May 2023 IssueLong scroll reading

Briefly Noted

By TheShadow


In a “less than meets the eye” kind of way, the headline is “ESG funds lose $5.2 billion in assets in 2023.” The story behind the story: the Republican temper tantrum had led to outflows from BlackRock, whose ESG Aware MSCI USA ETF alone dropped $6.4 billion. In a defensive reaction, BlackRock reduced the ESG allocation in its model portfolios, which then triggered the outflow.

In an unrelated note, BlackRock CEO Larry Funk received $32.7 million in compensation last year.

Capital Group, the adviser to the American Funds, is launching three more active, transparent ETFs, likely by the end of June. Capital Group International EquityCapital Group World Dividend Growers, and Capital Group Core Balanced ETFs will bring the behemoth’s total to twelve. Reputedly, they’re gearing up for a steady stream of new active ETF launches.

On April 10, James Velissaris, the founder and former chief investment officer of Infinity Q Capital Management, was sentenced to 15 years in prison for his participation in a $1 billion scheme to defraud investors.

In comparative wrist slaps, the SEC ordered Merrill Lynch to pay $9.7 million over hidden currency exchange fees charged to clients and Betterment to pay $9 million for “material misstatements and omissions” related to its tax-loss harvesting service.

And don’t expect to get a human on the phone anytime soon! Capital Group is laying off 300 staff. Lazard anticipates cutting its headcount by 10%. Schwab is trimming a modest 80 jobs as part of its TD Ameritrade integration. AllianceBernstein, Betterment, and BlackRock had already announced reductions in force.

Briefly Noted . . .

Many MFO readers know that Devesh Shah was one of the creators of the original Cboe Volatility Index, famously “the VIX index.” The VIX launched in April 1993. On April 24, Cboe Global Markets announced the launch of the Cboe 1-Day Volatility Index (VIX1D). The VIX Index reflects expected volatility 30 days out. Son-of-VIX will measure S&P 500 volatility over just the current day, which will more accurately reflect … uhh, immediate and short-term trauma? Cboe’s illustration is that the collapse of Silicon Valley Bank and First Republic popped the VIX by 39% but would have seen the VIX1D spike by 163%.

Goldman Sachs will launch the passive Goldman Sachs North American Pipelines & Power Equity ETF to the market in late June. 


Cathie Wood’s ARK Venture fund is slashing expenses! The fund’s total e.r. recently hit 7.7%. The new waivers will bring it down to 2.9%. At launch, they assumed the fund would hit $250 million in assets pretty quickly. Instead, it’s mired in the $14 million range. The fact that the fund has been underwater since its inception and is part of a sprawling empire of thematic funds all run by the same person in the same style might contribute to its lackluster life.

In other ARK adventures, Tuttle Capital has filed to launch two more bad ideas: Tuttle Capital 2X All Innovation ETF and Tuttle Capital 2X Inverse All Innovation ETF. The former attempts to double the daily return of five ARK ETFs, while the latter doubles the inverse of their daily return. It’s the same advisor that recently launched the Inverse Cramer ETF.

Separately, ARK’s Canadian partner – Emerge Canada – has been subject to a cease trade order stopping it from trading any of its ETFs, including ARK’s, for screwing up regulatory filings.

The Brown Capital Management Small Company Fund, which has been closed since October 2013, will reopen to new investors on May 1. Fund assets were nearly $7.5 billion in late 2020 and early 2021, but assets under management have declined over the past couple of years. The fund is rated five stars / Gold by Morningstar.

The Loomis Sayles Growth Fund, rated four stars by Morningstar, is reopening to new investors effective April 25. The fund was closed to new investors as of April 1, 2019.

CLOSINGS (and related inconveniences)

Royce Investment Partners announced share class closings on six funds: Royce Dividend Value, International Premier, Small-Cap-Value, and Smaller-Companies Growth are all closing their Consultant classes; Dividend Value is also closing its Institutional Class and Premier, its R class shares.


The Hennessy Stance ESG Large Cap ETF will be renamed the Hennessy Stance ESG ETF.

On June 1, 2023, iShares MSCI Frontier and Select EM ETF will drop the “MSCI” designation and switch from a passive ETF to an active one.

Morgan Stanley Institutional Liquidity Funds ESG Money Market Portfolio will be rebranded Morgan Stanley Institutional Liquidity Funds Money Market Portfolio, and Morgan Stanley Sustainable Emerging Markets fund is becoming Morgan Stanley Emerging Markets ex China fund. A company spokesman allowed that the changes were made “for commercial reasons.”


Similarly, CCM Core Impact Equity and the CCM Small/Mid-Cap Impact Value Funds are being reorganized into the Hennessy Stance ESG ETF.

City National Rochdale Intermediate Fixed Income, City National Rochdale Government Bond, and City National Rochdale Corporate Bond Funds will be liquidated on May 26.

Ecofin Sustainable Water Fund was liquidated on April 21. Since the fund’s inception, the A share class, with the maximum load, lost 8.64%, according to their website.

Invesco’s board authorized a wide-ranging housecleaning in January. The latest victims will be their PureBetaSM FTSE Emerging Markets ETF, PureBetaSM FTSE Developed ex-North America ETF, PureBeta MSCI USA Small Cap ETF, and PureBeta US Aggregate Bond ETF. All leave this vale of tears on June 23, 2023.

Pioneer Global High Yield Fund, rated two stars by Morningstar, is being reorganized into the Pioneer High Yield Fund, rated three stars.  The reorganization is expected to be completed in the third quarter of 2023.

State Street is reorganizing the $1.7bn SPDR S&P 600 Small Cap ETF into their SPDR Portfolio S&P 600 Small Cap ETF on June 9. They both track the same index, but the surviving fund charges 10 bps less than the decedent, so that’s sort of a gain.

Manager Changes

Paul Jo has left the management team for American Century Quality Diversified International ETF, American Century STOXX U.S. Quality Growth ETF, and American Century STOXX U.S. Quality Value ETF. Apparently, that’s all subsequent to his decision to return to Korea.

Derek Janssen is retiring from Fidelity at year’s end. He has been responsible for the Fidelity Small Cap Discovery fund and its smaller Fidelity Series clone. Forrest St. Clair joins him during the transition. He co-manages Fidelity Small Cap Value with Gabriela Kelleher, who becomes the sole manager at his departure.

Effective January 1, 2024, Francisco Alonso will stop managing T. Rowe Price Small-Cap Stock Fund and T. Rowe Price Institutional Small-Cap Stock Fund and will become a mentor to the firm’s young equity analysts. He has been managing the funds since 2016 and gained a co-manager, Alexander Roik, for the transition period.

Donald Kilbride, lead manager of the huge, five-star Vanguard Dividend Growth Fund, is stepping off this fund at year’s end. He managed the fund alone from 2006 until Peter Fisher was added as a co-manager in July 2022. Mr. Fisher takes over with Mr. K’s departure. Mr. Kilbride will continue managing the Vanguard Advice Select Dividend Growth Fund.

This entry was posted in Briefly Noted, Mutual Fund Commentary on by .

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.