Monthly Archives: April 2021

April 1, 2021

By David Snowball

No one knows quite when the April Fool’s (or All Fool’s) tradition arose. The internet is rife with simple, self-assured explanations that are flawed only by the fact that they’re wrong. “Attestations,” that is, contemporary historical recordings referring to the event, are scarce and most of the explanations (“it’s all about the Gregorian calendar in France!”) fail to account for all of the observed behavior.

My preferred speculation: spring,  it felt like a good time to do silly things.

Huge swaths of the investing world have reached the same conclusion and have done things so odd that I keep thinking: “you’re joking, right? April Fool’s? Please!” Axios reports that “money has been flooding into US equities” as “investor psychology shifts to risk in a big way” (3/22/21). Apparently, stocks at astronomical valuations (Tesla sells for a p/e of 163, making Apple seem like a deep-value stock with a p/e of 28. Roku, which has never had earnings, trades at $330/share) aren’t enough to satisfy risk appetites, so our compatriots have gone elsewhere, too.

The S.S. Portfolio

Collectively, we’ve decided that trading cards, bitcoin, and .jpg files are worth billions to trillions. Erin Griffith, writing for The New York Times (3/13/21) begins the story:

This past week, a trading card featuring the quarterback Tom Brady sold for a record $1.3 million. The total value of the cryptocurrency Bitcoin hit $1 trillion. And Christie’s sold a digital artwork by an artist known as Beeple for $69.3 million after bids started at just $100 …  the frenzy has spilled over into the riskiest — and in some cases, wackiest — assets, including digital ephemera and media, cryptocurrencies, collectibles like trading cards and even sneakers.

Perhaps $60 billion of our stimulus checks is being “invested” in bitcoin. By coincidence, Morningstar published a nice analysis of the effect of adding even modest allocations of bitcoin to a portfolio. Amy Arnott looks at 10-year performance and concludes that even a tiny slice of bitcoin drives up volatility so much that the Sharpe ratio (i.e., risk-adjusted returns) for a buy-and-hold portfolio decreases with every addition of bitcoin.

Much of bitcoin’s eye-popping 10-year record owes to an off-the-charts runup from 2011 through 2013, when the CMBI Bitcoin TR index posted annualized returns of more than 1,000% per year … These gains may not be repeatable, partly because trading volumes in bitcoin have increased nearly 3,000-fold since 2014. … It’s also worth noting that as bitcoin moves to the mainstream, it’s becoming less valuable as a portfolio diversifier. (2/1/21)

And now Fortune magazine is relying on someone named La La Anthony as an authority on cryptocurrency.

(Okay, I Googled “La La Anthony.” It was not reassuring.)

And yet, the billions pour in, and even Fidelity is preparing to launch a bitcoin fund. Which, I guess, is justified by the confident conclusion that buy-and-hold investing is dead (again).

Fracking companies have decided to become part-time bitcoin miners. The gas that they’ve traditionally flared off during their mining operations is being converted to electricity and used to power bitcoin miners.

SPACs, or “blank-check companies,” have turned investors into stalkers. The New York Times (3/19/21) reports that many SPACs collect money first and find something to invest in second, which has led to intense pressure to find investable uses for their stash. The CFO at one private firm reports being “relentlessly hounded since last year” by SPACs.

Under the heading of “humility? Who needs humility?” Cathie Woods – the infallible investing wizard of ARK whose flagship ARK Innovation fund has returned 46% a year over the past five years – has filed with the SEC to remove unnecessary burdens from her funds. Up until now, no more than 30% of a fund’s portfolio could be held in a single stock. Gone! Up until now, a single fund could own no more than 20% of the total stock in a company. Gone! In their place? SPACs and space travel.

Kudos to Morningstar analyst Robby Greengold for startling clarity on the ARK mania:

ARK Innovation ETF has been in tune with market’s unfolding narrative in recent years, but its lone portfolio manager, inexperienced team, and lax risk controls make it ill-prepared to grapple with a major plot twist…

[Manager Cathie Wood] honed her thematic process at AllianceBernstein from 2001 to 2013, where the thematic strategies she ran had high volatility and underwhelming risk-adjusted results on her watch…

Exacerbating that key-person risk is the firm’s inability to develop and retain talent: Many of its analysts have come and gone, and most of the nine remaining lack deep industry experience.

Wood’s reliance on her instincts to construct the portfolio is a liability. …The firm favors companies that are often unprofitable, highly volatile, and could plummet in tandem. … As its asset base has swelled to $23 billion, the fund has become less liquid and more vulnerable to severe losses. (3/31/21)

Please do read his analysis if you’ve been tempted to hop aboard the rocket.

Jason Zweig has been positively aflame lately with stories that pretty much cry out, “watch out! The inmates are running the asylum! The preschoolers are flying the jet!” On March 26, 2021, he reported:

Bragging rights used to go to those investors who worked the hardest at learning the most. Now the glory often goes to those who know the least and don’t even care. That has turned the traditional investing hierarchy upside down, although it probably won’t last.

“I don’t know what the f— I’m doing,” a young man said in a TikTok video in January. “I just know I’m making money.”

The accompanying live graphic captures the moment when “investors” concluded that having even the slightest clue about what you’re doing is overrated:

He raised similar alarms about “a bitcoin savings account” (3/5/21) and the InfinityQ magical money machine (2/26/2021).

Blaine Rollins’ March 29th weekly briefing shares a Tweet from Ben Carlson, proprietor of A Wealth of Common Sense, that sort of encapsulates the moment.

My portfolio lives, now as ever, in boring (which is to say, “soothing”) balance: 50% equities, 50% stability. The Total Stock Market Index is up 62% in the past 12 months. 291 funds (and uncounted ETFs) have 12-month returns in excess of 100%, led by Victory Global Natural Resource’s 274% gain. The 200 Club – funds returning over 200% in 12 months – is a diverse bunch, including some funds whose long-term records are execrable.

  • Victory Global Natural Resources
  • Morgan Stanley Institutional Inception
  • Jacob Internet 
  • Morgan Stanley Global Endurance
  • Direxion Monthly Small Cap Bull
  • Rydex Russell 2000 2x Strategy
  • Upright Growth
  • ProFunds UltraSmall Cap
  • Jacob Discovery  Baron Partners
  • ProFunds UltraMid Cap

My best recommendation: this is no time to be a hero. If you’re curious about whether it’s ever time to be a hero, you might check this month’s “Do stocks pay even in the long-term” essay.

Thanks!

To David (Hi, David, and welcome! We’ve profiled Eventide Healthcare & Life Sciences but didn’t have a really satisfying interaction with the adviser. Good China-lite EM funds often have a smaller cap tilt: Virtus KAR EM Small Cap is 8% China, Harbor EM Equity is 10%, Harbor EM Small Cap is 11%, Seafarer is 16% while the average fund weighs in a 34%), Wilson, and the good folks at S&F Investments. To PayPal contributors Steven from San Francisco and Thomas from Williamsburg, both lovely towns. To our faithful subscribers, Greg, Matthew, William, William, Brian, David, and Doug.

And, as ever, to the indefatigable, joyful, curious, querulous folks on our discussion board: The Shadow (who sees all), Dave Moran, Ira Artman, OJ, and you all.  Thanks!

On the end of a pandemic

It’s not here.

Yet.

My brilliant, whimsical dean and I were talking. We’ve decided that if this were a baseball game we would be in the 8th inning.

Not all innings are created equal. The first brings hopefulness and a bunch of runs scored. The sixth, another peak for the hitters. The 7th has its stretch and musical interlude, the ghost of Harry Caray, and a sense of turning toward home. The 9th is all the excitement in the feeling of closure and the knowledge that “we’ll get them tomorrow.”

But the eighth inning? It’s kind of a slump in the game, I think. It’s typically a low-scoring inning. Not quite time to leave but not quite enough time to start building anything new. Mostly it’s the inning where the vendors cry out “last call for beer.” (Except, of course, at Fenway Park which has an 8th inning stretch instead of a 7th inning one. My guess is that that’s done, as most things in Boston are, to annoy the Yankees and their fans.)

And yet, with the prospect that 8/9s of the pandemic is behind us, that’s where we are. A bit weary, a bit hopeful, and still in our seats.

I’m using the time to think about the game so far. A lot of others are, too. I’m impressed by the ability of so many people to transcend our shared exhaustion and occasional numbness and to look with fresh eyes on a year that packed 12 years’ worth of events into it. (Did I say “and 12 years’ worth of grey hair”? No, I did not but, damn…) 

On this sunny, hyacinth-riddled, robin-spattered spring day, I wanted to pass along a handful of the ones that I’ve read and liked most. 

Therapist Esther Perel’s reflection: “Even when we can’t change our circumstances, we can change our mindset. Turning the unknown into something we look forward to exploring is the antidote to fear.” One interesting note that I’ve heard from several people, that a lot of us who had no real use for classroom technology and apps have been a bit surprised to learn that there might be cool uses for Kahoots or You Can Book Me in a purely normal classroom.

Pete Buttigieg, who has been working with his husband to relearn the basic negotiations of marriage, now wonders at “how little we communicate with words.”

Sandra Boynton, whose Hippos Go Berserk is classic, concluded that “birthday cakes are essential.” My impulse is, “I’m going to eat the icing first, just in case someone tries to snatch the damned cake away.” 

Tom Hanks’ takeaway is, “never play solitaire again.” During the worst of the pandemic, it was “a salve for the mind in the hands, the safety valve that meant having something to do.” Then it occurred to him actually, “there was already plenty to do! Damn! A sink to clean out, a dishwasher to empty, laundry to sort, rice to put in a cooker, letters I could have written and the typewriter and the stationery to do it.”

In a sort of “duh” moment, Neil deGrasse Tyson discovered “science needs better marketing.” (You mean I shouldn’t swallow a UV light?) 

As you might imagine, I really liked the fact that Katie Roiphe, a reporter and conservative provocateur who also teaches at NYU was seized by “the joy of in-person teaching.” After a year online, she returned to the classroom to discover that “something mysterious happens. It is physical. It is an energy you can fake or aspire to but not actually have in a Zoom class,” the exceptional and unnatural effort of which “exhausts you, depresses you and diminishes you in tiny but cumulative ways.” Sharing space and time with her students is, quite literally, embodied connection. 

A student who moved here from somewhere warm doesn’t yet have a proper winter coat, another student talks about her job in a grocery store. Another tells me about something a professor said in another class. There is something important in the hanging around, the idle, casual, totally random snippets of conversation… I send a friend a giddy text about how happy I am, ‘It’s like a drug.’

Yep. The one who’s too quiet to speak up on Zoom but who lingers after class until the others have gone. The chance to share a compliment that not everyone needs to hear. The awesome intensity, the stunning bravery, of a student who has journeyed 8,000 miles for this moment. I worry, sometimes, that I’ve focused too much on the extraordinary challenges to embrace the ordinary joys and rewards. I’ll try to do better.

Me? I think I’ve discovered I’m a vampire. (Don’t tell Chip. It’ll just make her worry.) I’ve always thought of myself as a solitary creature whose early life experiences left him reluctant to let other people get too close, uncomfortable in social gatherings, a bit awkward around strangers. Growing up, my best friends were all books. There is, I correctly but incompletely reported, “a difference between being ‘alone’ and being ‘lonely.’”

What I’ve recently discovered is that I’m a vampire, of a sort. I draw energy from those around me. The banter around a conference table before we got down to business. The five-minute meetings held in a colleague’s doorway. The long walks around campus, side by side. The sound of a friend on the other side of my thin office wall. The chance to sit with my students on benches in the Old Main hall, talking about the dreams of people forty years my junior.

I’ve discovered that I need their energy. I fade, bit by bit, without it. New projects seem too much to handle. Routine tasks get delayed, then completed … sort of. I need them, more than I knew. (But don’t tell them or their heads will get all swolled up!)

And you?  Tell me.

We’re here, side by side and shoulder to shoulder. In the bottom of the 8th. Ahead by one run, haunted by the bone-headed errors we made early in the game. Cheered by a handful of crucial plays. Weary, as the players on the field are, and hopeful. Knowing that the game has given us a lot, for good and ill, but that it is near its end. We will see it to its end. Summer. We’re that close.

Celebrate these last innings. Give yourself the break you deserve. Plunge your hands into the still-cool garden soil and actually see the richness of the world that sustains your life. Renew the habit of walking in the warming spring sun. Rise to the challenge of planning post-pandemic mischief. Threaten a haiku tattoo.

Because we’re that close and you’re that good.

david's signature

 

Scale Matters

By Edward A. Studzinski

“Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them.” Margaret Thatcher, interviewed on This Week, 5 February 1976

Another month of equities hitting new highs across the indices. In many instances, active equity managers, especially value managers, are again outperforming passive strategies. Sadly, the same has not been the case for bonds. A long-term (duration and maturity) Treasury fund has seen a market decline year-to-date in excess of 12%. Some of that is a function of foreigners dumping their U.S. Treasury holdings (more sellers than buyers). And some of it is a function of a whiff of inflation coming down the road. There is a proper concern that the government’s method of measuring inflation, excluding food and energy, does not reflect what is hitting most individual and family pocketbooks.

We now face the question of whether an increase in domestic corporate tax rates to pay for the current round of humanitarian largesse will ultimately lead to higher employment, higher wages, and a humming economy. And there are some who believe that major infrastructure investments will ultimately be deflationary, even as more trillions of dollars are so dedicated. Indeed, the proponents of Modern Monetary Theory, also known as “More Money Today” sincerely believe that the running of the Treasury printing presses will have no impact on our global economic status.

Count me as a skeptic. We are currently in a multi-phased contest with China, whose leadership has a hundred-year time horizon along with a cultural unanimity of purpose. Our current political leadership thinks they are engaged in a game of checkers with the Chinese. The reality is that it is a three-dimensional chess game or perhaps more culturally appropriate, a game of Go. Where things will come undone for us is when (not if) the U.S. dollar is no longer the world’s reserve currency. We will then find ourselves in the same position that the United Kingdom found itself in after World War II.  

In terms of investment strategy going forward then, it will remain to be seen how much of a disadvantage U.S. corporations face in terms of pricing and competition from a higher corporate tax rate. They will be much higher, for instance, than the corporate tax rates for a Swiss multinational. The issue will be whether capital investment flows will follow the lower tax rates for the greater profit advantage given to foreign businesses.

Greed Triumphs Again

I have argued for some time that the day of the 1940’s Act mutual fund was ending. I have also been arguing that to survive, there would have to be consolidation in the investment management business, with the smaller players (under $1 billion in assets under management) either going out of business or needing to be merged into another fund or organization. In the last few weeks, we have seen Affiliated Managers Group drop sixteen subadvisors, and shift the assets to their affiliated firms.  In Chicago, firms such as Skyline and Fairpointe had hundreds of millions of dollars in assets pulled from them almost overnight and sent to other firms. If you were invested in a fund that was managed by Fairpointe, you now find your money at a different investment management firm, not of your choosing. The justification – lower fees, economies of scale, etc., etc. The reality unfortunately is that the industry fee pressure caused by ETF products as well as passive funds is forcing a rethinking of the economics of the investment management business. For younger analysts and fund managers, the golden goose will be laying fewer, and smaller, eggs. The yachts will of necessity be much smaller.

The Spirit of Willie and Joe Lives On

One of the great editorial and political cartoonists of the 20th Century was Bill Mauldin, who created the characters of Willie and Joe for his World War II cartoons from the European Theater. Willie and Joe were the banes of both the officer class, as well as politicians, and Mauldin had a way of capturing the essence of the drafted American GI. In later years, Mauldin continued to pay close attention to the use and abuse of American military power, as well as the men and women who served in uniform. His entire career is now to be found in a one-volume retrospective study, with cartoons from the collection of The Pritzker Military Library Museum, entitled Drawing Fire edited by Todd DePastino. 

Right Beneath My Nose

By Charles Lynn Bolin

VictoryShares Enhanced Volatility Weighted ETF (CDC), a Great Owl with an Eye on Volatility

Each month, I sift through funds in my Ranking System, as well as trending funds, using the Mutual fund Observer MultiSearch screen. I search for high risk-adjusted returns across many asset classes for diversification. In March, I discovered VictoryShares Enhanced Volatility Weighted ETFs right under my nose. In this article, I look at the difference between low volatility funds and funds with high-risk adjusted returns.

 This article is divided into sections for those who wish to skip to particular sections:

    1. Track Record of Low Volatility Funds
    2. VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC)
    3. Building a Portfolio with High Risk-Adjusted Returns Based on 3 Year Performance
    4. Performance During the Past Year
    5. A Closer Look at FMSDX, TMSXR, CDC, and ARBIX
    6. A Glancing Look at RPAR, HNDL, and DIVO
    7. Recent Performance of Favorite Funds

1. Track Record of Low Volatility Funds

Key Point: Most low volatility funds have lower risk adjusted returns over time.

I downloaded all of the low volatility funds in existence for the past six years from Mutual Fund Observer and eliminated those that don’t reference volatility or risk in the name. The remarkedly shortlist is shown in Table #1. As expected, the S&P 500 has the highest return with one of the highest standard deviations. Ulcer Index is a better measure of risk than standard deviation (volatility) because it measures the depth and duration of drawdown. Surprisingly, the Ulcer Index and maximum drawdown of low volatility funds are nearly as high or higher than the S&P 500. Also surprising is that the Martin Ratio, which measures the risk adjusted return, is higher for the S&P 500 for the past six years than for the low volatility funds.

The explanation that I have is the low volatility funds often seek funds that do better during certain stages of the business cycle. Searching for funds with high-risk adjusted returns often leads to rotation strategies. Notice that there are three VictoryShares Enhanced Volatility Weighted ETFs in Table #1, in particular, VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC). The funds are sorted from the highest risk-adjusted return (Martin Ratio) to the lowest.

Table #1: Six Year Performance of Low Volatility Funds

Source: MFO Premium database and screener

2. VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC)

Key Point: CDC offers a disciplined and balanced investment approach that manages risk by automatically reducing exposure to stocks during periods of significant market declines

According to VictoryShares, CDC is suitable:

  • For exposure to high-dividend-yielding, large-cap U.S. stocks that have at least four consecutive quarters of net positive earnings
  • Offers a disciplined and balanced investment approach that manages risk by automatically reducing exposure to stocks during periods of significant market declines
  • The Long/Cash Index tactically reduces its exposure to the equity markets during periods of significant market declines and reinvests when market prices have further declined or rebounded.

The strategy employed

  • Selects the highest 100 dividend-yielding stocks in the Nasdaq Victory US Large Cap 500 Volatility Weighted Index, which first:
    • Screens for profitability (four quarters of net positive earnings)
    • Selects the largest 500 stocks by market capitalization
    • Weights stocks based on risk/volatility (standard deviation over the last 180 trading days)
    • Reconstitutes twice a year (March and September)
    • Automatically reduces its exposure to the equity markets during periods of significant market declines and reinvests when market prices have further declined or rebounded

Table #2 contains summary information from Mutual Fund Observer about VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC). Mutual Fund Observer classifies CDC as a “Great Owl” fund which means that it is in the upper quintile for risk-adjusted-performance.

Table #2: VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC)

Source: MFO Premium database and screener

Seeking Alpha gives CDC a Factor Grade of A+ for Risk and B+ for Momentum.

Table #3: Seeking Alpha Factor Grades

Source: Seeking Alpha

Figure #1: Total Return of VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC)

Source: Seeking Alpha

Morningstar, gives CDC Five Stars, a Neutral Rating, and its new Crowd Sense measurements are “High Attention” and “Medium Appeal”. According to Morningstar:

This share class, has had a strong short-term track record. Narrowing in on the past three-year period, it beat the category index, the Russell 1000 Value Index, by an annualized 2.9 percentage points, and outperformed the category average by 3.8 percentage points. And more importantly, when looking across a longer horizon, the strategy came out ahead. On a five-year basis, it led the index by an annualized 1.3 percentage points. Although the overall rating does not hinge on one-year performance figures, it is notable that this share class returned 38.8%, an impressive 16.5-percentage-point lead over its average peer, placing it within the top 10% of its category.

The risk-adjusted performance only continues to make a case for this fund. The share class had a higher Sharpe ratio, a measure of risk-adjusted return, than the index over the trailing five-year period. This strategy’s investors did not have to take on more risk for this fund’s strong risk-adjusted performance. The strategy delivered a smooth ride for investors with a relatively low standard deviation, 12.7%, compared with the benchmark’s 16.2%. Finally, the share class proved itself effective by generating positive alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

3. Building a Portfolio Based on 3 Year Performance

Key Point: Portfolio Visualizer is used to model a portfolio with high risk-adjusted returns.

With valuations so high and yields so low, I evaluated low-risk funds to build a diversified portfolio. I used Portfolio Visualizer to create a portfolio to maximize returns for the past three years at 8% volatility. The link to Portfolio Visualizer is provided here. Fidelity Multi-Asset Income (FMSDX) and T. Rowe Price Multi-Strategy Total Return (TMSRX) are two of my larger holdings.

Figure #2: Portfolio with High Risk-Adjusted Return (Three Years)

Source: Portfolio Optimization (Portfolio Optimization (portfoliovisualizer.com))

I use the Vanguard Wellesley as a conservative baseline fund. The recent trends were a factor in selecting these funds.

Table #4: Portfolio Visualizer Performance Metrics

Source: Portfolio Optimization (Portfolio Optimization (portfoliovisualizer.com))

Figure #3 is the Efficient Frontier which compares the Risk Free Return against Volatility.

Figure #3: Efficient Frontier

Source: Portfolio Optimization (Portfolio Optimization (portfoliovisualizer.com))

Figure #4 shows that the model portfolio compares well against the Vanguard Wellesley Income Fund, but recently began outperforming in the current environment.

Figure #4: Portfolio with High Risk-Adjusted Return (Three Years)

Source: Portfolio Optimization (Portfolio Optimization (portfoliovisualizer.com))

4. Performance During the Past Year

After reviewing the funds in the previous section over the past three years, I compared my preferred portfolio to one that maximizes return at 10% volatility and one that maximizes the Sharpe Ratio. The link to Portfolio Visualizer is provided here.

Figure #5: Portfolio Performance During Past Year

Source: Portfolio Optimization (Portfolio Optimization (portfoliovisualizer.com))

The preferred portfolio performs in a similar manner as the one that maximizes return for 10% volatility. Given that future returns are guaranteed to be different than the past, I prefer more diversification.

Figure #6: Portfolio Performance During Past Year

5. A Closer Look at FMSDX, TMSXR, CDC, and ARBIX

Key Point: Funds are compared for the possible purchase of ARBIX.

The role of Fidelity Multi-Asset Income (FMSDX) and VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC) is to add high risk-adjusted returns while the role of T. Rowe Price Multi-Strategy Total Return (TMSRX) and Absolute Convertible Arbitrage (ARBIX) is to add stability.

Figure #7: FMSDX, TMSXR, CDC, and ARBIX

Source: Backtest Portfolio Asset Allocation (Backtest Portfolio Asset Allocation (portfoliovisualizer.com))

6. A Glancing Look at RPAR, HNDL, TMSRX, and DIVO

Key Point: Funds are compared for the possible purchase of RPAR.

Risk Parity ETF (RPAR) is a one-year-old fund but has attracted $1B in assets. In Figure #8, I wanted to compare RPAR with funds that I own, Amplify CWP Enhanced Dividend Income (DIVO), Strategy Shares Nasdaq 7HANDL (HNDL), and T. Rowe Price Multi-Strategy Total Return (TMSRX). Each of the funds has advantages, and I particularly like the upward trend of TMSRX and DIVO.

Figure #8: RPAR, HNDL, TMSRX, and DIVO

The performance of RPAR has been good over the past year. I have tried the strategy using Portfolio Visualizer, but it was too conservative for me. I will continue to track RPAR.

7. Recent Performance of Favorite Funds

Table #5 contains recent information about some of the funds that I have written about.

Table #5: Favorite Funds

Name Symbol APR Max DD Martin Rtn 3Mon Trend 3Mon Flow
Vanguard Commodity Strategy VCMDX 10.7 -21.0 1.1 15.7 5.5 22.4
VictoryShares US EQ Inc Enh Vol CDC 16.6 -15.2 3.3 9.7 4.4 2.2
Fidelity Multi-Asset Income FMSDX 18.6 -10.9 6.2 8.6 3.0 26.2
Fidelity Strategic Real Return FSRRX 5.8 -14.5 1.1 5.6 1.8 4.6
T Rowe Price Mlti-Strat Tot Rtrn TMSRX 9.9 -4.7 8.9 4.5 1.4 15.5
Vanguard STAR VGSTX 18.1 -13.2 5.3 5.6 1.3 0.3
Vanguard Global Wellington VGWAX 11.4 -15.6 2.2 4.0 1.2 1.3
Amplify CWP Enh Div Income DIVO 14.0 -17.4 2.7 3.7 1.1 21.4
Columbia Thermostat COTZX 20.1 -2.4 25.0 3.2 0.7 3.9
ATAC Rotation ATACX 33.6 -6.7 11.6 13.9 0.1 6.6
Fidelity Freedom Income FIKFX 7.6 -3.1 9.1 0.2 -0.4 2.6
Dodge & Cox Income DODIX 7.7 -3.1 9.1 -1.0 -0.9 1.6
Strategy Shrs Nasdaq 7HANDL HNDL 11.0 -9.3 4.5 -0.1 -1.0 12.0
Fidelity Infl-Prot Bond FIPDX 8.2 -1.6 11.5 -0.2 -1.0 2.5

Source: Author, based on MFO Premium database and screener

Closing

When buying a fund, I prefer all weather buy and hold funds that will have high risk adjusted returns. Overtime, I would like to have six percent inflation adjusted returns. This may seem low, but the average inflation adjusted return of the stock market with dividends reinvested for the past 120 years is 6.7%. High valuations and inflation may result in low stock market real returns for the coming decade.

This quarter, I have been busier than usual. I purchased Vanguard Commodity Strategy (VCMDX) and Fidelity Strategic Real Return (FSSRX) for inflation protection. I purchased VictoryShares US EQ Income Enhanced Volatility Weighted ETF (CDC) because of its momentum and lower risk profile. I recently added Fidelity Freedom 2020 (FFFDX) for diversity. I added Absolute Convertible Arbitrage (ARBIX) as a lower risk alternative to bonds.

Best Wishes and Be Safe!

The case for a stock-light portfolio, version 4.0

By David Snowball

“Stocks for the long-term!” goes the mantra. That chant has two meanings: (1) in the (very) long-term, no asset outperforms common stock. And (2) in any other term, stocks are too volatile to the trusted so if you’re going to buy them, be sure you’re doing it with a long time horizon.

My own non-retirement portfolio, everything outside the 403(b), embeds a healthy skepticism about stocks. The strategic asset allocation is always the same: 50% equity, 50% income. Equity is 50% here, 50% there, as well as 50% large and 50% small. Income tends to be the same: 50% short duration/cash-like substances, 50% riskier assets, 50% domestic, 50% international. It is, as a strategy, designed to plod steadily.

In the past, 2004, 2010, and 2014, we’re shared research from T. Rowe Price that illustrates the dramatic rise in risk that accompanies each increment of equity exposure. Below is the data from the most recent of those articles, which looks at 65 years of market history, from 1949 to 1913.

Performance of Various Portfolio Strategies
December 31, 1949 to December 31, 2013
  S&P 500 USD 80% Stocks 20 Bonds 0 Cash 60% Stocks 30 Bonds 10 Cash 40% Stocks 40 Bonds 20 Cash 20% Stocks 50 Bonds 30 Cash
Return for Best Year 52.6 41.3 30.5 22.5 22.0
Return for Worst Year -37.0 -28.7 -20.4 -11.5 -1.9
Average Annual Nominal Return 11.3 10.5 9.3 8.1 6.8
Number of Down Years 14 14 12 11 4
Average Loss (in Down Years) -12.5 -8.8 -6.4 -3.0 -0.9
Annualized Standard Deviation 17.6 14.0 10.5 7.3 4.8
Average Annual Real (Inflation-Adjusted) Return 7.7 6.8 5.7 4.5 3.2

T. Rowe Price, October 30, 2014. Used by permission.

Over those 65 years, periods with included devastating bear markets for both stocks and bonds, a stock-light portfolio returned 6.8% annually. That translates to receiving about 60% of the returns of an all-equity portfolio with about 25% of the volatility. Going from 20% stocks to 100% increases the chance of having a losing year by 350%, increases the average loss in down years by 1400%, and nearly quadruples volatility.

A fascinating real-world experiment in asset allocation points to the same conclusion. Fidelity Investments run a series of Asset Manager funds, run by the same team, which differ only in the degree of their exposure to the stock market. Asset Manager 20% has … well, 20% in stocks while Asset Manager 70% has 70% in stocks. Otherwise, the same strategy from the same manager.

The youngest of the funds in the Asset Manager series is 12 years old and the oldest is twice that. If we look at raw returns, we see a familiar and predictable pattern: more stock exposure, more total return.

Fidelity Asset Manager 3 year 6 year 9 year 12 year 20 year 25 year
20% 5.9 4.4 4.5 6.4 4.9 5.5
30 7.1 5.5 5.8 8.0
40 8.2 6.4 6.8 9.3
50 9.0 7.2 7.8 10.5 5.7 7.0
60 9.7 8.0 8.7 11.5
70 10.2 8.7 9.5 12.6 6.0 7.2
85 11.3 9.8 10.9 14.1 6.1

In rough terms, increasing your equity exposure by 10% increases your annual returns by 1%. Over 12 years, the most stock-heavy fund returned 2.2 times what the most stock-light fund did.

The question is, how much risk are you taking for the sake of a 1% gain in returns? Are the additional returns a free lunch (that is, 1% more gain with less than 1% more pain) or are you being taken to the cleaners?

Here’s the data on risk and risk-adjusted returns:

Risks and return-return measures over the longest possible period, 12 years

Fidelity Asset Manager Maximum drawdown Standard deviation Capture ratio Sharpe ratio Martin ratio
20% 6.2 4.3 1.6 1.39 5.70
30 8.3 5.7 1.3 1.31 4.95
40 10.2 7.1 1.2 1.23 4.32
50 12.2 8.7 1.1 1.16 3.85
60 14.2 10.1 1.0 1.09 3.46
70 16.2 11.6 0.96 1.04 3.15
85 19.2 13.8 0.92 0.99 2.82
Ratio 3.1 3.2      

How do we read that table? First, the most stock-heavy fund earned 2.2x what you got with the most stock-light fund but that came at the price of tripling the maximum drawdown and volatility. All three risk-return measures – capture ratio, Sharpe ratio, and Martin ratio (a sort of “Sharpe ratio for risk-conscious investors” – deteriorated steadily with the addition of equity exposure. Every little bit of added equity saw a worsening of the funds’ long-term performance.

Just looking at the current market cycle – the Covid bear market in the first quarter of 2020 and the insane gains that followed – show a similar pattern. The losses in the bear were 3.5 times as great in the stock-heavy fund though the returns were almost as great: 3.4 times. The highest capture ratio and the highest Martin ratio were held by the stock-light fund, while the highest Sharpe ratio came with a 30-40% exposure to equities.

Risks and return-return measures during Recent Rocket Ride

Fidelity Asset Manager 2020 meltdown 2020 melt up Full cycle Capture ratio Sharpe ratio Martin ratio
20% -5.4 14.6 7.1 1.3 0.88 3.64
30 -7.7 20.3 9.5 1.2 0.90 3.60
40 -9.7 25.7 11.5 1.2 0.91 3.52
50 -11.9 31.1 13.2 1.1 0.88 3.34
60 -14.1 36.5 14.7 1.1 0.85 3.13
70 -16.2 41.9 16.0 1.1 0.82 2.93
85 -19.0 50.1 18.3 1.1 0.81 2.79

What would have happened if you bought exactly five years ago, but were freaked out by the Covid bear? Oops. The blue field represents the five-year growth of FAM 20, each succeeding line is the performance of sibling fund with more stock exposure.

At the bear trough, all of the excess returns were effectively wiped out. FAM 20 sat at $11,000. FAM 85 at $11,200. In one 16-day stretch, the five-year gains of FAM 85 went from $16,200 to $11,200.

Bottom line

Valuations in the US stock market, measured by the Shiller 10-year CAPE ratio, are at their second-highest level in over 150 years, and climbing. As we note in this month’s Publisher’s Letter, more and more investors are taking more and more rash, perhaps irrational, and sometimes almost-laughable, actions. Many pundits and others, paid to convince you to buy stocks, see the coming Biden Bull, most especially in sectors that might benefit from reopening and government spending on green infrastructure.

You should hope they’re right, and plan your investments around the possibility that they’re wrong. In general, that might mean dialing down your exposure to equities (a portfolio with 30% equities has, historically, returned 7% annually), shortening by a bit your bond portfolio duration, adding some strategic cash to your holdings – just in case you encounter a sudden, dramatic sale – and looking beyond recent winners and stocks beloved by the day-trading crowd.

There are no guarantees but, on average and over time, slow and steady wins, risk-conscious wins, quality wins, dividends win. You should, too.

SmartETFs Dividend Builder ETF (DIVS)

By David Snowball

Formerly Guinness Atkinson Dividend Builder (GAINX) and, prior to 2014, Guinness Atkinson Inflation Managed Dividend Fund.

Objective and Strategy

SmartETFs Dividend Builder ETF seeks consistent dividend growth at a rate greater than the rate of inflation by investing in a global portfolio of about 35 dividend-paying stocks. Stocks in the portfolio have survived four screens, one for business quality and three for valuation.

  1. They identify dividend-paying companies that have provided an inflation-adjusted cash flow return on investment of at least 10% in each of the last 10 years. That process reduces the potential field from 14,000 companies to about 400. That’s the “10 over 10” strategy that they refer to often.
  1. They screen for companies with at least a moderate dividend yield, a history of rising dividends, low levels of debt, and a low payout ratio.
  2. They do a rigorous fundamental analysis of each firm, including reflections on macro issues and the state of the company’s business.
  3. They invest in the 35 most attractively valued stocks that survived those screens and weight each equally in the portfolio.

The managers might hold as few as 25 or as many as 75 names.

Adviser

Guinness Atkinson Asset Management. The firm started in 1993 as the US arm of Guinness Flight Global Asset Management and their first American funds were Guinness Flight China and Hong Kong (1994) and Asia Focus (1996). Guinness Flight was acquired by Investec, then Tim Guinness and Jim Atkinson acquired Investec’s US funds business to form Guinness Atkinson. Their London-based sister company is Guinness Asset Management which runs European funds that parallel the U.S. ones. The U.S. operation has about $390 million in assets under management and advises the six GA funds and five actively managed Smart ETFs.

Managers

Ian Mortimer and Matthew Page. Dr. Mortimer joined GA in 2006 and also co-manages the Global Innovators (IWIRX) fund. Prior to joining GA, he completed a doctorate in experimental physics at the University of Oxford. Mr. Page joined GA in 2005 after working for Goldman Sachs. He earned an M.A. from Oxford in 2004. The guys also co-manage European versions of their funds including the Dublin-based version of this one, the $1.7 billion Guinness Global Equity Income.

Strategy capacity

About $5 billion based, in part, on trading and liquidity constraints.

Active share

90. Active share is a measure of the difference between what a manager holds and what their benchmark index holds. An index has an active share of zero and timid funds that charge active-manager fees but deliver timid index-like portfolios that might have an active share in the 20s or 30s. The higher the active share, the greater the prospect of non-index-like performance. 90 qualifies as an extremely high active share for a fund with a predominately large-cap portfolio.

Management’s stake in the fund

It’s a little complicated. The managers, both residents of England, do not own shares of the American version of the fund but both have six figure investment in the European version. That provides the same portfolio, but a different legal structure and far better tax treatment. Mr. Page avers “it’s most of my pension pot.”

Opening date

March 26, 2021 for the ETF. The strategy launched as a US fund on March 30, 2012. The European version of the fund is about a year older.

Minimum investment

None.

Expense ratio

0.65% on assets of $23 million (as of March 2021). That makes it one of the 10 lowest-priced funds or ETFs in its Lipper Global Equity Income, one-third less than the group average and about on par with the $100 billion American Capital Income Builder Fund.

Comments

The Dividend Builder ETF, along with its Asia Pacific Dividend sibling, are the first two mutual funds to be converted directly into ETFs. The authorization grew slowly as the SEC slowly became comfortable with the implications of direct conversion, rather than the more common strategy of running the ETF version of a fund side-by-side with the original.

It is a grand experiment and potentially a revolutionary one.

We first profiled the predecessor fund, Guinness Atkinson Dividend Builder (2014), shortly after its inception and after long conversations with its managers. Identifying it as “an intriguing new fund,” we concluded:

The fund strives for two things: investments in great firms and a moderate, growing, income stream that might help investors in a yield-starved world. Their selection criteria strike us as distinctive, objective, rigorous and reasonable, giving them structural advantages over both passive products and the great majority of their active-managed peers. While no investment thrives in every market, this one has the hallmarks of an exceptional, long-term holding.

We were right. Despite the strategy’s long track record, it’s fair to describe SmartETFs Dividend Builder as “an intriguing new (actively managed exchange-traded) fund.” We’ll defend that conclusion with three arguments.

SmartETFs Dividend Builder represents a very smart strategy.

There are, in general, two flavors of value investing:

  • buy cigar butts on the cheap (wretched companies whose stocks more than discount their misery) or
  • buy great companies at good prices.

DIVS is firmly in the latter camp. Many investors share their enthusiasm for the sorts of great firms that Morningstar designates as having “wide moats.”

The question is: how can we best determine what qualifies as a “great company”? Messrs. Mortimer and Page start with a simple, objective premise: great companies consistently produce great results. They believe the best measurement of “great results” is high and consistent cash flow return on investment (CFROI). In its simplest terms, CFROI asks “when a firm invests, say, a million dollars, how much additional cash flow does that investment create?” Crafty managers like cash flow calculations because they’re harder for firms to manipulate than are the many flavors of earnings. One proof of its validity is the fact that a firm’s own management will generally use CFROI – often called the internal rate of return – to determine whether a project, expansion, or acquisition is worth undertaking. If you invest a million and get $10,000 in cash flows the first year, your CFROI is 1%. At that rate, it would take the firm a century to recoup its investment.

The GAINX managers set a high and objective initial bar: firms must be paying a dividend and must have a CFROI greater than 10% in each of the past 10 years. Only about 5% of all publicly traded companies clear that hurdle. That screens out both cyclical firms and those whose management does not consistently and substantially add demonstrable value.

Because such firms tend to see their stocks bid up, the guys then apply a series of valuation and financial stability screens as well as fundamental analyses of the firm’s industry and challenges. In the end, they select the 30-35 most attractively valued names in their pool.

SmartETFs Dividend Builder executes it exceptionally well.

The fund has done exceptionally well since its inception. Lipper categorizes it as a “global equity income fund.” That is a more representative group than Morningstar’s “world large cap” one since the fund’s focus on dividends (i.e., equity income) is central to their discipline.

From inception through conversion, the Guinness Atkinson fund pretty much crushed its peer group.

  GAINX / DIVS Peer group
Annual returns 10.5 7.3
Maximum drawdown -18.6 -24.7
Standard deviation 12.2 13.1
Downside deviation 7.8 9.8
Sharpe ratio 0.81 0.53

Comparison period: 04/12 – o2/21

Which is to say, it had decisively stronger performance in raw returns, risk avoidance, and risk-adjusted returns than its peers. Perhaps more telling, it was consistently a top five fund in its group across a variety of time periods and a variety of metrics.

Metric Period Peer rank
Annual returns 8 years 3rd of 27
  5 years 1st of 34
  3 years 4th of 37
Sharpe ratio 8 years 3rd
  5 years 1st
  3 years 3rd
Capture ratio 8 years 4th (S&P 500), 1st (ACIxUS, tie)
  5 years 1st
  3 years 1st
Ulcer Index 8 years 4th
  5 years 2nd
  3 years 3rd

How do you read that? Annual returns are consistently in the top 10%, ranked 1 – 4 depending on the period. Sharpe ratio, the most widely quoted measure of risk-adjusted returns is consistently in the top 10%, ranked 1-3. The capture ratio compares the amount of an index’s upside you capture to the amount of downside. Think of it as “bang for the buck.” As a global fund, we checked the fund’s capture ratio against both the S&P 500 and the MSCI All-Country except the US index. The fund was almost always the highest-ranked fund in its group. Finally, the Ulcer Index combines two measurements – how far a fund drops and how long it stays down – with the insight that if a fund crashes and sits there smoldering, it’s going to create ulcers. Good news: GAINX investors were among the industry’s most ulcer-free, ranked 2-4.

That consistent excellence has won the fund notice if not yet US assets. The fund has earned MFO’s Great Owl designation for consistently top-tier risk-adjusted performance; it is one of only three global equity income funds to have done so.

European investors, who have committed $2 billion to the strategy, and raters seem to have a clear sense of the fund’s excellence.

We share their enthusiasm.

Its new ETF wrapper makes its future brighter than its past.

ETFs embody a series of structural advantages over open-ended mutual funds. They have lower structural costs, which means that they can charge lower fees to their investors. ETFs are modestly, though variably, more tax-efficient than identical open-end funds would be. And their investors are less bothered by the decision of others to sell fund shares; in a traditional fund, the departure of other investors can trigger substantial tax bills (and portfolio gyrations) for the remaining investors. In an ETF, not so much.

Bottom Line

GAINX has been a top-tier fund. We have confidence that DIVS, its new manifestation, will have equal success by investing in great companies that have proven their mettle across decades of performance.

Fund website

SmartETFs Dividend Builder. As you pursue your due diligence, at the SmartETF website and elsewhere, please note that there was another ETF that traded under the DIVS ticker. That might cause some confusion if you’re incautious. In addition, while DIVS is GAINX, Morningstar has struck all historical data for the fund (and is currently treating DIVS as if it first saw the light of day last week).

© Mutual Fund Observer, 2021. All rights reserved. The information here reflects publicly available information current at the time of publication. For reprint/e-rights contact us.

MFO Premium Webinar – Thursday, 15 April 2021

By Charles Boccadoro

On Thursday, April 15th, we will host two webinars about the MFO Premium search tool site.

The site helps individual investors and financial advisers 1) sort through the vast number of funds available today based on criteria important to them, 2) maintain candidate lists of promising funds to conduct further due diligence on, and 3) monitor risk and return performance of their current portfolios.

Since our last webinar in January, which featured my colleague Lynn Bolin, the site has experienced several upgrades, including:

  • Redesigned MultiSearch user interface
  • Dashboard of Launch Alerts tool
  • Saved Searches feature in MultiSearch
  • Expanded Watchlists and Portfolios
  • Jump Scroll, Plus Search, and Exclude Category features in MultiSearch

The morning session will be at 11 am Pacific time (2pm Eastern). The afternoon at 2pm Pacific time (5pm Eastern). The webinars will be enabled by Zoom. You are welcome to register for both webinars.

Please use the following links to register for the morning session or afternoon session. Each will last nominally 1 hour, including questions.

You can find a short preview in here.

Material covered in previous webinar can be found here.

Hope to you can join us again on the call. If you have any topics you’d like discussed, or general questions, happy to answer promptly via email ([email protected]) or scheduled call.

Elevator Talk: Phillip Toews, Toews Hedged US Fund (THLGX)

By David Snowball

Phillip (Felipe) Toews (“Taves”) founded Toews Asset Management in December 1994 with the aim of providing intelligently risk-managed portfolios for clients. Headquartered in New York, the firm manages $2.2 billion between its six mutual funds, two Agility Shares ETFs and separately managed accounts. In addition to managing investments directly, it has an active advisor education program to help advisors effectively incorporate behavioral insights into their practices.

Mr. Toews is the CEO and founder of the Toews Corporation. He helped pioneer the field of unconstrained tactical management by building models beginning in 1989. In 1987 he joined IDS/American Express as a Financial Consultant. From 1989 through 1994 he ran the money management division at Dorset Financial Services, Corp., of Devon, PA.  Since founding Toews Asset Management, he’s designed the Toews Dynamic Hedging Strategy, managed portfolios, and overseen all aspects of the Toews System. He earned his Bachelor of Science degree, with majors in Business and Economics from Bethel College, America’s first Mennonite college and the only national liberal arts college in the state of Kansas.

Driving much of Mr. Toews’ thinking about portfolio construction are two fundamental tenets: (1) investors have no clue of how bad “bad” can get and (2) investors will flee the stock market after substantial losses. The research he conducted in March 2020 offered three highlights:

  1. Investors are generally unaware of the severity of past market declines. Recency bias leads us to conclude the whatever’s happened in the relatively recent past is as bad as it can get. Toews’ notes that a conventional 60/40 balanced fund would have lost about 72% during the Great Depression.
  2. Having suffered a 40% decline, investors would flee the stock market completely. Other market historians note that many who lived through the Great Depression never returned to the stock market again.
  3. Two-thirds of investors claim to be willing to sacrifice some upside if they were confident that their portfolio was being shielded from significant losses.

The traditional answer to such concerns has been the addition of bonds to an equity portfolio, driven by the faith that the income generated by bonds and their traditionally low correlation with stocks, would buffer a portfolio against the worst of the market’s losses. There are three problems inherent in that solution:

  1. Losses in such portfolios can be daunting. Beyond the 72% loss in the 1930s, a simple 60/40 would have had maximum drawdowns of 30% during the 2007-09 crisis and more than 10% during the Covid bear market in early 2020.
  2. Things are not looking good for fixed-income markets in the decades ahead. Warren Buffett 2021 shareholder letter warned “bonds are not the place to be these days. Can you believe that the income recently available from a 10-year U.S. Treasury bond … had fallen 94% from September 1981? In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future.”
  3. Investors quickly grow impatient with all-weather portfolios as markets rise, and their own portfolios fail to keep up with the headline numbers.

In response, Mr. Toews and his colleagues have attempted to create a number of portfolios that shorten the left tail in the returns distribution (that is, minimize the worst-case losses) while preserving as much of the right tail (the occasional outsized gains) as possible.  One major goal, “to meaningfully reduce risk in a chaotic market.”

On whole, his funds have performed reasonably well to quite well.

  Morningstar category   Analyst rating Lipper category MFO rating
Toews Hedged Oceana Long-Short Equity ★★ SilverQ Global macro  
Toews Hedged U.S. Long-Short Equity ★★★★ SilverQ Global macro Honor roll
Toews Hedged U.S. Opportunity Long-Short Equity ★★★ SilverQ Global macro  
Toews Tactical Defensive Alpha Long-Short Equity ★★★★★ SilverQ Flexible portfolio  
Toews Tactical Income High Yield Bond ★★ NeutralQ High Yield Bond Great Owl
Toews Unconstrained Income Nontrad Bond ★★ BronzeQ Multi-sector income  

The problem with all innovative strategies is constructing a relevant benchmark for them.  The table above illustrates that challenge. The Toews Hedged US Fund (formerly Toews Tactical Monument Fund) has returned an average of 7.2% annually since 2010. The fund has three moving parts:

US large-cap equity exposure – gained primarily through futures contracts

US bond exposure – gained primarily through low-cost ETFs

A defensive options overlay

The challenge is benchmarking this fund against Morningstar’s long/short equity group is revealed in Morningstar’s portfolio analysis for the fund:

At the same time, the “global” part of “global macro” is similarly scant.

So what are we to make of a fund whose goals are to make real (i.e., inflation-adjusted) returns, consistently and without large drawdowns … but does it using a sui generis approach?

Good question! Here are Mr. Toew’s 400 (or so) words on what he’s been thinking and why you should add THLGX to your due diligence list.

We believe that investors are interested in finding ways to remain invested but also address contingencies of market drops. That’s especially true during market bubbles, when stocks can advance dramatically, but may be highly vulnerable to losses.

A key differentiator between our strategy and many other options-based or buffered strategies is our ability to exit equity markets entirely and move into defensive positions (cash and/or fixed income). That means that, at a certain point, instead of moving down less (but still declining), our strategies may be able to reduce risk and become uncorrelated. 

Our strategy has two layers of loss avoidance. First, we hold put options to attempt to reduce rapid losses (like the losses last year as the pandemic set in). Second, if losses continue to mount, our system may cause us to move out of the equity market entirely. During longer term declines, like what we experienced during the internet bubble burst or the financial crisis, our strategy has stayed out of the equity market for many months at a time.

How do we re-enter the market? Just as our system is designed to seek to exit in the early phase of declines, our algorithm seeks to react to market upturns and re-enter. That means potentially gaining during market rebounds (or realizing a possible net benefit from bear markets). 

An all-weather approach to investing might be to position this strategy alongside a passive total stock market index fund, with 50% in each. By investing with this approach, half of your portfolio would adhere to the efficient markets hypothesis and remain invested, but the other half may be able to account for potentially significant mis-pricing opportunities, and could potentially benefit from market disruption.

Toews Hedged US Fund  (THLGX) has a $10,000 minimum initial investment and is available through TDAmeritrade, Fidelity, Schwab, and others. The fund charges 1.31% net (1.48% gross) but does not assay a 12(b)1 fee. The Toews funds do not get individual web pages on their site. That said, Mr. Toews writes frequently. The site’s “Behavioral portfolio” section is clean and well-written and the “News & Insights” section has a combination of written pieces and video interviews.

Launch Alert: T. Rowe Price Global Impact Equity

By David Snowball

On March 15, 2021, T. Rowe Price launched T. Rowe Price Global Impact Equity (TGPEX).

Socially responsible investing is all the vogue, and for good reason. The great bulk of such funds have a limited mandate: do no evil. They’re not trying to change the world, they’re just charged with avoiding the worst actors in it.

A minority of funds accept a greater challenge: do good, while doing well. Their charge is to find and invest in companies whose activities make the world a better place, and which are still financially attractive. As a group, these are referred to as “impact investors.”  Morningstar identifies only a couple dozen funds whose names signal that orientation.

T. Rowe Price now joins the pack. T. Rowe Price Global Impact Equity will invest in 55-85 global stocks. The fund seeks “to generate a positive, measurable environmental and/or social impact with the potential to outperform its benchmark index.” They are not constrained by size, and so might hold anything from micro-caps to mega-caps. Likewise, it might choose to invest in emerging markets equities. The manager’s stated preference, common to Price, is “investing in durable quality growth at a reasonable price.”

The unifying characteristic of the portfolio companies is that the “current or future business activities are expected to generate a positive impact under one of the following three impact pillars: climate and resource impact, social equity and quality of life, and/or sustainable innovation and productivity.” The prospectus explicitly excludes investments in a handful of individual industries, including fossil fuels and private, for-profit prisons.

The manager notes that “the opportunity to own businesses that foster positive environmental and social change is broader than it has ever been. Being on the right side of these changes creates real opportunity to … provide attractive financial returns along with positive impact on the planet and our society.”

The Global Impact Equity Strategy is managed by Hari Balkrishna. For the past five years, he’s been an associate portfolio manager on the Global Growth Equity Strategy which is represented in the U.S. in the five-star Global Growth Stock Fund and the Global Growth Equity Fund in the UK and Europe. Mr. Balkrishna has been with T. Rowe Price for 15 years, starting as a college intern, hired as a research analyst, then promoted to associate portfolio manager, and now to manager. Mr. Balkrishna has lived and worked on five continents: he earned his Bachelors in Australia, his MBA in the US, and is now based in the UK. He’s supported by Price’s team of 200+ equity analysts and 80+ managers around the world.

Bottom line: T. Rowe Price gets it right with a consistency that should be the envy of the industry. Their funds are consistently thoughtful in design, low on hype, and excellent in execution. They avoid the creation of a media-loving superstar manager in favor of a cadre of consistently, quietly successful professionals. There is no reason to doubt that Global Impact Equity will be a solidly above-average offering for decades to come. Investors interested in pushing for meaningful change while still making creditable returns should look carefully at this young fund.

The initial expense ratio is 0.94% and the minimum initial purchase requirement is $2,500. The fund’s webpage is understandably thin but the basics are there and Price has traditionally been a good communicator.

Launch Alert: Touchstone Sands Capital International Growth

By David Snowball

On March 8, 2021, Touchstone Investments launched their latest fund in partnership with Sands Capital, Touchstone Sands Capital International Growth (TCDYX).

Across their strategies, Sands Capital looks for businesses with the same six characteristics:

  1. Sustainable, above-average earnings growth
  2. Leadership position in a promising business space
  3. Significant competitive advantage/unique business franchise
  4. Clear mission and value-added focus
  5. Financial strength
  6. Rational stock market valuation relative to the market and business prospects

Their portfolios are typically concentrated in 25-40 names and are conviction-weighted so that the “best” stocks receive a greater share of the portfolio.

Sands Capital advises or sub-advises four other mutual funds, each of which have earned a five-star rating from Morningstar:

  • Touchstone Sands Capital Select Growth
  • Touchstone Sands Capital Emerging Markets Growth
  • Sands Capital Global Growth
  • Harbor Global Leaders

The Touchstone Sands funds typically work by taking successful strategies that Sands Capital had been managing on behalf of institutional or high net worth investors and making them available to the public. That’s the case here, too.  The Sands Capital International Growth Strategy launched in 2018, making it Sands’ newest. It aims to take “an unconstrained approach to seeking the best growth businesses outside of the U.S.” The strategy has returned 31.5% annualized since inception, while its benchmark index returned 6.2%. That is a stunning gap. The strategy has a median market cap of $45 billion and an active share of 93, which signals an exceptionally high degree of independence from its benchmark.

The fund will be co-managed by Sunil Thakor (handsome devil in the checked shirt) and Ashraf A. Haque. Mr. Haque joined Sands Capital in 2008 after completing his MBA at Harvard. He serves as a co-portfolio manager of Sands Capital’s Emerging Markets Growth strategy and the Touchstone Sands Capital Emerging Markets Growth. Mr. Thakor joined Sands Capital as a research intern, became a full-time Research Analyst in 2006, co-manager of the Global Growth strategy in 2007, and manager of the Global Leaders strategy when it launched in 2017. Before joining Sands Capital, he was an analyst and an Associate at Charles River Associates, a strategic consulting firm.

Bottom line: Sands Capital is an exceptionally successful growth investor, whose strategies have succeeded across a range of markets. Despite a tilt toward stocks with above-average growth prospects, the funds have average to the below-average risk and an admirable consistency of performance. Venturesome investors looking overseas should consider adding Touchstone Sands Capital International Growth to their due diligence list.

The initial expense ratio is 0.98% and the minimum initial purchase requirement for “Y” shares is $2,500. The fund’s webpage is understandably thin (nothing yet about what the managers think or are up to) but the basics (factsheet, prospectus, SAI) are there and Touchstone has traditionally been a good communicator.

Funds in Registration

By David Snowball

The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Each month we survey actively managed funds and ETFs in the pipeline. We thought the “actively-managed” proviso would allow us to avoid the pain of reporting on the endless array of ETFs that have commissioned indices of … oh, SPACs plus cannabis or cryptocurrencies plus hotel stocks or stocks also loved by Gamestop investors. Sadly, we were wrong because there are now actively managed ETFs (below) proposing to target marijuana (2), bitcoin (2), and every dumb idea that has briefly captured the frenzy of the investing community (1).

This month brings 32 new products in the pipeline, most of which will launch by the end of June. The recent record, though, is that many authorized products are being withheld from the market; that is, there are funds that advisers could launch but haven’t chosen to. It might be a sign of market anxiety.

A half dozen of the funds aim at the ESG or climate market, with the largest set of those being released as Fidelity funds or active ETFs.

AdvisorShares Gerber Kawasaki ETF

AdvisorShares Gerber Kawasaki ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to buy “the top companies within the fastest growing current or future global macroeconomic trends.” That said, they might also buy ETFs. On whole, they anticipate 21-30 securities. The fund will be managed by Ross Gerber. Its opening expense ratio is X.XX%.

AdvisorShares Plant Medicine ETF  

AdvisorShares Plant Medicine ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in firms making their money off psychedelics, magic mushrooms, and pot. The fund will be managed by Dan S. Ahrens. Formerly manager of the Vice Fund. Its opening expense ratio is is X.XX%.

Angel Oak Core Impact Fund

Angel Oak Core Impact Fund will seek total return while giving special consideration to positive aggregate environmental, social, and governance outcomes. The plan is to create a pretty much unconstrained global fixed income portfolio: everything from Treasuries and asset-backed securities to private placements and junk bonds. The fund can also employ a variety of hedges, including short selling. The fund will be managed by Clayton Triick, Colin McBurnette, and Sam Dunlap. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.

Asian Growth Cubs ETF

Asian Growth Cubs ETF, an actively managed ETF, seeks to provide long-term growth. The plan is to create an ESG-screened portfolio of stocks from firms headquartered in Bangladesh, Indonesia, Pakistan, the Philippines, and Vietnam (the above-referenced “Cubs”). The fund will be managed by a team led by Maurits Pot of Kingsway Capital. Kingsway is a London-based advisor, though the managers all appear to be Americans with experience at firms like Goldman Sachs and Invesco. Its opening expense ratio has not been disclosed.

BBH Select Series – Mid Cap Fund

BBH Select Series – Mid Cap Fund will seek long-term growth of capital. The plan is to “buy and own” ESG-screened mid-cap stocks whose underlying firms show “qualitative merits, competitive profile and prospective value creation potential.” The fund will be managed by Timothy Harris. Mr. Harris has 21 years of investment experience but appears to manage no other funds or accounts. Its opening expense ratio, as written in the preliminary prospectus, is [0%], but I wouldn’t be getting your hopes up. The minimum initial investment will be $5,000.

BNY Mellon Sustainable US Equity ETF  

BNY Mellon Sustainable US Equity ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in the stocks of U.S. companies that demonstrate attractive investment attributes and sustainable business practices. The fund will be managed by Jeff Munroe and Yuko Takano of Newton Investment Management Limited. Its opening expense ratio has not been released. The same prospectus also covers international and global EM versions of the strategy.

Cabana Target Sector Rotation Conservative ETF

Cabana Target Sector Rotation Conservative ETF, an actively managed ETF, seeks long-term growth. The plan is to use their Cyclical Asset Reallocation Algorithm to figure out where to go, then to buy other ETFs to get there. No word on how conservative “Conservative” will be. The fund will be managed by a Cabana Asset Management team led by Andrew Serowik. Its opening expense ratio has not been disclosed. The same prospectus also covers “Moderate” and “Aggressive” versions of the fund.

Cannabis Growth ETF

Cannabis Growth ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in companies engaged in legal cannabis-related businesses, including industrial hemp. They promise to target only firms compliant with federal and local law. There’s also a proviso to hedge with call and put options. This ETF represents another conversion of a mutual fund, the Cannabis Growth Fund, into an active ETF format. The fund suffered a 62.5% maximum drawdown between launch and March 2020, rallied ferociously since, and is now down just 13% since launch. The fund will be managed by Korey Bauer. Its opening expense ratio is 0.67% after a huge fee waiver.

Conestoga Mid Cap Fund

Conestoga Mid Cap Fund will seek long-term growth of capital. The plan is to go old school, with a growth-at-a-reasonable-price discipline, seeking companies with sustainable advantages, implemented through bottom-up analysis. The fund will be managed by Derek  Johnston and Ted Chang. Mr. Johnston helps manage the firm’s four-star SMid Cap Fund. Its opening expense ratio is 1.05%, and the minimum initial investment has not been announced.

Fidelity Climate Action Fund

Fidelity Climate Action Fund will seek long-term growth of capital. The plan is to invest globally in “climate-aware companies.” Frankly, the “Action” part of the fund’s name strikes us as a misnomer. The fundamental inclusion criterion is not “taking action of manage climate change,” it’s a far wimpier “address climate change or its impact directly or indirectly” and it appears that simply generating very little CO2 for whatever reason would make you eligible. The fund will be managed by Asher Anolic. Its opening expense ratio has not been disclosed, and there is no minimum initial investment.

Fidelity Environmental Bond Fund

Fidelity Environmental Bond Fund will seek a high level of current income. The plan is to invest, primarily, in investment-grade bonds of issuers “that develop or provide products or services that seek to provide environmental solutions and/or support efforts to reduce their own environmental footprint, and debt securities that support environmental projects.” The fund will be managed by an as-yet-unnamed party. Its opening expense ratio has not been disclosed, and there is no minimum initial investment.

Fidelity Preferred Securities & Income ETF

Fidelity Preferred Securities & Income ETF, an actively managed ETF, seeks high total return through a combination of current income and capital appreciation. The plan is to invest in preferred “and other income-producing” securities issued by both US and non-US corporations. The fund will be managed by Adam Kramer and Brian Chang. Its opening expense ratio has not been disclosed.

Fidelity Sustainability U.S. Equity ETF

Fidelity Sustainability U.S. Equity ETF, an actively managed non-transparent ETF, seeks long-term growth of capital. The plan is to invest in US companies that have “proven or improving sustainability practices.” (“or improving” … ehh.) The fund will be managed by Nicole Connolly and Michael Robertson. Its opening expense ratio has not been disclosed.

Fidelity Women’s Leadership ETF

Fidelity Women’s Leadership ETF, an actively managed non-transparent ETF, seeks long-term growth of capital. The plan is to invest in companies that prioritize and advance women’s leadership and development. The fund will be managed by Nicole Connolly and Michael Robertson. Its opening expense ratio has not been disclosed.

First Trust Expanded Technology ETF

First Trust Expanded Technology ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to use a computer to identify stocks in the information technology, consumer discretionary, and communication services sectors. The fund will be managed by as many as six unnamed people. Its opening expense ratio has not been disclosed.

FOMO ETF

FOMO ETF, an actively managed ETF, seeks to provide capital appreciation. The plan is to invest in whatever is trendy – SPACs, emerging markets, junk bonds, IPOs… The fund will be managed by Matthew Tuttle who runs a bunch of other trendy funds and ETFs, such as the SPAC and New Issue ETFs. Its opening expense ratio has not been disclosed. (And no, I’m not giving you a link to it.)

Jacob Forward ETF

Jacob Forward ETF, an actively managed ETF, seeks long-term growth of capital. The plan is to invest in a broad group of (mostly) domestic companies, including many that are in their early stages of development, that “can leverage innovative technology to obtain sustainable competitive advantages in order to generate superior rates of growth.” (A sort of marketing buzz-term bingo winner.) The fund will be managed by Ryan Jacob and Darren Chervitz. Its opening expense ratio has not been disclosed.

John Hancock Mid Cap Growth Fund

John Hancock Mid Cap Growth Fund will seek long-term growth and capital appreciation. The plan is to use proprietary fundamental analysis to identify medium-sized companies with significant capital appreciation potential. (Two lexical notes. First, “long-term growth” is a synonym for “capital appreciation.” Second, they are not targeting “medium-sized companies,” they’re targeting companies of any size whose stock valuation is between $1 – 45 billion. The fund will be managed by Mario E. Abularach and Stephen Mortimer. Its opening expense ratio is 1.23%, and the minimum initial investment will be $1,000.

Nuveen Santa Barbara Dividend Growth ETF

Nuveen Small Cap Select ETF

Nuveen Winslow Large-Cap Growth ESG ETF

Nuveen has announced the launch of actively managed, non-transparent ETF versions of three of its funds. The key variable, the expense ratio, has not yet been disclosed for any of them.

Rockcrest Income Stability Fund

Rockcrest Income Stability Fund will seek to provide current income and some capital appreciation (an admirably modest aspiration.) The plan is to invest, directly or through ETFs, in a diversified portfolio of debt and equity securities. Also, derivatives linked to equities, bonds, and currencies with the occasional short selling. The fund will be managed by Robby T. Bryant. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $1,000.

Rockefeller Climate Solutions Fund

Rockefeller Climate Solutions Fund will seek long-term growth of capital principally through equity investments in global companies across the market capitalization spectrum offering climate change mitigation or adaptation products and services. It was previously a hedge fund, Rockefeller Climate Solutions Fund, and earlier, Rockefeller Ocean Fund. The fund will be managed by Casey C. Clark and Rolando F. Morillo of Rockefeller & Co. Rockefeller & Co. started life in 1882 as the office handling John D. Rockefeller’s personal investments. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $2,500.

Semper Brentview Dividend Growth Equity Fund

Semper Brentview Dividend Growth Equity Fund will seek a high level of risk-adjusted current income and capital appreciation. The plan is to buy equity securities of mid to large-capitalization companies that exhibit a commitment to sustainable and growing dividends. The fund will be managed by James R. Boothe and Hai H. Vu. Its opening expense ratio for both low-load “A” and no-load “Investor” shares is 1.25%, and the minimum initial investment will be $1,000 for “A” and $2,500 for “Investor” shares.

Sierra Tactical Risk Spectrum 30 Fund

Sierra Tactical Risk Spectrum 30 Fund will seek to provide total return and to limit volatility and downside risk. The plan is to invest 15-30% of the portfolio into “uptrending” equity funds and ETFs, with the rest in fixed income. The fund will be managed by Kenneth L. Sleeper (PhD) and David C. Wright (JD). Its opening expense ratio has not been disclosed, and the minimum initial investment will be $10,000. The same prospectus covers the 50 and 70 versions of the strategy.

Simplify Credit Hedge ETF

Simplify Credit Hedge ETF, an actively managed ETF, seeks to hedge credit spread movements arising from an increase in credit spreads, and to benefit from market stress when fixed-income volatility increases, while providing the potential for income. The fund will be managed by Harley Bassman, “Managing Partner & Convexity Maven”, Paul Kim, and David Berns of Simplify Asset Management. Its opening expense ratio has not been disclosed.

Simplify U.S. Equity PLUS Bitcoin ETF

Simplify U.S. Equity PLUS Bitcoin ETF, an actively managed ETF, seeks long-term capital appreciation. The plan is to invest in US equities (what sorts of equities? No word.) with up to 15% of the portfolio in Bitcoin (when would they be doing that? Why? No word.) The fund will be managed by Paul Kim and David Berns of Simplify Asset Management. Its opening expense ratio has not been disclosed.

Sunbridge Capital Emerging Markets Fund

Sunbridge Capital Emerging Markets Fund will seek long-term capital appreciation. The plan is to identify investment themes in emerging markets, then try to find well-managed companies with consumer-driven demand and above-average prospects. Formerly this was Fiera Capital EM. Prior to that, CNR EM. Earlier still, Rochdale Emerging Markets. The fund will be managed by Anindya Chatterjee who has been managing it since 2011. Since inception, the fund has averaged 11.2% annually which pretty much swamps its peers 6.7%, especially given the fund’s below-average volatility. Its opening expense ratio has not been set and the minimum initial investment will be set by whichever platform you buy it on.

USCF Gold Strategy Plus Income ETF  

USCF Gold Strategy Plus Income ETF, an actively managed ETF, seeks to track the price of gold and generate a bit of dividend income by selling call options. The fund will be managed by Andrew F Ngim and Jake DeSantis. Its opening expense ratio has not been disclosed.

Valkyrie Innovative Balance Sheet ETF

Valkyrie Innovative Balance Sheet ETF, an actively managed ETF, seeks to provide investors with a total return. (As an aside, if I were to walk up to Kirk, my college’s CFO, and say, “Hey, big guy, how ‘bout we get innovative with our balance sheet?”, he’d turn ghostly pale and press that big red button on his desk.) In any case, the plan here is to “invest principally in the securities of operating companies that have innovative balance sheets,” which is to say “companies into Bitcoin.” The adviser also filed in January 2021 for an ETF called Valkyrie Bitcoin Fund. The fund will be managed by Jeff Kilburg (identified on the firm’s website as “a respected CNBC contributor”) and Dan Deming of KKM Financial. Its opening expense ratio has not been disclosed.

VectorShares Min Vol ETF

VectorShares Min Vol ETF, an actively managed ETF, seeks to provide total return while limiting volatility. The plan is to combine a high-quality fixed-income portfolio with a bunch of S&P 500 options and cash. The fund will be managed by Jeffrey R. Donaldson and Don Flagg. Both are tenured professors at the University of Tampa  (beware a professor with a portfolio.) Its opening expense ratio is 1.10%.

Virtus KAR Developing Markets Fund

Virtus KAR Developing Markets Fund will seek capital appreciation. The plan is to find 30-60 companies with sustainable competitive advantages, strong management, and low financial risk who are able to grow over market cycles. The fund will be managed by Hyung Kim and Craig Thrasher. The managers are both international small-cap and EM small-cap analysts, which might tend the eventual portfolio to an outsized weighting in smaller issues. Its opening expense ratio has not been disclosed, and the minimum initial investment will be $2,500.

YieldX Diversified Income ETF

YieldX Diversified Income ETF, an actively managed ETF, seeks current income. The plan is to target a portfolio with a yield-to-worst between 3-5%. They’re free to buy corporate and sovereign debt, preferred securities, asset-backed securities, and the occasional private placement. The fund will be managed by a team from Red Gate Advisers. Its opening expense ratio has not been disclosed. The same prospectus covers high-income and short-term income ETFs with the same team.

Manager Changes, March 2021

By Chip

Each month we track changes to the management teams of actively managed, equity-oriented funds and ETFs. That excludes index funds and most fixed income funds. The index fund exclusion is pretty straightforward: in a passive fund, the managers are interchangeable cogs whose presence or absence is almost always inconsequential to the fund’s performance.

Similarly, most bond fund managers have a very limited ability to add value. Over the past 10 years, for instance, the top performing Core Bond fund in the Lipper universe outperformed its peers by just 1% per year with a virtually identical Sharpe ratio (0.98 for the top returning fund, 0.97 for the average fund). The best global income and flexible income managers outperformed by 3.5 and 2.4%, respectively, which is comparable to the margin between the best large-core equity fund managers and the pack.

This month, over 60 funds saw changes in their management teams … though the departure of Lukas J. Smart accounts for 23 of those changes.

Ticker Fund Out with the old In with the new Dt
BTLKX Baillie Gifford International Concentrated Growth Equities Fund James Anderson is expected to retire on or about April 30, 2022.  Lawrence Burns and Paulina Sliwinska will continue to manage for the fund. 3/21
BGEUX Baillie Gifford International Growth Fund James Anderson is expected to retire on or about April 30, 2022.  Thomas Coutts, Lawrence Burns, Brian Lum, and Julia Angeles will continue to manage for the fund. 3/21
BICIX Baillie Gifford International Smaller Companies No one, but… Charlie Broughton, holder of an MA (Hons) in Medieval History and Archaeology from University of St Andrews joins Praveen Kumar, Brian Lum, Milena Mileva and Steve Vaughan. 3/21
BXMDX Blackstone Alternative Multi-Strategy Effective March 10, 2021, Shelter Growth Capital Partners LLC no longer serves as a sub-adviser to the fund and Gideon Berger no longer serves as a portfolio manager of the fund. The other existing portfolio managers, Raymond Chan, Min Htoo, Robert Jordan, Ian Morris, Stephen Sullens, and Alberto Santulin, will continue to serve as portfolio managers of the fund. 3/21
WSBFX Boston Trust Walden Balanced William H. Apfel has announced his retirement. Effective after the close of business on June 30, 2021, Mr. Apfel will no longer serve as a portfolio manager for the fund. Stephen J. Amyouny, Tchintcia S. Barros and Sean A. Cameron remain onboard 3/21
WSEFX Boston Trust Walden Equity William H. Apfel has announced his retirement. Effective after the close of business on June 30, 2021, Mr. Apfel will no longer serve as a portfolio manager for the fund. Stephen J. Amyouny, Tchintcia S. Barros and Sean A. Cameron remain onboard 3/21
WIEFX Boston Trust Walden International Equity William H. Apfel has announced his retirement. Effective after the close of business on June 30, 2021, Mr. Apfel will no longer serve as a portfolio manager for the fund. Messrs. Riley and Sandell will remain Co-Portfolio Managers 3/21
CAVAX Catholic Values Equity Fund No one, but… R Todd Vingers has joined the managing team. 3/21
SFVCX Clearbridge All Cap Value Fund No one, but… Reed Cassady, sporting a BA in Music as well as his MBA, is added. 3/21
CEMRX Columbia Emerging Markets Fund Young Kim will no longer serve as portfolio manager for the fund. Darren Powell joins the existing team: Dara White, Robert Cameron Perry Vickery, Derek Lin, CFA. 3/21
CSEYX Columbia Select Global Equity Fund Darren Powell has left the fund. David Dudding and Alex Lee remain. 3/21
CRSOX Credit Suisse Commodity Return Strategy Fund Effective immediately, Bryant Lie will no longer be a portfolio manager of the fund. Christopher Burton will continue to manage the fund. 3/21
DFMVX DFA Tax-Managed U.S. Marketwide Value Portfolio II In a Smart move, Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall and Joel Schneider will continue to manage for the fund. 3/21
DFUVX DFA U.S. Large Cap Value Portfolio III Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall and Joel Schneider will continue to manage for the fund. 3/21
DFUSX DFA U.S. Large Company Portfolio Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall, Joseph Hohn, and Joel Schneider will continue to manage for the fund. 3/21
DFQTX Dimensional U.S. Core Equity 2 ETF Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall and Joel Schneider remain 3/21
DFEOX Dimensional U.S. Core Equity ETF Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall and Joel Schneider remain 3/21
DFAU Dimensional US Core Equity Market ETF Lukas J. Smart no longer serves as a portfolio manager for the fund. Jed Fogdall and Joseph Hohn will continue to manage for the fund. 3/21
SFAFX Goldman Sachs Strategic Factor Allocation Effective immediately, Nishank Modi no longer serves as a portfolio manager for the fund. James Park has been added as a portfolio manager for the fund. Federico Gilly and Patrick Hartnett will continue to serve as portfolio managers for the fund. 3/21
GGIUX Goldman Sachs U.S. Mortgages Fund Effective March 31, 2021, Christopher J. Creed will no longer serve as a portfolio manager for the fund. Christopher J. Hogan and Matthew T. Kaiser will continue to serve as portfolio managers for the fund. 3/21
HHCAX Highland Healthcare Opportunities Effective immediately, Nate Burns will no longer serve as a portfolio manager for the fund. James Dondero continues to serve as portfolio manager for the fund and is primarily responsible for the fund’s investments. 3/21
JNVYX Jensen Quality Value No one but… Tyra Pratt and Jorge Rivas join Eric Schoenstein, Kurt Havnaer, and Adam Calamar as portfolio manager for the fund. 3/21
JHMC John Hancock Multifactor Consumer Discretionary ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMS John Hancock Multifactor Consumer Staples ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMD John Hancock Multifactor Developed International ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHEM John Hancock Multifactor Emerging Markets ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHME John Hancock Multifactor Energy ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMF John Hancock Multifactor Financials ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMH John Hancock Multifactor Healthcare ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMI John Hancock Multifactor Industrials ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHML John Hancock Multifactor Large Cap ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMS John Hancock Multifactor Materials ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHCS John Hancock Multifactor Media and Communications ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMM John Hancock Multifactor Mid Cap ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHSC John Hancock Multifactor Small Cap ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMT John Hancock Multifactor Technology ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JHMU John Hancock Multifactor Utilities ETF Lukas Smart no longer serves as a portfolio manager for the Funds. Effective immediately, Andres Torres is added as a portfolio manager for each Fund. Joseph Hohn and Joel Schneider will continue as portfolio managers of each Fund. 3/21
JPMOX JPMorgan Macro Opportunities Fund No one, but . . . Virginia Martin Heriz joins Shrenick Shah, Benoit Lanctot, and Josh Berelowitz on the management team. 3/21
JMNAX JPMorgan Research Market Neutral Fund Effective immediately, Laura Huang is on primary caregiver leave and will not be involved in the day-to-day management of the fund. During the time Ms. Huang is on leave, Steven Lee and Raffaele Zingone will continue to manage the fund. 3/21
JPDEX JPMorgan Tax Aware Equity Fund Effective immediately, Laura Huang is on primary caregiver leave and will not be involved in the day-to-day management of the fund. During the time Ms. Huang is on leave, Susan Boa will continue to manage the fund. 3/21
MEMQX Mercer Emerging Markets Equity Dimensional Fund Advisors LP and Mondrian Investment Partners Limited have been terminated as subadvisors for the fund. Grantham, Mayo & Van Otterloo (GMO) and BennBridge US LLC have been selected to replace them. 3/21
MAKAX Morgan Stanley China Equity No one, but . . . Leon Sun joins Amay Hattangadi in managing the fund. 3/21
PEMCX Principal Edge Midcap Fund No one, but … Lauren Choi joins Daniel Coleman and Theodore Jayne of Principal Global Investors, LLC as a portfolio manager for the fund. 3/21
RCIRX Regan Total Return Income Effective immediately, Mr. Arup Saha no longer serves as portfolio manager to the Regan Total Return Income Fund. Messrs. Skyler Weinand and Chris Hall will remain as portfolio managers for the Fund. 3/21
RNWIX Rondure New World No one but… Blake Clayton and Jennifer Dunne join Laura Geritz and Lydia So as portfolio managers for the fund. 3/21
ROSOX Rondure Overseas No one but… Jennifer Dunne joins Blake Clayton, Laura Geritz and Lydia So as a portfolio manager for the fund. 3/21
CRDOX Six Circles Credit Opportunities No one but… On March 3, 2021, the Board approved BlueBay Asset Management and Muzinich & Co. Inc. as additional sub-advisers to the Fund effective March 12, 2021. They join BlackRock Investment, PGIM, Federated and Lord Abbett on the management team of the $24 million fund. 3/21
SULR SmartETFs Sustainable Energy II ETF Effective immediately, Edward Guinness no longer serves as a portfolio manager. Jonathan Waghorn and Will Riley, of Guinness Atkinson Asset Management, the Fund’s investment adviser, continue to serve as portfolio managers of the Fund. 3/21
SCJIX Steward Covered Call Income Fund No one, but… Ryan Caylor joins Paul Townsen to serve as co-portfolio managers for the fund. 3/21
SGIFX Steward Global Equity Income Fund No one, but… Ryan Caylor and Brent Lium join John Wolf as co-portfolio managers for the fund. 3/21
SPGEX Symmetry Panoramic Global Equity Lukas J. Smart is no longer a portfolio manager for the fund. The portion of the fund’s portfolio managed by DFA is managed by a team that includes Jed S. Fogdall and Joel P. Schneider. 3/21
SPUSX Symmetry Panoramic US Equity Lukas J. Smart is no longer a portfolio manager for the fund. The portion of the fund’s portfolio managed by DFA is managed by a team that includes Jed S. Fogdall and Joel P. Schneider. 3/21
USIFX USAA International Fund Effective March 1, 2021, Lazard Asset Management LLC is no longer a subadviser for the fund. Effective immediately, THB Asset Management, an investment franchise of Victory Capital Management Inc., has been added as a portfolio management team responsible for managing all or a portion of the fund. 3/21
USCAX USAA Small Cap Stock Fund Effective March 19, 2021, Wellington Management Company LLP is no longer a subadviser for the fund. Effective immediately, Integrity Asset Management and THB Asset Management, investment franchises of Victory Capital Management Inc., have been added to the fund’s portfolio management team responsible for managing all or a portion of the fund. 3/21
VWELX Vanguard Wellington Fund Effective at the close of business on June 30, 2021, Michael E. Stack will retire from Wellington Management Company LLP and will no longer serve as a portfolio manager for the fund. Loren Moran and Daniel Pozen, who currently serve as portfolio managers with Mr. Stack, will remain as portfolio managers of the fund upon Mr. Stack’s retirement. 3/21
VWUSX Vanguard U.S. Growth Jackson Square Partners, LLC has been removed as a sub-advisor to the fund. Cesar Orosco, James Stetler, Binbin Guo, Tom Slater, Gary Robinson, Kathleen McCarragher, Blair Boyer, and Andrew Shilling will continue to manage for the fund. 3/21
VSL Volshares Large Cap ETF Austin Wen and Rafael Zayas are the old team. Effective immediately, Rosenblatt Global Advisors, LLC has become the sub-adviser to the Fund, and Scott R. Burrill, Chief Operating Officer and Chief Investment Officer of RGA, will be responsible for the day-to-day management of the Fund. 3/21
WEGRX Wells Fargo Emerging Growth Fund Joseph M. Eberhardy, CFA, CPA has announced his intention to retire from Wells Capital Management Incorporated on June 30, 2021. He will continue to serve as a portfolio manager of the fund until June 30, 2021. Thomas Ognar, Robert Gruendyke, and David Nazaret will continue to serve as portfolio managers for the fund. 3/21
SGRHX Wells Fargo Growth Fund Joseph M. Eberhardy, CFA, CPA has announced his intention to retire from Wells Capital Management Incorporated on June 30, 2021. He will continue to serve as a portfolio manager of the fund until June 30, 2021. Thomas Ognar and Robert Gruendyke will continue to serve as portfolio managers for the fund. 3/21
SLGRX Wells Fargo Large Cap Growth Fund Joseph M. Eberhardy, CFA, CPA has announced his intention to retire from Wells Capital Management Incorporated on June 30, 2021. He will continue to serve as a portfolio manager of the fund until June 30, 2021. Thomas Ognar and Robert Gruendyke will continue to serve as portfolio managers for the fund. 3/21
EKJFX Wells Fargo Premier Large Company Growth Fund Joseph M. Eberhardy, CFA, CPA has announced his intention to retire from Wells Capital Management Incorporated on June 30, 2021. He will continue to serve as a portfolio manager of the fund until June 30, 2021. Thomas Ognar and Robert Gruendyke will continue to serve as portfolio managers for the fund. 3/21

 

Briefly Noted

By David Snowball

Updates

On March 26, 2021, Guinness Atkinson Asia Pacific Dividend Builder Fund (GAADX) and the Guinness Atkinson Dividend Builder Fund (GAINX) were converted into ETFs.

Following the model pioneered by GA, Adaptive Fundamental Growth Fund, Adaptive Hedged High Income Fund, Adaptive Hedged Multi-Asset Income Fund, Adaptive Tactical Outlook Fund, and Adaptive Tactical Rotation Fund are being converted into the Adaptive Fundamental Growth ETF, Adaptive Hedged High Income ETF, Adaptive Hedged Multi-Asset Income ETF, Adaptive Tactical Outlook ETF, and Adaptive Tactical Rotation ETF, respectively.

DFA, the other firm that has committed to transforming funds into active ETFs, reports that their first active ETFs, launched in November 2020, now have over $1 billion in assets. Their plans call for converting $26 billion in existing funds into active ETFs (Investment News, 3/4/2021). The hope, according to RIA Intel (11/17/2020) is to stanch the $3 billion per month outflows that the firm has been seeing.

Briefly Noted . . .

Arrow Reverse Cap 500 ETF (YPS) has launched. It’s a passive fund in which the smallest company in the S&P 5000 Index will have the largest weight and the largest company in the Index will have the smallest weight. Previously it was known as the Reverse Cap Weighted US Large Cap ETF (RVRS) and earned a four-star rating as a mid-cap value fund. Described as “a contrarian play on the S&P 500,” the fund’s three smallest holdings are Apple, Facebook, and Microsoft. Its three largest are HollyFrontier (an oil company), Marathon (an oil company), and Gap (of The Gap, Old Navy, and Banana Republic fame).

Effective on or about May 26, 2021, the Catalyst/Lyons Tactical Allocation Fund’s investment objective will change from “total return from long-term capital appreciation and current income” to the more aggressive “long-term capital appreciation.” It’s small but has a four-star rating at Morningstar.

On March 9, 2021, Richard Driehaus died at Northwestern Memorial Hospital after having suffered a brain hemorrhage. Mr. Driehaus was the founder of Driehaus Capital Management and a major philanthropist in Chicago. He founded Driehaus Capital in 1982, and the Richard H. Driehaus Foundation in 1983 which seems like a highly principled move for a startup in its first year of operation. He was a momentum investor who eventually endowed a Center for Behavioral Finance at DePaul University, his alma mater. His family’s name is attached, Pensions & Investments reports, to “a museum, a foundation, an architecture prize, a fashion competition, numerous academic buildings and programs, and on awards celebrating historic preservation and the Chicago bungalow.” The main hall of the Driehaus Museum, dedicated to art and architecture, is pictured above.

Litman Gregory Asset Management, the parent company of Litman Gregory Fund Advisors which is the advisor to what are now called the PartnerSelect (formerly LitmanGregory Masters) Funds, has agreed to be acquired by iM Global Partner US, a French asset management company. The handover is expected to be completed in the second quarter of 2021 but is not expected to result in any material change in the day-to-day management of the funds.

The sale is a tale of two lines.

The top line reflects LitmanGregory’s slowly declining assets even during a bull market and the blue lines reflect investor withdraws each quarter.

SMALL WINS FOR INVESTORS

Pioneer Securitized Income Fund will convert from a closed-end interval fund to an open-end fund sometime in the third quarter of 2021. Of all the sorts of conversions we cover, from hedge fund to mutual fund or mutual fund to ETFs, CEF to OEF has been the rarest sort. The fund only launched in December 2019 and has gathered only $17 million in assets which seems to be the fate of many interval funds: they represent an essential discipline for investing in illiquid securities but almost no one is interested in the prospect of not having daily liquidity.

CLOSINGS (and related inconveniences)

Calvert Emerging Markets Equity Fund will soft-close on May 14, 2021. It’s a four-star fund with $4.4 billion in assets. Substantially higher returns (9.9% vs 5.8%) and lower volatility (15.8% S.D. vs. 17.5%) since inception than its Lipper EM peers.

Hartford Schroders Emerging Markets Equity Fund will soft-close on April 15, 2021. Four-stars, $6 billion in AUM.

On March 12, 2021, JPMorgan Hedged Equity Fund instituted a softer-than-usual close with nine listed exceptions.

PIMCO California Municipal Opportunistic Value Fund and PIMCO National Municipal Opportunistic Value Fund were hard-closed on March 3, 2021.

PPM Small Cap Value Fund closed to new investors on March 13, 2021.

Wasatch Small Cap Value and Micro Cap (and their related institutional strategies) have closed to new investors attempting to set up accounts using third-party platforms such as Schwab or Fidelity. The funds remain open to investors working directly with Wasatch.

OLD WINE, NEW BOTTLES

Effective March 15, 2021, the Adaptive Hedged Income Fund is changing its name to Adaptive Hedged Multi-Asset Income Fund and the Adaptive Tactical Economic Fund is changing its name to the Adaptive Tactical Outlook Fund.

Effective April 23, 2021, Agility Shares Managed Risk ETF becomes Toews Agility Shares Managed Risk ETF while Agility Shares Dynamic Tactical Income ETF transforms into Toews Agility Shares Dynamic Tactical Income ETF.

In a rare development, DoubleLine has been booted from the management of AMG Managers DoubleLine Core Plus Bond Fund and replaced by Beutel, Goodman & Company Ltd. In connection with the hiring of Beutel Goodman, the fund changed its name to AMG Beutel Goodman Core Plus Bond.

Similarly, with the replacement of Freiss Associates with Boston Common Asset Management, AMG Managers Brandywine Fund becomes AMG Boston Common Global Impact Fund.

Finally, Loomis Sayles got removed from control of AMG Managers Loomis Sayles Bond Fund which led to the creation of AMG GW&K ESG Bond Fund.

Effective on or about June 9, 2021, Columbia Seligman Communications and Information Fund becomes Columbia Seligman Technology and Information Fund.

Strap in! On June 9, 2021, Columbia Small Cap Growth Fund I will change its name to Columbia Small Cap Growth Fund. In an equally bold move, Columbia Global Equity Value becomes Columbia Global Value which, so far as I can tell, will continue to invest in equities.

On March 5, 2021, perhaps in an attempt to sound a little bit less pathetic and grubby, the name DEMZ Political Contributions ETF will change to the Democratic Large Cap Core ETF.

Effective May 27, 2021, Federated Hermes Select Total Return Bond Fund will change its name to Federated Hermes Core Bond Fund.

As of April 1, 2021, the Global X funds are a bit less thematic and perhaps not quite so disruptive.

Current name Improved name!
Global X Health & Wellness Thematic ETF Global X Health & Wellness ETF
Global X Longevity Thematic ETF (LNGR) Global X Aging Population ETF (AGNG)
Global X Millennials Thematic ETF Global X Millennial Consumer ETF
Global X China Disruption ETF Global X China Innovation ETF

Effective April 30, 2021, the name of the three-star Hartford Multi-Asset Income and Growth Fund will change to Hartford Multi-Asset Income Fund. The fund’s current yield is 2.96% from a portfolio that’s about 50% global fixed-income and 50% equities or equity-linked stuff.

Effective April 30, 2021, the name of Hartford Municipal Income Fund will change to Hartford Sustainable Municipal Bond Fund.

On March 19, 2021the iShares Morningstar Large-Cap Growth ETF (JKE) was rechristened the iShares Morningstar Growth ETF whereupon it made two complementary (?) moves: it became more diversified by adding mid-caps to its investment universe and less diversified by … well, declaring itself non-diversified. The current version of the fund is a mega-cap growth portfolio with $1.8 billion in assets and a four-star rating.

On July 21, 2021, JPMorgan Small Cap Core Fund becomes JPMorgan Small Cap Sustainable Leaders Fund. In addition, Robert Ippolito, Vice President, will be added as a portfolio manager of the Fund, replacing Jonathan Tse.

Effective May 1, 2021, MassMutual becomes rather less select. Each of 14 funds’ names will drop the word “Select” from the title. So, for example, MassMutual Select Total Return Bond Fund will change its name to MassMutual Total Return Bond Fund. Likewise, any MassMutual fund with “Premier” as part of the name, loses it: MassMutual Premier Core Bond Fund will change its name to MassMutual Core Bond Fund.

It’s back to the future! Effective April 30, 2021, the $51 million Monetta Core Growth Fund changes its name to the Monetta Young Investor Growth Fund (MYIFX) without changing manager, strategy, or fees. On August 28, 2018, Monetta Young Investor Fund changed its name to Monetta Core Growth Fund without changing manager, strategy, or fees. The fund name change followed two terrible years and an outrush of assets. The change back follows one relatively terrible year (up 20% but bottom 12% performance) and a steady but not huge outflow.

Monetta is a fund o’ household names. Don’t be fooled by the fund’s current two-star rating at Morningstar. It has handily outperformed its large-growth peers since inception, during the Global Financial Crisis, and over the full market cycle from 2007-2020. In addition, it’s averaged 17% of the past five years. Two drivers of its low star rating. It performed poorly in the Covid bear during Q1/2020 and it has been merely “solid” in a highly frothy market. In the three recent years when the fund badly trailed its peers, it posted total returns of 23%, (-5%) and 20%.

Effective April 30, 2021, the Muzinich U.S. High Yield Corporate Bond Fund will change its name to Muzinich U.S. High Yield Credit Fund. (They underlined the word “Credit” in the filing just in case you got lost in the course of reading a single declarative sentence.)

Effective March 31, 2021, Pax ESG Beta Dividend Fund became Pax Global Sustainable Infrastructure Fund and develops a curiosity about … oh, water treatment plants worldwide. On the same date, Pax MSCI EAFE ESG Leaders Index Fund becomes Pax International Sustainable Economy Fund. Also effective March 31, 2021, Pax High Yield Bond Fund is expected to be fossil fuel-free.

As of July 1, 2021, Schwab High Yield Municipal Bond Fund becomes Schwab Opportunistic Municipal Bond Fund. The fund promises to invest at least 80% in investment-grade bonds but to invest opportunistically, which might entail exposure to high yield bonds again.

Pending shareholder approval in late April, the Stadion funds become North Square funds.

Acquired Fund Acquiring Fund
Stadion Tactical Defensive Fund North Square Tactical Defensive Fund
Stadion Tactical Growth Fund North Square Tactical Growth Fund
Stadion Trilogy Alternative Return Fund North Square Trilogy Alternative Return Fund

OFF TO THE DUSTBIN OF HISTORY

AAM/HIMCO Global Enhanced Dividend Fund has closed and will undergo (their choice of verbs, not mine) “termination, liquidation and dissolution” on or about May 5, 2021.

In a move first signaled by the funds’ closure in December 2020, CornerCap Large/Mid-Cap Value Fund and CornerCap Balanced were liquidated on March 15, 2021.

DGHM MicroCap Value Fund is expected to liquidate on or about April 26, 2021.

Bad news for anyone looking for 1.35X leverage on the long bonds: The Direxion Monthly 25+ Year Treasury Bull 1.35X Fund and the Direxion Monthly 25+ Year Treasury Bear 1.35X Fund will cease operations on April 27, 2021.

On an as-yet-undisclosed date, First Trust RiverFront Dynamic Asia Pacific ETF will be merged with First Trust RiverFront Dynamic Developed International ETF.

Forester Discovery Fund has closed and is in the process of liquidating, but the adviser hasn’t offered any guess about when the liquidation will be complete.

The five-star, $4 million Integrity Energized Dividend Fund will, The Shadow notes, be de-energized, drained, and powered-down on or about June 30, 2021. A five-star fund in Morningstar’s rating and a high-volatility laggard in Lipper/MFO’s system. The key is your choice of benchmark: Morningstar calls it an energy fund (“Energized” by an 81% stake in the sector) while MFO calls it an equity income fund (“Dividends” leading to a 4.65% yield). So a quick reminder: buyer, reader, manager beware!

IVA Worldwide Fund and IVA International Fund, successors to the legendary SocGen funds led by Jean-Marie Eviellard, and all of their linked separate accounts, will be liquidated on April 19, 2021, as IVA closes up shop. Collapsing economics (the last time they saw net inflows was Q4/2014) and, one should suppose, profound discouragement (senior partners began leaving a year ago and were never replaced) drove the decision.

Assets stand at $2.4 billion, down by two-thirds in a year. They were buying value in a growth bull, buying mid- and small-cap in a large-cap bull, holding cash as the froth relentlessly grew. The requiem might be: “They paid the ultimate price for doing all the right things at all the wrong times.”

John Hancock Alternative Risk Premia Fund has closed and will be gone by May 10, 2021.

Putnam PanAgora Managed Futures Strategy and Putnam PanAgora Market Neutral Fund will close on April 26, 2021, and will be liquidated by May 21, 2021. After looking like such an unbeatable strategy on paper, “managed futures” has been an absolute death zone for funds.

RiverBridge Eco Leaders Fund, a four-star, $14 million fund that earned the Great Owl designation, has closed and will merge into Riverbridge Growth Fund on April 30, 2021.

On or before April 27, 2010, the Russell U.S. Dynamic Equity Fund will be liquidated. Two weeks before that date, the manager’s advisory fee will be dropped to zero. Hmmm … the fund’s “A” shares historically have charged high fees; the managers haven’t invested their own money in the fund and Morningstar’s rating on the fund is “negative.” While I can understand the drop to zero, it’s hard to imagine it being praiseworthy.

Selective Opportunity Fund has accelerated its planned liquidation, from June 21, 2021, to April 12, 2021.

After considering the continuing very low-yield market environment for U.S. Treasury securities and the small size of the TIFF Short-Term Fund, its board authorized the fund’s liquidation on June 15, 2021.

At a Board meeting held on March 9, 2021, the fund’s Board of Directors approved the liquidation and dissolution of the T. Rowe Price Government Money Portfolio fund. The liquidation is expected to occur on May 6, 202

The $30 million Two Oaks Diversified Growth and Income Fund will merge with the $140 million North Star Opportunity Fund in May 7, 2021. Both are all-cap domestic equity funds with a willingness to hold some combination of bonds and cash; both sit about 75% equity / 25% other but North Star has a substantially stronger record. On whole, a win for the investors.

The liquidation of Wells Fargo Intrinsic World Equity Fund is expected to occur after the close of business on or about April 23, 2021. It’s seen complete manager turnover in the past decade but it’s, otherwise, a perfectly respectable $160 million fund. Quite possibly the fund wasn’t attractive to the private equity firms which recently bought Wells Asset Management.