June 2017 IssueLong scroll reading

Funds in Registration

By David Snowball

Before fund companies are allowed to offer mutual funds to the public, they need to submit them to SEC review. The SEC has 75 days to ponder the fate of the newly-registered funds before allowing them to proceed. The registration period is also called “the quiet period” because fund companies are not allowed to talk about their funds in registration. Happily, we are! The once-steady flow of 20-30 new funds a month has dwindled to a half dozen, many of which are simply converted versions of hedge funds or separately managed accounts. The former are more common this month, with five hedge funds morphing into two new mutual funds, including an unprecedented four-for-one merger and conversion offered up by Driehaus.

CBOE Vest S&P 500® Dividend Aristocrats Target Income Fund

CBOE Vest S&P 500 Dividend Aristocrats Target Income Fund will seek generate price returns that are approximately equal to the price returns of the S&P 500 and income that is approximately 4% over the annual dividend yield of the S&P 500 . The plan is to buy 30 Dividend Aristocrat stocks and write covered calls on each of them to generate income. The fund will be managed by Karan Sood and Jonathan Hale. The initial expense ratio for “A” shares will be 1.20%, which a 5.75% sales load. The minimum initial investment will be $1,000.

Counterpoint Long-Short Equity Fund

Counterpoint Long-Short Equity Fund will seek capital appreciation and preservation. The plan is to invest, long and short, in an all-cap portfolio which might include international stocks. The portfolio is constructed using computer models and such; the adviser assures us that the “models are based on proprietary research related to economic indicators found in peer-reviewed academic journals.” No idea what that means or why it’s reassuring; the single most common complain about anomalies found in peer-reviewed publications is that they disappear before you can profit from them. The fund will be managed by Joseph Engelberg, Ph.D., Chief Research Officer of for Counterpoint, and Michael Krause. The initial expense ratio has not been disclosed. The minimum initial investment will be $5,000.

Driehaus Small Cap Growth Fund

Driehaus Small Cap Growth Fund will seek to maximize capital appreciation. The plan is to build a domestic small cap growth portfolio and to “frequently and actively trade” it. The discipline is a mash of fundamental, macro and behavioral factors. In an unprecedented development, the new fund is also the mash-up for four (4!) Dreihaus hedge funds: Driehaus Institutional Small Cap, L.P., Driehaus Small Cap Investors, L.P., Driehaus Institutional Small Cap Recovery Fund, L.P. and Driehaus Small Cap Recovery Fund, L.P. All, we’re reassured, had identical portfolios. At same point the prospectus will disclose their performance; for now, that space is blank.The fund will be managed by Jeffrey James, assisted by Michael Buck. Together they also managed the four hedge funds. The initial expense ratio has not been disclosed, though we know there will be a 2% redemption fee. The minimum initial investment will be $10,000.

Gotham Short Strategies Fund

Gotham Short Strategies Fund will seek long-term capital appreciation and to provide positive returns in down markets. The plan is to construct an all-cap US equity portfolio that typically is 100% long and 150% short.  The fund represents the conversion of a Gotham hedge fund, Gotham Short Strategies (Master), LP., though the performance data on that partnership is not yet available. The fund will be managed by Messrs. Greenblatt and Goldstein, who’ve run the L.P. since 2008. The initial expense ratio will be 1.50%. The minimum initial investment will be the usual $25,000.

T. Rowe Price International Bond Fund (USD Hedged)

T. Rowe Price International Bond Fund (USD Hedged) will seek current income and capital appreciation. The plan is to purchases bonds issued in foreign currencies, which may include bonds issued in emerging markets currencies. Forward currency exchange contracts are used to hedge the fund’s foreign currency exposure back to the U.S. dollar.  The goal is to make sure returns are driven by security selection, rather than by the vagaries of the currency market. The fund will be managed by Arif Husain and Kenneth Orchard . The guys also manage T. Rowe Price International Bond which has, to be blunt, sucked since they took over. The initial expense ratio is “TBD.” The minimum initial investment will be $2,500.

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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.