Monthly Archives: April 2017

April 1, 2017

By David Snowball

Dear friends,

Welcome to spring!

The weather’s getting better. It’s not clear that the quality of writing about mutual funds is.

“This couple followed the 11 tips to picking good mutual funds and now they’re rich!”

Ummm … they’re lying on a bed of British pounds so unless they made a bunch of money, fled to the U.K. and exchanged (appreciating) U.S. dollars for (depreciating) British pounds, there’s a bit of a hole in this story.

Speaking of stories, cheers and cheers to the many young persons who chase bouncy balls up and down wooden courts. My Augustana Vikings teams made an incredible run to reach the D-III championship game, which they lost by a single point. The 2014 Vikings reached the national championship game and the 2015 Vikings were widely recognized as one of the top five teams in the nation. But the 2016 crew? We graduated our top six scorers (had I mentioned that Augie’s athletes all graduate, some go to medical school and bunches are Academic All-Americans?) and entered the season (and the tournament) with an unranked bunch of youngsters. Who then fought their way through a tough draw, with more than one game saved by wide-eyed freshmen rushing off the bench. I’m very proud of them.

And of Morghan William and the women from Mississippi State, who stared down UConn and snapped its 111 game win streak. Ms. William, a 5’4” guard, sank the winning basket in the last second of overtime to win the game (and was, promptly and properly, mobbed by her teammates). And of the young gentlemen from Gonzaga who, in their school’s 19th consecutive appearance in the tournament, brought their team to their first Final Four appearance, and the Ducks of Oregon for returning to the Final Four after 78 years. No matter how the final games play out, these are young folks who played with great heart … and who will take away a lifetime of stories.

Of anniversaries and other milestones

The Dow Jones Industrial Average dropped 0.7% in March. On March 8th, the current bull market moved into its 97th month. If we didn’t see the bull market’s final high (21,115) on March 1, then we will soon have cause to recognize this as the longest bull market in U.S. stock market history. It would just have passed the bull market of the 1920s (which rose 495% in 96 months).

We don’t know how the next years in the stock market will play out. Valuations now reside around the 99th percentile; that is, market valuations have been lower in 99% of all preceding months than they were in early March. The second- and third-longest bull markets were followed by dramatic price declines of 90% (the Great Depression) and 54% (the Financial Crisis of 2007-09), but that’s not a necessary outcome. It’s possible for bull markets to end, not with a bang but with a whimper. Some market analysts say that, rather than crashing, the markets might simply bump along for a decade or two, churning out gains of 2-3%. That’s certainly in the range of what GMO, a famously stubborn institutional investment house in Boston, thinks that valuations will support: US stocks are priced to decline by 1-2% annually through the middle of the next decade. The argument for slow decline is simple: people are so disgusted by the stock market that they’re not looking for big gains anymore, they’re simply hopeful of avoiding disasters.


At the same time, the bull market in US bonds is now in its 35th year. With even the U.S. Treasury secretary mulling the option of issuing 100-year bonds to book in low debt costs and the Fed beginning to raise rates, the years of robust domestic bond gains might be behind us.

Maybe. We might finally have achieved Irving Fischer’s “permanently high plateau,” first discerned in September 1929, for the financial markets. President Trump’s first proposed budget, predicated on 4% annual economic growth, suggests that we are.

Or not.

Our suggestion, now as always, is this: (1) know the risks you’re taking and (2) don’t put any more money at risk than you can bear to lose. We’ll try to highlight good managers who are adept to managing risk while producing returns, and we’ll continue to remind folks (as I did in talking with the AAII chapter in Albuquerque) that you’re well-served by thinking about your asset allocation and fund choices when you’re not panicked, rather than when you are.

In May, the Observer will celebrate its sixth anniversary. Including my time writing for FundAlarm, I’ll be passing my first decade of monthly essays. As a public service, non-profit and non-commercial, we really are driven by the desire to help you and we appreciate your support of us. While your financial support is essential, it’s the fact that 33,000 readers chose to share part of their month with us that matters most.

Thanks, as always!

We mentioned, in January, our need for the 2% solution. Not counting their support via Amazon, about 1% of our readers provide financial support (some generously and many yearly since we launched) for the Observer. Amazon has now announced a “simplification” of their program which has noticeably reduced their contribution to us.  In March, instead of receiving an amount equivalent to about 7.5% of what our readers spent, it was about 5.3%. (sigh) So, we’d like to raise more-active support to 2%, which would translate to around 500 people, including new and renewing members of MFO Premium, all told.

It’s a simple, painless, satisfying process: contributions to MFO are mostly tax-deductible (our attorney says I must repeat the phrase, “consult your tax adviser”) because we’re incorporated as a 501(3)c charity. We’re also an efficient 501(c)3 since our fund-raising costs are, well, zero. If you contribute $100 or more, Charles gives you immediate access to MFO Premium with all the attendant data and support.

By Charles’s best estimate, we added 21 new subscribers in January (on target!) and seven in February (off-target but that’s my fault; I was so embarrassed by our need to publish several days late that I didn’t raise the topic) and 18 more in March. I promised folks monthly updates on our progress so here ‘tis: we’re hoping to add 20 supporters (out of 25,000 readers) a month. If you’d like to join that happy crew, click on…

MFO Premium portal

Thanks to Ed Mayer, a long-time supporter, and to Jack, Steven, the estimable Dan Wiener, Jim, Richard, and more Davids than you can shake a stick at. And, as always, many, many thanks to our faithful PayPal subscribers, Jonathan, Greg, Brian and Deb.

Non-update on that journalism scam.

I warned, last month, of a sort of scam being perpetrated by desperate newspaper publishers: in a stealth price increase, the newspaper announces that the 52-week subscription you paid for has been reduced to a 46-week subscription. That’s the game played by my local paper, the Quad City Times, and at least one in New York. I’ve reached out to the publisher, executive editor, sales department and CFO  and have asked each the same question, “why isn’t this a breach of contract? You offered a 52-week subscription, I accepted the offer and gave you money, and now you’re reneging.” So far, no one at the paper has chosen to respond. I’ll keep at it.

Those of our readers who are paying for local paper subscriptions might want to check any correspondence or change in billing information. You might be surprised by what you find.

Then it’s off to Morningstar!

Ed, Charles and I will be at, or in the near vicinity of, the Morningstar Investment Conference again this year. The conference convenes on April 26 and runs through April 28. A number of very fine investors – including the folks from Centerstone, Evermore, FPA, Intrepid and Moerus – have agreed to spend some time talking with us. Separately, we’ll have a chance to chat this month with Laura Geritz, now the head of Rondure Global Advisors. If you’re going to be around Chicago for the conference and would like to meet, please do let us know. As always, we’ll try to share daily briefs with the folks on our discussion board.

As ever,


Morningstar to the industry: Move over. We can do it better ourselves.

By David Snowball

On March 6, 2017, Morningstar announced their intention to displace 50 existing mutual funds from their $30 billion Morningstar Managed Portfolio program and replace them with nine brand-new Morningstar-branded funds. Understandably, there’s been a bit of interest in the financial media, though much of it is behind paywalls. (I’m not complaining, by the way. Journalists need to be compensated.) The most notable “free” articles are:

Advisers split on Morningstar’s new mutual funds

Morningstar makes bid to offer mutual funds for exclusive use of advisers

Like everyone else, Morningstar expands its advisory business

By far the most thorough and balanced piece was How and why Morningstar sliced 16 bps for RIAs by dumping third-party mutual funds and stamping its Switzerland brand on its own mutual funds, written by Janice Kirkel of RIABiz.

Predictably, much of the cover has been hasty and … hmmm, lightly-informed by reality. Some of the quoted advisors, for example, seem to have no idea that the Morningstar star ratings are not subjective judgments issued by Morningstar analysts. The star ratings are purely mechanical calculations. If the eventual Morningstar Core Equity fund receives a five-star (or one-star) rating, it will not be because Morningstar analysts like (or dislike), favor (or disfavor), approved of (or disapprove of) the fund. It will be a five- (or one-) star fund because when its performance statistics are plugged into this formula

they fall into the top 10% (or bottom 10%) of their peer group’s values. You may or may not be impressed with them, but Morningstar does not play favorites with them.

Similarly, few of them seem to understand that Morningstar is already in competition with them. A common refrain is “Once they join the fray and become a competitor to those they judge and report on, they’ve given up their objectivity.” Morningstar’s investment services already manage $66 billion in assets (Form ADV) for about 1.1 million accounts.

That’s grown from $2 billion in 2010 (old Form ADV). In addition, the Morningstar brand is on 21 ETFs and Morningstar employees have served as sub-advisers on mutual funds.

Here’s what we know

Morningstar has proposed launching nine funds. They are:

  • Morningstar U.S. Equity Fund
  • Morningstar International Equity Fund
  • Morningstar Global Income Fund
  • Morningstar Total Return Bond Fund
  • Morningstar Municipal Bond Fund
  • Morningstar Defensive Bond Fund
  • Morningstar Multi-Sector Bond Fund
  • Morningstar Unconstrained Allocation Fund
  • Morningstar Alternatives Fund

Each fund will be a multi-manager operation. The half-blank prospectus leaves slots for three sub-advisors to each firm.

Morningstar proposes actively managing the allocation to each sub-advisor.

Morningstar will continue to use some third-party managers, so long as they’re willing to absorb a pay cut: “Given this, our continued conviction in a number of third-party managers that we use today, and our belief we can come to commercial terms with many of these managers, turnover should be moderate.”

The change may increase investors’ immediate-term tax liability, though Morningstar promises to try to mitigate it to the extent they can.

The funds will only be available through advisors to clients of the Morningstar Managed Portfolios program.

Not all of the Managed Portfolio programs will be affected. “Any portfolio that uses active funds would be affected. Those portfolios include our Mutual Fund and Active/Passive Asset Allocation, Retirement Income, Multi-Asset Income, and Absolute Return Portfolios. In these cases, where relevant, we’d replace third-party active funds with the appropriate Morningstar funds. Other portfolios will not be affected, such as the ETF Asset Allocation Portfolios, which invest only in ETFs, and the Select Equity Portfolios, which invest directly in stocks and other securities.”

The funds will launch in the fourth quarter of 2017.

Here’s what we do not know

There is no hint about who the sub-advisors will be. Morningstar’s filings do allow that some of their advisors may have no experience in managing mutual fund portfolios: “Morningstar funds will give us access to managers who, while skilled and capable, don’t offer mutual funds and will allow us to implement investment ideas from our valuation-driven, contrarian-minded investment approach that the third-party fund structure would not.” And again, the new family “gives us access to asset managers who do not offer mutual funds.”

There is no word about what the fund expenses will be. Morningstar’s argument is that they will drive expenses down by paying the new sub-advisors less than they currently pay the outside fund managers. It would be attractive to Morningstar if they reduce what they pay by 50%, reduce what they charge by 20% and pocket the difference.

As an outsider, I do not have access to data that demonstrates Morningstar’s track record as an asset manager. The folks at Morningstar note, “All Morningstar Managed Portfolios are measured and reported against stated benchmarks, with most of these strategies published in the U.S. Separate Accounts (SA) database in Morningstar Direct.” They are certainly under no obligation to disclose that information to anyone except their investors and the appropriate regulators. Morningstar has attracted billions in AUM but, to be honest, so have a bunch of painfully mediocre firms.

Three things we do not know, but which might be true

  1. Morningstar analysts would ridicule anyone else pulling this move. As you might imagine, this claim is the subject of a vigorous exchange of views between us and the folks at Morningstar. At the crux is the question of whether Morningstar’s analysts think you should invest be willing to invest in managers who have less than a couple billion in assets in a fund and four years of a public track record managing it. We’re looking at the same data but placing a different interpretation on it. It feels like a classic glass half full / glass half empty discussion.

    The glass might be half full. Our colleagues in Chicago note that they do cover a number of exemplary, smaller and/or newer funds. Nadine Youssef, Morningstar’s director of media relations, shared some of the data: “As of today, Morningstar has assigned a Morningstar Analyst Rating™ of Gold, Silver, or Bronze to 593 unique non-allocation funds. Of those, 16 were incepted in the past five years, 160 of these funds had less than $2 billion in assets under management (AUM), and 13 of these funds were incepted in the past five years and had less than $2 billion in AUM.  We are happy to share additional examples of recommending smaller, lesser-known funds.” Jeff Ptak added a reminder about the Morningstar Prospects list, which highlights promising funds (I’ve been able to find four funds added last year, but that’s about what I know) and is available to advisers.

    The glass might be half-empty. Receiving Morningstar analyst coverage is an important, perhaps critical, source of validation for many funds. It marks the point where Morningstar deems them as “relevant.” For many small funds, no degree of distinctiveness or accomplishment seems likely to earn them the “relevance” necessary.

    Universe: 5-star funds

    # of funds

    # of funds with analyst coverage

    Chance of coverage

    Under  a billion




    $1-2 billion




    2-3 billion












    Over $5 billion




    (five star, distinct portfolio, not life-cycle, assets at or below target amount, as of 4/1/17)

    It appears that $4 billion is the breakeven point, where a five-star fund earns a 50/50 chance of coverage. But even the best funds under $4 billion still have a fraction of the coverage of average funds over $4 billion.


    # of funds

    # of funds with analyst coverage

    Chance of coverage

    All funds over $5 billion




    Funds below $4 billion with 5-star rating overall, plus 4- or 5- star rating for the past 3-, 5- and 10-year periods




    Greater likelihood of any fund over $5 billion getting analyst coverage compared to the most consistently excellent funds under $4 billion is 4.6x.

    About the same appears to be true if you look at probabilities by age. There are 66 five-star funds which have been around for less than four years; of those, five have analyst coverage. 44 funds have been around for more than four, but less than five years. Of those, two have analyst coverage. So, 6% of five-star funds receive analyst coverage by their fifth anniversary.

    Senior folks on the research end (Mr. Rekenthaler, quite clearly) are increasingly skeptical of the prospects for active management and of trendy fund categories like liquid alts, non-traditional bonds, and so on.

  2. Morningstar may not have the freedom to care about damage to the traditional brand. To be blunt, their old fund-ratings core is somewhere between stagnant and declining. While some of the older employees doubtless have a soft spot for star ratings and monthly fund ratings packets that snap into three-ring binders, that’s not the future. The serious money comes from managing money, and a firm with $600 million in expenses is built to pursue serious money.

  3. Morningstar will reward managers who stick to their knitting. Morningstar finds two faults in the funds they’ve been using: they charge too much and they’re too unpredictable. That is, the managers don’t stick closely-enough to their benchmarks. Here’s Morningstar’s explanation of why they want to contract directly with managers for narrow portfolios.

    The Morningstar funds should afford our portfolio managers greater flexibility to express investment ideas and adjust positions as circumstances warrant. Currently, it can be a bit cumbersome to adjust allocations to third-party mutual funds. That process should be smoother with Morningstar funds, which will invest through separate-account sleeves. We believe we will be able to reallocate capital between subadvisors more nimbly and precisely than before in this format.

    The implied problem is that independent managers don’t always color inside the lines: a large cap manager might choose to hold a lot of cash, a small cap manager might hold some mid-cap stocks, or the domestic bond fund manager might pick up some Euro-denominated debt. That’s good for their investors because they’re actively pursuing the portfolio with the best risk-reward profile, style box be damned. It’s bad for Morningstar’s managers-of-managers: suddenly a portfolio of funds that targets 5% cash might be at 10% cash because of the not-immediately-disclosed decisions of their managers.  That problem is mitigated if your small cap value guy is, like an index, always 100% invested and only invested in securities representative of the benchmark index.

    That propagates up the chain: the “large-cap growth” manager within the U.S. Core Equity fund needs to be always and only large-cap growth and the U.S. Core Equity Funds needs to be always and only U.S. core equity so that the managers at the level above them have very predictable pieces from which to assemble a portfolio.

Bottom line: One of Morningstar’s core values is “Investors first.” The question is “which investors?” As a publicly-traded corporation, the answer has to start with “investors in Morningstar (MORN).” Professor Stephen Bainbridge of the UCLA School of Law wrote, “the law requires corporate directors and managers to pursue long-term, sustainable shareholder wealth maximization in preference to the interests of other stakeholders or society at large” (A Duty to Shareholder Value, New York Times, 04/16/2015). Discharging that responsibility likely entails upholding the Morningstar brand identity but that’s necessarily secondary. Mr. Kapoor and his team have a primary responsibility to make Morningstar shareholders richer, both by attracting assets (financial and human) and extracting the greatest possible return from them.

Potential investors might ponder the implicit advice from the Morningstar research teams: don’t get sucked in by the siren song on smooth marketers and untested teams, hold off writing a check, put these funds on your watchlist for 2022 – 2025, come back then and see whether the alluring idea proved itself in the marketplace.

Morningstar has at least three SEC filings that interested parties might want to pursue. The most informative is their discussion for investors and attendant FAQ. The next-best is their fund prospectuses, which still lack the most vital information (expenses and managers, for instance). The least helpful is their request for exemptive relief which, at base, just gives them permission to have a bunch of sub-advised funds.

Nothing Personal, It’s Just Business

By Edward A. Studzinski

“This is the business we’ve chosen. I didn’t ask who gave the order, because it had nothing to do with business.”

Hyman Roth speaking to Michael Corleone in the movie “Godfather II”

Another month has gone by, and the current period of disruption has not only continued, but accelerated in the mutual fund management business. For all but the true believers (or perhaps those holding stock in the publicly-traded fund managers), it should be apparent that we are witnessing not just a cyclical decline, but a secular one.

Let’s start with the settlement between Bill Gross and his prior employer, PIMCO. If public accounts are accepted, Gross is receiving a settlement payment in the vicinity of $80M. Since it is hard to believe that PIMCO, and their owners, Allianz, the German insurer, are in the habit of throwing money around for no good reason, it appears that Mr. Gross may have had a more than colorable case. At the least, the discovery process would have provided some fascinating insights in terms of emails and phone records, into the PIMCO culture. Myself, I have always believed that the issues were centered on greed. A younger group of managers resented the amount of phantom equity or bonus pool units that Mr. Gross had, making their slices of the pool too small in their opinion. Get rid of Gross, and you can reallocate his units. Just raise a group of issues that allow you to move in that direction.

Mr. Gross was lucky in one regard. This was all taking place in California, which as a matter of public policy considers non-compete and other restrictive employment constraints to be null and void. So Mr. Gross was able to go out the door, move to Janus, keep his following, AND be in a position to litigate the issues. Had we been talking about Illinois, Massachusetts, or New York this debate would never have seen the light of day. Another case of at the least blatant age discrimination would have vanished.

Next, we have Cambridge Associates, one of the original investment consulting firms, restructuring its business by cutting professional staff, and indicating that they wanted to focus on a business model of being an outsourced chief investment officer for endowments. Big surprise of course, the primary shareholders of the privately–held firm were trying to figure a way to monetize their investment. Reminds me of the primary shareholder of a closely-held bank I know who had many chances to sell his bank at 2.5X tangible book value. He thought he could get 3X book ultimately so did not sell. Five years later, he ended up selling for about 1.8X tangible book, as in a period of economic stress, the book value (the primary metric for valuing banks and p&c insurance companies) first flattened and then began to regress backwards. Sometimes if you wait too long, you can miss the market.

We next have the curious case of Morningstar. My friend and colleague David Snowball is writing extensively in this issue about the Morningstar decision to launch their own group of proprietary mutual funds for their investment advisory clients. They will displace fifty existing funds from their Managed Portfolio program. So, is this a conflict of interest? Well, that depends on where you are sitting, and whether you want to believe in things like Chinese walls and management assurances. There is a certain amount of humor to be found in the fact that Morningstar’s equity research business took off when the Wall Street firms such as Morgan Stanley, caught by the SEC with having their analysts write reports at the behest of and to some extent scripted by the investment bankers, had to hire Morningstar to produce independent research for those firms’ brokerage clients. I have also listened to Morningstar executives tell me over the years that mutual funds were basically a bad business model for the INVESTOR, and that the coming of very low cost passive funds and exchange-traded funds would change the nature of the business forever. While that appears to be happening, this move to bring in hedge fund talent to run private label mutual funds seems to be an effort to go against the tide.

This then brings us to ponder the thought processes of Chairman of the Board $2.2 Billion net worth Joe Mansueto, and new CEO Kunal Kapoor in making this move now. I have no insights to offer other than to say that neither one of them appears to have the makings of a Jeff Bezos. David and I and the rest of the MFO family are grateful to them however, for the business opportunity they have presented us with, in being about the only ones who will be able to write objective evaluations of their new funds.

Lest you think that was a sufficient amount of disruption, BlackRock, the world’s largest asset manager, announced that it will be closing or rearranging its active fund lineup, laying off a number of professional staff – analysts and fund managers, and shifting to a group of quantitatively managed funds selectively.

They have the benefit of being actively managed, but can be offered at a much lower fee break point than fundamentally managed active funds, and still be extremely profitable.

I have always been a fan of blending a quantitative approach with fundamental analysis and active portfolio management. Indeed, while still at the Mercantile National Bank of Indiana, I used the investment research of both Chicago Investment Analytics, a quantitative multi-factor model shop, and Select Equity, which at the time was making available its individual stock research (which was attuned to high return on invested capital businesses). This allowed my bank’s common trust funds to compete quite handily against the industry Goliaths, even though we lacked a team of in-house analysts.

One benefit of that approach is that it serves as a check on the integrity of the analyst’s numbers. For example, I heard third-hand a while back the story of a young equity analyst who was frustrated that he could not get his new stock ideas approved and purchased. A senior equity analyst allegedly told him, “What’s the problem, just make up some numbers that make your idea look better.” The young analyst is still frustrated while the senior analyst has since been promoted into executive management. Now you might think that rather fanciful, but I will tell you that a number of the quant/fundamental firms have teams of analysts scrubbing the numbers that go into their quantitative multi-factor models just to make sure that the fundamental side is not gaming the system.


I had two conversations this past month which were, I think, indicative of where we are now.

One was with David Marcus at Evermore Global, for whom I have a tremendous amount of respect (which started back before I personally knew him as I do now, but knew of him when he was running Mutual European Fund at Mutual Shares under Michael Price). I asked David whom he respected who was running money today. The universe he cited was very small, probably less than ten, which shrunk even more when you factored in the question of whether they were still investors or had been swept up by “the business” of running a mutual fund or an investment management firm. The number of names I had was equally small, well under ten. The sad part about this was that often asset bloat was the triggering factor of change, which shifted priorities away from finding good ideas and investing in them.

The other conversation I had was with my friend and former colleague, Robert Sanborn. We were discussing investing for endowments, since he sits on three endowment committees, as well as changes in the mutual fund world. I reminded him of one of our other former colleagues, who used to obsess about finding the best investments until he became a mutual fund portfolio manager. The obsession changed to finding the best investments given the business he was in (scalability, liquidity, etc.). Robert, off the top of his head quoted the words from “Godfather II” with which I opened this piece.

So my readers, I leave you with this. Should you attend the Morningstar Conference at the end of this month, or should you be watching either Bloomberg TV or MSNBC, and there is a speaker being interviewed or a speaker making a pitch presentation, I want you to visualize the scene with Hyman Roth and Michael Corleone again in your mind. Ask yourself if that is not what you are really seeing, over and over again.

Planning a Rewarding Retirement, Part 3: When Should I Start Retirement Plan Withdrawals?

By Robert Cochran

This is the third in a series of articles. 

My original intent was to retire when I turned 70.  However, as I noted in Part 2 of this series, the realization that “it’s time” bumped up my retirement to this fall, when I turn 67.  Thus the mental switch was flipped, then the “Can I afford to retire?” review and decision was made.  A large number of people find that their retirement plan (IRA, 401k, 403b, company pension, profit sharing, or other) account is the biggest part of their financial picture, often bigger than any Social Security benefits for which they qualify.  My own picture is probably not that much different.

Social Security retirement benefits are much more modest than many people realize, according to the Center on Budget and Policy Priorities. Benefits represent 90% or more of income for 41% of those receiving benefits.  My wife and I are most fortunate to not be in this situation.  The Social Security retirement benefits my wife and I will receive, along with other sources of income, and with realistic expected reduced spending (no mortgage or credit card debt), help make possible the expected delay of our retirement account withdrawals.

Folks who have a pension account, such as public employees or state teachers, will already have received an estimate of their benefits, based on when they retire. Regardless of the kind of retirement account, tax planning is important, since there is a good chance it will be necessary to file quarterly estimated tax payments. Tax planning allows me to know what I must set aside for taxes and what net, after-tax dollars I will have available for cash flow.

My own situation should allow me to not touch my retirement account (currently in a 401k plan) until I am 70 ½, when I must begin taking Required Minimum Distributions each year. The rule is that the initial RMD must take place by April 30th of the year following the year in which I turn 70 ½. For me, that means my first distribution must take place by April 30, 2021. But since this distribution is for the previous calendar year, I will also need to take a distribution by December 31st of the same year for 2021. To avoid being forced to take two distributions in the same year, I will move up my first RMD to 2020. Yes, it sounds complicated, but once you get the first one out of the way, the rest simply have to be done by December 31st of each year. Whether I need dollars from my retirement account or not, once I turn 70 ½, I must start annual distributions. The percentage required increases each year, but starts at around 3.6% of the value of the account as of December 31st of the previous year.

If I want to make any large charitable contributions prior to my RMDs, I can make a distribution from my retirement plan, no taxes withheld, and the charitable gift will offset the distribution, with no tax consequence. Once I am in the RMD phase, I can designate part or all of my RMD be sent directly to my charities of choice, with no taxes withheld. However, I do not get to also claim the gift as a deduction.

The next question is how to transition my retirement account from one of accumulating assets to one of planned distributions. I know for sure I do not want to convert my account to an annuity of any kind. Interest rates for fixed annuities are abysmal now, and the equity-indexed annuities being pushed by commissioned salespeople are very expensive and extremely complicated. The only ones who benefit from them are the insurance companies.

In fact, I can structure my account to send money directly to my bank account each month. This is especially attractive to people (my wife included) who like knowing that on the 30th day of each month, a specific dollar amount will be deposited to their bank account. And the ability to withhold federal and state taxes (or not) is also a plus. Thus, I can establish my own “annuity”, but keep expenses low and retain control of the dollars and the income I receive.

I like to have 4-6 years of cash flow needs from an account invested in short-term bonds, CDs or cash for clients taking distributions. The rest of the retirement account can be invested in line with long-term goals, time horizon, and risk tolerance. This protects cash flow needs so that we don’t need to sell equities when the market is down. The 4 to 6-year timeframe will likely cover most bear markets. In good years, we might sell equities and leave the fixed assets alone. This strategy allows flexibility, something true annuities cannot do.

In summary, there can be a lot of moving parts to calculating what retirement cash flow will be. Retirement accounts like 401k, IRA, profit sharing and others may be the biggest piece for many retirees. It’s important not only to plan when distributions will start, but also to plan how they will happen and to create a flexible investment allocation that reflects a well-thought out strategy.

Now that I have my income stream plotted, I will take a look at health care planning in the next chapter.

Northern Global Tactical Asset Allocation (BBALX), April 2017

By David Snowball


The fund seeks a combination of growth and income. Northern Trust’s Investment Policy Committee develops tactical asset allocation recommendations based on economic factors such as GDP and inflation; fixed-income market factors such as sovereign yields, credit spreads and currency trends; and stock market factors such as domestic and foreign earnings growth and valuations. The managers execute that allocation by investing in other Northern funds and ETFs. As of 12/31/2016, the fund held two Northern funds and nine ETFs.


Northern Trust Investments is part of Northern Trust Corp., a bank founded in 1889. The parent company provides investment management, asset and fund administration, fiduciary and banking solutions for corporations, institutions and affluent individuals worldwide. As of December 30, 2016, Northern Trust Corporation, through its affiliates, had assets under custody of $6.7 trillion, and assets under investment management of $942 billion (both noticeably up over the past two years). About half of Northern’s assets are actively managed and about half are passive. The Northern funds account for about $51 billion in assets. When these folks say, “affluent individuals,” they really mean it. Access to Northern Institutional Funds is limited to retirement plans with at least $30 million in assets, corporations and similar institutions, and “personal financial services clients having at least $500 million in total assets at Northern Trust.” Yikes. There are 40 Northern funds, seven sub-advised by multiple institutional managers.


Daniel Phillips, Robert Browne and James McDonald. Mr. Phillips joined Northern in 2005 and became co-manager in April, 2011. He’s one of Northern’s lead asset-allocation specialists. Mr. Browne joined as Chief Investment Officer of Northern Trust in 2009 after serving as ING’s chief investment officer for fixed income. Mr. McDonald, Northern Trust’s chief investment strategist, joined the firm in 2001. This is the only mutual fund they manage.

Management’s Stake in the Fund

As of March 30, 2016, two of the fund’s three managers who investments in the fund in the range of $100,000 – 500,000. Only one of the fund’s eight trustees has invested in it, though most have substantial investments across the fund complex. The research is pretty clear, that substantial manager and trustee ownership of a fund is associated with more prudent risk taking and modestly higher returns and is a visible symbol of the alignment of the managers’ interests with their investors.

Opening date

Northern Institutional Balanced, this fund’s initial incarnation, launched in July 1, 1993. On April 1, 2008, this became an institutional fund of funds with a new name, manager and mission and offered four share classes. On August 1, 2011, all four share classes were combined into a single no-load retail fund.

Minimum investment

$2500, reduced to $500 for IRAs and $250 for accounts with an automatic investing plan.

Expense ratio

0.57% on assets of $105.9 million, as of July 2023.


When we reviewed BBALX in 2011 and 2012, Morningstar classified it as a five-star moderate allocation fund. We made two points:

  1. It’s a really intriguing fund
  2. But it’s not a moderate allocation fund; you’ll be misled if you judge it against that group.

We followed up in 2015. Morningstar then classified it as a two star moderate allocation fund. We made two points:

  1. It’s a really intriguing fund.
  2. But it’s not a moderate allocation fund; you’ll be misled if you judge it against that group.

We’re pleased to note that, somewhere in there, Morningstar concurred. It’s now recognized as a four-star fund in Morningstar’s World Allocation group. Lipper places it in their Flexible Portfolio group and rates it as a four out of five for total return, consistency of return and capital preservation. It qualifies as a Lipper Leader for its low expenses.

It’s a really intriguing fund. As the ticker implies, BBALX began life is a bland, perfectly respectable balanced fund that invests in larger US firms and investment grade US bonds. Northern’s core clientele are very affluent people who’d like to remain affluent, so Northern tends toward “A conservative investment approach . . . strength and stability . . . disciplined, risk-managed investment . . .” which promises “peace of mind.” The fund was mild-mannered and respectable, but not particularly interesting, much less compelling.

In April 2008, the fund morphed from conservative balanced to a global tactical fundof-funds. At a swoop, the fund underwent a series of useful changes.

The strategic or “neutral” asset allocation became more aggressive, with the shift to a global portfolio and the addition of a wide range of asset classes.

Tactical asset allocation shifts became possible, with an investment committee able to substantially shift asset class exposure as opportunities changed.

Execution of the portfolio plan was through index funds and, increasingly, factor-tilted ETFs, mostly Northern’s FlexShare products. For any given asset class, the FlexShare ETFs modestly overweight factors such as dividends, quality and size which predict long-term outperformance. The decision to use those “smart beta” style ETFs has two virtues: it minimizes the costs and risks associated with individual active managers and it minimizes the momentum bias and volatility associated with market capitalization-weighted indexes and ETFs.

Each year, Northern’s investment policy committee sets a “strategic asset allocation” annually then tweaks the recommendations monthly to create a “tactical asset allocation.” Moderate allocation funds tend to be 60% US stocks and 40% US bonds. World allocation funds right now sit around 25% US stocks, 25% international stocks, 25% bonds, 25% cash and other. Northern’s allocations are more granular and sophisticated.

Here’s the current game plan. The first column is an asset class, the second column are the vehicles used to gain exposure (all are Northern’s FlexShares ETFs, unless noted) and the third column is the tactical positioning.

  Vehicle Tactical allocation
(compared to strategic)
U.S. stocks Morningstar US Market Factor TILT Index ETF (15%) US Quality Dividend Index ETF (13%) 28% (substantial tactical overweight)
High yield and EM debt Northern High Yield Fixed Income Fund (10%) 10 (over)
Investment grade bonds Northern Bond Index Fund (25%) 25 (under)
Developed international Morningstar Dev Markets Ex-US Factor TILT Index ETF (3%) International Quality Dividend Index ETF (10%) 13 (under)
Emerging markets Morningstar Emerging Market Factor TILT Index ETF (6%) 6
Global real estate and infrastructure (a/k/a “real assets”) Global Quality Real Estate Index ETF (3%) STOXX Global Broad Infrastructure Index ETF (3%) 6
Natural resources Morningstar Global Upstream Natural Resources Index ETF (7%) 2 (over)
Gold n/a 0
Inflation-protected securities iBoxx 5-Year Target Duration TIPS Index ETF (4%) 4
Cash Northern Government Assets Portfolio (1%) 0

Both the broadened strategic allocation and the flexibility of the tactical shifts have increased shareholder returns and reduced their risk.

    1 year returns 3 year returns 5 year returns
BBALX The fund 9.12 2.90 6.75
Asset allocation blend A 60/40 blend 5.92 3.27 6.64
Internal benchmark Northern’s strategic allocation 7.75 3.10 6.08
World Allocation fund average Morningstar peer group 6.04 1.0 5.30

All data as of 12/31/2016

Compared to the average world allocation fund, BBALX is adding between 150 – 300 basis points in returns each year. In most cases, Northern’s strategic allocation outperforms a simple 60/40 global allocation and, in most cases, Northern’s tactical allocation – that is, the performance of the fund, is better than its strategic allocation. In short, the underlying “tilt” in Northern’s ETFs add value and the possibility of monthly tweaks in the tactical allocation add more.

That’s also true when you compare BBALX to the strongest offerings in the category, Morningstar’s “Gold” and “Silver” medalists.

    Full market cycle annual returns Full market cycle downside deviation Full market cycle Sharpe ratio
Northern GTAA BBALX 4.1% 6.6% 0.39

Gold medalist

BlackRock Global Allocation Fund, “A” MDLOX 3.5 7.3 0.30

Silver medalists

Capital Income Builder, “A” CAIBX 3.1 8.4 0.24
Franklin Mutual Quest, “A” TEQIX 4.6 7.5 0.41

All data as of 02/28/2017. Two other Silver medalists have track records too short to be included.

These are all very good funds. In Morningstar’s judgment, the best there are. And Northern is just as good. Its returns have been higher than most across the full market cycle, its downside risk has been the lowest in the group and its Sharpe ratio – a measure of risk-adjusted returns – is second highest in the group.

The key difference between Northern and the medalists? It has $80 million in assets, they have between $5 billion and $103 billion in assets and all, except the $103 billion CAIBX, charge more (in one case, 100% more) than BBALX.

When we repeat the screen for just the period of the current bull market (March 2009 – present), the same pattern emerges. Over both the full market cycle and the upmarket cycle, BBALX is competitive with the best global allocation funds in existence.

Bottom Line

There is a very strong case to be made that BBALX might be a core holding for two groups of investors. Conservative equity investors will be well-served by its uncommonly broad diversification, risk-consciousness and team management. Young families or investors looking for their first equity fund would find it one of the most affordable options, no-load with low expenses and a $250 minimum initial investment for folks willing to establish an automatic investment plan. Frankly, we know of no comparable options. This remains a cautious fund, but one which offers exposure to a diverse array of asset classes. It has used its flexibility and low expenses to outperform some very distinguished competition. Folks looking for an interesting and affordable core fund owe it to themselves to add this one to their short-list.

Fund website

Northern Global Tactical Asset Allocation. Northern has an exceptional commitment to transparency and education; they provide a lot of detailed, current information about what they’re up to in managing the fund. 

© Mutual Fund Observer, 2017. All rights reserved. The information here reflects publicly available information current at the time of publication. For reprint/e-rights contact us.

iMGP Alternative Strategies Fund (formerly Litman Gregory Masters Alternative Strategies), (MASFX/MASNX), April 2017

By Charles Boccadoro

At the time of publication, this fund was named Litman Gregory Masters Alternative Strategies.

Objective and Strategy

The Litman Gregory Masters Alternative Strategies Fund seeks to provide attractive “all-weather” returns relative to conservative benchmarks, but with lower volatility than the stock market. It seeks this objective through a combination of skilled active managers, high conviction “best ideas,” hedge fund strategies, low beta, and low correlation to stock and bond market indices.

The fund’s risk-averse managers, asset allocations, and hedging strategies position it as an alternative to traditional 80/20% or 60/40% bond/stock portfolios for conservative or moderately conservative investors. The advisor’s strategy is to divide the fund’s assets up between five sub-advisor teams, up from the original four, each pursuing distinct but complementary strategies. The chart below depicts the five teams, strategic title, allocation, firm and lead.

A summary of the five strategies: 

  • Opportunistic Income will often focus on mortgage related securities;
  • Strategic Alpha focuses on the tactical allocation of long and short global fixed income opportunities and currencies;
  • Contrarian Opportunity allows tactical investments throughout the capital structure (stocks and bonds), asset classes, market capitalization, industries and geographies;
  • Arbitrage & Event Driven focuses on mergers and other “special situations” (restructuring and refinancing); and, 
  • Long-Short Equity focuses on liquid global equities based on macroeconomic analysis, fundamental research, and quantitative tools for portfolio construction.


Litman Gregory Fund Advisors, LLC, Walnut Creek, California, moving from Orinda in fall of 2016. As profiled originally and with all its “Masters Funds,” Litman Gregory 1) conceives of the fund, 2) selects the outside sub-advisors who will manage portions of the portfolio, and 3) determines how much of the portfolio each team gets.

The other three Masters Funds are Equity (MSEFX/MSENX), International (MSILX/MNILX), and Smaller Companies (MSSFX). Collectively, the funds hold about $2.7 billion in assets, with the lion’s share in Alternative Strategies (MASFX/MASNX). Two previous Masters Funds, Focused Opportunity and Value, were merged into Equity in 2013 due to some overlap in sub-advisors and low assets under management. A new Alternative High Income Masters Fund is in registration.

The firm was co-founded in 1987 by Ken Gregory and Craig Litman with a newsletter called No-Load Fund Analyst. The newsletter was retired and rolled into the firm’s AdvisorIntelligence offering. Today the firm formally advises its Masters Funds series, provides investment management services for separate accounts, publishes investment research for financial advisors (aka AdvisorIntelligence), and maintains portfolio strategies on selected platforms. Ken Gregory remains active with the firm, while Craig Litman recently retired.

The premise behind its Masters Funds? Litman Gregory believes over the long term:

  • Experienced, world class investment managers are likely to outperform passive benchmarks, and
  • Portfolios comprised by these skilled managers’ highest-conviction ideas are likely to outperform their more diversified, lower active-share portfolios.

The firm emphasizes that the distinctive portfolios created by the investment managers who run the individualized sleeves in each Master Fund are not fund of funds and cannot be replicated by “building” comparable mix of existing funds normally available to most investors.

Litman Gregory believes it can identify such skilled managers based on years of due diligence, it combines them to provide diversification at the fund level, and creates an environment of minimal constraints but with enough oversight to ensure commitment to its Masters Funds concept.

In the alternative fund space, Litman Gregory found few compelling options back in 2011. What it did find was high costs, lack of liquidity, lack of track record, no clear investment edge, lack of transparency and questionable quality.

So, it launched its own.


Jeremy DeGroot, Litman Gregory’s Chief Investment Officer and a Principal. He’s ultimately responsible for sub-advisor due diligence and selection, day-to-day coordination with the sub-advisors, monitoring the individual performance and capabilities of the investment managers, and fund administration. He joined Litman Gregory in 1999. He holds the CFA designation, a BS in Economics from University of Wisconsin, and an MS in Economics from Berkeley.

Jason Steuerwalt, a Senior Research Analyst at Litman Gregory appears to be DeGroot’s lieutenant. He too holds the CFA designation and a BA in Economics from Brown. He joined Litman Gregory in 2013.

The daily investments of the fund, however, are determined by its five teams, led by Jeff Gundlach of DoubleLine, Steve Romick of FPA, Matt Eagan of Loomis Sayles, John Orrico of Water Island Capital, and John Burbank III of Passport Capital. All leads except one have been with the fund since inception; Mr. Burbank, the newcomer, started October 24, 2014.

All highly respected managers whom Litman Gregory believes are among the best in their strategies. Google any of them and one would be hard-pressed to disagree. A characteristic of Masters Funds is a long-term relationship between Litman Gregory and the sub-advisors, often predating their tenure on the fund.

Strategy Capacity and Closure

Litman Gregory believes the fund’s capacity as it stands now is approximately $3B, at which point, we would likely “soft close.” The main constraint appears to be with Gundlach’s sleeve due to availability and selection in his preferred spaces of the mortgage market. Romick too “isn’t finding a whole lot to like right now …” As of December 2016, Romick’s Contrarian Opportunity sleeve held 37% cash.

The fund currently stands at $1.7B and has grown steadily since inception, as depicted below. The preponderance is in institutional shares.

Management’s Stake in the Fund

Per last April’s SAI filing, Jeremy DeGroot maintained $100 – 500K in the fund. Water Island’s Gregg Loprete has between $50 – 100K and Todd Munn has between $10 – 50K. Four of the funds’ six directors, including co-founder Ken Gregory, have more than $100K in the fund.

A company spokesman stresses that each sub-advisor also invests directly in their own internal strategies. “Gundlach has publicly stated that his largest personal holding is the Opportunistic Income strategy, which is the hedge fund he runs at DoubleLine and is essentially the same sleeve he runs for this fund.” Similar expectations apply to Romick, Eagan, Orrico, and Burbank.

The spokesman adds Jason Steuerwalt has 10% of his personal assets in the fund. And, Litman Gregory employees and associates buy the same institutional shares and pay the same fees as everybody else.

An updated SAI is expected to be published shortly.

Opening Date

September 30, 2011 for both share classes, making it one of the earlier so-called alternative funds.

Lipper shows only 19 funds as old as Litman Gregory Alternative Strategies in the Multi-Strategy Alternative fund category, which it defines as follows:

Funds that, by prospectus language, seek total returns through the management of several different hedge-like strategies. These funds are typically quantitatively driven to measure the existing relationship between instruments and in some cases to identify positions in which the risk-adjusted spread between these instruments represents an opportunity for the investment manager.

Today, 75 such funds exist.

Minimum Investment

Institutional shares impose a $100,000 minimum initial investment for regular accounts, but a very reasonable $5,000 level for retirement accounts, and only $2,500 for automatic investment accounts. The investor shares minimum seems to range from $500 to $2,500, depending on platform and account type.

Expense Ratio

July 2023: The institutional class share is 1.44% and the investor class share is 1.69% on assets under management of $903 million. The investor net expense ratio includes a 0.25% 12b-1 fee. 

The fund’s annual net expense ratio is 1.47% on institutional shares (MASFX) and 1.72% on investor shares (MASNX). The latter reflects industry’s ubiquitous 12b-1 0.25% fee to facilitate “no fee” transactions on platforms like Fidelity and Schwab.

While not published previously, Litman Gregory’s COO reports: “We signed a fee waiver agreement effective 1/1/17 that contractually caps our retained fees on the Alt Strats fund at 50 bps on the first $2 billion, 40 bps on the next billion, 35 bps on the next …” These limits will be published in the April 2017 prospectus.

The prospectus has previously published the fund’s aggregate sub-advisor fee of 0.82%. And, for 2016, operating expenses to independent service providers (eg., the trust’s custodian State Street, Boston Financial Data Services, legal, audit, etc.) were 0.15%. So, net expense ratio = 0.50 + 0.82 + 0.15 = 1.47%.

Like with most hedged strategies, the fund typically incurs an additional annual expense for short sales and borrowing costs on leverage. It runs 0.36% or gross expense ratios of 1.83% and 2.12%, respectively, for the two share classes.

There is no load, thankfully, and Schwab for one charges no short-term redemption fee on institutional shares.     

The net expenses to investors appear to be higher than the broader versions of these strategies run at the sub-advisors’ shops for three of the five sleeves: FPA Crescent Fund (FPACX) with er = 1.09%, Water Island’s Arbitrage Fund (ARBNX) with er = 1.22%, and Loomis Sayles Strategic Alpha Fund (LASYX) with er = 0.85%. The other two sleeves (DoubleLine and Passport) appear both cheaper to investors and are simply not available to regular investors, since they are so strongly rooted in their hedge funds. The hedge fund industry typically charges 2% annually and 20% on any profit earned.

For the record, Gundlach’s Opportunistic Income sleeve does not compare well with DoubleLine’s flagship Total Return Bond Fund (DBLTX) or any other DoubleLine fixed income fund for that matter; in fact, the Opportunistic Income sleeve crushes DBLTX with 59% return versus 23% over past 21 quarters through December 2016.


David Snowball originally profiled the fund in April 2012, shortly after it launched. Here are a couple excerpts:

  • Alternative Strategies is likely to fare better than its siblings because of the weakness of its peer group … most of the “multi-alternative” funds are profoundly unattractive and there are no low-cost, high-performance competitors in the space as there is in domestic equities.
  • In a Wall Street Journal article, I nominated MASNX as one of the three most-promising new funds released in 2011. In normal times, investors might be looking at a moderate stock/bond hybrid for the core of their portfolio. In extraordinary times, there’s a strong argument for looking here as they consider the central building blocks for their strategy.

Since inception, the fund has indeed delivered as promised: A top three absolute return performer in its category for each of the past 5, 3, and 1 year evaluation periods with concurrent top quintile risk adjusted returns.

As of month ending February, it holds both the MFO Great Owl (GO) and Honor Roll (HR) designations. The former recognizes consistent top quintile risk adjusted returns, while the latter recognizes consistent top quintile absolute returns. It is the only fund in its category of 75 funds to do so. The fund also receives Morningstar’s Five-Star designation. It has consistently maintained low volatility, coming in on the low end of its target range of 4 to 8%.

Here are some five-year metrics from our MFO Premium site for the top performing funds in the Alternative Multi-Strategy category of 19 (click on graphic to enlarge):

Here are three-year metrics for the top funds in the category of 34:

Finally, here are past year metrics of top funds within the category of 72:

The two next charts breakout performance by sub-advisor, first aggregate growth and then quarterly return. Note that the sub-advisor breakouts do not include Litman Gregory’s fee, which is reflected in the dark blue lines for institutional share performance (MASFX).

The fund managed healthy positive or only slightly negative returns in just about every quarter except the fall of 2014, when the S&P 500 dropped 8.3% in yet another dark October. The Alternative Strategies fund also weathered well the “taper tantrum” of 2013 when US aggregate bonds dropped 3.7%.

The five sleeves appear fairly uncorrelated over the past five years, but ironically and perhaps fortunately this time MASFX remained largely correlated with the S&P 500 but negatively correlated with US aggregate bonds. Litman Gregory explains the alignment was a bit of a surprise, since stock market beta remains low, but it expects the correlation to vary over time given its managers’ “opportunistic approaches.”

It notes the fund’s correlation to stocks was lower during drawdowns; indeed, the fund’s Bear Market Deviation (BMDEV) remained well below that of the S&P 500 over the past five years. Litman Gregory summarizes: “The fund’s volatility more closely matches that of aggregate bonds than of equities, so far anyway, yet it is negatively correlated to aggregate bonds and delivered a meaningfully higher return with a very similar net yield.”

The final chart below shows net asset allocation shifts at the fund level by quarter. Short exposure ran about -30% in 2016, up from previous -20% nominally. Long exposure also increased in 2016 to about 110% and higher (132% in 3rd quarter), up from previous 105% and under.

Alternative funds proliferated after investors experienced two extreme drawdowns in equities the past fifteen years, one bottoming out in August 2002 with the S&P 500 down 45% and another in February 2009 down 50%. Many have called the current up cycle, now more than 8 years old, the most hated bull market in history. Several well know fund managers who weathered 2009 just fine, have well underperformed in the intervening years.

Respected shops like GMO, Research Affiliates, and Leuthold warn that US equities remain overvalued with attendant low expected returns (premiums) going forward, if not heavy retractions. While others warn of the end of our decades long bond bull market, suggesting the performance of traditionally conservative bond-heavy allocations, like the Vanguard’s stellar Wellesley Fund (VWINX/VWAIX), may not fare so well in future. To pile on, risk-free returns are at historic lows.

What’s an investor to do? Enter alt funds! In the space, there is no question Litman Gregory has delivered an outstanding fund in the first five years since inception, with just about everything promised … hats-off to them. Other shops, like short-lived Whitebox Funds, with experienced and highly respected managers failed to make the conversion from hedge fund to mutual fund success.

On the other hand, quant shops like AQR Funds, are finding success similar to Litman Gregory’s, although they would likely attribute it to their portfolio constructions being based on “factor premia.” (Disclaimer: While personally I’m a Cliff Asness fan, I’ve experienced a chronic lack of transparency from AQR Funds, which makes it hard for me to recommend it.)

In their new book, “Your Complete Guide To Factor-Based Investing,” Andrew Berkin and Larry Swedroe argue that if a factor is to be deemed worthy of investment (as distinguished from the “factor zoo”) it must be persistent, pervasive, robust, investable, and intuitive. So, is Litman Gregory’s Masters Funds approach worthy of investment? Does its strategy persistent across different fund categories for example? Fact is performance as yet of its long-time Equity and Smaller Cap Masters Funds is undistinguished, unlike that of its Alternative Strategies and International Masters Funds.

Our colleague Ed Studsinski remains skeptical: “You are paying a higher than average fee for the benefit of the vendor’s due diligence, which can be very thorough but … are you really getting the five best ideas from each of the sub-advisors?” He adds: “The other thing we have seen with Vanguard is that a multiple manager situation can often result in the cancelling each other out.”

Indeed, at the simply outstanding Litman Gregory Masters Funds Due Diligence Forum for the Alternative Strategies Fund held recently in San Francisco, Jeffery Gundlach’s outlook could not have been more different than that of John Burbank’s. Here are some examples:

  • Gundlach stated he’s “completely out of financials,” while Burbank stated he’s “never been more bullish on financials.”
  • Gundlach thinks “oil is in a perpetual bear market.” Basically, while tech can bring down cost of extraction, OPEC can drop prices to where profits remain nil for any competition. Burbank is bullish on oil.
  • Gundlach thinks EM is one of few undervalued markets. Burbank thinks EM will get crushed as republicans push through their America First agenda, including the border tax.
  • Gundlach is skeptical on China, but bullish on India. Burbank is bullish on China.

The irony is that access to the hedge fund strategies run by both these money managers represents one of the more compelling reasons to own Alternative Strategies.

Bottom Line

Will Litman Gregory’s Alternative Strategies Fund protect investors during the next significant equity drawdown? Will it protect investors from raising interest rates? Will it deliver attractive returns relative to conservative and moderately-conservative benchmarks, like 3-Month LIPOR, Barclay’s US Aggregate Bond Index, and traditional 80/20% or 60/40% bond/equity allocations … across “all weather” markets with volatility below equities?

Answer: Many indications suggest it will.

Fund Website

Litman Gregory continues to maintain a good website filled with background and updates on its Master Funds. I remain impressed with the firm’s openness, transparency with shareholders, and responsiveness to our many inquiries.

Grandeur Peak Global Stalwarts/Grandeur Peak International Stalwarts (GGSYX/GISYX), April 2017

By Samuel Lee

Objective and strategy

Grandeur Peak calls fast-growing, high-quality stocks with market capitalizations above $1.5 billion “stalwarts”. They are too big for Grandeur Peak’s small- and micro-cap funds, but too good to let go, so Grandeur Peak rolled out two funds to hold them.

It is a little appreciated fact that most of the gains in the stock market are driven by a handful of runaway winners; most stocks earn sub-par returns. Grandeur Peak’s strategy is to try to find them when they’re small—the tinier, the better—and ride them up. Founder Robert T. Gardiner made an ungodly sum of money applying this strategy for the lucky shareholders of Wasatch Micro Cap (WMICX) from 1995 to 2006.

Here’s how a 2000 New York Times article described Gardiner’s strategy:

“To choose the 80 or so stocks in the fund, he first looks at companies with annual earnings and revenue growth of at least 15 percent. … Next, he screens the stocks for stable or increasing operating return on assets, or earnings before interest and taxes, divided by company assets other than cash and intangibles. …To help make his final choices, he visits more than 100 companies a year.”

Grandeur Peak builds on this very successful formula. The firm’s analysts screen the global market for quality stocks, which usually have high margins, low earnings/revenue volatility, high (and increasing) returns on capital, minimal debt and restrained share issuance. Once promising stocks have been found, the analysts look to see if they have good business models, competent and honest leadership, and room for more growth.

Analysts travel the world to investigate particularly interesting companies. (Grandeur Peak has a public “touch tracker” showing how many companies their analysts have visited.) The sheer amount of legwork they put into visiting obscure stocks in remote locales creates an informational edge; many of the firms they’ve visited are rarely if ever contacted by analysts. This due diligence is important because screening for attractive statistical traits in emerging-markets micro-cap stocks will also surface some (perhaps many) companies engaging in accounting fraud.

Stocks that pass this gantlet get an extensive earnings model built. The decision to buy is determined by a “quality/value/momentum” matrix, where the stocks with the highest quality, cheapest valuations, and strongest business momentum get the biggest weights (with a cap of around 3%). High quality stocks that are too expensive are put on a watch list. Positions are frequently monitored and revised, leading to turnover that has ranged from 20% to 50% across all their funds.

The process has worked well. Most of Grandeur Peak’s funds have beaten their peers and benchmarks, some by crushing margins.


Grandeur Peak Global Advisors, LLC, located in Salt Lake City, Utah, was founded in 2011 by Robert Gardiner, Blake Walker and Eric Huefner. All three worked together at Wasatch Advisors and many key hires also came from Wasatch. The firm managed $2.9 billion as of 2016 end and employs about 32 people, most of whom are in research or investment roles. Thankfully, the firm doesn’t have a chief marketing officer.

The firm’s principals have shown admirable restraint. Grandeur Peak could easily quadruple assets by monetizing its track record but has held true to their promise to keep assets in their small- and micro-capped strategies capped at $2 billion to $3 billion. All the firm’s micro- and small-cap funds are hard closed.

Recently Grandeur Peak announced a partnership with Rondure Global Advisors, taking a minority stake in the firm. Rondure and Grandeur Peak share office space, research analysts, and operations. Rondure is launching international funds that may overlap with Grandeur Peak’s funds. I am not concerned about potential conflicts of interest yet because Rondure likely won’t reach a size where it matters for at least a couple of years. Rondure is also pursuing a “core” strategy, which should reduce its overlap with Grandeur Peak’s growth-oriented approach.


Randy Pearce and Blake Walker are the portfolio managers. Robert Gardiner is “guardian” portfolio manager, where his role is to act as a consultant to Pearce and Walker.

Pearce is lead portfolio manager of the Stalwarts funds. He was the firm’s first hire in 2011 and his ascent has been swift. He became co-director of research in 2015 and chief investment officer this year. Pearce is guardian portfolio manager of Grandeur Peak Global Reach (GPRIX) and had stints helping run Grandeur Peak International Opportunities (GPGIX) and Grandeur Peak Emerging Markets Opportunities (GPEIX).

He has a CFA and an MBA from UC Berkeley’s Haas School of Business. Prior to business school, he worked at Wasatch as a research analyst from 2005 to 2009. Gardiner has singled out Pearce for praise in his letters. Pearce picked the firm’s first 20-bagger, Australian asset manager Magellan Financial Group.

Walker is chief executive officer and co-founder. In addition to the Stalwarts funds, Walker manages Grandeur Peak Emerging Markets Opportunities (GPEIX), Grandeur Peak Global Opportunities (GPGIX), and Grandeur Peak International Opportunities (GPIIX). He had stints managing Grandeur Peak Global Reach (GPRIX) and Grandeur Peak Global Micro Cap (GPMCX).

At Wasatch, he co-managed Wasatch Global Opportunities (WIGOX) with Gardiner and Wasatch International Opportunities (WIIOX). He had a brief stint managing Wasatch Emerging Markets Small Cap (WIEMX).

Gardiner is chairman and co-founder. In addition to the Stalwarts funds, he’s guardian portfolio manager of Grandeur Peak Global Micro Cap (GPMCX). With Walker he co-manages Grandeur Peak Global Opportunities (GPGIX) and Grandeur Peak International Opportunities (GPIIX).

He was a long-time employee (and later partner) of Wasatch Advisors, where he managed Wasatch Micro Cap (WMICX), Wasatch Micro Cap Value (WAMVX), and Wasatch Global Opportunities (WIGOX).

The criss-crossing of portfolio management responsibilities reflects Grandeur Peak’s team-oriented process. While Gardiner and Walker are still relatively young, the widespread delegation of responsibilities helps cultivate future talent and mitigates worries about succession. That said, I can’t rule out the possibility that Grandeur Peak’s fantastic results are driven by the principals’ non-replicable abilities. Daniel Chace, who co-managed Wasatch Micro Cap with Gardiner for three years, produced mediocre returns for over a decade after Gardiner left the fund, despite having years to observe and learn from Gardiner.

Strategy capacity and closure

Grandeur Peak estimates its Stalwarts strategy can roughly handle $5 billion to $7 billion. The Stalwarts mutual funds have about $386 million as of March-end but there are also separate accounts and other vehicles that run the strategy.

Manager incentives

Portfolio managers are given relatively small base salaries and paid bonuses only when their funds beat the median fund manager in the relevant Morningstar category or the primary benchmark over 1- or 3-year periods. Anything below median peer performance or benchmark performance results in no bonus; the full bonus is only paid for top-quartile peer performance or more than 400 basis points versus the primary benchmark.

This compensation structure is sensible. It penalizes below-benchmark performance and pays out linearly as performance surpasses peers or the benchmark.

Gardiner and Walker have equity ownership of the firm; Pearce likely has synthetic equity ownership. For Gardiner and Walker, their incentives are tied much more strongly to the overall financial success of the firm than to the performance of the Stalwarts funds.

As of April-end 2016, Walker had $100,001-$500,000 in each of Global Stalwarts International Stalwarts; Pearce had $100,001-$500,000 in Global Stalwarts and $50,001-$100,000 in International Stalwarts; and Gardiner had $500,001-$1,000,000 in Global Stalwarts and $100,001-$500,000 in International Stalwarts. The managers’ personal allocations suggest that they like Global Stalwarts version over International Stalwarts, but I suspect it’s driven by diversification considerations as Grandeur Peak has no U.S.-only funds.

Overall, the portfolio managers’ incentives are well-aligned with shareholders’. The firm’s principals have consistently behaved in a way that indicates they care about producing superior risk-adjusted returns more than maximizing fee income.

Expense ratio

The Global Stalwarts Fund charges 1.17% for its Investor class shares and 0.93% for its Institutional class shares on assets of $191.3 million. 

The International Stalwarts Fund charges 1.14% for its Investor class shares and 0.89% for its Institutional class shares on assets of $1.7 Billion. 

(July 2023)


Grandeur Peak Global Stalwarts Fund

Grandeur Peak International Stalwarts Fund

SamLeeSam Lee and Severian Asset Management

Sam is the founder of Severian Asset Management, Chicago. He is also former Morningstar analyst and editor of their ETF Investor newsletter. Sam has been celebrated as one of the country’s best financial writers (Morgan Housel: “Really smart takes on ETFs, with an occasional killer piece about general investment wisdom”) and as Morningstar’s best analyst and one of their best writers (John Coumarianos: “ Lee has written two excellent pieces [in the span of a month], and his showing himself to be Morningstar’s finest analyst”). He has been quoted by The Wall Street Journal, Financial Times, Financial Advisor, MarketWatch, Barron’s, and other financial publications.  

Severian works with high net-worth partners, but very selectively. “We are organized to minimize conflicts of interest; our only business is providing investment advice and our only source of income is our client fees. We deal with a select clientele we like and admire. Because of our unusual mode of operation, we work hard to figure out whether a potential client, like you, is a mutual fit. The adviser-client relationship we want demands a high level of mutual admiration and trust. We would never want to go into business with someone just for his money, just as we would never marry someone for money—the heartache isn’t worth it.” Sam works from an understanding of his partners’ needs to craft a series of recommendations that might range from the need for better cybersecurity or lower-rate credit cards to portfolio reconstruction. 

Launch Alert: 361 US Small Cap Equity ASFQX

By David Snowball

On December 30, 2016, 361 Capital Management launched 361 US Small Cap Equity (ASFQX). This fund is the newest embodiment of an investment strategy initiated by John Riddle and Mark Jaeger of BRC Investment Management. Messrs. Riddle and Jaeger co-founded BRC in 2005, then merged with 361 Capital in October 2016. BRC was managing about $800 million in assets at the time of the merger, 361 had about $1.3 billion.

What do you need to know?

The strategy is thoughtful and distinctive.

The portfolio is driven the predictable and irrational behavior of other investors. The boom in passive investing was spurred on by efficient market theorists, who labored under the delusion that investors were rational and fully-informed, hence that prices were always “right.” Since every security was, they argued, valued more-or-less correctly, there was no reason to use active managers to pursue “price discovery,” that is, to determine the fair market value of a security.

A bunch of smart people, in and outside of finance, rolled their eyes at this nonsense. The most rudimentary reading of financial history repeatedly, unequivocally, demonstrated that prices were frequently, laughably wrong. Investors would pay the equivalent of 200 years’ worth of earnings for shares of one stock while refusing to pay five years’ worth for another, stock prices jumped around two- to four-times more than a firm’s earnings did, single tulip bulbs fetched the price of an entire house and the value of the land under Japan’s Imperial Palace was once greater than the value of all the land in California. And then it wasn’t.

The task was to identify the drivers and predictable patterns of irrationality. Riddle and Jaeger are among those who believe they did. In particular, they found exploitable patterns of irrationality surrounding favorable earnings announcements or upward earnings revisions.

The managers use two sets of screens: first, a behavioral screen surrounding earnings events and, second, a valuation screen since they found that low-priced stocks are subject to even greater mispricing than most. They then create an evenly weighted, sector neutral, 75-125 stock portfolio.

The managers are richly experienced.

Mr. Riddle was one of the earliest researchers to publish in behavioral finance, with his first article appearing in 1991. In the years between that early research and the founding of BRC, he was President and CIO of Duff & Phelps Investment Management and CEO and CIO of Capital West Asset Management LLC, among other things. Mr. Jaeger was a managing director at Duff & Phelps and a financial executive at Comcast, AT&T Broadband and Arthur Andersen. They describe their investment team as having “over 96 years combined experience utilizing proprietary techniques to identify attractive securities [and] to maximize alpha capture.”

The strategy has performed exceptionally well.

They’ve accomplished those consistently solid returns while capturing over about 85% of the market’s downside. While these results reflect the performance of the strategy in a different vehicle (that is, separate accounts), those accounts were quite large and the results were generated consistently over time. Investors intrigued by the prospect of small-cap exposure that’s capable of generating independent alpha might well want to put 361 Small Cap on their due diligence list.

The “I” class shares of the fund carry 1.26% expense ratio, with a $2,500 minimum initial purchase. “Investor” shares have the same minimum but carry a 12(b)1 fee of 0.25%.

The fund’s website is 361 U.S. Small Cap Equity. It’s a decent site, but there’s substantially more depth of information available around the homepage for BRC’s Small Cap Equity Strategy.

Funds in Registration

By David Snowball

Some months, fund registrations are just weird. Perhaps that’s “the new normal,” a phrase that we’re allowed to use again now that former PIMCO chief Bill Gross and current PIMCO management have hugged, made up and announced that they can’t even remember what the silly fight was all about. PIMCO wrote a check of $81 million to Mr. Gross, which Mr. Gross rounded up to $100 million … and gave it to his own charitable foundation.  Beyond that, a fund about childhood, one with a $350 million minimum investment, nine Morningstar funds that you can’t have (and might not want), three inexplicable ones and a couple that are reasonably promising.

AlphaCentric Global Innovations Fund

AlphaCentric Global Innovations Fund will seek long-term growth. The plan is to buy “a diversified portfolio” of U.S. and foreign common stock of companies involved in innovative and breakthrough technologies across multiple sectors. The fund is non-diversified, which does rather raise questions about the preceding sentence. The managers can also hedge by holding inverse ETFs, volatility-linked ETFs or cash. The fund will be managed by Brian Gahsman, Chief Investment Officer for the sub-advisor, Pacific View Asset Management.  The opening expense ratio on no-load “I” shares is 1.75%.. The minimum initial investment will be $2,500.

American Beacon IPM Systematic Macro Fund

American Beacon IPM Systematic Macro Fund will seek long-term growth through a managed futures strategy; at base, a sort of trend-following strategy implemented, long and short, through futures contracts. The fund will be managed by two Swedish guys from IPM Informed Portfolio Management AB . Good news: the e.r. is just 1.8%. Bad news: the minimum initial investment is $350 million. Good news: you should get pretty good customer service, since the firm will earn $6.3 million in fees from you each year. Bad news: there’s no publicly-available evidence that they’re worth it.

Balter Invenomic Fund

Balter Invenomic Fund will seek long term capital appreciation. A spectacularly vague description of the fund’s investment strategy comes down to “it’s a long/short fund that might hold 25% in high yield bonds.” (They invest long in things that are “both undervalued and timely.” That’s the secret sauce recipe!) The fund will be managed by Ali Motamed. Mr. Motamed , now an Invenomic Capital Management, LP manager but formerly a manager with Boston Partners Long/Short Equity Fund, indisputably the best long/short fund on the market. The opening expense ratio has not yet been disclosed. The minimum initial investment will be.$5,000, reduced to $1,000 for various tax-advantaged accounts and accounts with an AIP.

Childhood Essentials Growth Fund

Childhood Essentials Growth Fund will seek long-term capital appreciation. The plan is to invest in “companies that derive a majority of their revenues from products and services related to raising children from newborn to age 18, such as pharmacies, national superstores, family restaurants, and children’s retail stores.” I wish them luck. The fund will be managed by Kevin Bush and Bahavana Khanna of KBK Capital Management. The opening expense ratio is 1.25% for “A” shares. The minimum initial investment will be $5,000.

Friess Small Cap Growth Fund

Friess Small Cap Growth Fund will seek capital appreciation. The plan is to invest in small growth companies (though not for long: the prospectus warns of a 250% annual turnover). This fund is the successor to the Friess Small Cap Trust, a private fund in operation since 2002. The prospectus shows only the record for the last three years of the Trust’s existence; during that period, it substantially outperformed the Russell 2000.The fund will be managed by Scott Gates, CIO of Friess Associates. Prior to that, he was co-CIO of Friess and Friess. The opening expense ratio for Investor shares will be 1.45%. The minimum initial investment will be $2,000.

Morningstar (nine funds)

Morningstar is launching a suite of nine funds for use in their managed portfolios; they will launch by late 2017 but will only be available through the Morningstar Managed Portfolio program. The prospectus is silent, so far, about both expenses and managers. The fund’s names and (utterly bland) missions are:

  • US Core Equity –an all-cap domestic portfolio that still might be 20% international.
  • International Equity – an all-cap foreign portfolio that might also invest through ETFs, other mutual funds, closed-end funds and options.
  • Global Income – oddly, it invests “primarily” in income-producing equities, with “the balance” in bonds and cash.
  • Total Return Bond – a “diversified portfolio of fixed-income instruments of varying maturity and duration”
  • Municipal Bond – munis!
  • Defensive Bond – will seek capital preservation by investing in a diversified, global bond portfolio
  • Multi-Sector Bond – presumably more of the same (since the language describing the portfolio investments is the same as the above funds), but different.
  • Unconstrained Allocation – stocks and bonds, with no note about what’s “unconstrained” here
  • Alternatives – up to eight liquid alts strategies.

OFI Pictet Global Environmental Solutions Fund

OFI Pictet Global Environmental Solutions Fund will seek capital appreciation by investing in a global portfolio of companies whose business it is to address environmental challenges. OFI Global Asset Management, Inc. is the manager, OppenheimerFunds, Inc. is the investment sub-adviser and Pictet Asset Management SA is the Fund’s investment sub-sub-adviser. (That’s actually the first sub-sub-adviser I’ve encountered; I could imagine some spoilsport warning of extra layers of expenses.) The opening expense ratio has not been announced. The minimum initial investment will be $1,000.

T. Rowe Price Retirement Income 2020 Fund

T. Rowe Price Retirement Income 2020 Fund will seek to provide monthly income. It’s a fund of funds that will make monthly payouts to generate income for those in retirement, though non-retirees are welcome, too. The fund will be managed by Jerome Clark and Wyatt Lee. The opening expense ratio will be 0.74%. The minimum initial investment will be $25,000.

Upright Assets Allocation Plus Fund

Upright Assets Allocation Plus Fund will seek total return. The plan is to keep 60-80% in a core portfolio and invest 20-30% in an opportunistic tactical portfolio (or, if “economic and market conditions [are] suitable for such,” they might switch to some poorly-explained options-based strategy). The fund will be managed by David Y.S. Chiueh, president of Upright Financial Corp. The opening expense ratio will be 1.75%. The minimum initial investment will be $2,000.

Upright Growth & Income Fund

Upright Growth & Income Fund will seek current income consistent with growth of capital. The plan is to invest in stocks (50-80%), bonds (10-40%) and options. Up to 30% might be invested overseas. The fund will be managed by . The opening expense ratio will be 1.95%. The minimum initial investment will be. And no, I have no idea of why that strategy warrants a 1.95% fee especially when the Upright Growth Fund (UPUPX) has managed to trail 90% of its peers over the past 15 years and sports an even higher e.r.

Manager changes, March 2017

By Chip

It’s really rare that the world’s largest investment firm stages a full-scale revolution, but the scope of BlackRock’s changes this month – including the dismissal of 30 investment professionals including seven lead managers and the shift of billions in assets to new quant-based disciplines – seems to have that feel. Not quite a whiff of desperation but certainly determination. And, oh yes, investing legend Mark Mobius has moved into the shadows and 70 other funds underwent less changes.

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Ticker Fund Out with the old In with the new Dt
MQRAX ACR Multi-Strategy Quality Return (MQR) Fund No one, but . . . Neel Shah and Mark Unferth have joined Tim Piechowski, Willem Schilpzand and Nicholas Tompras in managing the fund. 3/17
NRFAX AEW Real Estate Fund John Garofalo will no longer serve as a manage to the fund Matthew Troxell, Gina Szymanski and J. Hall Jones, Jr. will continue to manage the fund. 3/17
ALMAX Alger SMid Cap Growth Fund Daniel Chung is no longer listed as a portfolio manager for the fund. Joshua Bennett, H. George Dai, and Matthew Weatherbie will now manage the fund. 3/17
BDSAX BlackRock Advantage Small Cap Core Fund No one, but . . . Travis Cooke is joined by Raffaele Savi and Richard Mathieson in managing the fund. 3/17
CSGEX BlackRock Advantage Small Cap Growth Fund No one, but . . . Travis Cooke is joined by Raffaele Savi and Richard Mathieson in managing the fund. 3/17
MDCPX Blackrock Balanced Capital Fund No one, but . . . David Rogal and Todd Burnside join Philip Green, Rick Rieder, Bob Miller and Peter Stournaras 3/17
MDBAX BlackRock Basic Value Fund Bartlett Geer is no longer listed as a portfolio manager for the fund. Carrie King is joined by Joseph Wolfe in managing the fund. 3/17
BACHX BlackRock Emerging Markets Dividend Luiz Soares is no longer listed as a portfolio manager for the fund. Erin Xie will continue to manage the fund. 3/17
BLSAX BlackRock Emerging Markets Long/Short Equity Fund Dan Blumhardt and Clint Newman are no longer listed as portfolio managers for the fund. Jeff Shen is joined by David Piazza, Gerardo Rodgriuez, and Richard Mathieson in managing the fund. 3/17
BMCAX BlackRock Flexible Equity Fund No one, but . . . Todd Burnside joins Peter Stournaras in managing the fund 3/17
BMCAX BlackRock Flexible Equity Fund Peter Stournaris will no longer serve as a portfolio manager for the fund. Travis Cooke, Raffaele Savi and Richard Mathieson will manage the fund. 3/17
BROAX BlackRock Global Opportunities Thomas Callan, Ian Jamieson, and Simon McGeough are no longer listed as portfolio managers for the fund. Raffaele Savi, Kevin Franklin and Richard Mathieson will manage the fund. 3/17
MDGCX BlackRock Global Small Cap Murali Balaraman and John Coyle are no longer listed as portfolio managers for the fund. Raffaele Savi, Kevin Franklin and Richard Mathieson will manage the fund. 3/17
BREAX BlackRock International Opportunities Thomas Callan, Ian Jamieson, and Simon McGeough are no longer listed as portfolio managers for the fund. Raffaele Savi, Kevin Franklin and Richard Mathieson will manage the fund. 3/17
MDLRX BlackRock Large Cap Core Fund No one, but . . . Peter Stournaras is joined by Todd Burnside in managing the fund. 3/17
MDLHX BlackRock Large Cap Growth Fund No one, but . . . Peter Stournaras is joined by Todd Burnside and Lawrence Kemp in managing the fund. 3/17
MRLVX BlackRock Large Cap Value Fund No one, but . . . Peter Stournaras is joined by Todd Burnside in managing the fund. 3/17
BDRFX BlackRock Mid Cap Value Opportunities Fund Murali Balaraman and John Coyle are no longer listed as portfolio managers for the fund. Tony DeSprito, Franco Tapia, and David Zhao will manage the fund. 3/17
MDPCX BlackRock Pacific Oisin Crawley will no longer serve as a portfolio manager for the fund. Andrew Swan will continue to manage the fund. 3/17
BGSAX BlackRock Science & Technology Opportunities Portfolio Thomas Callan is no longer listed as a portfolio manager for the fund. Tony Kim will continue to manage the fund. 3/17
MDSWX BlackRock Small Cap Growth Fund II No one, but . . . Travis Cooke is joined by Raffaele Savi and Richard Mathieson in managing the fund. 3/17
BMEAX BlackRock U.S. Opportunities Portfolio No one, but . . . Simon McGeough joins Thomas Callan and Ian Jamieson on the management team. 3/17
MILCX BNY Mellon Large Cap Stock Fund No one, but . . . Syen Zamil joins C. Wesley Boggs, William Cazalet, Ronald  Gala, Peter  Goslin in managing the fund. 3/17
MIMSX BNY Mellon Mid Cap Multi-Strategy Fund No one, but . . . John Porter joined the management team of Todd Wakefield, Robert Zeuthen, David Daglio, James Boyd, Dale Dutile, Joseph Feeney, Thomas Murphy, Steven Pollack, Amy Croen, Michelle Picard, William Scott Priebe, William A. Priebe, and Caroline Lee Tsao. 3/17
MISCX BNY Mellon Small Cap Multi-Strategy Fund No one, but . . . John Porter joined the management team of Todd Wakefield, Robert Zeuthen, David Daglio, James Boyd, Stephanie Brandaleone, Joseph Corrado, Dale Dutile, and Caroline Lee Tsao. 3/17
MMCIX BNY Mellon Small/Mid Cap Multi-Strategy Fund No one, but . . . John Porter joined the management team of Todd Wakefield, Robert Zeuthen, David Daglio, James Boyd, Edward Walter, Stephanie Brandaleone, Joseph Corrado, Dale Dutile, and Caroline Lee Tsao. 3/17
CTRAX Calamos Total Return Bond Jeremy Hughes is no longer listed as a portfolio manager for the fund. John P. Calamos, R. Matthew Freund, John Hillenbrand, Eli Pars, Jon Vacko, and Chuck Carmody continue to manage the fund. 3/17
BUYAX Catalyst Buyback Strategy Fund Choice Financial Partners, Inc. no longer serves as the adviser of the fund and Timothy McCann is no longer is the portfolio manager. Michael Schoonover will continue to manage the fund. 3/17
SOPAX Clearbridge Dividend Strategy Fund No one, but . . . Scott Glasser joins Michael Clarfeld, Harry Cohen and Peter Vanderlee in managing the fund. 3/17
CHNAX Clough China Fund Francoise Vappereau is no longer serving as a co-manager Brian Chen, who arrived 8/16, remains 3/17
GEFIX CMG Mauldin Solutions Fund Andrew Lo, Alexander Healy, Michael Hee, and Przemyslaw Grzywacz are no longer listed as portfolio managers for the fund. Stephen Blumenthal and John Mauldin will now manage the fund. 3/17
CAGAX Columbia Acorn Emerging Markets Fund Fritz Kaegi will no longer serve as a portfolio manager for the fund. Stephen Kusmierczak, Louis Mendes, and Satoshi Matsunaga will continue to manage the fund. 3/17
ACRNX Columbia Acorn Fund Fritz Kaegi will no longer serve as a portfolio manager for the fund. P. Zachary Egan  and Matthew Litfin will continue to manage the fund. 3/17
FSEAX Fidelity Emerging Asia Colin Chickles will no longer serve as a portfolio manager for the fund. John Dance will continue to manage the fund. 3/17
FCAAX Frost Aggressive Allocation Messrs. Thompson, Hopkins, Telling, Tarver, Bergeron, Mendez, Bambace and Duncan Thomas Stringfellow with “appropriately trained analysts” is in charge 3/17
FDSFX Frost Conservative Allocation Messrs. Thompson, Hopkins, Telling, Tarver, Bergeron, Mendez, Bambace and Duncan Thomas Stringfellow with “appropriately trained analysts” is in charge 3/17
FACEX Frost Growth Equity Fund AB Mendez and Tom Stringellow will no longer serve as a portfolio manager for the fund. John Lutz will continue to manage the fund. 3/17
FAKDX Frost KempnerMulti-cap Deep Value  Equity Messrs. Thompson, Hopkins, Telling, Tarver, Bergeron, Mendez, Bambace and Duncan Harris L. Kempner and M. Shawn Gault remain 3/17
FAKSX Frost MidCap Equity Messrs. Thompson, Hopkins, Telling, Tarver, Bergeron, Mendez, Bambace and Duncan Thomas Stringfellow with “appropriately trained analysts” is in charge 3/17
FASTX Frost Moderate Allocation Messrs. Thompson, Hopkins, Telling, Tarver, Bergeron, Mendez, Bambace and Duncan Thomas Stringfellow with “appropriately trained analysts” is in charge 3/17
FADVX Frost Value Equity Fund Tom Bergeron and Tom Stringfellow are no longer listed as portfolio managers for the fund. Craig Leighton will continue to manage the fund. 3/17
HGGIX Harbor Global Growth Fund, which is changing its name to Harbor Global Leaders Fund Marsico Capital Management is no longer a subadvisor to the fund and Thomas Marsico is no longer listed as a portfolio manager for the fund. Sunil Thakor will manage the fund and Sands Capital Management will be the subadvisor to the fund. 3/17
HTECX Hennessy Technology Fund Winsor Aylesworth and David Ellison will no longer serve as portfolio managers for the fund. Daniel Hennessy, Ryan Kelley, and Brian Peery will now manage the fund. 3/17
JEVAX John Hancock Emerging Markets Fund No one, but . . . Mary Phillips joins the team of Joseph Chi, Jed Fogdall, Allen Pu and Bhanu Singh in managing the fund. 3/17
JISAX John Hancock International Small Company Fund Henry Gray will no longer serve as a portfolio manager for the fund. Mary Phillips joins the team of Joseph Chi, Jed Fogdall, Arun Keswani and Bhanu Singh in managing the fund. 3/17
JASOX John Hancock New Opportunities Fund Henry Gray will no longer serve as a portfolio manager for the fund. Juliet Ellis, Juan Hartsfield, Joseph Chi, Jed Fogdall, Joseph Craigen, Daniel Miller, Joel Schneider, Justin Bennitt, Gregory Manley, and Davis Paddock will continue to manage the fund. 3/17
JGIAX JPMorgan Income Andrew Headley joins the fray Andrew Norelli remains as co-manager 3/17
KACVX Keeley All Cap Value Fund Edwin Ciskowski will no longer serve as a portfolio manager for the fund. Brian Keeley will continue to manage the fund. 3/17
GHCAX Leland Currency Strategy Fund FDO Partners, LLC is no longer managing any portion of the fund’s assets. The changes to the management team are not yet clear. 3/17
MNILX Litman Gregory Masters International No one, but . . . David Marcus, and Evermore Global Advisors, joins the management team of David Herro, Jeremy DeGroot, Howard Appleby, Jean-Francois Ducrest, James LaTorre, W. Vinson Walden, Mark Little, Rajat Jain, Benjamin Beneche, and Fabio Paolini. 3/17
LSBAX Loomis Sayles Core Disciplined Alpha Bond On June 1, 2017, William Stephens plans to retire. We wish him well. Lynne Royers, heretofore co-manager, takes over 3/17
MYITX Mainstay International Opportunities Fund Gaurav Gupta is no longer listed as a portfolio manager for the fund. Ping Wang joins Andrew Ver Planck and Jeremy Roethel on the management team for the fund. 3/17
EXITX Manning & Napier International No one, but . . . Kasey Wopperer has joined Scott Shattuck and Jeffrey Donlon on the management team. 3/17
MFVAX MassMutual Select Equity Opportunities Messrs. Bierig, Coniaris and Hudson are out after two years Scott Linehan of T. Rowe Price and Donald Kilbride of Wellington Management take the helm. 3/17
DVRAX MFS Global Alternative Strategy Jose Andres and Nathan Shetty are onboard Ben Nastou and Natalie Shapiro remain, so the team moves to four 3/17
MNDAX MFS New Discovery Fund Effective October 1, 2017, Paul Gordon will no longer be listed as a portfolio manager to the fund. Michael Grossman will continue to manage the fund. 3/17
NMEDX Northern Multi-Manager Emerging Markets Debt Opportunity Fund Lazard Asset Management will no longer subadvise the fund. Ashmore Investment Management joins BlueBay Asset Management in subadvising the fund. 3/17
PLOWX Perritt Low-Priced Stock Brian Gillespie steps down after five years Founding co-manager Michael Corbett becomes the sole manager 3/17
PNVAX Putnam International Capital Opportunities Fund Brett Risser and Robert Shoen are no longer listed as portfolio managers for the fund. Karan Sodhi, Spencer Morgan and Andrew Yoon will now manage the fund. 3/17
PNSAX Putnam Small Cap Growth Fund Pam Gao is no longer listed as a portfolio manager for the fund. William Monroe will now manage the fund. 3/17
PSLAX Putnam Small Cap Value Fund No one, but . . . Eric Harthun has been joined by David Diamond in managing the fund. 3/17
QTRAX Quaker Global Tactical Allocation Fund Robert Andres is no longer listed as a portfolio manager for the fund. Paul Hoffmeister and Thomas Kirchner will now manage the fund. 3/17
RQSIX RQSI Small Cap Hedged Equity Fund Benjamin McMillan is no longer listed as a portfolio manager for the fund. Jaideep Karnawat is now running the fund. 3/17
TDTFX TD Target Return Fund Anish Chopra and Jonathan Shui will no longer serve as managers to the fund. Geoff Wilson and Anna Castro will now run the fund. 3/17
TCWAX Templeton China World Fund Mark Mobius is no longer listed as a portfolio manager for the fund. Eddie Chow continues to manage the fund. 3/17
TEDMX Templeton Developing Markets Trust Mark Mobius, Tom Wu, Dennis Lin, and Allan Lam are no longer listed as portfolio managers for the fund. Chetan Sehgal will now manage the fund. 3/17
TAEMX Templeton Emerging Markets Balanced Fund Mark Mobius, Allan Lam, Dennis Lim, and Tom Wu are no longer listed as portfolio managers for the fund. Michael Hasentab and Laura Burakreis remain and are joined by Chetan Sehgal. 3/17
TEMMX Templeton Emerging Markets Small Cap Fund Mark Mobius, Tom Wu, Dennis Lin, and Allan Lam are no longer listed as portfolio managers for the fund. Chetan Sehgal will now manage the fund. 3/17
TFMAX Templeton Frontier Markets Fund Allan Lam and Dennis Lim are no longer listed as portfolio managers for the fund. Mark Mobius and Tom Wu will remain as portfolio managers to the fund. 3/17
DVIBX Transamerica Partners Balanced Rick Perry is no longer listed as a portfolio manager for the fund. Brian Westhoff, Doug Weih, Matthew Buchanan, Bradley Doyle, Tyler Knight, Steven Lee, Tim Snyder, and Raffaele Zingone will continue to manage the fund. 3/17
IIVAX Transamerica Small/Mid Cap Value Short-termers Brett Hawkins and Kevin McCreesh move on Kenneth Burgess continues in a role his assumed in since 2011 3/17
BNAAX UBS Dynamic Alpha Fund Andreas Koester and Jonathan Davies no longer serve as portfolio managers. Nathan Shetty and José Ignacio Andrés will now manage the fund. 3/17
BNGLX UBS Global Allocation Fund Andreas Koester and Jonathan Davies no longer serve as portfolio managers. Philip Brides will be joined by Gian Plebani on the management team. 3/17
PWTAX UBS U.S. Allocation Fund Andreas Koester is no longer a portfolio manager of the fund. Gregor Hirt and Paul Lang will assume portfolio management responsibilities for the fund. 3/17
VEXPX Vanguard Explorer Fund Dana Walker and Jennifer Pawloski are no longer listed as portfolio managers for the fund. Brian Angerame, Derek Deutsch, Aram Green and Jeffrey Russell join the team of Binbin Guo, Brian Schaub, Chad Meade, Daniel Fitzpatrick, Ryan Edward Crane, James Stetler, Michael Roach, and Kenneth Abrams. 3/17
SRVEX Victory Diversified Stock Fund No one, immediately. However, effective May 12th, the existing team of Lawrence Babin, Paul Danes, Carolyn Rains, Martin Shagrin, and Thomas Uutala, will no longer manage the fund. Michael Gura will manage the fund, effective May 12, 2017 3/17
SAVAX Virtus Bond Fund Christopher Kelleher will retire, effective April 30, 2017 Stephen Hooker will join David Albrycht in managing the fund. 3/17
VCOAX Virtus Credit Opportunities Fund Edwin Tai is no longer listed as a portfolio manager for the fund. Eric Hess joins the team of David Albrycht, Timothy Dias, and Patrick Fleming in managing the fund. 3/17
HIMZX Virtus Low Duration Income Fund Christopher Kelleher will retire, effective April 30, 2018 Lisa Baribault will join David Albrycht and Benjamin Caron in managing the fund. 3/17
IIBPX Voya Balanced Portfolio Christine Hurtsellers will no longer serve as portfolio manager for the fund. Matthew Toms is being added as a portfolio manager, joining Chrostopher Corapi and Paul Zemsky. 3/17
INGBX Voya Global Bond Fund Christine Hurtsellers will no longer serve as portfolio manager for the fund. Mustafa Chowdhury and Brian Timberlake will continue to manage the fund. 3/17

Briefly Noted

By David Snowball


Third Avenue Management, Marty Whitman and former president David Barse have agreed to a $14.25 million cash settlement of a lawsuit brought on behalf of investors in Third Avenue Focused Credit. The fund, if you recall, made headlines first through huge losses in the completely illiquid positions that dominated the portfolio, then by moving all of its assets into a locked trust which kept investors from reclaiming their money. The plan was to liquidate the illiquid when “rational” prices prevailed; after about 18 months, that process is still not complete. The whole mess has cost Third Avenue over $3 billion in assets and threatened its survival. (Reuters)

Naturally, none of the parties involved admit to having done anything wrong. The payment is just to … ummm, eliminate distractions or help us focus on the future or some such.

Steven C. Vannelli, whose Gavekal KL Allocation Fund we profiled back in 2014 when it was named the GaveKal Knowledge Leaders Fund (GAVAX/GAVIX), has purchased a majority stake in his firm which allows it be become independent of their long-time partners at GaveKal Research (Hong Kong). In consequence, he’s dropping the GaveKal part of the name. The firm is now Knowledge Leaders Capital and they’re in the process of removing the GaveKal name from both their mutual fund and their ETF. Morningstar has changed the fund’s peer group three times in six years (from world stock to large growth to aggressive allocation), which makes assessments of relative performance a bit iffy. It had a weak 2016 against its Lipper flexible portfolio peers but has historically produced substantially better returns for substantially less risk than they.

Mark Mobius is finally stepping back. Franklin Templeton has announced that Mr. Mobius, now 80 years old, is stepping away from management of 12 strategies including four funds available to U.S. investors. He’s stepping aside from his flagship Developing Market Trust (TEDMX), which he and Tom Wu began managing in 1991. In all that time, TEDMX had only one other person on the management team, Allan Lam (1991-2004, 2011 – present). For now, he remains co-manager, with Mr. Wu, of Templeton Frontier Markets Fund (TFMAX). It’s curious that he’s been retained only on the weakest of all his funds.

This is part of a larger set of management changes at Franklin-Templeton, which are substantial enough for Morningstar to lower their assessment of the firm from “Positive” to “Neutral.” The complex has seen huge outflows over the past three years; in response, they cut 300 staff worldwide and began reorganizing their investment management structures. A year ago, they rolled Mr. Mobius’s EM Group into another unit and moved the Chief Investment Officer title to Stephen Dover, who then became responsible for combined operations.

Mr. Mobius, meanwhile, has been relegated to a series of what seem to be largely symbolic roles. Citywire reports that he’ll be “sharing ideas and engaging with clients and media to share his insights” (“Mobius drops 12 funds as ‘next gen’ of PMs step up,” 03/21/2017).

Briefly Noted . . .


AMG Managers Cadence Emerging Companies Fund (MECAX) announced an unusually large reduction in their management fee, from 1.25% to 0.69% as of June 1, 2017. At the same time, the expense ratio cap will fall from 1.42% to 0.89%. To be clear, that’s a remarkable offer from a five-star fund that’s beaten its peers, by our calculation, for the past 1-, 3-, 5-, 10- and 20-year periods.

CLOSINGS (and related inconveniences)

Fidelity Inflation-Protected Bond Fund (FPINX) closed to new investors on March 31, 2017. Over the last three years, the fund has operated with a perfect correlation (100) to its sibling Fidelity Inflation-Protected Bond Index (FSIQX). The so-called “active” fund charges 0.25% more than the index and, not surprisingly, returns about 0.25% less. One might reasonably imagine a liquidation in its future.

Effective April 30, 2017, FMI International Fund (FMIJX) will be closed to new investors. When we profiled the fund in 2012, we suggested “all the evidence available suggests that FMI International is a star in the making.” Four years and $4.5 billion later, Morningstar initiated coverage with a “Silver” rating and the observation that the fund offered “a superb record with strong downside protection.”

Effective March 1, 2017, the Principal Global Opportunities Equity Hedged Fund (PGOHX) closed to new investors. Ummm … $7 million in AUM, trails 96% of its peers over the past year. I suspect it won’t stay closed for long.

RMB Mendon Financial Services Fund (RMBKX) “soft closed” on March 15, 2017.


On March 31, 2017, the adviser to the Meridian Funds, Arrowpoint Asset Management, changed its name to “ArrowMark Colorado Holdings, LLC, d/b/a ArrowMark Partners.” No idea of why and no evidence of other changes underway.

The Berwyn Funds (Berwyn, Cornerstone and Income) will pass into history at the end of June, 2017, to be reborn as the Chartwell Funds. Each Chartwell Fund will have the same investment objective and principal investment strategy as the corresponding Berwyn Fund, except that Berwyn Cornerstone Fund (BERCX) will become Chartwell Mid Cap Value Fund with “similar, but not identical, investment objectives, as well as different investment strategies and risks.” There are, as yet, no details on those differences. The star of this show is clearly the $1.7 billion Berwyn Income (BERIX), so the continuity there is wise and reassuring.

There’s a load of BlackRock name changes working through, as BlackRock moves assets from human-driven portfolios to computer-driven ones; the latter are its “Advantage” funds. BlackRock Global SmallCap Fund has been renamed BlackRock Advantage Global Fund (MDGCX), BlackRock Mid Cap Value Opportunities Fund is renamed BlackRock Mid Cap Dividend Fund (BDRFX) and. BlackRock Pacific Fund has become (here’s the sexy one!) BlackRock Asian Dragon Fund (MDPCX).

On May 1, 2017 Brown Advisory Emerging Markets Small-Cap Fund (BIANX) is rechristened as Brown Advisory – Macquarie Asia New Stars Fund, at which point it will focus its portfolio on small and medium cap companies in Asia (excluding Japan.

Subsequent to the removal of EquityCompass as the fund’s managers, Catalyst/EquityCompass Buyback Strategy Fund (BUYAX) became Catalyst Buyback Strategy Fund.

Century Capital Management, advisor to Century Shares Trust (CENSX) and Century Small Cap Select Fund (CSMVX), has agreed to be acquired by Congress Asset Management in the second half of 2017. Expect the fund names to change but the fund manager, Alexander Thorndike, to remain the same under the new regime. We’ll share details when we can.

Effective March 24, 2017, Class T shares of all Fidelity funds were renamed Class M. I tingle.

Harbor Global Growth Fund has been reborn as Harbor Global Leaders Fund (HGGIX), subsequent to installing Sands Capital as the fund’s new adviser.

Effective April 3, 2017, Ivy Emerging Markets Local Currency Debt Fund (IECIX) becomes Ivy Pictet Emerging Markets Local Currency Debt Fund and Ivy Targeted Return Bond Fund (IRBIX) is renamed Ivy Pictet Targeted Return Bond Fund.

On March 28, 2017, MassMutual Select Mid Cap Growth Equity II Fund was changed to the MassMutual Select Mid Cap Growth Fund (MEFZX).  They assure us that “The investment objective, investment strategies, management, and all other aspects of the Fund remain unchanged.” Hmmm … it’s a five-star fund with low expenses that has outperformed 90% of its peers over time, so that “remain unchanged” part is okay with us, I guess. (I know MassMutual was just waiting for that approval.)

As on March 28, 2017, MassMutual Select Focused Value Fund became MassMutual Select Equity Opportunities Fund (MFVAX); Harris Associates (a/k/a Oakmark) was excused from managing the fund and T. Rowe Price and Wellington took the reins. It’s been high beta (1.3 or so) with negative alpha, so the move seems sensible on face.

Effective as of March 10, 2017, RiverPark Commercial Real Estate Fund became RiverPark Floating Rate CMBS Fund (RCRIX). Morningstar’s site seems not to recognize either fund name or the ticker symbol.

Virtus Asset is adopting the Ridgeworth family of funds. In consequence of that move, the word “Virtus” has been substituted for “Ridgeworth” in the names of the 28 funds. So, for example, RidgeWorth Ceredex Mid-Cap Value Equity Fund (SMVTX) became Virtus Ceredex Mid-Cap Value Equity Fund. In two cases, the name change also includes naming the fund’s subadviser.

RidgeWorth Innovative Growth Stock Fund became …

Virtus Zevenbergen Innovative Growth Stock Fund

RidgeWorth International Equity Fund is now …

Virtus WCM International Equity Fund

Effective May 8, 2017, the other 35 Virtus Funds will change their names to highlight the funds’ subadvisers. For example

Virtus Credit Opportunities Fund will become …

Virtus Newfleet Credit Opportunities Fund

Virtus Multi-Strategy Target Return Fund is rebranded…

Virtus Aviva Multi-Strategy Target Return Fund

Virtus Select MLP and Energy Fund …

Virtus Duff & Phelps Select MLP and Energy Fund, and so on.


The AdvisorOne CLS Global Growth Fund (CLBLX) has closed and will “discontinue its operations” on April 28, 2017.

Advisory Research International All Cap Value Fund (ADVEX) is subject to termination, liquidation and dissolution on April 24, 2017.

AlphaCentric/IMFC Managed Futures Strategy Fund (IMXAX) liquidated on March 30, 2017. In 16 months of operation, the fund booked a loss of 26% for its investors and trailed virtually all of its peers in a troubled category.

AMG Managers Cadence Capital Appreciation Fund (MPAFX) is merging into AMG Renaissance Large Cap Growth Fund (MRLTX), subject to the approval of shareholders, on or about July 31, 2017. The Renaissance fund is smaller, younger and better-performing.

At the end of December, 2016, Balter Event-Driven Fund (BEVRX/BEVIX) “indefinitely suspended all sales of fund shares.” On March 6, 2017, they issued a supplement to their prospectus to reiterate that fact. The fund converted from a hedge fund at the start of 2016, trailed 80% of its peers over the course of 2016, raised no assets and suspended sales at the end of 2016. On March 28, they announced their decision to liquidate the fund on April 28, 2017.

Bishop Street Strategic Growth Fund (BSRIX) is expected to cease operations and liquidate on or about April 7, 2017.

BlackRock Advantage International Fund (BDNAX) has closed and, by May 5, 2017, “assets of the Fund will have been liquidated completely.”

BMO’s board announced that BMO Mortgage Income Fund (BMTAX) has been renamed BMO Strategic Income and its investment strategy has changed to become identical to the strategy at BMO TCH Intermediate Income Fund (BAAIX); that is, from “provide current income” to “maximize total return consistent with current income.” Then, once it had become a clone of BAAIX, it would absorb that fund into itself. So, Mortgage Income + Intermediate Income = Strategic Income.

On January 18, 2017, the Board of Trustees approved a plan of liquidation for Fidelity Municipal Income 2017 Fund (FAVIX). The fund is expected to liquidate on or about June 30, 2017.

Franklin Global Government Bond Fund (FGGAX) will terminate and liquidate the fund on or about June 16, 2017. Something seems to have gone just a bit awry for them in early November:

The $13 million Geneva Advisors Emerging Markets Fund (GNLRX) will be closed and liquidated as of the close of business on April 28, 2017.

Effective immediately, Hatteras Long/Short Equity Fund (HLSAX), Long/Short Debt Fund (HFIAX) and Managed Futures Strategies (HMFIX) funds have closed and will“ return each Fund’s investor capital” on April 26,2017. Between them, the three funds have $48 million in investor capital (and a total of five Morningstar stars) to distribute.

IronBridge Global Fund (IBGFX) will be liquidated on or around March 31, 2017.

Janus Capital recommended, and the Board approved, a proposal to merge Janus Fund (JANSX) into Janus Research Fund (JAMRX) as a way “to streamline its large cap offerings in order to better position these offerings within the marketplace.” The firm launched Janus Fund in February 1970 under the leadership of Thomas Bailey, who guided it for 16 years. James Craig followed for 13, Blaine Rollins for six, then a bunch of people for three or four years each. Janus Fund’s current managers will not have a role in managing the merged fund.

John Hancock Global Real Estate Fund (JHGRX) will close at the end of April and will liquidate on or about May 25, 2017.

Leland International Advantage Fund (LDAAX) liquidated on March 31, 2017.

Effective March 17, 2017, Lyons Small Cap Fund (LFSAX) closed to new investors; it liquidated two weeks later. I like the turn of phrase they used: “the Board of Trustees has determined to close the Fund and wind up its affairs.” The fund has been in operation for 16 months.

The $170 million Manning & Napier Dynamic Opportunities (MDOSX) becomes a Former Fund on April 18, 2017.

Mirae Asset Global Great Consumer Fund (MGUAX), having discovered that investors aren’t particularly interested in Global Great Consumers, will liquidate on or about April 28, 2017.

MN Rainier Intermediate Fixed Income Fund (RIMFX) will liquidate at the close of business on May 1, 2017.

Neuberger Berman Long Short Multi-Manager Fund (NLMIX) will liquidate on or about April 20, 2017.

I really respect folks who choose to speak clearly, even in bad times: “The Royce Fund’s Board of Trustees approved a plan of liquidation for Royce International Small-Cap Fund (RISNX), to be effective on May 1, 2017. The Fund is being liquidated primarily because it has not attracted and maintained assets at a sufficient level for it to be viable.”

Schooner Hedged Alternative Income Fund (SHAAX) sailed off into the sunset on March 31, 2017. It never quite played the normal “market neutral” game:

USA Mutuals/Carbon Beach Deep Value Fund (DEEPX) liquidated at the close of business on March 30, 2017. The fund was launched four months ago and not marketed, so most of its assets were held by insiders. No word on why the firm decided to reverse course so quickly.

On or about May 10, 2017, Virtus Strategic Income Fund (VASBX) and Virtus Emerging Markets Debt Fund (VEDAX) will terminate, liquidate and evaporate.

Wilmington Strategic Allocation Aggressive Fund (WAAAX) and Wilmington Strategic Allocation Conservative Fund (WCAAX) will liquidate on April 27, 2017. Both were small, mild-mannered funds-of-funds with low expenses and good risk management; in a booming market, I suspect that potential investors were worrying more about booking short-term gains than managing long-term risks.