I’ve lost track of many of the funds that we profiled back in the FundAlarm days. This month one surfaced, Capital Advisors Growth Fund (CIAOX), and it was awfully nice to see that (a) they’re still providing exactly what they promised long ago – cautious equity exposure with no glitz – and (b) we were right, nine years ago, in assessing it as an exceptionally solid citizen for equity investors interested in sleeping well at night.
Briefly the number of mutual funds liquidating matched the number of ETFs liquidating, then September 29th came around and a bunch of fund advisers officially admitted that they’d reached the end of the road. About 40 funds became historical footnotes by month’s end.
Frontier Netols Small Cap Value Fund (FNSVX) was set to merge into Frontier Phocas Small Cap Value Fund, then the board decided they should check with the Frontier Phocas shareholders first. As a result, the execution – scheduled for October 27, 2017 – has been indefinitely postponed.
Briefly Noted . . .
American Beacon ARK Transformational Innovation Fund (ADNPX), which launched in January 2017, has formally added Bitcoins to its investable universe. Apparently it already invested in the Bitcoin Investment Trust which, conceivably, fell in a grey area for permissible investments. In any case “The Fund has contributed its holdings in the Bitcoin Investment Trust (accounting for less than 10% of the value of its total assets) to a wholly owned subsidiary organized under Delaware law (the “Delaware Subsidiary”). In the future, the Fund will seek to gain additional exposure to the Bitcoin Investment Trust by investing up to 25% of the value of its total assets (less the percentage of that value invested in the Delaware Subsidiary) in a wholly owned subsidiary organized under the laws of the Cayman Islands.” No idea of why it’s only Bitcoin (our colleague, Sam Lee, finds Ethereum to be a more interesting vehicle and there are lots of other blockchain-based crypocurrencies on the loose).
The three AMG SouthernSun Funds have added REITs to the list of securities in which they might invest.
SMALL WINS FOR INVESTORS
Capital Advisors Growth Fund (CIAOX) has eliminated its 12(b)1 fee and has lowered its expense cap from 1.25% to 1.00%. I like both the fund and its ticker symbol (our eldest cat is Ciao, when she was feral we tamed her with plates of Kitty Chow and she heard the call “Kitty Chow! Chow!” so much that she took it to be her name). Back in Ye Olde FundAlarme days, in mid-2008, we profiled CIAOX as an excellent choice for stunned equity investors. The fund finished 2008 in the top 2% of its peer group and we noted:
Despite its excellence and prudence, it has a minute asset base. Why so? CIAOX remains true to its origins… the fund was launched as a service offering; it was a way for friends, employees or relatives of Capital Advisor’s affluent investors to access Capital’s expertise even though they couldn’t meet the separate account minimum. As a result, the firm has no marketing for the fund. Perhaps as a result, assets and expenses before waivers have been extremely stable over the past five years.
[For investors shaken by the market collapse] the alternative to running and hiding is to seek out folks who are intensely risk-aware but also committed to balancing that risk with the prospect of returns. And it makes sense, too, to seek out folks who have actually managed to accomplish those goals rather than just talking about them as the marketing ploy du jour. Capital Advisors Growth has managed to accomplish just that. Investors looking to creep back into the market might reasonably seek them out.
Over the course of the entire market cycle, from its start 10 years ago, through the collapse and subsequent bull market, CIAOX has done exactly what we would have expected: entirely reasonable returns, very modest risk and very stable assets.
|Annual Return||MAX Drawdown||Std Deviation||Downside Dev||Ulcer Index||Bear market deviation||Bear Rating|
|Large-Cap Core Average||6.4||-49.4||15.5||10.9||16.0||10.6||5|
The $50 million fund’s new expense ratio is 1.03% with an odd redemption fee applicable only to shares held for one week or less. Such idiosyncratic restrictions are usually a sign that someone tried misusing the fund (akin to the local “escape room” that now requires visitors to sign a promise to remain clothed) and the adviser imposed a gate.
Goldman Sachs Small Cap Value Fund (GSSMX) has reopened to new investors, but “for approximately three months” according to their SEC filing.
Hmmm … Snow Capital Opportunity Fund (SNOAX) and Snow Capital Small Cap Value Fund (SNWAX) each reduced their management fee by 20 bps, effective October 1, 2017.
CLOSINGS (and related inconveniences)
Effective October 1, 2017, Champlain Mid Cap (CIPMX) will be closed to new investors.
Driehaus Micro Cap Growth Fund (DMCRX) soft-closed on September 29, 2017.
In what’s an increasingly common move for asset-challenged funds, KKM Enhanced U.S. Equity Fund has closed its “A” share class (KKMAX), kept over the institutional shares (KKMIX) and dropped its management fee from 0.85% to 0.50%.
Neuberger Berman Greater China Equity Fund (NCEAX) closed to new investors on September 20, 2017.
Effective on October 13, 2017, the Adviser Share Class of all of the Payden funds will be closed.
OLD WINE, NEW BOTTLES
On November 15, 2017, Aberdeen Equity Long-Short Fund will become Aberdeen Focused U.S. Equity. The plan is for it to transition from a long/short fund to an all-cap US equity fund with 20-30 names in the portfolio. As always, these sorts of transitions trigger lots of short-term portfolio turnover and higher than average tax bills.
Alpha Risk Hedged Dividend Equity Fund (CANTX) has become Alpha Risk Tactical Rotation Fund.
“Effective as of the Effective Date” (I love lawyers), American Beacon Holland Large Cap Growth Fund becomes American Beacon Bridgeway Large Cap Growth II Fund. The effective date in question was September 27, 2017. That’s all pursuant to the decision by the folks at Holland Capital Management to get out of asset management and shutter their business.
Effective October 1, 2017, AMG Managers Fairpointe Focused Equity Fund (AFPTX, formerly ASTON/Fairpointe Focused Equity Fund) became AMG Managers Fairpointe ESG Equity Fund. Mary L. Pierson and Brian M. Washkowiak will serve as portfolio managers of the Fund though, oddly enough, “Ms. Pierson, Mr. Washkowiak and Thyra E. Zerhusen will be jointly and primarily responsible for the day-to-day management of the Fund.”
Kaizen Hedged Premium Spreads Fund (KZSIX) becomes Raise Core Tactical Fund on November 17, 2017. “Kaizen” is the Japanese term for “continuous improvement.”
Jeffrey Ptak shared the answer, “Dinosaur Financial Group Holdings has acquired a minority stake in New York-based Lebenthal Lisanti Capital Growth LLC.“
Thank you, sir!
I’m still processing this one. Lebenthal Lisanti Small Cap Growth Fund has become Dinosaur Lisanti Small Cap Growth Fund (ASCGX) for no reason I can discern. There’s been some turmoil at Lebenthal Lisanti, the adviser, with “change of control” announcements coming and going. Pursuant to the latest, the fund has changed its name. Why Dinosaur? No clue (yet). There’s no “Dinosaur” elsewhere in the documents, so I can only guess that it’s a bit of bitter sarcasm from manager Mary Lisanti who’s been managing mutual funds since 1996.
Around Thanksgiving, Kempner Multi-Cap Deep Value Equity Fund (FAKDX) becomes Kempner Multi-Cap Deep Value Fund, thereby eliminating the need to keep 80% of the portfolio in equities.
Effective November 1, 2017, RBC BlueBay Emerging Market Select Bond Fund (RESAX) will be renamed RBC BlueBay Emerging Market Debt Fund and RBC BlueBay Global High Yield Bond Fund (RHYAX) will become RBC BlueBay High Yield Bond Fund.
Plans to have the Sentinel funds be adopted by Touchstone are proceeding apace. Absent last minute surprises, the change is expected to be completed October 27, 2017. A couple of the Sentinel funds have been consistently solid (and left behind by Morningstar); in recognition of that, we’ll offer a profile of at least one in our November issue.
On October 31, 2017, Wasatch Large Cap Value Fund (FMIEX) becomes Wasatch Global Value Fund. The new name signals two changes: from domestic to global and from large cap to all-cap. Normally 40% of the portfolio will be international but in the extreme, up to 50% might be in the emerging markets. Morningstar has decided to jump the gun; their site has changed to Global while Wasatch legally remains Large Cap.
OFF TO THE DUSTBIN OF HISTORY
AI International Fund (IMSSX) and AI Large Cap Growth Fund (LGNIX) will both liquidate on October 19, 2017. Their board urges them to be prompt in their unwinding.
Alger Mid Cap Focus Fund (SPEAX) will liquidate on or about October 25, 2017. Sad summary: 10 years, $10 million, bottom tenth.
AMG Systematic Large Cap Value Fund (MSYAX) is expected to liquidate on or about October 31, 2017.
Baird LargeCap Fund (BHGSX) seems to be on the path to extinction, but we’re not sure of that yet. For now, Baird terminated the fund’s sub-adviser and closed it to new purchases. The board will decide in November whether to liquidate the fund, merge the fund or do something else. The fund’s been sort of a study in mediocrity, with a 17 year history and $42 million in assets, which doesn’t really cry out “save me!”
Catalyst/Princeton Unconstrained Hedged Income Fund (HIFAX) has closed, and will dissolve and liquidate on October 27, 2017. One sign of its distress:
Destra Focused Equity Fund has closed and will liquidate by October 31, 2017.
Direxion Indexed Managed Futures Strategy Fund (DMXAX) will pursue “an orderly liquidation,” set for October 27, 2017.
Shareholders of Dreyfus Small Cap Equity Fund (DSEAX) are being asked to agree on merging their fund into Dreyfus/The Boston Company Small Cap Value Fund (RUDAX). Meanwhile, Dreyfus MLP Fund (DMFAX) is being liquidated on or about November 15, 2017. DMFAX is small and has produced index-like returns over its 30 months of existence, which is to say it’s lost a lot of money for its shareholders.
The Fidelity Multi-Manager Target Date Funds are expected (expected by who?) to liquidate on or about December 8, 2017.
Hatteras Disciplined Opportunity Fund (HDOIX) will “return the Fund’s investor capital … to the Fund’s shareholders,” a particularly delicate phrase most commonly associated with hedge fund closures, on October 30, 2017. HDOIX is actually one of the top performing option-strategy funds whose three-year average return is more than double its average peer’s. Presumably the adviser found the $54 million asset base to be financially unsustainable.
On or about October 13, 2017, Global X Junior MLP ETF (MLPJ), Global X Permanent ETF (PERM), Global X Guru International Index ETF (GURI), Global X Guru Activist Index ETF (ACTX), Global X FTSE Andean 40 ETF (AND), Global X Brazil Mid Cap ETF (BRAZ) and Global X Brazil Consumer ETF (BRAQ) will liquidate.
JPMorgan Diversified Real Return Fund (JRNAX) will become an unreal fund around December 8, 2017.
JPMorgan International Opportunities Fund will liquidate and dissolve (may I watch?) on October 2, 2017.
Manning & Napier Emerging Markets Series (MNEMX) has closed and will soon liquidate.
MassMutual Premier Value Fund (MCEAX) will be dissolved on March 23, 2018.
MassMutual Select Large Cap Value Fund (MMLAX) will merge into the MassMutual Select Diversified Value Fund (MDVYX) sometime in January 2018.
Mirae Asset Asia Great Consumer Fund (MCGEX) will merge into Mirae Asset Asia Fund (MALAX), “later this year.”
ProShares liquidated a slew of ETFs in September. Those were ProShares Short S&P Regional Banking, Ultra S&P Regional Banking, Ultra Oil & Gas Exploration & Production, UltraShort Oil & Gas Exploration & Production,Ultra MSCI Mexico Capped IMI, UltraShort MSCI Mexico Capped IMI, Ultra Junior Miners, UltraShort TIPS, UltraShort 3-7 Year Treasury, German Sovereign/Sub-Sovereign, USD Covered Bond, Hedged FTSE Europe and Hedged FTSE Japan ETFs.
Roosevelt Multi-Cap Fund (BULLX, originally the Bull Moose Growth Fund and briefly the Abacus Bull Moose Growth Fund) is no longer accepting purchase orders for its shares and it will close effective November 15, 2017.
SSGA Enhanced Small Cap Fund (SSESX) will be liquidated and terminated on or about November 20, 2017
Tactical Asset Allocation Fund (GVTAX) ceased to allocate anything on or about September 28, 2017.
TFS Market Neutral Fund (TFSMX), TFS Small Cap Fund (TFSSX) and TFS Hedged Futures Fund have terminated the public offering of their shares and will discontinue each Fund’s operations on or about October 27, 2017.
Third Avenue International Value (TVIVX), a shell of its former self, has closed to new investors and will merge into Third Avenue Value Fund (TAVFX) as soon as the board permits. Those who remember it fondly should check Moerus Worldwide Value (MOWNX) run by Amit Wadhwaney, the former manager.
“As a result of lack of demand in the marketplace for the Funds and difficulty in attracting and retaining assets,” which actually strike me as the exact same thing, TD Short-Term Bond Fund (TDSHX), TD Core Bond Fund (TDBFX), TD High Yield Bond Fund (TDHBX), Epoch U.S. Equity Shareholder Yield Fund (TDUEX), Epoch Global Equity Shareholder Yield Fund (TDGIX) and TD Target Return Fund (TDTFX) will be liquidated on or about January 17, 2018. The “TD” here is Toronto Dominion bank, whose funds seem to have limited availability in the US, which is sad because several of their funds are quite good. (TDAM Global Low Volatility Equity TDLVX, which is not being liquidated, earned MFO’s “Great Owl” designation for outperforming its peers on a risk-adjusted basis in every applicable trailing time period.) TD helpfully recommends that shareholders redeem quickly since “shareholders remaining in a Fund just prior to the Liquidation Date may bear increased transaction fees incurred in connection with the disposition of the Fund’s portfolio holdings.” Less helpfully, they note that this isn’t a taxable event for the fund, but it is a taxable event for the fund’s shareholders.
Turner liquidations: on, off, on. Turner Midcap Growth Fund, Turner Small Cap Growth Fund and Turner Titan Long/Short funds had been slated to liquidate, then received a reprieve from the governor (or the Board) but the reprieve has now been eliminated. The new Liquidation Date will be on or about September 25, 2017. That will officially take the count of Turner Funds down to zero, for now.
VanEck Long/Short Equity Index Fund (LSNAX) will liquidate on November 20, 2017. Rather earlier, four other VanEck ETFs (AMT-Free 6-8 Year Muni Index, Solar Energy, Treasury-Hedged High Yield Bond and AMT-Free 12-17 Year Muni Index) will undergo “termination and winding down” on or about October 6, 2017.
Another two silly ETFs are biting the dust. USCF Restaurant Leaders Fund (MENU) and Stock Split Index Fund (TOFR … get it? Two-fer) will liquidate on October 20, 2017. Fortunately USCF will provide us with two worthy replacements: USCF SummerHaven Private Equity Strategy Index Fund (BUY) and USCF SummerHaven Private Equity Natural Resources Strategy Index Fund (BUYN) are both now in registration with the SEC.