June 2022 IssueLong scroll reading

Briefly Noted…

By TheShadow

Allianz Global Investors admitted to one count of criminal securities fraud in relation to its Structured Alpha Funds. This admittance resulted in a 10-year ban on Allianz advising on any mutual funds in the U.S.

AllianzGI has agreed to pay more than $1 billion in penalties and $5 billion in compensation to investors.  The Structured Alpha funds suffered huge losses during the Covid episode in March 2020.  The funds offered complex hedge strategies that were intended to protect investors in the event of a sharp selloff.

The mutual funds and investment teams will move to Voya Investment Management. The Voya Corporate Leaders Trust “B” (LEXCX, formerly ING Corporate Leaders Trust and originally Lexington Corporate Leaders) remains a fine choice and the purest example of passive management, ever. On the verge of the Great Depression, the fund’s original advisor built a portfolio of America’s greatest companies and limited the fund, forever, to own only those companies (or, in the case of mergers, spinoffs, bankruptcies, or whatever, their direct successors). The fund has no manager, a turnover rate of near zero, and 4% YTD (through 5/27/2022) gain. In our profiles, we’ve called it the ghost ship of the investing world.

On May 23, the Securities and Exchange Commission today charged BNY Mellon Investment Adviser, Inc. for misstatements and omissions about Environmental, Social, and Governance (ESG) considerations in making investment decisions for certain mutual funds that it managed. To settle the charges, BNY Mellon Investment Adviser agreed to pay a $1.5 million penalty.

The SEC’s order finds that, from July 2018 to September 2021, BNY Mellon Investment Adviser represented or implied in various statements that all investments in the funds had undergone an ESG quality review, even though that was not always the case. The order finds that numerous investments held by certain funds did not have an ESG quality review score as of the time of investment.

Bridgeway Capital Management has announced that it will reorganize its Blue Chip Fund (BRLIX, formerly the Blue Chip 35 Index which targets “ultra-large” stocks as a complement in its Ultra Small Company funds) into EA Bridgeway Blue Chip ETF, an actively managed exchange traded fund.  The new ETF will be sub-advised by Bridgeway Capital Management. The reorganization should be completed during the fourth quarter of 2022.

Upgrading goes undercover: The two-star FundX Upgrader and FundX Aggressive Upgrader funds will soon be repackaged as the FundX ETF and FundX Aggressive ETF, respectively. The “investment objective, investment strategies or portfolio management” remain the same.

Josh Stewart left Seven Canyon Funds on May 9.  Mr. Stewart is one of the sons of Sam Stewart, who founded both Wasatch Fund and later Seven Canyons Advisor. His future plans were not disclosed and his brother Spencer remains atop SCA.

Poster/contributor ET91 posted that Lydia So accepted a portfolio manager position with Seafarer Funds. She left Rondure Global Advisors in early May. Prior to joining Rondure, she was with Matthews International Capital Management, where she was the manager of the   Matthews Asia Small Companies Fund (known now as the Matthews Emerging Markets Small Companies Fund) from its inception in 2008 to 2020. Lydia was also a Co-Portfolio Manager of the Matthews Asia Science and Technology Fund (known now as the Matthews Asia Innovators Fund) from 2008 to 2017 and Co-Portfolio Manager of the Matthews China Small Companies Fund from 2019 to 2020.

Charles, David, and Devesh met with Seafarer founder Andrew Foster at the Morningstar Investment Conference. Mr. Foster is a Matthews Asia alumnus and famously a “core” sort of investor with a preference for well-managed firms that generate enough revenue to allow them to grow without reliance on sometimes iffy capital markets. As part of his plan to broaden the perspectives available to himself and his investors, Andrew added a dedicated value guy (Paul Espinosa) and a growth specialist (Inbok Song). Eventually, Inbok returned to Matthews Asia, where she now co-manages the $6 billion Pacific Tiger Fund and strategy.

Lydia So inherits the mantle that Ms. Song once wore. She’s been charged with building a growth team and strategy but she will not be immediately assigned to manage a fund.

T. Rowe Price has filed a registration notice to establish two actively managed ETFs, T. Rowe Price U.S. High Yield and T Rowe Price Floating Rate ETFs. The T. Rowe Price Floating Rate ETF will have an expense ratio of .61%; T. Rowe Price US High Yield ETF will have an expense ratio of .56%. T. Rowe Price U.S. High Yield and T. Rowe Price Floating Rate ETFs will be managed by Kevin Loome and Paul Massaro, respectively; both of whom manage the mutual funds bearing similar names.


Grandeur Peak Advisors has announced that it will re-open its Grandeur Peak Emerging Markets Opportunities, Global Opportunities, Global Micro Cap, International Opportunities, and International Stalwarts Funds to third-party financial intermediaries effective May 16 due to current market sell-off.

Capital Funds has lowered the expense fee on several of its equity and bond funds. The 11 fixed income funds to get management fee reductions include the: American Funds Corporate Bond Fund, lowered (0.25% from 0.36%); AF Emerging Markets Bond Fund (0.46% from 0.55%); AF Multi-Sector Income Fund (0.33% from 0.42%); AF Strategic Bond Fund (0.28% from 0.30%); and AF Mortgage Fund (0.18% from 0.19%).

The Short-Term Bond Fund of America and AF Inflation-Linked Bond Fund have each been reduced to 0.25% from 0.26%.

The other fixed income funds to get management fee reductions were the: AF Short-Term Tax-Exempt Bond Fund (0.20% from 0.33%); AF Tax-Exempt Fund of NY (0.24% from 0.29%); AF Tax-Exempt Fund of California (0.23% from 0.26%); Limited Term Tax-Exempt Bond Fund of America (0.18% from 0.20%); and American High-Income Municipal Bond Fund (0.24% from 0.25%).

Three Capital Group equity funds got management fee reductions: American Funds International Vantage Fund, to 0.48% from 0.60%; American Funds Developing World Growth & Income Fund, to 0.65% from 0.73%; and American Funds Global Insight Fund, to 0.41% from 0.42%.

Meanwhile, the Capital Group Emerging Markets Growth Fund was reduced to 0.62% from 0.76%, and two of its American Funds Insurance Series were reduced: the VI Ultra Short Bond Fund, to 0.26% from 0.32%, and VI International Fund, to 0.48% from 0.49%.

JP Morgan Asset Management has registered its JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). The active equity ETF seeks to deliver an attractive distributable yield while also delivering a significant portion of the returns associated with the fund’s primary benchmark, the Nasdaq-100 Index, with less volatility utilizing large cap companies included in the Nasdaq-100 Index and will incorporate an options strategy to generate income while lowering the volatility of the overall portfolio. Hamilton Reiner will be the lead portfolio manager with portfolio managers Eric Moreau and Andrew Stern. Management fees will be .35%.

Old Wine, New Bottles

AXS Managed Futures Strategy Fund is to be reorganized into the AXS Chesapeake Strategy Fund.  The reorganization is expected to take effect in the third quarter of 2022.

The Point Bridge GOP Stock Tracker ETF is being rebranded as the Point Bridge America First ETF. In both cases, the goal is to invest in companies that contribute heavily to Republican candidates for elected federal office. We’ll note that this is an old and failing game: Blue- and Red-branded funds launch pretty regularly, and disappear without notice equally regularly.


BNY Mellon International Small Cap Fund is to liquidate on or about July 18, 2022.

BNY Mellon Emerging Markets Securities Fund is to liquidate on or about July 22, 2022.

The AINN Fund, a fund of ETFs, was liquidated on May 6.

Left Brain Compound Growth Fund will discontinue its operations effective June 24, 2022. On that whole “compounding” thing, the fund’s portfolio targeted growth stocks and high-yield securities, its cumulative return since inception is -27%, and neither manager chose to invest in the fund.

The Infusive Compounding Global Equities ETF follows suit on or about June 17, 2022.

The Pinnacle Sherman Breakaway Strategy Fund (IPTRX, which Morningstar designates the Pinnacle TrendRating Innovative Equity Fund) breathes its last on June 24, 2022.

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About TheShadow

The Shadow here! Like Mark, I’m a long-time member of the MFO community. I’ve started over 2300 discussion threads, most focusing on developments in the fund industry. I am a personal investor that was introduced to mutual funds when I was young to fund my college education. As I have grown older, I have expanded my mutual funds holdings to a point where I probably have too many; however, this year they all did extremely well due to the overall performance of the market. I work in the financial industry regulating the consumer finance industry in my state. My hope for the months ahead is that I might share word of developments in the finance industry – the comings and goings, launches and liquidations, the fun and the follies – with you.