Updates
The Balter Invenomic Fund (BIVIX) is in the process of shedding Balter. As a practical matter, that will translate to a name change, Invenomic Fund, and little more. BIVIX is, as we noted in our May 2019 profile, an exceptionally strong performer with steady asset growth. The manager is both talented and self-assured, so I’m not particularly concerned though I am curious. The proxy document offers this somewhat cryptic explanation for the change:
BLA (i.e., Balter Liquid Alts) informed the Board that it was making this request because it is currently exiting the investment advisory business due to uncertainty involving a “seed investor” which could potentially affect its ability to provide services to the Fund and other funds in the future. BLA believes that this transition is in the best interest of the Fund and its shareholders as it will provide continuity for the Fund and create a more direct relationship between shareholders and Invenomic. The seed investor currently holds a non-voting equity interest in BLA and initially contributed seed capital for the Fund.
We’ve reached out to the Invenomic team for comment and will share what we’ve learned in our July issue.
Thanks, most especially, to Kirk Taylor for giving us a heads up about the impending change and the Invenomic folks for promising to talk through the change as soon as they’re able.
And thanks, as ever, to The Shadow – a long-time stalwart of MFO’s discussion board – for his indefatigable reading of SEC filings each month. He finds things before the SEC even knows they’ve been filed. It helps a lot to be able to scan his list of finds on the Board each month, just to be sure that I haven’t missed anything significant.
Which, usually, I have.
Briefly Noted . . .
A bunch of Direxion funds have announced reverse share splits. That normally occurs when a fund’s NAV has dropped to an inconvenient level. The Direxion funds are not investments; they are trading vehicles meant to be held for a day or less. A particularly stark illustration of that fact: a $10,000 investment made five years ago in Direxion Daily Natural Gas Related Bull 3X ETF (GASL) would today be worth $2.
| Reverse Split Ratio | |
| Direxion Daily Mid Cap Bear 3X Shares | 1 for 5 |
| Direxion Daily Small Cap Bear 3X Shares | 1 for 5 |
| Direxion Daily Financial Bear 3X Shares | 1 for 5 |
| Direxion Daily MSCI Real Estate Bear 3X Shares | 1 for 5 |
| Direxion Daily Natural Gas Related Bull 3X Shares | 1 for 5 |
| Direxion Daily Junior Gold Miners Index Bull 3X Shares | 1 for 5 |
| Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares | 1 for 5 |
| Direxion Daily Semiconductor Bear 3X Shares | 1 for 10 |
In a move that only Vanguard could get away with, Vanguard Long-Term Bond Index Fund (VBLAX) will impose a 0.50% on all purchases of its Investor and Admiral shares. “Purchase fees,” they note, “are paid directly to the Fund to offset the costs of buying securities. This fee is separate from, and in addition to, other expenses charged by the Fund.” So the (two star) fund will advertise a 0.07% expense ratio but, for new investors, the practical expense ratio will be 0.57% – eight times as high.
In related news, “Vanguard crushing the competition with largest fund inflows so far in 2019” (Philly.com, 5/27/2019).
I miss Jack Bogle.
SMALL WINS FOR INVESTORS
As usual, a bunch of funds have lowered their expense ratios this month. That strikes me as a strategy that weakens the advisor without materially increasing the competitiveness of their funds, but it’s sort of de rigueur for advisors to make the gesture.
Some of this month’s offerings …
| AdvisorShares Newfleet Multi-Sector Income ETF (MINC) | from 0.65% to 0.50% |
| Columbia EM Core ex-China ETF | from 0.35% to 0.16% |
| Columbia Multi-Sector Municipal Income ETF | from 0.28% to 0.23% |
| Federated Adjustable Rate Securities Fund (FEUGX, FASSX), their also shuffling around the names of their share classes | from 0.60% to 0.30% |
| T. Rowe Price Institutional U.S. Structured Research Fund | from 0.50% to 0.33% |
| T. Rowe Price Capital Opportunity Fund | from 0.69% to 0.50% |
In other news …
Effective June 1, 2019, the Diamond Hill Long-Short Fund will re-open to new investors.
DWS Total Return Bond Fund will drop their maximum front-end sales load to 2.75% on “A” shares.
Federated High Yield (FHYAX) will eliminate its 2.0% redemption fee on June 30, 2019.
Principal Contrarian Value Index ETF is, for now, off the deathwatch. They’d been threatened with delisting by Nasdaq for having fewer than 50 investors. Principal just announced that we’ve gotten the number of investors over 50.
OLD WINE, NEW BOTTLES
AB Intermediate Bond Portfolio (ABQUX) Is being rechristened AB Total Return Bond Portfolio. Not surprisingly, it’s new mandate is to seek “total return” and it will no longer be required to hold only intermediate-term bonds.
Advisorshares Treesdale Rising Rates ETF has changed its ticker symbol to GTAA. Be still, my beating heart!
Effective as of June, 30, 2019, FAM Equity-Income Fund (FAMEX) will change its name to FAM Dividend Focus Fund. The fund is already dividend-focused so there won’t be any changes in goals, strategy or management.
Green Square Tax Exempt High Income Fund (GSTAX) has become Green Square High Income Municipal Fund
Invesco is acquiring a bunch of Oppenheimer ETFs. Absent last minute hang-ups, here are the unsurprising name translations:
| Predecessor Funds | Successor Funds |
| Oppenheimer Emerging Markets Revenue ETF | Invesco Emerging Markets Revenue ETF |
| Oppenheimer Emerging Markets Ultra Dividend Revenue ETF | Invesco Emerging Markets Ultra Dividend Revenue ETF |
| Oppenheimer Global ESG Revenue ETF | Invesco Global ESG Revenue ETF |
| Oppenheimer Global Revenue ETF | Invesco Global Revenue ETF |
| Oppenheimer International Revenue ETF | Invesco International Revenue ETF |
| Oppenheimer International Ultra Dividend Revenue ETF | Invesco International Ultra Dividend Revenue ETF |
| Oppenheimer Russell 1000® Low Volatility Factor ETF | Invesco Russell 1000® Low Volatility Factor ETF |
| Oppenheimer Russell 1000® Momentum Factor ETF | Invesco Russell 1000® Momentum Factor ETF |
| Oppenheimer Russell 1000® Quality Factor ETF | Invesco Russell 1000® Quality Factor ETF |
| Oppenheimer Russell 1000® Size Factor ETF | Invesco Russell 1000® Size Factor ETF |
| Oppenheimer Russell 1000® Value Factor ETF | Invesco Russell 1000® Value Factor ETF |
| Oppenheimer Russell 1000® Yield Factor ETF | Invesco Russell 1000® Yield Factor ETF |
| Oppenheimer S&P 500 Revenue ETF | Invesco S&P 500 Revenue ETF |
| Oppenheimer S&P Financials Revenue ETF | Invesco S&P Financials Revenue ETF |
| Oppenheimer S&P MidCap 400 Revenue ETF | Invesco S&P MidCap 400 Revenue ETF |
| Oppenheimer S&P SmallCap 600 Revenue ETF | Invesco S&P SmallCap 600 Revenue ETF |
| Oppenheimer S&P Ultra Dividend Revenue ETF | Invesco S&P Ultra Dividend Revenue ETF |
| Oppenheimer ESG Revenue ETF | Invesco ESG Revenue ETF |
| Oppenheimer Russell 1000® Dynamic Multifactor ETF | Invesco Russell 1000® Dynamic Multifactor ETF |
| Oppenheimer Russell 2000® Dynamic Multifactor ETF | Invesco Russell 2000® Dynamic Multifactor ETF |
Nuveen Symphony Credit Opportunities Fund is becoming Nuveen Symphony High Yield Income Fund. When the fund’s name changes, it will be permitted to invest up to 30% of its net assets in loans and will no longer invest in convertible securities as a principal investment strategy.
Effective July 31, 2019, the $400 million PIMCO Global Multi-Asset Fund (PGMAX) becomes PIMCO Global Core Asset Allocation Fund.
PNC is selling its asset manager biz to Federated.
Hmmmm … the first thing that strike me is that both operations are (largely) headquartered in Pittsburgh, my hometown. The larger part of PNC started life as Pittsburgh National Bank (PNB) before merging with Piedmont Bank. Federated launched in Pittsburgh in about 1957, got bought by Aetna, bought themselves back and are working to buy European exposure. One wonders if proximity allowed for ideas to germinate.
Federated admits that “For more than four decades, clients have turned to Federated for liquidity management solutions,” and money markets are still – even post Hermes – two-thirds of their assets. That’s an incredibly low margin business. Their corporate goals include seeking “additional options for international acquisitions and growth, particularly in the Latin America and Asia-Pacific regions, and are actively working to establish strategic relationships with select financial institutions to add regional distribution of Federated investment strategies.” So, clearly “international” and “getting beyond money markets” are on their mind.
Why might PNC sell? Perhaps because it’s a stagnant business segment with contracting margins? Their asset growth has been negative, the number of funds has been decreasing, most of the PNC-branded funds are niche-y which means their market potential is likely limited and there is no hint in the company’s annual report that they have any plans to commit to investment services.
In some instances Federated will merge PNC funds into their own existing offerings. In other cases, the PNC funds will become new Federated ones.
Therefore we get
| PNC Funds becoming … | Federated Funds |
| PNC Government Money Market | Federated Government Obligations |
| PNC Treasury Money Market | Federated U.S. Treasury Cash Reserves |
| PNC Treasury Plus Money Market | Federated Treasury Obligations |
| PNC International Equity | Federated International Equity New |
| PNC Multi-Factor Small Cap Core | Federated MDT Small Cap Core |
| PNC Ultra Short Bond | Federated Ultrashort Bond |
| PNC Small Cap | Federated MDT Small Cap Core |
| PNC Total Return Advantage | Federated Total Return Bond |
| PNC Multi-Factor Small Cap Growth | Federated MDT Small Cap Growth |
| PNC Multi-Factor Large Cap Value | Federated MDT Large Cap Value |
| PNC Multi-Factor Large Cap Growth | Federated MDT Large Cap Growth |
| PNC Tax Exempt Limited Maturity Bond | Federated Short-Intermediate Duration Municipal Trust |
| PNC Intermediate Tax Exempt Bond | Federated Intermediate Municipal Trust |
| PNC Multi-Factor Small Cap Value | Federated MDT Small Cap Core |
| PNC Balanced Allocation | Federated MDT Balanced |
| PNC Emerging Markets Equity | Federated Emerging Markets Equity New |
| PNC Multi-Factor All Cap | Federated MDT All Cap Core |
| PNC International Growth | Federated International Growth New |
Effective as of May 1, 2019, Summit Global Investments U.S. Low Volatility Equity Fund (LVOLX) becomes SGI U.S. Large Cap Equity Fund.
Effective August 5, 2019, the Arbitrage Event-Driven Fund (AGEAX) will change its name to Water Island Diversified Event-Driven Fund.
In a slightly Orwellian announcement, there will be “a repurposing” of one of the Touchstone Funds on August 23, 2019. The small and sedentary Touchstone Premium Yield Equity Fund (TPYAX) will find new purpose in life as Touchstone International ESG Equity Fund. Rockefeller & Co. LLC will take over the fund from Miller/Howard Investments, Inc.
On or about July 29, 2019, Touchstone Sustainability and Impact Equity Fund (TEQAX) will be renamed Touchstone Global ESG Equity Fund. Nothing else will change..
Effective July 1, 2019, T. Rowe Price Capital Opportunity Fund (PRCOX) changes to T. Rowe Price U.S. Equity Research Fund. It’s a large and successful fund. Given the absence of any other change, I’m guessing that it’s just tired of being mistaken for the T. Rowe Price Capital Appreciation Fund.
Effective on or after July 9, 2019, VanEck Vectors Global Alternative Energy ETF (GEX) becomes VanEck Vectors Low Carbon Energy ETF. The fund’s history of producing negligible-to-negative returns might be a more pressing issue than its name.
Effective July 9, 2019, Virtus Newfleet Bond Fund will change to Virtus Newfleet Core Plus Bond Fund and Virtus Newfleet Low Duration Income Fund will change to Virtus Newfleet Low Duration Core Plus Bond Fund.
The former American Beacon SGA Global Growth fund is now available as the Virtus SGA Global Growth Fund (SGAAX). Small fund. Five-star rating. Top 2% returns since launch. Same management team since launch.
Effective July 22, 2019, Wells Fargo Traditional Small Cap Growth Fund (the “Fund”) becomes Wells Fargo Fundamental Small Cap Growth Fund. Zero Mostel mourns.
OFF TO THE DUSTBIN OF HISTORY
Let’s start with The Big List of Dying Funds.
| Liquidation Date | |
| Alambic Mid Cap Value Plus Fund (ALMVX) Alambic Small Cap Value Plus Fund (ALAMX) |
June 30, 2019 |
| Balter L/S Small Cap Equity Fund (BEVRX) | June 28, 2019 |
| Bishop Street Dividend Value Fund (BSLIX) | June 26, 2019 |
| BNY Mellon Absolute Insight Multi-Strategy Fund (MAJAX) | July 19, 2019 |
| Brandes Value NextShares | June 28, 2019 |
| Brandes Global Opportunities Value Fund (BGOAX) | June 28, 2019 |
| Columbia Beyond BRICs ETF (BBRC) Columbia EM Quality Dividend ETF (HILO) Columbia India Infrastructure ETF (INXX) Columbia India Small Cap ETF (SCIN) |
June 14, 2019 |
| ETF Industry Exposure & Financial Services ETF (TETF) | June 20, 2019 |
| Franklin India Growth Fund (FINGX) | September 13, 2019 |
| Franklin K2 Global Macro Opportunities Fund (FKMAX) | June 24, 2019 |
| Goldman Sachs Tactical Exposure Fund (GSMPX) | June 28, 2019 |
| Hartford Long/Short Global Equity Fund (HLOAX) | July 11, 2019 |
| Intrepid International Fund (ICMIX) | September 27, 2019 |
| JPMorgan International Equity Income Fund (JSEAX) | July 8, 2019 |
| Pax Mid Cap Fund (PWMDX) | July 15, 2019 |
| PSI Total Return Fund (FXBAX) | June 27, 2019 |
| Stadion Alternative Income Fund (TACFX) | August 16, 2019 |
| Templeton Emerging Markets Balanced Fund (TAEMX) | June 24, 2019 |
| Templeton Global Currency Fund | October 10, 2019 |
| WBI BullBear Global High Income ETF (WBIH) WBI BullBear Global Rotation ETF (WBIR) |
June 14, 2019 |
Three notes about that list:
- Investing outside the US is proving fatal. Of the 21 funds on this list, two-thirds invested globally or internationally.
- Bishop Street was an excellent fund, period.
- Templeton EM Balanced was a solid fund benchmarked inappropriately. Morningstar benchmarks EM balanced funds against EM equity funds, a decision excused by the “too few for a peer group” argument. EM balanced funds produce equity-like returns with far lower risk but get buried in the equity group.
A number of funds are getting merged into other funds.
| Disappearing fund | Surviving fund |
| Broadview Opportunity Fund | Madison Small Cap Fund |
| FDP BlackRock Capital Appreciation Fund | BlackRock Capital Appreciation Fund |
| FDP BlackRock Equity Dividend Fund | BlackRock Equity Dividend Fund |
| FDP BlackRock International Fund | BlackRock International Fund |
| Royce Micro-Cap Opportunity Fund | Royce Opportunity Fund |
| Royce Small/Mid-Cap Premier Fund | Royce Pennsylvania Mutual Fund |
| Royce Small-Cap Leaders Fund | Royce Pennsylvania Mutual Fund |
| Touchstone Credit Opportunities Fund | Touchstone Credit Opportunities II Fund |
| Wells Fargo Asia Pacific Fund | Wells Fargo Emerging Markets Equity Income Fund |
| Wells Fargo Capital Growth Fund | Wells Fargo Endeavor Select Fund |
| Wells Fargo Small Cap Value Fund | Wells Fargo Small Company Value Fund |
I’m struck mostly by the continued unwinding of the Royce Funds. Following their acquisition decades ago by Legg Mason, they rolled out a slew of virtually indistinguishable small-cap value funds. They’ve been unwinding that decision for about a decade now.
