed and will liquidate on November 10, 2016. The fund isn’t yet two years old, is long-only equity, has $3 million and Morningstar reports a 1240% annual turnover. Curious.

The name of the Giralda Fund (GDAMX – G. dam?) has changed to AlphaCore Absolute Fund and its Manager Class shares are now Institutional Class shares. That wouldn’t normally land the fund in the dustbin of history, except for the fact that the management team was just replaced (Jonathan Belanger and Richard Pfister of AlphaCore are in, effective October 3, 2016), the fund has under a million in assets despite low fees and a strong, long-term record. At the same time, other parts of the Giralda empire are crumbling:

Giralda Risk-Managed Growth Fund (GRGIX) liquidates on October 21, 2016. That’s after two years of operation. It’s a very volatile long/short fund which still has vastly above-average returns since inception.

Gripman Absolute Value Balanced Fund (GAVBX) will be terminated, liquidated and dissolved on October 17, 2016. The adviser has chosen to shutter the fund after less than one year of operation.

Investment Partners Absolute Return Fund (IPOFX) liquidates on October 12, 2016. That “absolute return” part has proven elusive; the fund has lost money in four of its five full calendar years of operation.

Invesco Strategic Income Fund (SIZAX) and Invesco Unconstrained Bond Fund (IUBAX) will both be liquidated on October 28, 2016. Again, both just passed their second anniversaries, both had very solid 2015s, both lagged in Q1 2016 and now both are slated for elimination.

A bunch of Morgan Stanley Active Assets income funds were liquidated in September. Those included California Tax-Free Trust, Government Securities Trust, Money Trust and Tax-Free Trust.

Lee Financial Tactical Fund (LOVIX) liquidated on September 29, 2016. The “Financial” in the name referred to the name of the advisor, not to a sector in which they invested. Pretty solid little fund, $44 million, top 10% of the past five years although in a very troubled peer group.

Loomis Sayles Emerging Markets Opportunities Fund (LEOAX) submerges one last time, on November 10, 2016. The fund has just over two years of operation, during which time it’s posted slightly above average returns driven by vastly below-average risk. Investors yawned and avoided the fund in droves.

MFS Institutional Large Cap Value Fund (ILVAX) will shut down on November 29, 2016. This is a five-star fund with managers who’ve posted top 10% returns over the past 3, 5, and 10-year periods. It’s drawn only $51 million in assets, so …

At the recommendation of RiskX Investments, RX MAR Tactical Moderate Growth Fund (MGZAX) and RX MAR Tactical Growth Fund (MGMAX) will be liquidated on October 28, 2016, just short of their third anniversaries. Both funds were generally competitive with their peers up until July 2016, at which point both missed major market moves.

Effective immediately, Snow Capital Inflation Advantaged Equities Fund, Snow Capital Mid Cap Value Fund and Snow Capital Hedged Equity Fund were liquidated on September 20, 2016. 

Stewart Capital Mid Cap Fund (SCMFX) will close and redeem all outstanding shares on or before December 31, 2016. It’s not entirely clear when. Over the fund’s first five years of existence, it led its peers by about 350 bps/year but over the last five it has trailed them by about 200.

Stone Ridge Reinsurance Risk Premium Fund (SREMX) will be absorbed by Stone Ridge High Yield Reinsurance Risk Premium Fund (SHRIX) on or about December 5, 2016.

The Board of Trustees of Transamerica Funds has approved the liquidation of Transamerica Global Bond (ATGBX) effective on or about December 2, 2016. The fund is just two years old, had a terrible 2015 and a great 2016. It attracted $50 million in assets which apparently isn’t enough to warrant a third year.

Also on December 2, the one-star Transamerica Income & Growth (TAIGX) fund, which only owns stocks, will be acquired by newer, smaller Transamerica Strategic High Income (TASHX) which owns very few stocks.

TCW SMID Cap Growth Fund (TGMDX) will be liquidated on or about October 27, 2016. The fund has trailed its peers, typically by 500-700 bps, in five of its six years of operation.

VanEck Vectors Gulf States Index ETF (MES) and VanEck Vectors Indonesia Small-Cap ETF (IDXJ) will be winding down on or about October 14, 2016. They have $12 million in assets between them. The former returned 1% annually over the past three years; the latter books an annualized loss of 11%.

The Victory Select Fund (VFSAX), which saw durn few victories in its two years of operation, will liquidate on October 28, 2016

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About David Snowball

David Snowball, PhD (Massachusetts). Cofounder, lead writer. David is a Professor of Communication Studies at Augustana College, Rock Island, Illinois, a nationally-recognized college of the liberal arts and sciences, founded in 1860. For a quarter century, David competed in academic debate and coached college debate teams to over 1500 individual victories and 50 tournament championships. When he retired from that research-intensive endeavor, his interest turned to researching fund investing and fund communication strategies. He served as the closing moderator of Brill’s Mutual Funds Interactive (a Forbes “Best of the Web” site), was the Senior Fund Analyst at FundAlarm and author of over 120 fund profiles. David lives in Davenport, Iowa, and spends an amazing amount of time ferrying his son, Will, to baseball tryouts, baseball lessons, baseball practices, baseball games … and social gatherings with young ladies who seem unnervingly interested in him.