Bill Gross must be very sad today. Mr. Gross has been involved in an ugly dispute with a neighbor. As part of that dispute, Mr. Gross played The Gilligan’s Island theme, loudly and continuously, night after night. The neighbor complained. In court. Mr. Gross’s partner, Amy Schwartz, testified to loving the “Gilligan’s Island” theme but denied playing it loud or on repeat. “I don’t know how to work a loop,” she swore. Mr. Gross himself claimed the song held “special meaning” for the couple. On December 22nd, a judge disagreed with … well, pretty much all of Mr. Gross’s claims. Mr. Gross reportedly was “disappointed” but vowed, “to dance the night away, ‘Gilligan’s Island’ forever.”
A week later, on December 30, 2020, Dawn Wells – the well-loved actress who played Mary Ann on the sitcom – died at age 82 of complications arising from Covid-19. With her passing, only one of the original cast members remains.
On December 22, 2020, T. Rowe Price incorporated the following provision in the prospectus of 55 of its funds: “The Firm integrates pecuniary environmental, social, and governance factors into its investment research process. We focus on the ESG factors we consider most likely to have a material impact on the performance of the holdings in the fund’s portfolio.”
Vanguard Total Stock Market Index Fund has surpassed $1,000,000,000,000 in assets.
Congratulations to three True Believers. Morningstar’s Russ Kinnel notes that “manager ownership is the second-best predictor of outperformance after fees… I decided to look for niche funds with manager investment levels over $1 million, so I could see funds where managers really did go above and beyond in putting their money where their mouths are.” Managers familiar to MFO readers who earned Kinnel’s respect:
- Andrew Foster of Seafarer Overseas Growth and Income
- Bernie Horn of Pear Tree Polaris Foreign Value Small Cap
- Rajiv Jain of GQG Partners Emerging Markets Equity
Mr. Kinnel’s complete story is These Fund Managers Are True Believers (11/18/2020).
Briefly Noted . . .
Bloomberg reports that Fidelity has had to waive nearly $250 million in fees and expenses for the Fidelity Government Money Market Fund (SPAXX) last year. Without those waivers, the fund would have “broken the buck” and inflicted losses on its investors. The fund’s seven-day yield is 0.01%.
Fidelity notes that it’s waiving expenses on most of its money market funds to keep them above water and anticipates doing so for “an extended period.” In the words of one observer: “ouch.” (Fidelity’s Largest Money Market Fund Waives $247 Million of Fees,” 12/23/2020).
Waddell & Reed Financial announced that it’s been acquired by Macquarie Asset Management for$1.7 billion. As our colleague, Charles Boccadorro notes, “the consolidation continues!”
SMALL WINS FOR INVESTORS
On December 30, 2020, PartnerSelect High Income Alternatives Fund (fka Litman Gregory Masters High Income Alternatives Fund) closed the Investor share class for the fund and converted all of their current Investor class shareholders into Institutional class shareholders. At the same time, they drop the minimum initial investments from $100,000 to $10,000 for regular accounts and $5,000 to $1,000 for retirement accounts.
On December 10, 2020, Vanguard Treasury Money Market Fund lowered its minimum initial investment from $50,000 to $3,000. There was a lively discussion on our board about the Vanguard options.
CLOSINGS (and related inconveniences)
AlphaCentric Prime Meridian Income Fund has increased the minimum purchase requirements for regular accounts from $2,500 to $10,000 and for retirement plan accounts from $1,000 to $10,000.
Effective March 1, 2021, Federated Hermes Kaufmann Small Cap Fund (FKASX) will be closed to new investors.
Goldman Sachs Multi-Manager U.S. Dynamic Equity Fund closed to new investors on December 18, 2020.
Grandeur Peak Global Opportunities Fund (GPGIX/GPGOX) and Grandeur Peak International Opportunities Fund (GPIIX/GPIOX) will close to new investors through intermediary platforms after December 31, 2020. The Funds will remain open to existing investors. The funds will remain open to new investors who purchase directly from Grandeur Peak.
Effective on December 31, 2020, the Infinity Q Diversified Alpha Fund is closed to all new investment, including through dividend reinvestment. It’s a $1.8 billion hedge-fund style mutual fund that has earned both MFO’s Great Owl designation and a Morningstar five-star rating. “Shareholders will be notified when the Infinity Q Fund is re-opened for all investment.”
Effective on December 31, 2020, the JPMorgan Emerging Markets Equity Fund is closed to most new investors. It’s a $15 billion EM fund that has earned both MFO’s Great Owl designation and a Morningstar five-star rating.
Effective December 29, 2020, the PCS Commodity Strategy Fund has closed to new investment, and the sale of fund shares is suspended. Unlike the preceding two closure announcements, PCS is a tiny fund with a poor record. Liquidation impends.
Effective immediately, investor shares of Vanguard Cash Reserves Federal Money Market Fund (VMRXX) (formerly known as Vanguard Prime Money Market Fund) are closed to new investors. As with other Vanguard funds, the current Investor investors will be converted to Admiral shares, and then the Investor share class will be eliminated.
OLD WINE, NEW BOTTLES
On December 1, 2020, Aberdeen Focused U.S. Equity Fund (GGUIX), a bad large growth fund, found a new passion as Aberdeen U.S. Sustainable Leaders Smaller Companies Fund.
On the same date, the Aberdeen International Equity Fund changed its name to the Aberdeen Emerging Markets Sustainable Leaders Fund. It’s cool that one of the managers, William Scholes, earned his B.A. in Modern and Medieval Languages from Magdalen College, Oxford. Another team member, Fiona Manning, earned her B.A. in History with French from Durham University. All of the new team members also manage emerging markets funds for European investors.
And Aberdeen Select International Equity Fund (BJBIX, formerly Artio International, more formerly Julius Baer International) changed its name to the Aberdeen International Sustainable Leaders Fund.
Then Aberdeen U.S. Multi-Cap Equity Fund changed its name to the Aberdeen U.S. Sustainable Leaders Fund. The “sustainability” thing is great and all, but it’s not clear that they’re particularly good at it.
Effective February 1, 2021, the Allianz Funds become Virtus Funds, with only a few additional naming tweaks.
|Current Fund Name||New Fund Name|
|AllianzGI Dividend Value Fund||Virtus NFJ Dividend Value Fund|
|AllianzGI Emerging Markets Opportunities Fund||Virtus AllianzGI Emerging Markets Opportunities Fund|
|AllianzGI Focused Growth Fund||Virtus AllianzGI Focused Growth Fund|
|AllianzGI Global Small-Cap Fund||Virtus AllianzGI Global Small-Cap Fund|
|AllianzGI Health Sciences Fund||Virtus AllianzGI Health Sciences Fund|
|AllianzGI Income & Growth Fund||Virtus AllianzGI Income & Growth Fund|
|AllianzGI International Value Fund||Virtus NFJ International Value Fund|
|AllianzGI Large-Cap Value Fund||Virtus NFJ Large-Cap Value Fund|
|AllianzGI Mid-Cap Fund||Virtus AllianzGI Mid-Cap Growth Fund|
|AllianzGI Mid-Cap Value Fund||Virtus NFJ Mid-Cap Value Fund|
|AllianzGI Small-Cap Fund||Virtus AllianzGI Small-Cap Fund|
|AllianzGI Small-Cap Value Fund||Virtus NFJ Small-Cap Value Fund|
|AllianzGI Technology Fund||Virtus AllianzGI Technology Fund|
Effective December 31, 2020, Catalyst/Exceed Defined Shield Fund became Catalyst/Exceed Buffered Shield Fund.
On March 1, 2021, the iShares MSCI Frontier 100 ETF becomes the iShares MSCI Frontier and Select EM ETF.
Effective December 28, 2020, the Jackson Square All-Cap Growth Fund has changed its investment strategy and its name to the Jackson Square International Growth Fund.
Effective on February 8, 2021, Lazard Emerging Markets Equity Blend Portfolio (EMBOX) becomes Lazard Emerging Markets Strategic Equity Portfolio. The prospectus then adds risk warnings for “value” and “focused” while scrapping “quant,” “allocation,” and “value and growth.” It also completely changes out the management team.
On February 28, 2021, MainStay MacKay Unconstrained Bond Fund becomes MainStay MacKay Strategic Bond Fund. Morningstar worries that “A short-tenured duo of managers is supported by a modest and unstable team.” I’m more irked at the cynical substitution of one marketing buzzword in the name for another.
Effective December 18, 2020, the Thornburg Value Fund name changed to Thornburg Small/Mid Cap Core Fund, and the Thornburg Core Growth Fund changed to Thornburg Small/Mid Cap Growth Fund.
Effective January 22, 2021, Toews substitutes hedges for tactics.
|Current Fund Name||New Fund Name|
|Toews Tactical Oceana Fund||Toews Hedged Oceana Fund|
|Toews Tactical Monument Fund||Toews Hedged U.S. Fund|
|Toews Tactical Opportunity Fund||Toews Hedged U.S. Opportunity Fund|
Effective December 23, 2020, the Trend Aggregation Aggressive Growth ETF became the less-aggressive Trend Aggregation Growth ETF. There was no accompanying change in the strategy or objectives.
OFF TO THE DUSTBIN OF HISTORY
Fans of Buying the Unloved might look for recurring words in the names of the descendants. Risk-managed. Hedged. Value. Asia. Multi-asset.
Aberdeen Asia-Pacific (ex-Japan) Equity Fund and Aberdeen U.S. Mid Cap Equity Fund will be liquidated on or about February 11, 2021.
Effective as of December 22, 2020, the US Global Investors All American Equity Fund (historically, a spectacularly poor performer) was reorganized with, and into, the Global Luxury Goods Fund. If you were looking for a reason to stop and philosophize about income inequality, K-shaped (“the rich get richer”) recoveries, and the prospect of long-term political unrest, this might be a good one.
AlphaSimplex Multi-Asset Fund disappears on or about January 14, 2021.
BNY Mellon Inflation Adjusted Securities Fund didn’t make it to Christmas. (Nuts. We’ll have to return the socks we got for it.)
Carillon Cougar Tactical Allocation Fund will be liquidated and terminated on or about February 28, 2021.
Columbia Georgia Intermediate Municipal Bond Fund and Columbia Maryland Intermediate Municipal Bond Fund will close to new investors on January 11, in anticipation of being liquidated on May 7, 2021.
Columbia Multi-Asset Income Fund and Columbia Pacific/Asia Fund are also closing to new investors on January 11, but their dispatch is much more imminent: February 5, 2021.
CornerCap Large/Mid-Cap Value Fund and CornerCap Balanced Fund will each be liquidated on February 26, 2021.
Emerald Small Cap Value Fund and Emerald Select trueLiberty Income Fund will be closed and liquidated on or about January 11, 2021.
In what strikes me as a first (or near-first), an actively-managed ETF, EquityCompass Tactical Risk Manager ETF, is giving up the ghost and agreeing to merge with another actively-managed ETF, EquityCompass Risk Manager ETF. The move requires shareholder approval, which is pretty much pro forma but keeps them from publishing a liquidation date.
FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund, and FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund will be liquidated and terminated on or about January 29, 2021
The Frontier Caravan Emerging Markets Fund was liquidated on December 15, 2020.
Effective January 29, 2021, Glenmede Large Cap Value Portfolio will close to all additional investments; then, on February 26, 2021, the Portfolio will be liquidated.
Effective on or about January 22, 2021, Goldman Sachs Imprint Emerging Markets Opportunities Fund will merge into Goldman Sachs ESG Emerging Markets Equity Fund.
GuideMark Tax-Exempt Fixed Income Fund and GuideMark Opportunistic Fixed Income Fund will be liquidated on or about March 31, 2021.
HSBC High Yield Fund and the HSBC Strategic Income Fund will each cease investment operations and liquidate assets. The Adviser expects that each fund will be liquidated on or before January 29, 2021
IQ Enhanced Core Plus Bond U.S. ETF is the object of “liquidation and dissolution” on or about February 10, 2021.
John Hancock Asia Pacific Total Return Bond Fund and U.S. High Yield Bond Fund are on the path to liquidation. Asia Pacific disappears on January 15, High Yield follows on April 16, 2021.
North Shore Dual Share Class ETF was liquidated on December 31, 2020.
Northern Municipal Money Market Fund will be liquidated and terminated on or about February 12, 2021. At some point in the second quarter of 2021, Northern Money Market Fund will merge into Northern U.S. Government Money Market.
The PCS Commodity Strategy Fund has terminated the public offering of its shares and will discontinue its operations effective February 12, 2021.
PGIM Jennison 20/20 Focus Fund will merge into PGIM Jennison Focused Growth Fund sometime in the second quarter of 2021.
Riverbridge Eco Leaders Fund will be merged into the Riverbridge Growth Fund, likely in April 2021.
Sage ESG Intermediate Credit ETF will be liquidated on January 7, 2021.
VanEck Vectors Coal ETF (KOL) is no more. The $35 million fund posted annualized losses of -8.3% over the past 13 years, including a catastrophic 88% drawdown in 2016.
Wells Fargo Cash Investment Money Market Fund is merged with Wells Fargo Heritage Money Market Fund. Should you care? Yeah, rather a lot. The driver behind the accelerating changes in the money market fund world is the realization that interest rates are near zero, and they’re not going up any time soon. That makes money market funds a money-loser for their advisers (though they’re a useful tool for keeping money in-house for other investors; someone selling a Wells Fargo equity fund can deposit the proceeds in a Wells Fargo MM fund, which makes it more likely that their next purchase will be some other Wells Fargo fund) since their investment returns are below their costs of operation. More importantly, it helps the rest of us understand forces that will shape the performance of our longer-term investments: US interest rates at zero encourage speculation, weaken the dollar (hence strengthen the case for international investing) and weaken the role of bond funds as essential partners in a balanced portfolio.