Monthly Archives: March 2018

March 1, 2018

By David Snowball

Dear friends,

I’m often a bit confused. Sometimes it’s as simple as the stuff in my pantry. Why, for instance, is cranberry sauce canned upside down? Look! The part you’ve supposed to open is on the bottom.

Sometimes it’s the challenge of figuring other people out. What was Snap’s board thinking when they gave their CEO at $637 million (an amount equal to 75% of the company’s revenue) bonus? Someone named Kylie Jenner shared the following 19 words on Twitter: “”so does anyone else not open Snapchat anymore? Or is it just me? Ugh, this is so sad.” How on Earth did that convince investors to trim $1.6 billion in Snap’s market value in 24 hours?

In the Republican gubernatorial primary, one candidate ran a freakish, offensive, racist, xenophobic and homophobic ad attacking the incumbent conservative governor. The ad had one woman thank the governor for paying for her many abortions, a gentleman in a dress for allowing them to use the women’s restroom, a white guy in a bandana thanked him for letting terrorists run free or some such. And the only response the governor could muster was to allege that the ad was bankrolled by Democratic politicians. Not that it was either (a) wrong or (b) repulsive, just that Democrats were somehow behind it. Uhhh … beyond the lack of evidence for the assertion, why would they bother? It’s very confusing.

My special confusion this month was occasioned by the hiccup in the stock market that started in the last few days of January and ran for a week or so. The Morningstar benchmark for a portfolio that was between 50-70% invested in equities would have lost a bit over 5% through the worst of it. Within a week, that was pared back to a 3.5% loss. In truth, I was rather more shaken to have learned that I’d gained 3.5 pounds (grrrr!) than that I’d lost 3.5%.

Nevertheless, people acted like the world was ending. “The US market meltdown is spreading across Asia and Europe!” (Quartz, 2/5/2018). Wall Street is “shell-shocked” (Business Insider, 2/12/2018). “The market meltdown was just an appetizer” (Morgan Stanley, 2/21/2018). “The numbers that explain this week’s stock market crash” (Vox, 2/6/2018). “Stock Market CRASH: Nikkei 225 PLUNGES 700 points as global market MELTDOWN continues” (Daily Express (London), 2/9/2018). “‘Playtime is officially over’: $4 trillion wiped out in global market meltdown” (Financial Post, 2/6/2018, with the ironic note “This content is sponsored by CFA Institute”). “What’s Really Causing This Global Stock Market Meltdown?” (The Motley Fool Canada, 2/6/2018). “Despite surging volatility and rising rates, no need to panic — yet” (CNBC, 2/7/2018).

Really? Global market meltdown? Shell-shock?

Goodness, folks.

In the month of February, all risk assets declined in value. Value stocks dropped about 4.8%, growth stocks a couple points less. Relatively conservative balanced funds dropped about 2%, relatively aggressive ones dropped a couple points more. International fund categories dropped between 3.5 – 5.5%. Intermediate bonds dropped by less than a percent, munis by less than half a percent.

At the end of which, domestic stock investors are sitting on 12% annualized gains over the past five years, balanced investors have booked around 8% annually and international investors have made about 9%. (Sorry bond guys: you’re under 2%.) Those are, for equities, mighty healthy gains.

Things I think I think

  1. If you felt panic in February, you need to double-check your asset allocation.
  2. If you felt panic in February and you’ve already double-checked your asset allocation, you need to double-check your priorities. Get away from the news feed and away from your portfolio. Get out of the house. Try a local live music venue. Walk a bit more and wonder at the change of seasons. Read a book. At base, do anything but allow short-term emotional reactions control long-term rational actions.
  3. The market is wildly overvalued. Most of its recent gains have already come from multiple expansions (that is, from people willing to pay ever more for the exact same thing) rather than from economic expansion. It’s been wildly overvalued for years and might remain so for a while longer.
  4. When it ceases to be overvalued, there’s a good prospect that it might do so in a several of 2000 or 3000 point drops on the Dow (you’ll remember that Dan Wiener offered a chart converting historic market declines into current point values, which means that a one day drop of 5,000 points on the Dow would not be unprecedented) and will likely do so by falling sharply then rebounding then falling again. If the past is any indication, those obsessed with stock market averages will want their heads to explode. (Ick. Not in the kitchen, please.)
  5. Neither the average ETF nor the average mutual fund will help you sleep any better through it all. The average ETF is market-cap weighted, which means it’s driven by market momentum. And the average large mutual fund is little more than an index fund in disguise.
  6. Exceptional managers, risk-attuned asset allocations and even some thoughtfully-constructed ETFs can help you sleep better. The key is simple: you need to take a bit of responsibility now, look at where your portfolio sits and ask yourself, “is this where I want to be when the storm hits?”

We’ve been pretty consistent with that message for a while now. If you’re new to MFO, you might want to look through some of the articles that have tried to help guide you through a risk assessment. “Time to put on your big-boy pants and check your investments” (6/2017) walks you through how to estimate the likely maximum loss (called a drawdown) that your current portfolio faces. Start there. If you don’t like the answer, then look at “On the discreet charm of a stock light portfolio” (11/2014) walks through the asymmetric effects of adding stocks to your portfolio: generally a poor risk-return move for short-term goals, a better one if your target is decades off. If you’re interested in some options for exploiting the “revaluation event” when it comes, look at “The Dry Powder Gang, updated” (7/2017) which identifies the small, hardy group of absolute value investors who are willing to hold cash on your behalf, rather than fling the last of your money into the market froth.

In the months ahead, we’ll try to offer more options and perspectives to help you prepare. We start with this month’s profile of FAM Value (FAMVX), which has weathered more storms than 90% of its peers. There’s an Elevator Talk with Ali Motamed, who helped manage one of the best long-short funds around and who has just launched a disciplined long-short fund of his own. It’s interesting that that fund, Balter Invenomic (BIVIX) didn’t blink at the January-February market moves. We’re sharing a Launch Alert for JOHCM Global Income Builder, an income-oriented, absolute value fund run by a team recently departed from First Eagle. And there’s more in the pipeline.

Be of good cheer. We’ll get through it together. We always have.

Thanks to all the folks who support MFO

Those of you visiting for the first time might find it odd that there is no advertising here, no pay-to-play links and no paywalls. That’s made possible by the willingness of readers to make a tax-deductible contribution (MFO is a non-profit corporation, recognized as a 501(c)(3) by the IRS) to help keep the lights on. Sometimes those are $5 gifts, sometimes much larger ones. They are, in all cases, important to us and immensely welcome. Regardless of the size of your gift, you have our thanks. In a gesture of thanks and encouragement, folks who contribute $100 or more are offered a year’s access to MFO Premium. MFO Premium houses our mutual fund database and screeners, along with a steadily widening array of tools that you’d normally have to pay thousands of dollars to access: rolling average calculations, fund correlation matrices, sophisticated risk calculations and more.

We write a short e-note to everyone who contributes $100. We use this space to celebrate – with a certain concern to mask folks’ identities just in case they didn’t wish to be public – all of the other folks who’ve reached out to us.

Thanks, as ever, go to Wayne, Robert, Jason and Michael. Welcome, guys! Thanks to the folks who’ve “subscribed,” that is, who’ve set up recurring monthly contributions: Greg, Brian and Deb. Finally, to our friend, director and recent retiree, BobC. We’ve so got to get you writing again, sir. It’s good for your health and for our readers!

A special thanks this month to Ted, our discussion board’s long-tenured, endlessly engaged Linkster. Ted starts each day at 5:30 a.m. with a cup of coffee and a round of postings to our discussion board. The vast majority of those posts are links to articles about funds (often), investing (frequently) and life (which we designate as “off-topic”). This month we celebrate Ted’s 20,000th link, which occurred on February 26, 2018. That complements the 36,000+ threads he started at FundAlarm, our revered predecessor site.

We’re grateful to Ted and wish him great cheer, good health, fine coffee and many links to come.


It Was the Best of Times ……

By Edward A. Studzinski

“I have to change to stay the same.”

Willem de Kooning

Horses for Courses

One of the columnists I have a great deal of time for is John Authers, who writes the “Markets Insight” column for the Financial Times of London. On 22 February, his column discussed the publication of this year’s edition of the Global Investment Returns Yearbook produced annually for Credit Suisse by the Elroy Dimson, Paul Marsh, and Mike Staunton. Historically they have looked at stock and bond returns for different markets, going back to 1900. This year for the first time the study included housing and some collectibles, with indices constructed going back to 1900 for wine, stamps, violins, artwork, precious metals, and gems.

Wine, at 3.7% a year came in second to equities. Gold is a non-starter.

Cutting to the chase, equities have outperformed all other asset classes over the long-term. Going back to 1900, equities have produced a real return of 6.5% a year. Wine, at 3.7% a year came in second to equities. Gold is a non-starter, with a real return of 0.7% a year over that period. It has underperformed cash and bonds since 1900. Gold is also much more volatile. It is safe to say you don’t really want to own it except in periods of hyper-inflation or hyper-deflation.

For me, the real shocker was housing. Most of us have grown up with the American dream of owning your own house, taken from the example of parents who bought post-WWII, and then stayed in the same house for fifty or sixty years. Unfortunately, the U.S. has been since 1900 the weakest country studied in terms of the real return from housing, coming in at 0.3% a year. And while there was a decade in the nineties when the U.S. housing market managed equity-like real returns of 6.5% a year, that may have been an aberration.

Now that 0.3% a year for the long-term is still positive for housing, so it at least remains a store of value, right? Last year’s tax act may have put paid to that assumption. Take the example of a couple entering their retirement years, both in their late sixties. For most of the last thirty years, they have lived in a small brownstone in Chicago’s Old Town neighborhood, 2200 square feet in size, with real estate taxes of roughly $18,000 a year. Assuming no mortgage at this point, cash flow requirements are taxes, utilities, and maintenance. If they opt to sell and move to a luxury doorman building, the math becomes more interesting. Assume you purchase a luxury condominium for $3,300,000. Given the Obama tax bill, you can only deduct the interest on the first $1,000,000 of a mortgage. The maintenance fee for the unit is $1500 a month, covering all utilities except electricity. But then you get to real estate taxes – and if the unit has been resold three or four times since the building was built, you have been giving the tax assessor some pretty good market sales numbers for his database. If you assume that the property taxes on that $3,300,000/3200 square foot unit are $44,000 a year, you have $62,000 of annual costs to live there. And now there is a cap on deductibility above $10,000 in state and local taxes. So the cash flow numbers become unstable. And you are probably wiping out the Social Security income for both partners.

It strikes me that this is not a unique set of facts. Rather, it is all too common in cities like Chicago, Boston, New York, San Francisco, etc. If people bought these high-end condominiums and co-ops in their later working years, who is going to buy them from them in their late sixties and early seventies when they are effectively cash-flow stretched? And oh, by the way, over the last three years there has been no price appreciation on that unit, none, zilch, as the identical unit one floor down is on the market for $3,000,000 or $300,000 less.

Rental housing might work if you were changing locations, going from an urban to more rural environment. But staying in the same location the cost of renting comparable housing stock, as one friend in New York City pointed out to me, far exceeds the cost of staying in the same property where you are (and this individual is in another townhouse/brownstone). It just seems to me that we have a whole class of property owners for whom the recent tax reforms mean they most likely cannot afford to stay where they are, BUT, we have also eliminated the incremental buyer demand for those units. Is there a conclusion here? Yes, as in most things financial, timing is everything.

And now a word from Ed’s neighboring state, Iowa.

(Just sayin’, Ed. Love, David)

Water, Water Everywhere

Another real property belief that I think past assumptions about are totally wrong in today’s environment is that there would always be ready liquidity and constant demand for waterfront real estate. The thought that but for the occasional hurricane causing flood surge and beach erosion, coastal oceanfront real estate represents a trophy asset is, at this point, simply incorrect. In many instances the numbers no longer work given the increase in premiums in flood insurance (which are still inadequate for the risks being borne) as well as for the increased premiums for general homeowner’s insurance required. While there are segments of the population for whom coastal land and housing ownership works, albeit more expensively, there are an increasing number of home owners who can neither sell their homes nor afford to remain in them.

And this is not limited to single family homes. An attorney friend of mine went to visit a client in Florida, who lived at a high-rise waterfront condominium in the tony section of Miami. She noticed as she drove into and parked in the parking lot that it had two inches of water covering it. And the flooding ran all the way up to the front door of the building and into it. She inquired of her client what this was all about. He indicated that the flooding was now a constant problem, and there was no way to solve it. Note that this constant flooding presents the issues of mold, rot, and creatures living in the water. And apparently, Miami is built on porous rock, so the rising sea level cannot be stopped in many city areas.

Culture and Conflicts

When I speak about conflicts of interest in the investment world, I have noticed that many people’s eyes glaze over. And in Chicago, where as journalist Mike Royko opined, the unofficial moto is “Ubi est meum?” or “Where’s mine?” this is even more likely to be the case.

Imagine a situation, allegedly not apocryphal. Star Analyst and Star Portfolio Manager are in an investment firm, where they are part of the anointed future next generation leadership and brain trust. Star Analyst comes across an equity investment which he discerns has the potential to be the classic Peter Lynch ten-bagger. He tells his friend Star Portfolio Manager. They decide to hitch their financial fortunes to the idea.

Most investment firms would have a code of ethics that would give priority to the clients of the firm, especially where the scalability of the idea was capitalization constrained. Star analyst and star portfolio manager are told that priority in the investment should be given to the clients. Star Analyst and Star Portfolio Manager both threaten to resign if they are not permitted to buy as much of the investment idea as they wanted, shutting out the clients. The leadership of the firm allegedly caves.

Which brings us to the one advantage that index funds offer, in addition to low costs. And that is, that the index is the index. No one is going to get an advantage in being able to purchase a unique investment idea. Dilbert, who often seems to have hidden cameras in many investment firms today put it best in his February 24/25 Calendar. Frame one has ASOK saying, “I followed your investment advice and lost all of my savings in the stock market.” Frame two has the CEO saying, “Did I mention that past performance is not an indication of future returns?” Frame three has ASOK asking, “Then how does ‘advice’ actually work?” In the same frame, the CEO replies, “It only works for the people that give it.”

Funds for the Gun-Shy

By David Snowball

I grew up in western Pennsylvania where even the elementary schools let out classes on the first day of small game season. I’m the son of a veteran and a hunter, and the grandson of a sheriff. I spent a lot of mornings, just after dawn, in blaze orange, walking as quietly as a seven-year-old could. I owned a single-barrel 20 gauge Remington and cared for it well. (I also owned a .22 with a scope I never quite mastered.) I was thrilled when I got to stay overnight in a hunting camp with “the men,” though I modestly regretted both the jar of Limburger cheese that someone had left the season before and the creepy sounds you heard when visiting the outhouse at night. I’ve sheltered in the eerie calm of a white pine grove whose branches touched the ground and completely tented us during a sudden squall. I’ve enjoyed venison and rabbit, though somewhat less, a friend’s attempt at homemade liver paté. I get guns.

And yet I don’t dodge the simple fact that 38,551 of us were killed by guns in 2016. Mostly suicides, rarely in headline-grabbing mass shootings, rarely because of mental illness, often enough because of alcohol and stupidity. While there are countries with far higher rates of gun violence, they’re countries where drug cartels control entire towns and militant groups kidnap schoolgirls by the hundreds; there are no developed countries with near the problem we have.

Others have noticed and a national debate – alternately marked by great passion and hysteria, by thoughtful reflection and calculated misinformation – rages. That strikes me as healthy. In the ideal, we’d all start with respect for those with whom we disagree, a desire to learn, and a willingness to make things better rather than a demand that we get them perfect. (Radical, yes?)

That debate has spilled over into the investment community. Almost all equity investors are also gun owners. Or owners of the stocks of firearms firms, through their ownership of passive or active funds. Two of the largest shareholders of America’s gun manufacturers, for instance, are Vanguard and BlackRock (“You Might Be Giving Gun Companies Money, Even if You Don’t Own a Gun,” NYT, 2/26/2018). About 10% of the stock of Sturm Ruger (RGR), for example, is owned by just four Vanguard index funds. Morningstar has offered a near-encyclopedic list of funds with such exposure, but also offers the reassurance that it’s almost always “tiny.”

Investors’ reactions to that exposure, and to the prospect of reducing it, vary. Warren Buffett says it would be “ridiculous” for Berkshire Hathaway to avoid doing business with gun owners. (Berkshire doesn’t have any investments in firearms firms and the phrase “doing business with gun owners” isn’t exactly the way most folks phrase it, but his point is that he’s not letting personal beliefs drive investment decisions.) Vanguard rightly holds that mutual funds would be an awfully blunt instrument for trying to effect social change. BlackRock, State Street and others believe that holding firearms and related stocks, then engaging with company management on issues of social responsibility, is the most productive approach.

That said, many investors prefer investments that are aligned with their beliefs. They do so for one of those reasons:

  1. They believe that their investment decisions can make the world a better place. That’s sometimes referred to as “impact investing,” which might occur when you lend money to a community revitalization project.
  2. They believe that they should not underwrite activities which they detest, regardless of whether they can materially reduce such activities. I might, for instance, be planning on getting rich by selling cigarettes to elementary school children; the mere fact that withholding your investment won’t stop me doesn’t justify underwriting me.

The evidence is unambiguous: the imposition of such value judgments does not reduce your investment returns, though it doesn’t reliably increase them either.

There are a number of funds which marry strong investment returns with screens which forbid investments in weapons, among other things. They include purely passive, passive and active strategies, equity, balanced, and income strategies, domestic and global strategies.

To help you examine some of the options, we started with the list of mutual funds and ETFs at the Forum for Sustainable and Responsible Investment. The master list identifies the particular social, environmental and governance (ESG) screens for several hundred funds and ETFs. We identified all funds that avoided investments in firearms, then used the screener at MFO Premium to identify funds with other desirable characteristics: strong returns, stable management, good risk controls, affordable minimums and no sales loads. The funds below represent our attempt to give you a sense of the range of investment options for folks interested in manifesting their personal values in their investment portfolio. This list is not exhaustive and each of these funds reflects a constellation of ESG concerns; they are not single-issue investors. That said, they are worthy of further research.

Appleseed Fund (APPLX)

A “world allocation” or “flexible portfolio” fund, but a durn quirky one. The fund avoids alcohol, tobacco, gambling, weapons, pornography and “too big to fail” banks. It’s a global all-cap portfolio with a surprisingly high allocation to cash and gold, reflections of the managers’ skepticism of the market. The prior generation of managers were nailed for a series of SEC violations, but the firm has new managers, tighter controls and a perfectly clean record. The fund has returned 7% annually since inception, 1.5% higher than its peers. $2,500 minimum and 1.14% expenses.

Ariel Appreciation (CAAPX)

A mid-cap value fund of the high risk – high return variety. The fund is not generally socially-screened but it does draw the line at tobacco and guns: “The Fund does not invest in companies whose primary source of revenue is derived from the production or sale of tobacco products or the manufacture of handguns. We believe these industries may be more likely to face shrinking growth prospects, litigation costs and legal liability that cannot be quantified.” It’s a reasonably concentrated, low-turnover strategy with above average volatility (beta is 1.32 and both standard deviation and downside deviation are high). The fund has returned 11.1% annually since inception, 1.7% better than its peers. $1,000 minimum and 1.12% expenses.

Aspiration Redwood (REDWX)

Okay, I have to admit that this strikes me as a fascinating financial institution. (Their description of themselves is “a financial firm you can fall in love with.” Chip, who quickly identified this as a plausible first fund for her son, agrees.) This is a concentrated (25 stock), high turnover (130%) domestic equity strategy sub-advised by UBS. The manager excludes firms “with more than 5% of sales in industries such as alcohol, tobacco, defense, nuclear, GMO, water bottles, gambling and pornography, and will entirely exclude all firearms issuers and companies within the energy sector.” The fund is just two years old; its 17.2% annual return tops its peers by 2.3% annually. Those gains are accompanied by relatively high volatility. $100 minimum initial investment and 0.51% expenses. (Mostly; the firm actually allows you to set your fees.)

Azzad Wise Capital Fund (WISEX)

WISEX is an international short-term bond fund that doesn’t quite invest in … well, international short-term bonds. It invests, primarily, in alternate instruments with bond-like features: wakala and sukkuk. In addition, up to 10% of the portfolio can be in income-producing equities. It positions itself as an alternative to CDs or money market accounts. The fund does not invest in corporations that derive substantial revenue (defined as more than 5% of total revenue) from alcohol, tobacco, pornography, pork, gambling, hydraulic fracturing, private prisons, or weapons industries. The portfolio is managed for Azzad by Federated Investment Management of Pittsburgh. (Go, Steelers!) The fund’s 2% annualized returns are modest, but its volatility is even more so: the fund has a standard deviation of 1.8% while its Lipper peer group clocks in at 6.7%. Its maximum drawdown (since launch in 2010) was -2.7% while its peers dropped 12.3%. $4,000 minimum initial investment and 1.29% expense ratio.

iShares MSCI USA ESG Select ETF (SUSA)

This passive ETF tracks the MSCI USA ESG Select index. It invests in mid- and large-cap domestic firms with the highest ESG ratings. Firearms are among the industries excluded from the index. The notion of ESG-screened ETFs is relatively new, so few have even three-year track records. Of those, SUSA has the highest Sharpe ratio. Its 14.9% annualized return over the past five years best its multi-cap core peers by 1.3% annually. Expenses of 0.50%.

Parnassus Mid-Cap (PARMX)

Morningstar pretty much raves about this fund, praising everything from performance and risk-management to the management team and their distinctive approach to ESG screens. Analyst Wiley Green declared it “Mid-cap ESG investing at its finest. Parnassus Mid Cap has it all for environmental, social, and governance investors seeking mid-cap exposure. The fund’s distinct ESG-focused investment process is applied by a quality management team at a reasonable cost.” They’re looking for the best 40 stocks which offer wide moats that protect market share and profitability, relevancy over the long term, which provides a compounding growth component, quality management teams … and a favorable three-year investment horizon.” Like all Parnassus funds, they flatly exclude “companies with significant revenues derived from the manufacture of weapons.” The fund’s 9.2% annual returns over the past decade best its peers by 1.5% annually, and do so with substantially lower volatility. $2,000 minimum and 0.99% expenses.

TIAA-CREF Social Choice Equity (TICRX)

This is awfully close to an index fund, and intentionally so. It tries to replicate the characteristics of the Russell 3000 index but does so after the application of ESG screens. If you’re not a Friend of the FAANGs, you’ll be glad to hear that Apple, Amazon, and Facebook didn’t survive their labor relations, human rights, and environmental stewardship screens though Netflix and Google/Alphabet did. The managers (a team from MSCI) generally applies positive screens (i.e., they’re looking to include “good actors” rather than merely exclude “bad actors”) but they do rule out those responsible for “alcohol, tobacco, military weapons, firearms, nuclear power and gambling products.” The fund’s 9.4% annual returns over the past decade best its peers by 0.8% annually, and do so with substantially lower volatility. $2,500 minimum and 0.46% expenses.

FAM Value (FAMVX/FAMWX), March 2018

By David Snowball

Objective and strategy

The managers seek to maximize long-term return on capital. They can invest in firms of any size, but mostly invest in mid- to large-cap US firms and invest through both common stocks and convertibles. They pursue a patient value approach to investing which favors companies which meet at least one of these three criteria:

  1. records of above-average growth of sales and earnings over the past 5 to 10 year span and are selling at a price which Fenimore believes is at a discount from the true business worth of the company
  2. become severely depressed in the market because of adverse publicity and are, thus, selling at a deep discount to the perceived future potential value of the company; and
  3. the capability of achieving accelerated growth of earnings and the current price understates this potential.

In many cases that translates to growth companies temporarily selling at value prices, which helps explain the divergence between Fennimore’s value discipline and Morningstar’s assignment of them to the mid-cap growth group.

In general the managers prefer to remain fully invested though stretched valuations have led them to hold about 8.5% cash currently (12/31/17).


Fenimore Asset Management, Inc. Fenimore was founded in 1974 by Thomas Putnam, who still serves as portfolio manager and chairman. The firm is headquartered in Cobleskill, New York, and provides advisory services to individuals, pension and profit sharing plans , corporations, and non-profit organizations throughout the US. The firm has $2.8 billion in assets under management, and offers nine investment platforms including the three FAM funds.


Thomas O. Putnam, Chairman, John D. Fox, CFA and Andrew P. Wilson, CFA of Fenimore Asset Management, Inc. Mr. Putnam has managed the Fund since the Fund’s inception in 1987. Mr. Fox has co-managed the Fund since 2000. Mr. Wilson has managed the Fund since July 17, 2017. Mr. Putnam co-manages the other two FAM funds while Messrs. Fox and Wilson are responsible only for this one.

Strategy capacity and closure

The advisor did not respond to a request for this information. Assuming that the managers want to maintain the freedom to hold a few small cap positions each of which represent 1-2% of the portfolio, which is where they are now, the strategy could accommodate at least $3 billion.

Management’s stake in the fund

Substantial and widespread. Details are below.

Active share

“Active share” measures the extent to which a fund’s portfolio differs from its benchmark or its peers. The general notion, supported by considerable research, is that if your portfolio looks an awful lot like your index’s, then your portfolio is going to act an awful lot like the index’s. Managers earn their keep through their willingness to make independent, contrary, and sometimes wrong, judgments about where to place their investors’ money.

The leading researcher on active share claims, “Research has shown that as a group and over fairly long periods of time:

  • funds with low Active Shares have tended to underperform their benchmarks net of costs
  • funds with high Active Shares have tended to outperform their benchmarks net of costs, especially among funds that do not trade frequently, among small cap funds and among funds that do not have very large assets under management.”

The subject is controversial (see “Interpreting Active Share”), in part because large funds with low active share push back against being called “closet indexes” and in part because the early research was rather too simplistic.

As a general rule, a large cap fund with an active share above 90% is highly active. FAM Value qualifies as a high active share fund.

Graph from

Graph from

Opening date

January 2, 1987.

Minimum investment

The minimum initial purchase is $500 for a regular account and $100 for an individual retirement account. The minimum subsequent investment is $50.

Expense ratio

1.19% on assets of $1.5 billion, as of July 2023. 


There’s something reassuring here.

Actually, there’s rather a lot reassuring here.

It starts with the clarity and simplicity of their strategy. The statutory prospectus captures the fund in all of three pages; and the principal investment strategy requires fewer than 100 words to explain.

It includes the stability of their team. The newest member of the management team has been on-board for seven years, which the others have 20 and 40 year tenures. The only person to leave the team departed 18 years ago. Four of the five shareholder services folks have been around since 1993, and the fifth since 1999.

It certainly includes unprecedented levels of insider ownership. Most investors know that it’s important for managers to have “skin in the game.” Funds with the highest levels of manager ownership outperform their peers in about two-thirds of rolling five and ten year periods. Sadly, about half of equity funds have zero manager ownership.  Fenimore is an outstanding exception to that rule; every manager is substantially invested in every FAM fund, including ones they don’t manage.

What’s less well known is that ownership by the fund’s trustees is also important. When a fund’s trustees have their own money at risk, they tend to be a lot more vigilant, expect far more thoughtful risk management and are far likelier to push for change when a fund under-performs. Sadly, industry-wide, it’s even more rare than manager ownership. Except at FAM. Every independent trustee is substantially invested in every FAM fund.

That’s all the more striking because Fenimore’s trustees make just under $20,000 for their service.

Finally, it ends with consistently excellent performance.

Lipper categorizes FAMVX as a multi-cap core fund, which strikes us as more accurate than Morningstar’s assignment of it to the mid-cap growth category. Why? In part because only 27% of the portfolio is invested in mid-cap growth stocks while the remainder of the portfolio is scattered across all nine style-boxes.

Below is the record of FAMVX’s performance against its multi-cap core peer group over each period we track. In any cell with the words “FAM win,” the performance of the fund was superior to that of its peers: absolute returns were higher, volatility was lower, and the risk-return balance was better.

  3 years 5 years 10 years 20 years Since inception
Total returns FAM wins FAM wins FAM wins FAM wins FAM wins
Maximum drawdown FAM wins FAM wins FAM wins FAM wins FAM wins
Standard deviation FAM wins FAM wins FAM wins FAM wins FAM wins
Downside deviation FAM wins FAM wins FAM wins FAM wins FAM wins
Bear market deviation FAM wins FAM wins FAM wins FAM wins FAM wins
Sharpe ratio FAM wins FAM wins FAM wins FAM wins FAM wins

MFO’s designation for the funds with the most compelling risk-return profile is “Great Owls,” a modest play on the Great Horned Owl which inspired our logo. “Great Owl” funds have delivered top quintile (that is, top 20%) risk-adjusted returns, based on Martin Ratio, in its category. The Martin Ratio, like the better known Sharpe and Sortino ratios, attempts to create a risk-return snapshot. The difference between Martin and the others is that Martin is more sensitive to mitigating deep losses. Our colleague (and impresario of MFO Premium) Charles Boccadoro writes, “After the 2000 tech bubble and 2008 financial crisis, which together resulted in a ‘lost decade’ for stocks, investors have grown very sensitive to drawdowns. Martin excels at identifying funds that have delivered superior returns while mitigating drawdowns.”

Of the 78 multi-cap core funds with records over 20 years or more, only two have earned Great Owl designations for the past three year, five year, 10 year and 20 year periods: FAM Value and Principal Capital Appreciation (CMNWX), a load-bearing fund.

Which is to say, FAM has a virtually unmatched record of consistency in serving its investors.

We find that reassuring.

Morningstar, which suspended coverage of the fund exactly five years ago, seemed to agree. Here are the titles from their last 17 reviews (starting with 2013 and going back to 2005) before they lost interest:

  • A rough patch doesn’t diminish this fund’s appeal.
  • This fund has been consistent.
  • This fund knows what it knows.
  • This fund has a proven formula.
  • This mutual fund channels Warren Buffet (sic).
  • This mutual fund is a fine core holding.
  • This mutual fund provides the best of both worlds.
  • This mutual fund is demonstrating its worth.
  • This is still a solid mutual fund.
  • This mutual fund is sensible.
  • This mutual fund is good at what it does.
  • It takes a specific mindset to own this mutual fund. (The mindset is “patient and long-term focused,” by the way.)
  • This mutual fund is a smart diversifier for a growthy portfolio.
  • We like this mutual fund’s disciplined approach.
  • This mutual fund would be a good diversifier.
  • This mutual fund is a strong mid-cap option.
  • This mutual fund’s approach isn’t conventional, but we find it compelling.

The “rough patch” mentioned in the last analyst review refers to the fact that the fund’s 11.3% return in 2012 trailed 75% of its peers.

Are there reasons for caution? Two come to mind. First, Mr. Putnam is closer to the end of his career than to its beginning. He’s been guiding the fund, and the firm, for 43 years and he’s around 73 years old. One might have reasonable concern about his changing role at the firm and with the firm’s succession planning. Second, the fund goes its own way without regard for the behavior of indexes or peers. Of necessity, that means that it can suffer stretches of relative and absolute underperformance. Relative to its Morningstar peer group, for example, if underperforms once every couple years. When MFO calculated the fund’s five-year rolling average for the past 20 years, the range of returns of (-5.6) to 20.9 with an average return of 8.3%. What does that mean? It means that there was one five-year stretch in the past 20 years that saw an average annual loss of 5.6%, though the average annual return for someone holding the fund for five years during that period was 8.3%. To be clear, that’s a much smaller loss and a much higher average gain than an investor in a broad-based index fund would have seen in the same period, but it is a loss nonetheless.

Bottom Line

At $1.2 billion, FAM Value is neither unknown nor unmanageable. It deserves to be better known, most especially by equity investors looking for a committed team, a value-sensitive strategy and a long, consistent record.

Fund website

FAM Value. The information on-site is pretty rich but it’s mostly in the form of periodic letters to shareholders. The thing most folks call a fact sheet is under the tab called “FAM Graph.”


Elevator Talk: Ali Motamed, Balter Invenomics (BIVIX)

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200 word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more.

Ali Motamed manages Balter Invenomic Fund (BIVIX), which launched in June 2017, but he’s been playing this game for far longer. Mr. Motamed was Co-Portfolio Manager of the Boston Partners Long/Short Equity Fund (BPLEX/BPLSX). In that role, Mr. Motamed was awarded Portfolio Manager of the Year in the Alternatives Category by Morningstar in 2014. Like many fund entrepreneurs, he chafed under the constraints of working within a large, bureaucratic organization. In October 2015, he left Boston Partners and founded Invenomic Capital Management with the intention to advise individuals, family offices, endowments, foundations, trusts, charitable organizations, and pension plans in an investment capacity. In 2017, he joined with Balter Liquid Alternatives to launch BIVIX.

What does “invenomic” mean? Good question. It’s a term invented by Mr. Motamed to try to capture his investing philosophy. “Autonomic,” he notes, “derives from Greek words for ‘self’ and ‘a system of rules that govern a particular field’. ‘Invenomic’ reflects my conclusion that investing must be approached as a rules-governed activity.”

The translation is this: investing offers you a million possible pitfalls and human nature offers you the prospect of falling into each, perhaps repeatedly. The solution is a quantitative system that creates structural safeguards against human frailty. By way of example, many professional investors revel in all of the contact they have with management teams. Mr. Motamed and his team, contrarily, stay as far from management teams as possible: “Generally speaking, companies whose stock we short are led by excellent communicators with charm and charisma. Their job is to create value for their shareholders, and having an overvalued stock should be a badge of honor. Very rarely do the leaders of these companies end up going to jail. What they do, however, is selectively disclose information that positions their company in a favorable light.” Invenomic’s solution is to maintain rigorous four page statistical profiles about each firm in its universe, where each of the data points illustrates something about a firm’s prospects that is more revealing than their management team’s sweet words.

The key differentiator, from his perspective, is a successful short book. Mr. Motamed argues that most long/short managers fail on the short side. They maintain too few shorts, they put too much money into each, they maintain a large short book when market conditions don’t warrant it and they view themselves as on a crusade against the management teams. Each of those mistakes limits the power of the short portfolio to generate alpha rather than just limiting beta; that is, Mr. Motamed thinks a good short portfolio should make money rather than just hedge volatility. BIVIX might hold 100 short positions, but allocates only a small amount into each (30-70 bps) and caps the max size of a short position at 250 bps. They target “story stocks,” firms with deteriorating fundamentals and firms artificially buoyed by one-time windfalls that investors are treating as structural advantages. Depending on market conditions, as little as 10% of the portfolio or as much as 75% of it might be in the short book.

Boston Partners Long/Short Equity (BPLEX/BPLSX), Mr. Motamed’s previous charge, is by far the best long-short fund we’ve seen over the past decade. It has not only vastly outperformed its peer group (leading them by 7.8% annually over the decade), it’s also vastly outperformed the second-best fund in its peer group (leading RMB Mendon Financial Long/Short by 3.8% annually). The first eight or ten months of a fund’s existence is largely inconsequential, and yet it seems worth noting that BIVIX has substantially outperformed BPLEX and its peers over that period.

And while performance over three or four weeks can prove nothing, it can certainly raise interesting questions. Late January and early February 2018 saw a sudden, sharp and unanticipated market correction. The graph below illustrates the performance of BIVIX (which rose in value during the tumult) contrasted with the average long/short fund (down 4%), the S&P 500 (down nearly 6%), and BPLEX (down 6.25%). For the sake of a sterner test, we also included Morningstar’s top-rated long/short fund, Boston Partners Long/Short Research Fund (down 3.9%).

Here are Ali’s 200 (or so) words on why you should add BIVIX to your due-diligence list.

Because in our view it is really quite simple…Because we love and truly believe in what we do, we want to win for our clients and we are happy to put in the effort necessary to achieve our lofty goals…Because we have a time-tested strategy and have experience through various market cycles…Because we rely on fundamental analysis which helps us avoid the pitfalls and unexpected outcomes that come with many modern alternative strategies and we benefit from quantitative analysis which improves our efficiency and allows us to leverage evolving technology…Because capital preservation and driving returns do not have to be mutually exclusive…Because we have a robust short book of individually selected stocks we expect to produce absolute positive returns…Because this market is near all-time highs and volatility is unlikely to remain dormant…Because we thrive on volatility since the cash flows from our short portfolio allows us to take advantage of dislocations…Because great hedge funds need to be independent and we are…Because great mutual funds need strong operational and compliance support, which the team at Balter provides…Because we believe no one has a better process or is more passionate about long/short equity investing…

Balter Invenomic (BIVIX) has a nominal $50,000 minimum initial investment. Expenses are 2.24% for institutional shares. The management fee is a stout 2%, comparable to the fee traditionally assessed by a hedge fund. The fund has about gathered about $38 million in assets since launch. Here’s the fund’s homepage. It’s understandably thin on content, though there are links to a factsheet and manager commentary, both updated monthly.

Launch Alert: JOHCM Global Income Builder

By David Snowball

On November 29, 2017, J.O. Hambro Capital Management launched JOHCM Global Income Builder (JOFIX/JOBIX) managed by the firm’s Multi Asset Value Team. It seeks to achieve a reliable stream of meaningful monthly income distributions, coupled with some capital growth and a vigilant concern for limiting investor losses. It is a multi-asset fund but it is largely unconstrained: it targets US and international income-producing securities including common stock, high-yield and investment grade debt, preferred shares and convertibles, and a variety of hedges including gold, precious metals, currency forward contracts, and inflation-linked vehicles.

In normal times, the fund will hold between 30% – 70% in equities and 40% of the portfolio invested overseas. In less normal times, international exposure might drop to 30%.

It’s designed to be a fund for the next market: income-oriented yet wary of today’s low yields, interested in capital growth yet skeptical of overpriced assets, determined to minimize the risk of permanent loss of capital but agnostic about which asset classes are best suited to do that. It intends to pursue a sort of absolute value discipline, whose core tenet is that the best way to make money long term is first and foremost not to lose it. As a result, the managers intend to only buy assets which provide a sufficient margin of safety. With fixed-income instruments, that means issues with reasonable income and negligible default risk. With equities, it means buying the income-generating securities of good firms only when they’re selling at a 20% or greater discount to the underlying business value. That insistence on a margin of safety means that some traditional equity-income assets – such as US REITs or utilities – are largely missing from the portfolio because they have been sorely overpriced. The advantage they hold over other absolute value investors is that cash is not their only refuge; being a multi-asset fund, they can, as their Team Head observes, “still provide clients with the service of income even while risk assets are not particularly attractively priced.”

Given current valuations, the managers believe they might generate mid to high single digit total returns annually with relatively low risk. Of that, 3.0 – 5.0% might be net income; that is, income after deducting the fund’s operating expenses. By comparison, Vanguard Total Stock Market Index has a yield of 1.54% and Vanguard Total Bond Market Index offers 2.53%.

There is reason to believe they can fulfill their mission. The management team here is highly experienced and, in particular, highly experienced at managing this strategy. Team Head Giorgio Caputo and Robert Hordon co-managed First Eagle Global Income Builder (FEBIX) from inception through July 19 and October 20, 2016, respectively. Both served as analysts on First Eagle’s Global Value Team which oversees First Eagle Global (SGENX) and both had the opportunity to work with renowned investor Jean-Marie Eveillard. Under their watch, FEBIX earned a four-star rating from Morningstar. The only fault that Morningstar’s analysts found with the fund was a fixed-income team that was overcommitted to high-yield securities, which offer risk without substantial diversification for an equity portfolio.

Mr. Caputo describes the five person management team as “purpose built.” That is, he was able to start with the clean slate and hire the associates whose personalities and disciplinary focuses best meshed. In addition to himself and Mr. Hordon, the team includes:

Lale Topcuoglu, a portfolio manager for Goldman Sachs and, in particular, the four-star Goldman Sachs Income Builder (GSBFX). She’s a credit specialist, though has experience managing equities as well.

Rémy Gicquel, who was served as a senior international investment analyst with David Herro’s team on Oakmark International (OAKIX) and Oakmark International Small Cap (OAKEX).

Hugues La Bras, who served as a research analyst for Munich-based Paradigm Capital but, before that, at First Eagle during the tenure of Messrs. Caputo and Hordon.

While the team is in close contact throughout the day, it sits together formally every Friday to reason things through. Rather than responding to top-down mandates (whether about which asset classes they have to hold or what global macro-economic conditions dictate), the team builds and maintains the portfolio one security at a time, always getting back to the same question, “where are we seeing the margin of safety we need and the income we’re seeking?”

Administrative details for JOHCM Global Income Builder.

Symbol / Clas Expense ratio, after waivers Minimum initial investment
JOFIX (I Class) 0.99 No minimum
JOBIX (Institutional Class) 0.89 $1,000,000

The fund is available through Pershing, and potential investors can learn about direct purchase via the JOHCM website . They are looking to add Schwab, Fidelity, TD Ameritrade and others to that list, but have limited fund capacity to $10 billion to preserve their investment flexibility

Messrs. Caputo and Hordon have each invested $1,000,000 or more in the fund, Ms. Topcuoglu has invested between $100,000 – 500,000.

The fund’s website required a few extra clicks to reach and is, as yet, thin on content. The “PM (Portfolio Manager) Insights” tab has some current content, though it doesn’t reflect this particular team. Curiously, the “News” articles all date to 2016.

The Morningstar Minute

By David Snowball

The Morningstar Investment Conference returns to June and to the McCormick Place. MICUS runs June 11–13, 2018 at McCormick Place, Chicago. Jeremy Grantham and Dan Kahnemann are speaking and folks from a bunch of first-tier small fund firms will be there: Centerstone, FPA, JOHCM, Moerus, Queens Road, RiverPark, Seafarer. Not Grandeur Peak or Rondure. Pity. We’ll be there. Let us know if you’d like to meet.

Having trouble with the new Morningstar website? It’s not you. It’s the site.

As of March 1, 2018, it’s still not possible to screen for 2017 fund returns.

The search engine still has trouble … well, searching. We wrote this month about JOHCM Global Income Builder (JOBIX/JOFIX). From some pages the search can find it but, from others, neither the ticker nor the name is recognized.

And up until the end of February, the only way to see my portfolio when using Chrome was by a workaround mailed to me by “Joe,” their retail support team. In each case, Joe (in reality, a very helpful Min) responded “Our product team is aware of the issue and they are actively working to fix the tool.” Chip, an IT professional herself, urges folks who encounter problems to share them as a way of helping “Joe” direct resources to get the most pressing fixed.

Morningstar has updated its semi-annual Prospects report, their roster of not-ready-for-prime-time players. With one exception, they’re smaller funds from large firms.

  • AQR Global Equity
  • AQR International Equity
  • Baird Chautauqua International Growth
  • BlackRock Event-Driven Equity
  • Fidelity International Sustainability Index
  • Fidelity U.S. Sustainability Index
  • JPMorgan SmartRetirement Blend Series
  • Principal Blue Chip
  • Prudential Jennison Global Opportunities
  • State Street Target Retirement Series

On the other hand, several funds from smaller firms graduated to analyst coverage.

  • American Beacon AHL Managed Futures, Bronze.
  • Credit Suisse Managed Futures, Bronze.
  • Davenport Equity Opportunities, Bronze.
  • Hartford Total Return, Bronze.
  • Hood River Small Cap Growth, Neutral.
  • Madison Mid Cap, Neutral.
  • Queens Road Small Cap Value,Neutral. MFO profile, 2015.
  • Schwab Hedged Equity (SWHEX), Bronze.
  • WisdomTree Barclays Yield Enhanced US Aggregate Bond, Bronze.

I’ve got a lot of respect for the Queens Road (QRSVX) folks. I deeply regret not having profiled Davenport (DEOPX) or Hood River (HRSRX) when they first came across our screens two years ago; It’s the eternal problem of a small operation. Schwab likely deserves more attention. Over the entire market cycle from October 2007 to now, it has the fifth highest Sharpe ratio and the fifth highest total return of any long-short fund that’s available for purchase. Among long-short funds with above-average returns, it has the third lowest Ulcer Index which Is a measure that combines the length and severity of a fund’s worst declines. And it’s available for $100.

Funds in Registration

By David Snowball

The SEC requires advisers to give them 75 days to review and comment upon any proposed new fund offering. During those 75 days, the advisers aren’t permitted to say anything about the funds except “please refer to our public filing with the SEC.” At peak times of the year, there might be a couple dozen no-load retail funds and active ETFs in registration. This month the offerings are few but intriguing: a health sector fund from Baron, Matisse Capital’s second fund targeting discounted CEFs, the re-emergence of a successful Scout manager at Oberweis and an intriguing (but unexplained) active ETF that’s 90% stocks and 60% bonds, sort of.

Baron Health Care Fund

Baron Health Care Fund will seek capital appreciation. The plan is to invest in the stocks of health care industry firms which have significant growth opportunities, sustainable competitive advantages, exceptional management, and attractive valuations. The fund will be managed by Neal Kaufman, an research analyst at Baron. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $2,000, reduced to $500 for accounts established with an automatic investment plan.

Matisse Discounted Bond CEF Strategy

Matisse Discounted Bond CEF Strategy will seek total return with an emphasis on providing current income. The plan is to buy closed-end funds (CEFs) which invest primarily in bonds; pay regular periodic cash distributions; and trade at substantial discounts relative to the underlying net asset values. As with the other Matisse fund and RiverNorth Core, the plan is to start with the returns generated by the underlying funds then to add an arbitrage component. The arbitrage occurs when a CEF is selling at an unsustainable discount to the value of the assets it holds. The managers might buy those assets when they’re selling for eighty cents on the dollar in anticipation that they’ll eventually revert to par. The fund will be managed by Bryn Torkelson and Eric Boughton of Matisse Capital. Its opening expense ratio has not been set, and the minimum initial investment will be $1,000.

Oberweis Emerging Markets Fund

Oberweis Emerging Markets Fund will seek to maximize long-term capital appreciation. The plan is to buy small- and mid-cap growth stocks of firms whose stock trades on an emerging markets exchange or whose revenues of predominantly linked to emerging markets. The fund will be managed by Mark Weber. Before joining Oberweis in 2018, Mr. Weber managed Scout Emerging Markets Fund (SEMFX) and served as a Senior International Analyst with Scout Investments. Its opening expense ratio is 1.75%, and the minimum initial investment will be $1,000, reduced to $100 for those establishing an automatic investment plan.

Peritus High Yield ETF

Peritus High Yield ETF, an actively-managed ETF, will seek high current income with a secondary goal of capital appreciation. The plan is to bring a deep value contrarian approach to the credit markets, focusing on absolute value and buying high yield bonds at a discount to fair value on the secondary markets. This fund is a reorganized version of AdvisorShares Peritus High Yield ETF (HYLD), which Morningstar rates as a one-star fund. The fund will be managed by Tim Gramatovich, Ron Heller, and Dave Flaherty, all of Peritus I Asset Management. Its opening expense ratio is 1.25%.

Sirios Long/Short Fund

Sirios Long/Short Fund will seek long-term capital appreciation. The plan seems pretty standard: invest long in good stocks and short either derivatives or the securities of firms in deteriorating conditions. Non-diversified, mostly mid- to large-cap, potentially global with a net long exposure of 0-90%. The fund will be managed by John F. Brennan, Jr., who co-founded Sirios in 1999. Prior to that, he was a portfolio manager and senior vice president for MFS Investment Management. Its opening expense ratio for Retail shares is 1.65% after waivers, and the minimum initial investment will be $2,500.

USCF Commodity Strategy ETF

USCF Commodity Strategy ETF, an actively-managed ETF, seeks long-term total return. The plan is to gain exposure to the commodities market by investing in a wholly-owned subsidiary based in the Cayman Islands. The subsidiary works to maintain exposure to the SummerHaven Dynamic Commodity Index Total Return Index. That index is based on the notion that commodities with low inventories tend to outperform commodities with high inventories, and that priced-based measures can be used to help assess the current state of commodity inventories. Everything that follows sounds, to the layperson, like yada yada yada. The short version is that there are 27 commodity futures available and they will, in any given months, have some exposure to the niftiest 14 of them. The fund will be managed by Andrew F Ngim and Ray W. Allen of SummerHaven Investment Management. Its opening expense ratio has not been set.

WisdomTree 90/60 U.S. Balanced Fund

WisdomTree 90/60 U.S. Balanced Fund, an actively-managed ETF, seeks total return. The plan is to invest 90% of its assets in a market cap-weighted basket of US large cap stocks and 10% in cash which will serve as collateral for U.S. Treasury futures contracts. The notional exposure to the aggregate U.S. Treasury futures contracts’ positions will represent approximately 60% of the Fund’s net assets and will maintain an intermediate duration. The fund’s management team has not yet been named and its opening expense ratio has not yet been set.

Manager changes, February 2018

By Chip

Sixty-two funds saw partial turnover in their management teams but no high profile manager stalked off or was shown the door, and no rising star was awarded a new charge. Actually there were rather more than 62, since we don’t track boring bond funds (the value added by the third manager on a Massachusetts muni fund is modest enough that we don’t track those teams; sorry, guys) and, this month only, we’re boycotting changes in the Dreyfus funds. Frankly, Dreyfus got annoying. Their announcements show up in the SEC filings under a bunch of labels (including dozens of Dreyfus series, CitizensSelect, Advantage Funds and Strategic Funds) and were poorly written. We ended up with a headache and the decision to share the following announcement: “about a dozen Dreyfus funds shifted teams this month; if you invest with them, you might want to double-check.”

Ticker Fund Out with the old In with the new Dt
CLSHX AdvisorOne CLS Shelter Fund Paula Wieck is no longer listed as a portfolio manager for the fund. Case Eichenberger, Jackson Lee and Rusty Vanneman will join Gene Frerichs on the management team. 2/18
TWGTX American Century All Cap Growth Fund Marcus Scott and Michael Orndorff are no longer listed as portfolio managers for the fund. Joseph Reiland and Gregory Woodhams will now manage the fund. 2/18
TWHIX American Century Heritage Fund  Michael Orndorff, Marcus A. Scott and Greg Walsh are no longer listed as portfolio managers for the fund. Robert Brookby will join Nalin Yogasundram on the management team. 2/18
TWEGX American Century International Discovery Fund No one, but . . . Federico Laffan, oddly, has just been added to the prospectus, though he’s been on the team that manages the fund since 2014. Trevor Gurwich and Pratik Patel are the other 2/3 of the team. 2/18
AMJVX American Century Multi-Asset Income Fund No one, but . . . John Donner joins Vidya Rajappa, Scott Wilson, Richard Weiss, and Radu Gabudean on the management team. 2/18
ACFIX Arbitrage Credit Opportunities Fund No one, but . . . John Orrico joins Gregory Loprete and Robert Ryon on the management team.. 2/18
ARSQX Aristotle Value Equity Fund No one, but . . . Gregory Padilla joins Howard Gleicher on the management team. 2/18
MDEGX BlackRock Long-Horizon Equity Fund No one, but . . . Jane Holl joins Stuart Reeve and Andrew Wheatley-Hubbard on the management team. 2/18
EGEAX Carillon Eagle Smaller Company Fund Matthew McGeary, Betsy Pecor and Charles Schwartz are no longer listed as portfolio managers for the fund. James McBride and Timothy Miller will now manage the fund. 2/18
CLSAX CLS Global Diversified Equity Fund Paula Wieck is no longer listed as a portfolio manager for the fund. Grant Engelbart and Rusty Vanneman will continue to manage the fund. 2/18
CLERX CLS Growth and Income Fund Paula Wieck is no longer listed as a portfolio manager for the fund. Joshua Jenkins and Rusty Vanneman will continue to manage the fund. 2/18
CLHAX CLS International Equity Fund No one, but . . . Jackson Lee joins Konstantin Etus and Joe Smith on the management team. 2/18
CLSHX CLS Shelter Fund Paula Wieck is no longer listed as a portfolio manager for the fund. Gene Frerichs will be joined by Case Eichenberger, Jackson Lee, and Rusty Venneman on the management team. 2/18
CBSAX Columbia Mid Cap Growth Fund William Chamberlain is no longer listed as a portfolio manager for the fund. John Emerson, Matthew Litfin, and Erika Maschmeyer will now manage the fund. 2/18
SLMCX Columbia Seligman Communications and Information Fund Rahul Narang will no longer serve as a portfolio manager for the fund. Vimal Patel joins Paul Wick, Shekhar Pramanick, Sanjay Devgan, Jeetil Patel, and Christopher Boova on the management team. 2/18
SHGTX Columbia Seligman Global Technology Fund Rahul Narang will no longer serve as a portfolio manager for the fund. Vimal Patel joins Paul Wick, Shekhar Pramanick, Sanjay Devgan, Jeetil Patel, and Christopher Boova on the management team. 2/18
FGMNX Fidelity GNMA Fund William Irving no longer serves as lead portfolio manager of the fund. Sean Corcoran joins Franco Castagliuolo in managing the fund. 2/18
FINPX Fidelity Inflation-Protected Bond Fund William Irving no longer serves as lead portfolio manager of the fund. Sean Corcoran joins Franco Castagliuolo in managing the fund. 2/18
FSNGX Fidelity Select Natural Gas Ted Davis will no longer serve as a portfolio manager for the fund. Ben Shuleva will continue to manage the fund. 2/18
FNARX Fidelity Select Natural Resources John Dowd will no longer serve as a portfolio manager for the fund. Nathan Strik will continue to manage the fund. 2/18
FSRRX Fidelity Strategic Real Return Fund William Irving is no longer listed as a portfolio manager for the fund. Sean Corcoran joined Franco Castagliuolo, Samuel Wald, Mark Snyderman, Adam Kramer, and Ford O’Neil on the management team. 2/18
HISIX Homestead International Equity No one, but . . . Scott Crawshaw joins Patrick Todd, Andrew West, Bryan Lloyd, Alexander Walsh, and Ferrill Roll in managing the fund.
“Ferrill Roll” is a fascinating name, something worthy of Game of Thrones.
WASAX Ivy Asset Strategy Fund Cynthia Prince-Fox is retiring, effective April 30th, and will no longer serve as a portfolio manager for the fund. W. Jeffrey Surles joins F. Chace Brundige on the management team. 2/18
IGJAX Ivy Government Securities Fund No one, but . . . Susan Regan joins Rick Perry in managing the fund. 2/18
IWGAX Ivy Wilshire Global Allocation Fund Cynthia Prince-Fox is retiring, effective April 30th, and will no longer serve as a portfolio manager for the fund. W. Jeffrey Surles joins F. Chace Brundige on the management team. 2/18
Various John Hancock Funds II Multi-Index Lifestyle Portfolios Effective immediately, Marcelle Daher no longer serves as a portfolio manager of the funds. Robert Sykes joins Robert Boyda and Nathan Thooft on the management team. 2/18
Various John Hancock Funds II Multi-Index Lifetime Portfolios Effective immediately, Marcelle Daher no longer serves as a portfolio manager of the funds. Robert Sykes joins Robert Boyda and Nathan Thooft on the management team. 2/18
Various John Hancock Funds II Multi-Index Preservation Portfolios Effective immediately, Marcelle Daher no longer serves as a portfolio manager of the funds. Robert Sykes joins Robert Boyda and Nathan Thooft on the management team. 2/18
Various John Hancock Funds II Multimanager Lifestyle Portfolios Effective immediately, Marcelle Daher no longer serves as a portfolio manager of the funds. Robert Sykes joins Robert Boyda and Nathan Thooft on the management team. 2/18
Various John Hancock Funds II Multimanager Lifetime Portfolios Effective immediately, Marcelle Daher no longer serves as a portfolio manager of the funds. Robert Sykes joins Robert Boyda and Nathan Thooft on the management team. 2/18
MVPFX Marathon Value Portfolio Marc Heilweil, who’d guided the fund since inception in 2000, will no longer serve as a portfolio manager. Todd Jones now runs the fund. 2/18
MITTX Massachusetts Investors Trust No one, but . . . Alison O’Neill Mackey joins Kevin Beatty and Ted Maloney on the management team. 2/18
DIFAX MFS Diversified Income Fund As of September 1, 2018, William Adams will no longer be a portfolio manager of the fund. As of December 31, 2018, Jim Swanson will no longer serve as a portfolio manager for the fund. Robert Almeida and Michael Skatrud join Ward Brown,  David Cole, Rick Gable, Matt Ryan, Jonathan Sage, and Geoffrey Schechter on the management team. 2/18
MWOFX MFS Global Growth Fund No one, but . . . Joseph Skorski joins David Antonelli and Jeffrey Constantino on the management team. 2/18
MHOAX MFS Global High Yield Fund As of September 1, 2018, William Adams will no longer be a portfolio manager of the fund. Michael Skatrud will join David Cole, Matt Ryan and William Adams in managing the fund, in anticipation of Mssr. Adams departure. 2/18
MFEGX MFS Growth Fund Matthew Sabel is no longer listed as a portfolio manager for the fund. Eric Fischman and Paul Gordon will continue to manage the fund. 2/18
MHITX MFS High Income Fund As of September 1, 2018, William Adams will no longer be a portfolio manager of the fund. Michael Skatrud will join David Cole and William Adams in managing the fund, in anticipation of Mssr. Adams departure. 2/18
OTCAX MFS Mid Cap Growth Fund Matthew Sabel is no longer listed as a portfolio manager for the fund. Eric Fischman and Paul Gordon will continue to manage the fund. 2/18
FPPAX MFS Prudent Investor Fund No one, but . . . Edward Dearing joins David Cole and Barnaby Weiner in managing the fund. 2/18
MFIOX MFS Strategic Income Fund As of September 1, 2018, William Adams will no longer be a portfolio manager of the fund. Michael Skatrud joins Joshua Marston, Ward Brown, Philipp Burgener, David Cole, Alexander Mackey, Robert Persons, and Matt Ryan in managing the fund, in anticipation of Mssr. Adams departure. 2/18
MFGIX Monteagle Quality Growth Fund No one, but . . . Steven MacNamara joined Tom Sauer, Craig Cairns, Stefan Kip Astheimer, and Brett Winnefeld on the management team. 2/18
QVGIX Oppenheimer Global Allocation Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Alessio de Longis and Benjamin Rockmuller will continue to manage the fund. 2/18
ODAAX Oppenheimer Global Multi-Alternatives Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Alessio de Longis and Benjamin Rockmuller will continue to manage the fund. 2/18
QMGAX Oppenheimer Global Multi-Asset Growth Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Alessio de Longis and Benjamin Rockmuller will continue to manage the fund. 2/18
QMAAX Oppenheimer Global Multi-Asset Income Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Alessio de Longis and Benjamin Rockmuller will continue to manage the fund. 2/18
OYCIX Oppenheimer Portfolio Series Conservative Investor Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Jeffrey Bennett will now run the fund. 2/18
OYAIX Oppenheimer Portfolio Series Equity Investor Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Jeffrey Bennett will now run the fund. 2/18
OYMIX Oppenheimer Portfolio Series Moderate Investor Fund Mark Hamilton and Dokyoung Lee will no longer serve as a portfolio managers for the fund. Jeffrey Bennett will now run the fund. 2/18
PNOPX Putnam Multi-Cap Growth Fund Richard Bodzy and Robert Brookby are no longer listed as portfolio managers for the fund. Katherine Collins and R. Sheperd Perkins will now manage the fund. 2/18
RDMIX Rational Dynamic Momentum Fund Michael Ivie and R. Jerry Parker will no longer serve as portfolio managers for the fund. Adam Butler, Rodrigo Gordillo, and Michael Philbrick will now manage the fund. 2/18
SIEPX Saratoga International Equity Fund Marc Miller is no longer listed as a portfolio manager for the fund. John Brim, Stephanie Jones, and Stephen Smith are now managing the fund. 2/18
SITIX STAAR International Fund J. Andre Weisbrod is no longer listed as a portfolio manager for the fund. Brett Boshco now manages the fund. 2/18
SITAX STAAR Investment Trust – Alternative Categories Fund J. Andre Weisbrod is no longer listed as a portfolio manager for the fund. Brett Boshco now manages the fund. 2/18
SITLX STAAR Larger Company Stock Fund J. Andre Weisbrod is no longer listed as a portfolio manager for the fund. Brett Boshco now manages the fund. 2/18
SITSX STAAR Smaller Company Stock Fund J. Andre Weisbrod is no longer listed as a portfolio manager for the fund. Brett Boshco now manages the fund. 2/18
FPCIX Strategic Advisers Core Income Fund Stewart Wong is no longer listed as a portfolio manager for the fund. Jonathan Dugan joins Gregory Pappas, Jeffrey Moore, Michael Plage, Franco Castagliuolo, Sean Corcoran, and James Herbst on the management team. 2/18
HMVAX The Hartford Midcap Value Fund James Mordy has announced his plan to retire from the fund, effective December 31, 2018. Gregory Garabedian will continue to manage the fund. 2/18
USMIX USAA Extended Market Index Fund Jennifer Hsui, Rachel Aguirre, Creighton Jue, Alan Mason, and Greg Savage will no longer serve as portfolio managers for the fund. Richard Brown, Thomas Durante, and Karen Wong will now run the fund. 2/18
WEEMX Wells Fargo Factor Enhanced Emerging Markets Fund No one, but . . . Monisha Jayakumar is added as a portfolio manager, joining Dennis Bein, Harindra de Silva, and David Krider on the team. 2/18
WINTX Wells Fargo Factor Enhanced International Fund No one, but . . . Monisha Jayakumar is added as a portfolio manager, joining Dennis Bein, Harindra de Silva, and David Krider on the team. 2/18
WLECX Wells Fargo Factor Enhanced Large Cap Fund No one, but . . . Monisha Jayakumar is added as a portfolio manager, joining Dennis Bein, Ryan Brown, and Harindra de Silva on the team. 2/18
WFESX Wells Fargo Factor Enhanced Small Cap Fund No one, but . . . Monisha Jayakumar is added as a portfolio manager, joining Dennis Bein, Ryan Brown, and Harindra de Silva on the team. 2/18

Briefly Noted

By David Snowball


The 2018 Thomas Reuters Lipper Fund Awards have been announced. By their calculation, the top fund families overall are Thrivent Mutual Funds and TIAA Investments. Thrivent represents the universe of small fund companies while TIAA represents large firms. The top small fund families were PRIMECAP (equities), Ashmore (fixed income) and Allianz Global Investors (mixed assets).

Individual funds worth noting include Artisan High Income (top high income fund over three years), DoubleLine Shiller Enhanced CAPE (top LCV over three years), and Towle Deep Value Fund (top SCV over three).

Longboard Alternative Growth Fund (LONAX) underwent a -1-for-4 reverse share split on February 23, 2018. In general, such moves are (1) rare and (2) window-dressing. Not to be outdone, Direxion Daily Technology Bear 3X Shares, Direxion Daily Energy Bear 3X Shares, Direxion Daily MSCI Emerging Markets Bear 3X Shares, Direxion Daily S&P Biotech Bear 3X Shares and the Direxion Daily FTSE China Bear 3X Shares all announced on February 28, 2018, reverse splits of 5:1 or 10:1.

Mirae Asset Global Investments is buying the Global X Funds for an undisclosed sum. At $10 billion, Global X is a tiny player in the ETF industry. At $120 billion, Mirae is still no more than a mid-sized one. The Global X ETFs, which will continue being sold under the Global X name, mostly occupy weird little niches: the Founder-Run Companies ETF (BOSS), the Guru Index ETF (GURU), the Lithium& Battery Tech ETF (LIT), the Scientific Beta ETF (SCIU) and so on.

Thomas Kirchner launched the Pennsylvania Avenue Event-Driven Fund (PAEDX) in 2003. We were impressed by him and the fund, and long-ago profiled them. Frustrated by his inability to raise assets, in June 2010 it became the Quaker Event Arbitrage Fund (QEAAX). Despite being remarkably good (top 10% over the past decade, for example), the fund still hasn’t drawn assets. In another reboot, Mr. Kirchner and his co-manager have filed to reorganize the fund as the Camelot Event Driven Fund. While we regret the fund’s ongoing sales fee (a 5.5% front load) and high expenses (1.99% e.r.), we have faith in his ability and best wishes for his success.

Briefly Noted . . .


I’ve seen nothing, except the endless trickle of four or five basis point reductions in management fees. While they qualify as better than nothing, they really do strike me as terrified, grudging and impotent gestures. On a $1,000 investment, for example, a three basis point reduction saves the investor $0.30 per year. If you’re doing this in response to the fact that your industry is being ground into irrelevance, you’re apt to be sorely disappointed about how much loyalty thirty cents will buy you. And if you blind yourself to the need for a more fundamental rethinking (“Hey, we cut our fees to the bone! What more could they ask of us?”), you’re likely to end up in a minor niche business.

Had I mentioned that you could still buy hand copied book manuscripts in England in the 19th century. Right, 400 years after Gutenberg people were still making a living by hand copying entire books for rich eccentrics.

Okay, here’s a last minute find of The Shadow’s: the investment minimums for the Zevenbergen Funds’ Institutional Classes will decrease from $250,000 to $50,000. The funds in question are Zevenbergen Growth Fund (ZVNIX) and Zevenbergen Genea Fund (ZVGIX).

CLOSINGS (and related inconveniences)

Davis Funds has closed Class T shares for Davis New York Venture Fund (DNVTX), effective immediately.

Effective April 13, 2018, Eaton Vance Atlanta Capital SMID-Cap Fund (EAASX) will discontinue all sales of its shares to new qualified retirement plans.

Effective February 2, 2018, Fidelity Small Cap Growth Fund (FCPGX) closed to new investors. Only time will tell whether closing a small cap fund at $4.3 billion was too late. 

Goodwood SMID Long/Short Fund (GAMAX) has closed its Advisor Class shares and will liquidate them on April 23, 2018.


On April 20, 2018 Columbia U.S. Government Mortgage Fund becomes Columbia Quality Income Fund.

Cognios Market Neutral Large Cap Fund (COGIX) is being reorganized as a newly created series of M3Sixty Funds Trust.

Effective on or about February 26, 2018, the name of Pax Ellevate Global Women’s Index Fund (PXWEX) will change to Pax Ellevate Global Women’s Leadership Fund. At that same time, the advisor will waive another 10 bps of their management fee.

Effective April 27, 2018, PIMCO is changing the name of its Class P shares to Class I-2 shares. “P” designates the more expensive of PIMCO’s two institutional share classes: a $1 million minimum like “Institutional,” but about 10 bps higher expenses.

Putnam has decided to terminate one of its more interesting experiments. In 2009, Putnam tried to turn about their failing fortunes – roughly speaking, their funds sucked and investors had noticed – with the launch of their Absolute Return series, which was accompanied by a full media onslaught. The basic story was this: each fund would target a return of cash plus a certain number of basis points, so Absolute Return 100 hoped for returns 100 bps (or 1% annually) above what you could get with T-bills.

Putnam recently announced a plan to change the funds’ names, goals, and investment strategies … and, by the way, to eliminate the use of performance fees. Here’s the short version:

Putnam Absolute Return 100 (PARTX) becomes Putnam Short Duration Bond and dreams of “as high a rate of current income as Putnam Management believes is consistent with preservation of capital.”

Putnam Absolute Return 300 Fund (PTRNX) becomes Putnam Fixed Income Absolute Return Fund, “seeking positive total return” (unlike the rest of us).

Putnam Absolute Return 500 Fund (PJMDX) will merge into Putnam Absolute Return 700 Fund (PDMAX), which then becomes Putnam Multi-Asset Absolute Return Fund. While AR 700 was “seeking to earn a positive total return that exceeds the return on U.S. Treasury bills by 700 basis points (or 7.00%) on an annualized basis over a reasonable period of time (generally at least three years or more) regardless of market conditions,” the new version just hopes for “positive total return.”

They’re a hard bunch to judge. Morningstar gives them between two and four stars but that’s a judgment against a peer group (nontraditional bond or multialternative) and not against their self-declared mission. Except for a few share classes of AR 100, the funds were not able to hang out the “mission accomplished” banner.

Here’s the data. The “target return” is Putnam’s calculation of what cash plus 100/300/500/700 would have come to from the funds’ inception through February 2018. Each fund has nine share classes, so the “actual return” is the range of the worst- to best-performing share classes.

Fund Target return Actual return
AR 100 1.24% 0.7 – 1.7%
AR 300 3.24% 1.8 – 2.8%
AR 500 5.24% 3.0 – 4.3%
AR 700 7.24% 3.2 – 4.8%

The changes occur on April 30, 2018 but Putnam believes that the portfolio transition, in June 2018, will involve portfolio makeovers with the prospect of attendant transaction costs and short-term taxable distributions.

John Rekenthaler offered a thoughtful eulogy for Putnam, the funds and the “absolute return” category (“Why Putnam has struggled with its absolute return funds,” 2/2/18). He graciously allows, “I would not go so far as to call absolute return funds ‘absolute nonsense’ (a phrase that I also once used for the group, but I have become more moderate with age). However, I remain unconvinced.”

Putnam Multi-Cap Value Fund is becoming Putnam Sustainable Future Fund on March 19, 2018. The goal remains long-term capital appreciation but will invest in “growth stocks of mid-size companies whose products and services we believe provide solutions that directly contribute to sustainable social, environmental and economic development.”

Effective on or about April 25, 2018, the name of the REX VolMAXXTM Long VIX Weekly Futures Strategy ETF (VMAX) will change to REX VolMAXXTM Long VIX Futures Strategy ETF.

On May 1, 2018, the T. Rowe Price Media & Telecommunications Fund (PRMTX) will change its name to the T. Rowe Price Communications & Technology Fund.  Price notes that the “investment universe available to the fund has evolved since the fund adopted its current name in 1997, and Internet-related securities now represent a much more significant portion of the fund’s holdings,” so the new name reflects an attempt to accurately reflect the current portfolio and strategy.

Effective on or about April 17, 2018, Touchstone Global Growth Fund (TGGAX, formerly DSM Global Growth Fund) will be renamed the Touchstone International Growth Opportunities Fund. At base, they’re eliminating their stake in U.S. stocks (over half of the portfolio) and reducing expenses by 10 bps. “There will be no other changes to the Fund,” they aver.

Value Line Income and Growth Fund has become Value Line Capital Appreciation Fund (VALIX). At base, they plan to lose the need for their “income” to be “as high and dependable as is consistent with reasonable risk and capital growth to increase total return” and downshift it to “income consistent with its asset allocation.”

To better coincide with its new investment objective and corresponding benchmark index, Vanguard REIT Index Fund (VGSIX) has changed its name to Vanguard Real Estate Index Fund


Thanks, as always, to The Shadow whose indefatigable sleuthing in the dark hallways of the SEC’s EDGAR database drags dozens of fund changes – most especially liquidations – to light each month. Even when I’ve already caught the changes, it’s incredibly reassuring to have him there … in the shadows … watching.

Both AB Asia ex-Japan Equity Portfolio (AXJAX) and AB Credit Long/Short Portfolio (ALASX) have closed and will liquidate on April 20, 2018. As you read on, you might notice that April 20, 2018 is the most popular date for liquidating one’s fund. (It probably has something to do with social media.)

Altegris Multi-Strategy Alternative Fund (MULNX) will liquidate on March 31, 2018.

Avenue Credit Strategies Fund (ACSAX) will be liquidated on March 14, 2018. If you know of ACSAX at all, it’s because of its tie to the spectacularly ill-fated Third Avenue Focused Credit Fund (TFCVX). Focused Credit trapped itself with such a spectacularly illiquid portfolio that it had to suspend all redemptions in December 2015 in order to relieve pressure as it is tried to liquidate itself. Two years later, TFCVX has been paying out dribs and drabs so that the current NAV is $0.51/share. They anticipate final liquidation this year, at which point Third Avenue shareholders will have received about 85% of their December 2015 account value back.

In any case, Avenue Credit Strategies was launched in 2012 by Jeffrey Gary, the founder manager of Focused Credit. Two things stand out about the first. First, he refuses to report the fund’s daily assets under management which is legal but very rare. One speculation is that he’s trying to confuse hedge fund traders who might otherwise be able to front-run his trades. Second, his trades don’t appear to have worked well enough that folks would want to copy them.

ACSAX is in blue while his boring long-short credit peers are in orange and the bond market aggregate is green.

BMO TCH Emerging Markets Bond Fund closed on February 8, 2018 and was, on short notice, liquidated. Similarly, the Class R3 share class of BMO Mid-Cap Value Fund and BMO Small-Cap Value Fund have been closed and will be liquidated.

The $2 million Bridgeway Small-Cap Momentum Fund (BRSMX) will liquidate on May 14, 2018.

CM Advisors Fund (CMAFX) merged into CM Advisors Small Cap Value Fund (CMOVX) on February 23, 2018. In an unnecessarily macabre note, the SEC filing designated CMOVX as “the Survivor Fund,” which rather brings a zombie apocalypse to mind. Others use the phrase “acquiring fund.”

Dreyfus Global Infrastructure Fund (DGANX) will liquidate on March 27, 2018. 

Dreyfus Core Equity Fund (DLTSX), a clone of the no-load Dreyfus Appreciation Fund (DGAGX) is slated to merge into Dreyfus Worldwide Growth Fund (PGROX) on or about June 29, 2018. Why not merge into Appreciation? Because both Core and Worldwide carry sales loads.

Cohen & Steers Active Commodities Strategy Fund (CDFAX) will liquidate on April 13, 2018, if not sooner. (It’s rare that a Board allows that it might hurry up the execution, but here they did.)

The Trustees of Context Capital Funds have voted to liquidate and terminate Context Macro Opportunities Fund (CMOFX) effective on or about March 30, 2018. 

On or about March 19, 2018, Equinox Crabel Strategy Fund (EQCRX) will “discontinue operations, close, liquidate and terminate.”  It will pass its fifth anniversary on March 5, 2018, with a record of having lost money since inception and still having earned a three-star rating from Morningstar which tells you something about the managed futures peer group.

Equinox Systematica Macro Fund (EBCIX) is closing down. It’s another tiny managed futures fund with a losing record since inception. Final liquidation of the Fund is currently anticipated to occur on March 19, 2018.

“The Board of Trustees of Renaissance Capital Greenwich Funds has concluded that it is in the best interests of the Global IPO Fund (IPOSX) and its shareholders that the Fund be liquidated on or about March 28, 2018.” Yuh … the fund has been around since the late 1990s and has managed to return 1.9% per year which is identical to the return on the three-month T-bill over the same period. (The fund’s expense ratio – 2.5% – substantially exceeds its 20 year annual return.) The biggest difference: no money market fund has subjected itself to the 85% drawdown experienced by IPOSX investors.

Goldman Sachs Strategic Macro Fund (GAAMX, formerly Goldman Sachs Fixed Income Macro Strategies Fund) was scheduled for liquidation on February 20, 2018 but the execution has now been delayed until about March 26, 2018. “The Liquidation Date may be further changed without notice at the discretion of the Trust’s officers.” Having checked the performance chart, I don’t think the delay is attributable to second thoughts on the Board’s part.

Around July 16, 2018, The Hartford Municipal Real Return Fund (HTNAX) merges into The Hartford Municipal Opportunities Fund (HHMAX).

Hartford Schroders Emerging Markets Debt and Currency Fund (SARVX) is expected to merge into Hartford Schroders Emerging Markets Multi-Sector Bond Fund (SMSVX). No date is set, but shareholders (baaaaa!) will be asked for their approval during a May 2018 proxy vote. The funds are pretty weakly correlated (0.74 from the inception of SARVX) but is should still be a pretty clear win for SARVX shareholders. They are moving into a less expensive fund whose three-year annual returns are 220% of their current fund’s while its volatility is only 130%.

Hartford Global Equity Income Fund (HLEAX) will be merging into Hartford International Equity Fund (HDVAX), assuming shareholder (baaaaa!) approval. The merger will occur on June 25, 2018.

HSBC Total Return Fund liquidated on February 28, 2018.

MassMutual Premier Value Fund (MCEAX) will be dissolved on or about March 23, 2018 (the “Termination Date”). “Will be dissolved” always strikes me as the fate of the intrepid spacefarers captured by the Xoraxian Empire.

Hurry to pay your last respects: Janus Henderson Real Return Fund (JURAX) liquidates on Friday, March 2, 2018.

LJM Preservation and Growth Fund (LJMAX) closed to new investments on February 7, 2018 and will liquidate on March 29, 2018. Here’s a hint as to why:

Yuh, that would be rather more than an 80% repricing event there. Morningstar was “Neutral” on the fund until February 9, 2018, at which point they were officially “Negative.”

Manning & Napier Fund Quality Equity Series (MNQSX) will liquidate on March 9, 2018. No one will notice.

Neiman Tactical Income Fund (NTAFX) will undergo “orderly dissolution” on March 16, 2018.

Parnassus Asia Fund (PAFSX/PFPSX) will be liquidated on March 29, 2018.

Pear Tree Panagora Risk Parity Emerging Markets Fund (RPEMX/EMRPX) is merging into Pear Tree PanAgora Emerging Markets Fund (QFFOX), which “have identical investment objectives and substantially similar investment strategies” but “there will be an increase in fees for Risk Parity Fund shareholders.” Both funds badly trail their peers with the Risk-Parity fund offering one-third of its peers’ returns in exchange for a small reduction in short-term volatility. The reorganization will close on or about March 28, 2018.

In an announcement almost too dull to make, PNC has announced the liquidation of PNC Maryland Tax Exempt Bond Fund and PNC Ohio Intermediate Tax Exempt Bond Fund, both of which will close May 8 and liquidate June 8.

Folks at Poplar Forest Capital has announced the intention of merging Poplar Forest Outliers Fund (IPFOX) into Yorktown Mid Cap Fund (YWBIX) on April 20, 2018. The two funds’ “investment objectives, strategies, policies and a portfolio management team … are substantially similar,” which is to note that Poplar founder J. Dale Harvey runs both.  The manager for Yorktown Mid Cap is Dale Harvey. He’s been the subadvisor for a year and the fund is two years old. It’s got $23 million and a 1.25% e.r. for “I” shares.  The retail “A” shares for the Outliers fund was eliminated in November 2016. The remaining “I” class has $5 million and 1.1% expenses. Neither fund is covered in glory.

Green represents their Morningstar peer group, orange is Poplar and blue is Yorktown. The funds have a correlation of 0.88 and nearly identical short term Sharpe ratios.

The Schwab Money Market Fund (SWMXX) will liquidate on May 25, 2018. No idea of why.

SSGA High Yield Bond Fund (SSHGX) will liquidate on April 20, 2018.

Effective February 7, 2018, the Virtus Seix Limited Duration Fund was liquidated. The SEC filing explains that that means “the Fund has ceased to exist and is no longer available for sale. Accordingly, the Fund’s Prospectuses and SAI are no longer valid.”

WisdomTree has announced the liquidation of nine ETFs on or about March 16, 2018. The walking dead are:

  • WisdomTree Strong Dollar Emerging Markets Equity Fund EMSD
  • WisdomTree U.S. Domestic Economy Fund WUSA
  • WisdomTree U.S. Export and Multinational Fund WEXP
  • WisdomTree United Kingdom Hedged Equity Fund DXPS
  • WisdomTree Global ex-U.S. Hedged Dividend Fund DXUS
  • WisdomTree Japan Hedged Real Estate Fund DXJR
  • WisdomTree Japan Hedged Capital Goods Fund DXJC
  • WisdomTree Japan Hedged Health Care Fund DXJH
  • WisdomTree Global ex-U.S. Hedged Real Estate Fund HDRW