Monthly Archives: October 2025

October 1, 2025

By David Snowball

Dear friends,

Welcome to the October issue of the Mutual Fund Observer. We’re glad you’re here.

And welcome to the Dog Days of Autumn! The natural world is scrambling to keep up with the changes we’ve triggered, and continue to intensify, upon it. As I walked one of the many bike/hike trails in the Quad Cities on Sunday, I confronted two worlds. One was defined by 90-degree temperatures, hot sunshine, and cracked earth. The other by the rhythm of birds called southward and plants quietening for the season to come, ready for the renewal that heralds the spring.

Some plants need the signal of darkness to trigger their autumnal bloom. The mums in our south garden once attended my mum’s funeral; today, they celebrate, triggered by the lengthening night. A sort of “geez, it’s getting dark around here, I better get my butt moving” response.

I wonder if we might take inspiration from them?

Common milkweed, the Augustana College Quad, late September 2025

In this month’s Observer …

Our colleague Lynn Bolin addresses portfolio construction for uncertain times with two complementary October pieces. In “Putting My Conservative Retirement Portfolio on Cruise Control,” he presents a ten-fund “all-weather” strategy targeting 8% returns with 12% maximum drawdown, emphasizing Alternative Global Macro, Alternative Multi-Strategy, and globally diversified funds. Drawing on Rob Dix’s The Price of Money and Kenneth Rogoff’s Our Dollar, Your Problem, Bolin argues that Quantitative Easing inflated asset prices, while current high valuations suggest below-average future U.S. stock returns, leading him toward funds like FPA Flexible Fixed Income (FPFIX), PIMCO Inflation Response Multi-Asset (PZRMX), and BlackRock Tactical Opportunities (PCBAX).

His companion article, “Long-term Inflation Protection for Conservative Portfolios,” explores hedges against what Dix and Rogoff predict will be “more frequent bouts of inflation” and financial instability. While gold has soared past $3,750, Bolin seeks lower-volatility alternatives, comparing funds like AQR Risk-Balanced Commodities Strategy (ARCNX) and Frost Credit (FCFAX) against his target portfolio. Though Lynn is not expecting 1970s-style stagflation imminently, he’s adding fifty funds to his evaluation system for potential portfolio modifications, balancing inflation protection with his conservative risk tolerance. Stay tuned!

We had an unusual wealth of fund launches to report on, resulting in two Launch Alerts and one not-quite-Launch-Alert.

Tweedy, Browne International Insider + Value ETF launched on September 10, 2025. It is active, quantitative, and research-driven. It works from two assumptions, which are corroborated by a lot of evidence. You should:

Identify undervalued stocks because value works
Identify undervalued stocks where the corporate insiders confirm your assessment by either buying large amounts of the stock themselves or initiating stock buybacks.

If the folks in the know are pouring money into stocks you’ve identified as undervalued, that’s a powerful confirmation. It has worked well with its sibling, Tweedy, Browne Insider + Value ETF, which launched in 2024, falls in the mid-cap value box, and is up 23% YTD.

RACWI US ETF launched on September 11, 2025, and is Research Affiliates’ permutation of an S&P 500 index fund. Here’s the tweak: RAFI starts with the question, “Should these firms even belong in the investable universe?” They answer that question by looking at corporate fundamentals (do they make money?) and then excluding companies that are failing, without regard to their stock price. Currently, they exclude about 25 of the S&P 500 companies, but then market-cap-weight the remainder just as the S&P does.

The Militia Long/Short ETF is the not-quite-a-Launch-Alert. Launch Alerts target funds launched in roughly the past 6-8 weeks, while Militia launched in January 2025. We wanted to put it on your radar because Sam Lee, former Morningstar editor and strategist, founder of SVRN Asset Management, former MFO contributor, and a remarkably smart guy, wanted to put it on ours.

Finally, The Shadow reports on the industry’s latest tribulations, including T. Rowe Price’s decision to liquidate its once-promising T. Rowe Price Multi-Strategy Total Return Fund, a bunch of funds deciding they’d rather go to the ETF dance, and Dodge & Cox triggering three sets of share splits.

The conversion story took a twist in early October with the SEC’s imminent announcement of a decision to permit ETF share classes of mutual funds. That means that you might be able to choose either the Fidelity Low Priced Stock fund’s no-load retail share class or the same fund’s ETF share class. According to Morningstar, at least 75 fund firms have lined up to create ETF shares of their existing funds, which might well blunt the incentive for the fund-to-ETF conversions that have proliferated in the past year or two.

Like lambs to the slaughter

Geoff Colvin, senior editor-at-large at Fortune, made two useful observations in late September:

His simple statement that stocks are highly valued is indisputable. Most measures are screaming that the S&P is insanely overpriced. The Shiller Cyclically Adjusted Price/Earnings ratio is the highest it has been since the dotcom peak. The price-to-sales ratio hit a new all-time high this week. The Buffett Indicator—ratio of the market’s capitalization to GDP—says stocks are highly overvalued, and Warren Buffett is holding an enormous cash cache because he can’t find bargains.

But also:

Greenspan gave his [Irrational Exuberance] speech in December 1996—almost four years before the market plunge. As he told Fortune years later, “If you had left the market when I gave my irrational exuberance speech, you would have missed another 80% of increase” in stock values. (Actually, it was closer to 100%.) (“Back in the ’90s a Fed chief warned about ‘irrational exuberance’ in the markets. Stocks rose 105% over the next 4 years,” Fortune, 9/30/2025)

CNN notes the same anomaly: “Hiring is at a standstill. Inflation is on the rise again. Consumer sentiment is slipping near historic lows. Americans are increasingly fed up with the economy” (“Why are stocks setting records when the economy feels down in the dumps?” CNN, 9/15/2025).

Satya Pradhuman, once the chief small cap strategist at Merrill Lynch and now director of research at Cirrus Research, claims that the market is already in crazy-land: “The melt-up of risk-taking in U.S. equities has pierced the upper boundaries of a normalized range. A combination of a very crowded equity market, combined with an extreme risk appetite, places the U.S. equity market into an overtly speculative chapter” (“Stock market’s relentless rally threatens to turn into a ‘melt-up’,” via Dow Jones, 9/13/2025).

Quartz reports, “Wall Street’s penny aisle is back in business. More than 90 companies — including a Hong Kong noodle shop and a smattering of obscure startups — have floated IPOs this year at $5 a share, the highest number since the Regan years. Penny stocks’ comeback has less to do with solid fundamentals than it does with commission-free apps that turn speculation into a swipe, crypto-fueled investors chasing the next moonshot, and a regulatory spotlight that has wandered elsewhere. For retail traders shut out of $4 trillion tech titans and six-figure Bitcoin, penny stocks offer a cheap thrill: thousands of shares for less than the price of a single iPhone” (Quartz Daily Brief, 9/25/2025).

On the day I write this (a) the federal government shut down, (b) the jobs report from ADP was disastrous, and (c) the stock market went up.

The federal response has been “to boldly implement” Trump’s order to get alternative assets into retirement plans (Department of Labor News Release, 9/23/2025), while FINRA moved to relax the rules surrounding day-trading, so both retirement and non-retirement investors can treat their portfolios like a roulette wheel! Whee?

The key to all of this is the willingness of the American consumer (aka “you”) to continue having confidence in Mr. Trump’s steady hand on the tiller, which leads you to continue buying more and more stuff, relying on more and more debt (currently a record $18.4 trillion) to do so. And the level of stock ownership is now at a record high; almost 45% of Americans’ net wealth rests in their stock portfolios (Federal Reserve data, 9/28/2025). So the American consumer is propping up the stock market, and the stock market is propping up the economy, and now consumer confidence is cratering.

Will there be a devastating market crash? Yep.

Soon? Maybe. Maybe not.

What’s an investor to do? The same as always, dear friends. Act before the storm, not during it. Find an asset allocation (mine, as readers now, is 25/25/25/25) that will likely produce the returns you need to meet your goals with a level of volatility that allows you to continue enjoying life and sleeping regularly. Our recommendation has always been to look for managers who earn their keep and your trust: they have an enormous dislike of losing your money, they’re fully invested with you, they speak sensibly, and have a record of success across friendly and hostile markets. Do not ever sit at the same table with someone who preens and struts and talks about beating the market; they’re fools and potentially contagious. The goal is not to “beat the market,” it’s to live a good life and then move on.

Farewell, Jonathan Clements (1963-2025)

Jonathan Clements, who died this week of cancer at 62, was that rarest of financial journalists: someone the industry couldn’t buy, couldn’t charm, and couldn’t seduce into softening his message. For nearly two decades at The Wall Street Journal and later as founder of Humble Dollar, he wielded his pen like a scalpel, cutting away the jargon, the self-serving studies, and the expensive nonsense that Wall Street had convinced investors was gospel.

Jonathan Clements and I corresponded once, around the launch of Humble Dollar. He was amiably cool from my perspective, which I expected and respected. I invited him to add his voice to Mutual Fund Observer when it called to him, but he had other plans and, as it turned out, far greater success.

Clements’s prescription was elegant in its simplicity: eliminate human agency wherever possible, invest in broad market index funds, keep costs ruthlessly low, and refuse to believe that anyone, whether broker, advisor, or fund manager, could consistently beat the market. He had the data on his side, the integrity to say it plainly, and the courage to sustain a “nonstop blizzard of complaint and criticism” from an industry that hated what he wrote.

MFO pursued a different path. I’ve argued for considering small, boutique managers whose strategies made sense and whose understanding of themselves as “risk managers” rather than “return managers” was deeply ingrained. I believe that thoughtful human judgment, properly applied and fairly compensated, can add value for investors willing to do their homework, most especially in turbulent markets.

Jonathan would have seen this as precisely the kind of thinking he spent his career arguing against. And he wouldn’t have been entirely wrong to be skeptical.

But here’s what mattered more than our tactical disagreement: we shared an absolute commitment to helping people achieve financial security in the face of forces designed to enrich an industry at the expense of those it claimed to serve. Clements and I arrived at different answers, but we were working on the same problem, and we were both trying to solve it honestly.

That honesty was Clements’s defining characteristic. Jason Zweig noted that in over 1,000 columns, Jonathan “never once, to the best of my knowledge, wrote anything that was flagrantly wrong. He never misled or fibbed, or lied to his readers.” In an industry built on obfuscation, that record is astonishing.

But what strikes me most, reading the tributes from those who knew him, is how Clements understood that money was never the point. Money was a tool for building relationships, for creating experiences with family and friends, for making a difference, and for achieving peace of mind. He wrote about raising financially responsible children. He mocked the industry’s obsession with accumulating possessions rather than celebrating meaningful experiences (which is not the same as “selfies”). And in his final year, he wrote with grace and humor about his own dying, making space for others to talk about what we’re all moving toward and helping them feel less alone.

“To philosophize is to learn to die,” wrote Montaigne (with thanks to Jason Zweig for the reminder of Montaigne’s words). Jonathan Clements spent his career teaching people how to live, how to use money as a means rather than an end, how to see through the fog, how to protect themselves and their families from predation dressed up as advice. And then, at the end, he taught us how to face death with laughter and courage and generosity.

The financial services industry will not mourn him. But millions of investors who achieved comfortable retirements because of his clear, consistent, principled guidance will remember him with gratitude. Those of us who disagreed with some of his investment philosophy can still honor the integrity with which he held and expressed it.

In a field that rewards complexity, obfuscation, and self-interest, Jonathan Clements chose clarity, honesty, and service. The example matters more than the investment strategy.

Rest in peace, Mr. Clements. You fought the good fight.

Congratulations to the good folks at Akre Focus

After a small struggle to get their shareholders to endorse or reject a proposal to make AKREX the largest-ever fund-to-ETF conversion. A majority of shareholders finally voted in September to endorse the change. The upcoming benchmarks:

October 10, 2025, the retail ARKEX shares merge with the institutional AKRIX ones

October 24, AKRIX-the-fund becomes AKRE-the-ETF

October 27, ARKE begins trading on the NYSE

While Akre shareholders were considering, BlackRock moved to swiftly convert two funds into active ETFs: the BlackRock GA Dynamic Equity Fund and the BlackRock GA Disciplined Volatility Equity Fund. The new ETF names are iShares Dynamic Equity Active ETF (BDYN) and iShares Disciplined Volatility Equity Active ETF (BDVL). Both are managed by a Global Allocation team headed by the firm’s CIO, Rick Rieder. Both are three-star funds. Since both are part of BlackRock’s “managed portfolio” business, I suspect that the conversion was made to simplify their use for that program.

Thanks, as ever …

Before signing off and getting back to the work you rely on, we want to take a moment to pause and express our deepest gratitude to the readers who truly keep this project alive: our incredible donors. The messages and the money you send are a profound source of encouragement, and they ensure we can keep the lights on (the server lights in this case).

To our bedrock supporters, Greg, William, S & F Advisors, William, Stephen, Wilson, Brian, David, Doug, Altaf: Thank you. We are genuinely humbled by your ongoing commitment. And, to Fred, John, and David who sent donations this month: Thank you for the wonderful lift. Your gifts are an immediate vote of confidence and a powerful reminder that this community is full of people who value the work we do.

I’m utterly diffident about encouraging folks to contribute to the Observer when there are so many pressing needs to address: serious, adult journalism is struggling to find readers willing to pay for reliable information, food banks are being drained at an alarming rate, conservation groups are desperately trying to compensate for the insanity that’s gripped the executive branch, and so on.

Here’s our recommendation: Go do good. Don’t talk about doing it. Do it. Do something. That has two benefits: (1) it steadies you—action is the antidote to despair—and (2) it helps a beleaguered world.

Support your local foodbank

Pay for reliable journalism and pay for reliable local journalism

Plant a tree (or a seatree)

Support climate action near you

Volunteer at your library

Support independent local booksellers (Bookshop, an Amazon alternative, contributes directly to local bookstores with each book sold)

Support a worthy cause, support a worthy candidate.

Support MFO

The key isn’t what you do. The key is that you do. The chrysanthemums don’t wait for perfect conditions. Neither should we.

As ever,

Launch Alert: Tweedy, Browne International Insider + Value ETF

By David Snowball

On September 10, 2025, Tweedy, Browne Company LLC, launched the International Insider + Value ETF (ICPY). The ETF is both actively managed and fully transparent, which might engender some risk (for example, front-running by high-speed traders) but also simplifies the structure and reduces complexity.

The managers have the freedom to create an all-cap, all-world portfolio that can invest in developed and developing markets and, to a limited extent, in the US. The plan is simple and research-driven:

Identify undervalued stocks because value works
Identify undervalued stocks where the corporate insiders confirm your assessment by either buying large amounts of the stock themselves or initiating stock buybacks.

The logic: if you think it’s valuable and the leaders of the company think it’s valuable, then there’s a pretty good chance that it actually is valuable. At which point Tweedy buys and holds.

There are, of course, a lot of details that go into the simple word “identify.” Tweedy gives their capsule description of their discipline:

Most investments in Tweedy, Browne portfolios have one or more of the following investment characteristics: low stock price in relation to book value, low price-to-earnings ratio, low price-to-cash-flow ratio, above-average dividend yield, low price-to-sales ratio as compared to other companies in the same industry, low corporate leverage, low share price, purchases of a company’s own stock by the company’s officers and directors, company share repurchases, a stock price that has declined significantly from its previous high price and/or small market capitalization. Academic research and studies have indicated a historical statistical correlation between each of these investment characteristics and above-average investment rates of return over long measurement periods.

Tweedy has also identified some “insiders” as more significant than others (roughly, the C-suite folks) and some purchases as more significant (large, voluntary, contrarian).

All of which explains, by the way, the ticker symbols for the two ETFs: COPY and ICPY, as in “copy the lead of informed insiders.”

Tweedy, Browne is one of the classic “white shoe” investment firms. It’s more than a century old and served as Benjamin Graham’s original broker. It long ago published (and gave away) a small classic, “What Has Worked in Investing” (1992 with updates), which presented the evidence for global value investing from 50 academic studies. I have always loved the humility reflected in that title: they report the empirical evidence on what has worked up until now, they do not trumpet the magic formula of “What Will Work in Investing.” The firm manages $7.2 billion between separate accounts, private funds, offshore funds, mutual funds, and ETFs. Tweedy, Browne insiders – the managing directors, employees, family members, and “a retired principal” – have collectively invested more than $1.7 billion in Tweedy, Browne portfolios (as of 6/30/2025).

Like MFO, Morningstar is impressed:

Tweedy, Browne boasts one of the most seasoned investment teams in the industry. The seven-member investment committee that collegially runs this strategy has about 30 years of firm tenure on average. While a few members are in the later stages of their careers, the firm has long been thoughtful about succession planning and has promoted a few analysts to the committee since 2013…

Alongside a solid team is a disciplined and consistent approach. With roots dating back to 1920, the firm takes great pride in its value investing heritage. The team prefers quality franchises that are appropriately capitalized and run by good management teams, but only if they are trading at compelling valuations…

[Their funds] consistently rank among the category’s least volatile options [which] stems from the team’s balance of quality and valuation, willingness to hold cash, and currency-hedging practices. Despite relatively poor recent performance, this strategy [referring to International Value] comes with a predictable return profile—consistently providing ballast during down markets while lagging in rallies—and it’s likely to shine on a risk-adjusted basis over the long term.

ICPY’s sibling, Tweedy, Browne Insider + Value ETF has seen both strong years (top 24% YTD among global small-cap funds) and strong fund inflows ($158 million in AUM in under a year) since launch in December 2024.

The opening expense ratio for the fund is 0.80%, perfectly reasonable for an actively managed ETF. The homepage for the Tweedy, Browne ETFs is aesthetically spare and easily navigable.

Putting My Conservative Retirement Portfolio on Cruise Control

By Charles Lynn Bolin

I am well on my way to implementing my version of the all-weather portfolio, where some funds will perform well in any environment. This conservative retirement portfolio is a subset of my overall portfolio and fits into tax-advantaged accounts within the intermediate bucket, along with several traditional bond funds and bond ladders. The goal for this “basket” of funds is to have income that meets most withdrawal needs with some upside potential. I incorporated three funds into this portfolio from David Snowball’s article, Thinking More Broadly: Bonds Beyond Vanilla, from the MFO September newsletter. I also included some funds that I already own.

I desire some protection against inflation and financial instability. I believe that U.S. stock market returns in the U.S. will be below average over the coming decade because starting valuations are so high. Funds were selected based partially on having global allocations. Likewise, some bond funds will perform well because interest rates are high and bond values rise when interest rates fall. Several of the funds use hedging strategies that invest beyond traditional stocks, bonds, and cash, and should only be purchased by experienced investors in a well-diversified portfolio.

This target sub-portfolio with ten funds would have returned eight percent over the past six years with a maximum drawdown of twelve percent. The Mutual Fund Observer Portfolio tool rates it conservative (MFO Risk = 2) and above average returns (APR Rating = 4). I own five of the ten funds and plan to buy two more before the end of the year.

I am now putting this strategy on cruise control. I will continue to monitor and adjust the portfolio if I find funds better suited for these uncertain times.

The Price of Money

I finished reading The Price of Money by Rob Dix who takes the reader through the conversion of the dollar into a fiat currency when it was taken off the gold standard, why governments target inflation, the tendencies for governments to spend more money than they bring in through taxes, the extraordinary rise in national debt during peace time and financing that debt, the impacts of Quantitative Easing, the increase in financial inequality, the return of inflation, and the rising risk of financial repression. He suggests that we may be in for a period of higher inflation and lower interest rates. The book was published in 2023, before tariffs were increased this year. The Federal Reserve is now facing the dilemma of weak employment and rising inflation.

The Price of Money is a great companion to “Our Dollar, Your Problem” by Kenneth Rogoff, which I also completed last month. Dr. Rogoff expects “a sustained period of global financial volatility marked by higher average real interest rates and inflation and more frequent bouts of debt and financial crises.”

I created Figure #1 to show the high correlation of stock market capitalization (dashed purple line) to Federal Reserve Assets (QE, dashed red line) compared to personal consumption expenditure price index (inflation, solid blue line) and nominal gross domestic product (dashed green line). Investors who owned or bought stocks during the past fifteen years have greatly benefited from the increase in price-to-earnings ratio, while savers have suffered from low yields. Profits (dashed gold line) and stock prices rose dramatically following the COVID recession in large part because of stimulus, including QE. People saving for retirement now are buying at a time when stock prices are near an all-time high, which implies lower average future returns.

Figure #1: Influence of Quantitative Easing on Market Capitalization

Source: Author using St. Louis Federal Reserve FRED database.

A traditional view of stock valuations for the S&P 500 can be found at S&P 500 PE Ratio – 90 Year Historical Chart by MacroTrends, as shown in Figure #2, which shows that stocks are highly valued. The Vanguard Capital Markets Model describes their forecasts over the next ten to thirty years, which estimates that Global ex-U.S. equities and many fixed income categories may do as well or better than US equities.

Figure #2: Price-To-Earnings of the S&P 500

Source: Author using MFO Premium fund screener and Lipper global dataset.

Conservative Portfolio with Equal Weights

I track around a thousand mutual and exchange-traded funds with share classes available at Fidelity with no loads or transaction fees each month using the MFO Premium fund screener and Lipper global dataset. To select funds for this portfolio, I filtered out funds that had poor downturn ratings, high correlations to the S&P500, and did poorly during the COVID recession, 2021, when inflation was rising, 2022, when rates were rising, and past recessions. I also selected funds that have returned at least 4% percent annually over the past five to ten years and have yields of over 4%. I used Portfolio Visualizer to assist in narrowing the list down to ten funds.

Table #1 contains the ten funds weighted equally in my conservative target portfolio, sorted from the highest “Yield to Ulcer Index” ratio to the lowest for risk-adjusted yield. While yield is one of my primary objectives, it is not the only one. Over the past six and a half years, the portfolio would have returned 8.4% annually with a maximum drawdown of 12.4%. The portfolio has an MFO Risk of “2” for below average, an APR rating of 4” for above average, and all but one fund has above average risk-adjusted returns as measured by the MFO Rating.

Table #1: Target Portfolio with Equal Weight Performance – 6.7 Years

Source: Author using MFO Portfolio Tool.

FPA Flexible Fixed Income (FPFIX, FFIRX) and Victory Pioneer Multi-Asset Income (PMAIX) were covered in David Snowball’s article, and I own shares in both. RiverPark Strategic Income Retail (RCTIX, RSIVX) was also covered in the article. I own PIMCO Inflation Response Multi-Asset (PZRMX) for inflation protection, and BlackRock Tactical Opportunities (PCBAX) for its performance during down markets. I own Aegis Value I (AVALX), which David Snowball covered in Aegis Value Fund (AVALX) for its global diversification of deep value, small-cap stocks. The stock market usually dips during government shutdowns, and I look for opportunities to buy FPA Crescent (FPACX, FPFRX) and Eaton Vance Glbl Macr Absolute Return (EAGMX) before the end of the year.

Figure #3 shows the funds during the COVID recession (2020), rising inflation (2020-2021), rising interest rates (2022- 2023), falling inflation (2022-2024), and falling interest rates (2024-2025). I selected funds that tended to do relatively well in each of these environments. I excluded 2024 and 2025 because valuations rose to very high levels.

Figure #3: Total Return of Funds in the Target Conservative Portfolio

Source: Author using MFO Premium fund screener and Lipper global dataset.

Portfolio Visualizer

I used Portfolio Visualizer to identify funds that would contribute to high risk-adjusted returns. For this to happen, the funds have to have low correlations to one another so that some are up when others are down. The objectives that I set in Portfolio Visualizer included “minimize drawdown given a targeted return”, “maximize return for a target volatility”, and “maximize the Sharpe ratio”. The link is provided here. From these results, I back-tested simplified allocations again using Portfolio Visualizer. The link is provided here. The results are summarized in Table #2.

Future results are guaranteed to be different than the past, so I am loosely following an equal-weighted allocation for simplicity. While I like the lower drawdown of the Maximize Sharpe Ratio, I am comfortable with that of the Equal Weight portfolio. I created the “Intermediate Portfolio” to review the results if I wanted to tilt the “Equal Weight” portfolio more towards the “Maximize Sharpe Ratio” portfolio with a preference for higher yield and return.

Table #2: Summary of Portfolio Strategies

Source: Author using Portfolio Visualizer

Figure #4 compares the growth of $10,000 from 2019 adjusted for inflation with the globally diversified Fidelity Asset Manager 40% (FFANX), which is a good globally diversified mixed asset fund. While I am comfortable with the drawdowns of the “Maximize Return @ 10% Volatility) over the past six years, I might not be under more severe market conditions. I like the backtested portfolios over FFANX because of their lower volatility.

Figure #4: Growth of $10,000 for Portfolio Strategies

Source: Author using Portfolio Visualizer

Figure #5 is the Efficient Frontier (blue line) of the funds. It estimates the maximum return that can be achieved for a given standard deviation (volatility) by combining funds. While I own and like Aegis Value (AVALX) for investing in globally diversified small-cap companies, I recognize that it is the riskiest fund by far, and I am comfortable with a reasonable buy-and-hold allocation to it.

Figure #5: Efficient Frontier of Funds in the Conservative Target Portfolio

Source: Author using Portfolio Visualizer

Short-Term Performance

Table #3 shows the short-term performance of the funds along with some of my baseline funds. I own the funds shaded green, and plan to buy the ones shaded yellow before the end of the year. As interest accumulates and bond rungs mature, I will evaluate the three remaining funds in the target portfolio and expect to add them to the portfolio. I evaluated BAMBX and PCBAX last month in BlackRock Systematic Multi-Strategy (BAMBX) vs BlackRock Tactical Opportunities (PCBAX) | Mutual Fund Observer, and purchased PCBAX. I am holding off on BAMBX because of poor short-term performance.

Table #3: Short-Term Performance of Funds in Target Conservative Portfolio

Source: Author using MFO Premium fund screener and Lipper global dataset, and Morningstar returns as of Sep 26th.

Closing

Tariffs, high domestic stock valuations, geopolitical risks, rising national debt, and uncertainty are creating an environment where I think actively managed funds will outperform. In particular, I favor Alternative Global Macro, Alternative Multi-Strategy, Flexible Portfolio, and globally diversified mixed-asset categories.

I am now re-reading Global Macro Trading by Greg Gliner. Mr. Gliner says, “The first rule in any kind of investing is to understand how much you stand to lose, rather than how much you stand to gain.” This is important to keep in mind with stock markets at all-time highs. With a government shutdown looming as I write this article, I have a little dry powder looking for the opportunity to add to funds in this article to my conservative portfolio if the opportunity arises.

Launch Alert: RACWI US ETF

By David Snowball

On September 12, 2025, Research Affiliates launched the RACWI US ETF, which will track its proprietary RACWI US Index. This is just RA’s second directly managed fund, following Research Affiliates Deletions ETF (NIXT), which launched in September 2024 and targets the stocks dropped from traditional large- to mid-cap indexes.

Research Affiliates, founded in 2002 by Rob Arnott, is a Newport Beach–based investment firm recognized for innovative, research-driven approaches in smart beta, factor investing, and asset allocation solutions. The firm partners globally to deliver mutual funds, ETFs, and other investment solutions, and, as of June 2025, more than $159 billion in assets are managed worldwide using strategies they developed. Their RAFI-branded funds, which embody their Fundamental Index concept, have built a strong track record by selecting and weighting stocks based on economic fundamentals instead of market capitalization. By our count, eight of the 10 RAFI-branded US funds have earned either four or five stars from Morningstar (as of October 1, 2025).

RACWI is a hybrid index that seeks to combine fundamental and cap-weighting components. In a traditional equity index, weightings are determined by sheer size: bigger stocks automatically carry bigger weights, which imposes a sort of large growth/momentum/bubble bias. The term is “market cap” weighted. Research Affiliates tweaks the process by selecting the companies in the index by their fundamental metrics, then cap-weights the resulting pool:

RACWI selects companies based on their economic footprint, using four equally weighted fundamental measures: adjusted sales, adjusted cash flow, dividends plus buybacks, and book value plus intangibles. After this selection step, constituents are cap-weighted, creating an index that looks and behaves almost identically to traditional benchmarks like the S&P 500, with the differentiated selection process historically providing a measurable performance edge.

In theory, that leads to a slightly higher-quality pool of index names and, since fundamental values are less volatile than mere market capitalization, less need to boot out shrinking companies and elevate “the new winners” into the index. It provides, RAFI argues,

a more robust foundation: the scale and success of the underlying businesses, rather than [stock] speculation …

While the ETF is new, the index has a four-year track record. Research Affiliates reports a series of data points about the index vis-à-vis the S&P 500:

RACWI has historically had less tracking error relative to the S&P 500 than the Russell 1000 does
RACWI has a turnover nearly identical to the S&P 500, and fewer addition/deletion flip-flops.
Since its inception (2021), RACWI has outperformed the S&P 500 by approximately 81 basis points annually
RACWI’s tracking error is under 60 basis points
RACWI has more than 95 percent overlap in holdings with the S&P 500.

The ETF will charge 0.15%. Because assets are small ($14.28 million) and trading is light, the fund might experience exceptional bid/ask spreads. Morningstar’s trading report for Friday, September 26, 2025, is worth noting:

RAFI anticipates a 30-day bid/ask spread of just 0.12%. The ETF’s webpage is understandably thin on content. That is more than made up for by the vast quantity of research and capital market projections on Research Affiliates’ own site. You will need to create a (free) account to read the content, but the process is painless. That will give you access to the white paper behind the fund: Rob Arnott and Lillian Wu, RACWI: Reinventing Cap-Weighted Indexing (September 2025).

Bottom line: this looks to be a pretty solid option for folks who are looking to invest in the S&P 500 but would appreciate a slight quality tilt to their index.

Long-term Inflation Protection for Conservative Portfolios

By Charles Lynn Bolin

Gold is considered one of the best hedges against inflation and uncertainty. Gold fell from about $385 in 1995 to a low of around $250 by 2001, to a high of $1,750 in 2011 before falling to $1060 in 2015. It is now over $3,750. For the past ten years, iShares Gold Trust (IAU) has had a total return of 195% compared to 289% for Vanguard 500 Index ETF (VOO). In this article, I compare funds with lower volatility than stocks and gold to protect from inflation. Preparing for inflation should be part of an overall strategy and not just timing the market when inflation rises.

Most of my career was in the precious metals industry on the technical side. It was a stable industry to be in during the financial crisis, but stressful when gold tumbled. Recently, the price of gold has increased significantly due in large part to central banks buying gold, the weaker dollar, geopolitical risk, economic uncertainty, falling interest rates, and inflation. The price of gold and stocks of gold miners have risen so fast, I don’t consider either category appropriate for my conservative, low-turnover portfolio in retirement.

Higher Inflation

Tariffs are making the headlines for increasing inflation. Core inflation has risen from 2.3% in April to 2.9% in August. New tariffs were just added for heavy trucks, drugs, and kitchen cabinets. Economists in the Federal Reserve Bank of Philadelphia’s Third Quarter 2025 Survey of Professional Forecasters estimate that headline CPI inflation will begin to fall from third-quarter levels, but the rules keep changing. The Federal Reserve is now lowering short-term rates to stimulate employment at the risk of aggravating inflation. Keep in mind that inflation is the change in price levels, so the increase from tariffs will be a temporary bump in inflation to a “permanently” higher price level.

In addition to tariffs, the value of the dollar has fallen by eleven percent this year. As inflation increases, the purchasing power of the dollar decreases. The falling value of the dollar raises the price of imports while making U.S. exports less expensive. The falling dollar hurts investments in U.S. held by foreigners who finance part of the national debt. The cost of buying a dollar of earnings of the S&P 500 is now $30 per dollar of earnings. It is known as the price-to-earnings ratio and has doubled since 2010.

The Price of Money

I recently read The Price of Money by Rob Dix, who suggests that we may be in for a period of higher inflation and lower interest rates. I also finished reading “Our Dollar, Your Problem” by Kenneth Rogoff, in which he expects “a sustained period of global financial volatility marked by higher average real interest rates and inflation and more frequent bouts of debt and financial crises.” The reasons have a lot to do with the burden of rising national debt and how it is financed, along with the decline of the dominance of the dollar as the world’s reserve currency. I am more concerned about long-term inflation as described by Rob Dix and Kenneth Rogoff; tariffs may play a role.

Mr. Dix explained that Quantitative Easing was not highly effective for raising inflation to the Federal Reserve target of 2% initially because the money went into the financial system and largely resulted in inflating asset prices such as stocks. QE was more effective following the COVID recession because it increased the money available to the Treasury to create stimulus for the consumer. Along with disruptions to the supply chain from COVID and the Russian invasion of Ukraine, inflation rose to levels not seen since the 1970s.

Figure #1 captures the annual inflation rate of the personal consumption expenditures price index and the Federal Funds rate, which is the rate at which commercial banks lend to other banks overnight. The COVID bear market occurred in 2020, inflation rose dramatically in 2021, and the Federal Funds rate was raised to slow inflation in 2022. My analysis of fund performance in this article focuses to a large extent on 2021.

Figure #1: Federal Funds Rate and PCE Year-Over-Year Inflation

Source: Author using St. Louis Federal Reserve FRED database.

Quantitative Tightening

Wolf Richter discusses mortgage rates being between 6% to 7% following a large increase in home prices after the COVID recession in Longer-Term Treasury Yields & Mortgage Rates Jump after Rate Cut, Yield Curve Steepens, Bond Market Gets Edgy on Wolf Street:

“But that’s a bubble-pricing problem now that should have never occurred, not a rate problem. The rates are fine. They’re historically at the low end of the normal range. The 5% and below mortgage rates were a creature of massive QE during the Financial Crisis and after, when the Fed loaded up on trillions of dollars of Treasury securities and MBS to push down long-term rates. But the Fed has been doing the opposite since the second half of 2022 and has shed $2.4 trillion of those securities as QT continues.”

The Federal Reserve has been gradually unwinding its balance sheet when the economy and markets are strong. I expect the long end of the yield curve to stay higher for longer because of the high national debt, specter of inflation, unwinding of Quantitative Easing, and rising geopolitical risks. Federal Reserve independence is gradually being eroded. The Federal Reserve is lowering short-term rates, and a coordinated effort by the Treasury and Federal Reserve may lower intermediate-term rates. I anticipate that short- and intermediate-term rates will be lower over the next year, but remain higher than they were from 2009 to 2021.

Planning For More Frequent Bouts of Inflation

Table #1 shows Lipper Categories that have traditionally hedged against inflation, along with those I identified by looking at the recent period of high inflation. They are sorted by a Ranking System composed of my proprietary ranking system, three-month return, return in 2021 when inflation was rising, four-year Martin Ratio for risk-adjusted return, and yield. I have added toggles to my investment system to add or tilt weights for “Tax Efficiency” for after-tax accounts, “Risk Off” for my outlook, and “Yield” if income is an objective. Table #1 is rated for a conservative, tax-advantaged account where I am seeking income. Metrics in the table are shaded red for “worst” and blue for “best”.

Table #1: Categories That Did Well During High Inflation – Four-Year Metrics

Source: Author using MFO Premium fund screener and Lipper global dataset, and Morningstar returns as of Sep 26th.

The Commodities Precious Metals category did not provide much protection against inflation in 2021, but has performed well since then because of rising rates, falling dollar, and uncertainty. Notice the high maximum drawdowns of Precious Metals Equity, Real Estate, and the S&P500 relative to other categories.

Inflation-protected bonds are considered safe protection against inflation. The green shaded categories are the ones that I identified in this month’s companion article, “Putting My Conservative Retirement Portfolio on Cruise Control”. The gold shaded categories are what I consider to be possible lower-risk hedges against inflation; however, commodities can be very volatile, as we will see later.

The green shaded funds are the ones that I currently own, and the blue shaded funds are in my Conservative Target Portfolio for future investments. I like the Flexible Portfolio, Alternative Global Macro, and Alternative Multi-Strategy categories, where managers have the discretion to adjust according to market conditions.

Creating a Short List of Funds

I used Mutual Fund Observer metrics and Portfolio Visualizer to select the following funds in Table #2 to be added to my watch list for inflation. As a general observation, they either have higher MFO Risk or lower MFO Rating for risk-adjusted returns compared to the funds in “Putting My Conservative Retirement Portfolio on Cruise Control”.

Table #2: MFO Metrics for Selected Funds – Six Years

Source: Author using MFO Premium fund screener and Lipper global dataset.

Substituting Funds into the Conservative Target Portfolio

In Table #3, I substituted Frost Credit (FCFAX) and AQR Risk-Balanced Commodities Strategy (ARCNX) for Calvert Flexible Bond (CUBAX) and BlackRock Systematic Multi-Strategy (BAMBX) in my conservative portfolio from the companion article. This adjusted portfolio has an APR of 9.5% compared to 8.4% for the Conservative Portfolio; however, it also has a higher drawdown of -14.8% compared to -12.4% and the Ulcer Index increases from 2.2 to 2.9. The portfolio continues to have an MFO Risk of “Conservative” (MFO Risk =2).

Table #3: MFO Portfolio Modified for More Inflation Protection – Six Years

Source: Author using MFO Portfolio Tool.

Figure #2 compares Frost Credit (FCFAX) and AQR Risk-Balanced Commodities Strategy (ARCNX) to BlackRock Systematic Multi-Strategy (BAMBX), Calvert Flexible Bond (CUBAX), and PIMCO Inflation Response Multi-Asset (PZRMX). The funds being tested have higher returns and higher volatility than the funds in my target portfolio.

Figure #2: Comparison of Total Return for Selected Funds

Source: Author using MFO Premium fund screener and Lipper global dataset.

Closing

After doing the research for this article, I added around fifty funds to my investment system, which I have not had time to evaluate thoroughly. This is a task for next month to see if I want to modify my Conservative Target Portfolio. When looking to invest in a fund, I generally start with the five funds with the highest rating per Lipper Category from my spreadsheet.

In a stagflationary environment like the 1970s, I would want to own a fund that invests in commodities such as the AQR Risk-Balanced Commodities Strategy (ARCNX). I don’t expect inflation to reach that extreme in the near term. I prefer the lower volatility of PIMCO Inflation Response Multi-Asset (PZRMX). More aggressive investors and those with major concerns over tariffs may prefer ARCNX.

Frost Credit (FCFAX) and Calvert Flexible Bond (CUBAX) are both good funds, with FCFAX having higher returns and yield with slightly more risk. I have rungs on my bond ladder maturing next year, and I will continually reevaluate the funds in my Conservative Target Portfolio.

Launch Alert: The Militia Long Short ETF

By David Snowball

An Unusual Offering from an Unusual Manager

In January 2025, the Militia Long Short Equity ETF (ticker: ORR) launched. We’re profiling it because Sam Lee strongly recommended we look at it, and we trust Sam Lee. Founder of Austin-based SVRN Asset Management, former Morningstar strategist and editor of ETFInvestor newsletter and MFO contributor, Sam is very smart, has assessed a lot of managers, and has never invested in a hedge fund before. He describes manager David Orr as possessing “generational talent” and calls him “one of the best discretionary investors active today.” Ultimately, Sam decided to partner with Mr. Orr on the launch of this ETF, and they collectively decided that they would put all the money generated by their management fee to buy shares of the fund; at base, both have decided to take their compensation in the form of a growing stake in the ETF. That endorsement sparked our interest and warrants yours.

The ETF: Objective and Strategy

The Militia Long Short Equity ETF seeks capital appreciation through a global long-short equity strategy. According to the prospectus, the fund invests in both long and short positions in equity securities or ETFs, maintaining at least 80% of net assets in equities. The fund may invest across all market capitalizations and includes both U.S. and foreign securities.

At launch, the strategy runs approximately 150% long and 100% short, creating a positive market beta (around 0.5). The fund pursues what Orr describes as “higher turnover, fundamental long-short global stock selection,” typically holding 100-200 positions with small individual position sizes. The management fee is 1.3%, though the headline expense ratio of 18.48% reflects accounting quirks: dividends paid on shorted high-yield securities (economically neutral as the underlying drops by the dividend amount), short borrow costs offset by interest earned on short proceeds, and margin interest for leverage.

Orr explicitly acknowledges the ETF has “less edge” than his hedge fund due to liquidity constraints and lower gross leverage. Until assets reach $50-150 million, the ETF shorts mainly ETFs rather than individual stocks due to the mechanics of shorting in an ETF wrapper. The fund holds approximately $127.5 million after nine months.

The Manager: A Different Perspective

David Orr, 39, came to investing through an unusual path. After degrees in accounting and economics, he spent a decade in Thailand as a professional poker player, playing 10 million hands and reaching the top-50 globally in No Limit Texas Hold’em. He’s been similarly passionate about questing games such as Hearthstone and Civilization. He views the stock market as “the best strategy game I’ve ever played.”

This background shapes his approach. From poker, he learned probabilistic thinking, position sizing, and the discipline to exit losing positions without emotional attachment. He looks for “low IQ ideas that seem obvious” and makes investment decisions within hours. His portfolio typically holds 200-300 positions, longs sized around 3%, shorts around 0.5%, with rapid turnover when facts change.

Two principles guide him: First, avoid crowded shorts except those with hard catalysts, recognizing that “degrossing” (i.e., “panicked rush for the exits”) events transform apparent diversification into concentrated risk. Second, prioritize systematic risk management through diversification and disciplined sizing. He runs 175-190% long and 95-125% short, maintaining a low to negative market beta—unusual for a long-biased industry.

And it appears to work.

Source: MilitiaCapital.com

The hedge fund launched in February 2021 with $3 million. Performance through mid-2025 was verified by Interactive Brokers and net of fees (0.5% management, 25% performance over S&P 500).

2021 (Feb-Dec): +72%

The Q2 2022 performance is particularly notable: +16% while the S&P fell 15.5%, with +53% from shorts and -24% from longs. The fund has maintained a slightly negative correlation to the market (-0.09 beta) over the full period with a Sharpe ratio of 2.14.

Assets have grown primarily through performance rather than fundraising. The fund raised $55 million but generated $100 million in profit. Orr’s personal partition (other managers run slices of the fund) runs on just $14 million in contributions, with the remainder profit. The fund now manages approximately $154 million, having registered with the SEC in 2025 when it grew beyond thresholds requiring registration.

What Drives the Returns?

Orr’s 2020 investor outline explicitly articulates his edge: exploiting two academic anomalies. First, the “betting against beta” effect: lower volatility stocks generate higher risk-adjusted returns. Second, the size premium: small stocks outperform large stocks. His strategy combines these: buying small, low-volatility stocks (which historically returned 16.73% annually) while shorting large, high-volatility names (7.81% annually).

Orr makes hundreds of bets annually (450 in 2024), identifying “the key fundamental variable” in each company rather than conducting exhaustive research. Sam Lee calls this “meta-rationality”—researching only to the point of maximum expected value rather than psychological comfort, maximizing learning through volume and rapid feedback, updating beliefs without anchoring to previous prices.

The edge manifests most clearly on the short side. Orr’s IRR on shorts has consistently exceeded his longs, genuinely unusual in the industry. He focuses on catalyst-driven shorts (government decisions, cash shortfalls, bankruptcies) and “melting ice cubes,” overleveraged companies where liabilities exceed assets. The 2022 performance validates this: shorts gained 53% during a bear market quarter.

Risk management amplifies the edge. Running 200-300 positions with negative beta avoided the forced deleveraging that destroyed many hedge funds during volatility spikes. His willingness to maintain negative beta through 2023-2024’s AI-driven rally, accepting underperformance while the S&P surged, indicates conviction in the framework over momentum.

ETF vs. Partnership: The Compromises

The ETF necessarily differs from the hedge fund in ways that reduce its expected edge:

Leverage: The ETF runs 150% long/100% short (250% gross) versus the hedge fund’s 200% long/125% short (325%+ gross). Lower leverage means lower absolute returns.

Liquidity requirements: The ETF must hold more liquid securities to handle unpredictable daily flows and maintain reasonable bid-ask spreads. It cannot access the illiquid micro-caps central to the hedge fund strategy.

Short book limitations: Until assets reach $50-150 million, the ETF shorts mainly ETFs rather than individual stocks. Even at scale, it cannot short many of the volatile, illiquid positions the hedge fund targets. Transparency requirements also constrain the short book—revealing risky shorts invites problems.

Beta: The ETF runs positive beta (0.5+) versus the hedge fund’s negative beta (-0.09). This materially changes the risk-return profile.

Portfolio managers: The hedge fund now backs additional portfolio managers (Rodrigo Cabezon and Michael Roussel) managing 40% of assets. Their positions don’t appear in the ETF.

Orr states explicitly: “The ORR ETF has a much lower edge than my hedge fund” and “won’t have its full edge” until reaching a larger scale. The 2025 YTD performance validates this. The ETF gained 8.1% through February versus the hedge fund’s 10.9%, and through June the hedge fund was up 45% versus the ETF’s more modest gains.

Why might you be interested?

Other, of course, than 48% annual returns.

Two factors warrant attention despite the compromises and brief track record:

The ETF’s own performance: Through August 2025, ORR returned 2.9% versus a 1.3% category average, earning an “A” grade. The fund has maintained market-neutral characteristics during volatility, often staying flat when indices declined 2%. Assets have grown to $127.5 million in nine months despite an alarming headline expense ratio, suggesting sophisticated investors see through the accounting quirks to the underlying value.

Sam Lee’s endorsement: Lee’s assessment carries weight because of who he is and what he’s done. As founder of SVRN Asset Management and a former Morningstar strategist, he has spent his career assessing managers professionally. This is the first hedge fund manager he has ever invested in personally: he was a “big day-one investor” in the fund and is now Orr’s co-founder in launching the ETF.

Lee addresses the central skepticism directly. John Hempton, himself a talented investor, views Orr as a poker player-turned-trader whose edge may not scale. Lee disagrees, arguing Orr’s “meta-rationality,” the ability to optimize research intensity, maximize feedback loops, and update beliefs rapidly, represents a durable cognitive advantage rather than a temporary information edge. That Orr and Lee are investing all management fee proceeds back into ORR on margin underscores genuine conviction.

Bottom Line

The Militia Long Short ETF offers something genuinely unusual: retail access to an emerging hedge fund manager before scale erodes advantage. The manager has compiled a verified four-year track record with documented outperformance during market stress. He articulates a clear framework (exploiting betting-against-beta and size premiums) rather than relying on market timing or undisclosed insights.

The caveats are substantial. Four years isn’t definitive. All performance occurred in a single macro regime of elevated interest rates, favoring value stocks and penalizing overleveraged companies. The ETF executes a compromised version of the strategy with lower leverage, more liquid holdings, and a limited short book. The manager explicitly states it has “less edge” than the hedge fund. Whether sufficient alpha survives the ETF structure remains unproven.

Yet the combination of broker-verified performance, articulated edge, systematic risk management, and sophisticated third-party validation from an investor who has never before invested in a hedge fund suggests this deserves consideration. Orr won’t beat raging bull markets, which he states explicitly. But for investors seeking genuinely market-neutral exposure from emerging talent, ORR offers access at the point where the manager still believes his edge exceeds his fees.

The real questions: Does the edge persist at scale? Does the ETF structure preserve sufficient alpha? Will Orr maintain the discipline that got him here? The answers will emerge over the next several years. For investors comfortable with uncertainty and attracted to managers who prioritize substance over marketing, that may be enough to warrant attention.

The ETF’s website is, understandably, pretty thin right now. I was amazed to discover that Mr. Orr allows open access to his hedge fund’s website, which contains both the fund’s performance data but also years’ worth of letters detailing what he was thinking and doing. The single most informative piece might be the very first, in which Mr. Orr explains who he is and why he’s doing what he’s doing. The most recent interview with Mr. Orr is at Raging Capital Ventures. The site that used to be Twitter contains notes from both Mr. Orr and Sam Lee. Which is to say, do your research before you even consider putting down your bets.

Briefly Noted

By TheShadow

Updates

The conversion of Akre Focus Fund into an ETF was authorized by its investors in September and is proceeding apace. Thanks to all who took the time to vote their shares!

Briefly Noted . . .

Launches and Reorganizations

On October 17, abrdn International Small Cap fund and the $36m abrdn Intermediate Municipal Income fund will become the abrdn International Small Cap Active ETF and the abrdn Ultra Short Municipal Income Active ETF, respectively.

The BlackRock GA Dynamic Equity fund has been converted into the iShares Dynamic Equity Active ETF, and the BlackRock GA Disciplined Volatility Equity fund has been converted into the iShares Disciplined Volatility Equity Active ETF.

JPMorgan Unconstrained Debt Fund has been reorganized into the JPMorgan Flexible Debt ETF effective September 26th.

And some funds in registration

Deepwater Beachfront Small Cap ETF is in registration. Joe Robillard will be the portfolio manager; expenses have not been disclosed. The ETF will primarily invest in small-cap companies.

Hood River Emerging Markets Fund is in registration. Lance R. Cannon, CFA, Rohan B. Kumar, and Ruoshi Qi will be the portfolio managers. Expenses have not been stated.

Sterling Capital has registered five new ETFs. Sterling Capital Ultra Short Duration; Short Duration Bond, National Municipal Bond, Multi-Strategy Income, and Equity Premium Income ETFs. Many managers, no expense ratios.

The Truth Social American Energy Security ETF, Truth Social American Icons ETF, Truth Social American Next Frontiers ETF, Truth Social American Red State REITs ETF, and Truth Social American Security & Defense ETF are in registration. Matthew Tuttle will be the portfolio manager for each of the funds. Expenses have not been stated.

Vanguard Core-Plus Bond Index ETF is in registration. Joshua C. Barrickman, CFA, will be the portfolio manager. Expenses have not been stated.

Westwood Enhanced Income Opportunity, Enhanced Multi-Asset Income, and Enhanced Alternative Income ETFs are in registration. Numerous managers; expenses have not been stated as of this filing.

Small Wins for Investors

Dodge and Cox is forward splitting several of its mutual funds: Balanced, International, and Stock in the amounts eight for one, four for one, and sixteen for one, respectively, at the close of business on October 24. Their reason for the stock split was the following:

New mutual funds generally launch with an initial NAV of $10.00 per share. Given their earlier inception dates and asset classes, the NAVs of the Balanced Fund, International Stock Fund, and Stock Fund have grown considerably. We believe the share splits will better align these Funds’ NAVs with the other Dodge & Cox Funds’ NAVs.

As of September 27, 2025, the NAV for Balanced is $110.13/share, Stock is $276.70, and International is $64.85.

Leuthold Grizzly Short Fund underwent a one-for-four reverse stock split at the close of business on September 22nd, which boosted its per-share NAV from about $5 to about $20.

Effective on January 21, 2026, Virtus is eliminating the Class C Shares on virtually all of its funds. Given that “C” shares are and always were a marketing malignancy (“hey, look! There’s no sales load though we do …umm, charge you 1.76% annually forever”), we always celebrate their disappearance.

Closings (and related inconveniences)

None that we’ve found.

Old Wine, New Bottles

DoubleLine Floating Rate Fund will be reorganized into the American Beacon DoubleLine Floating Rate Income Fund once it is approved by shareholders. The reorganization will occur sometime during the first quarter of 2026. Quick history: The American Beacon FEAC Floating Rate Income Fund was previously the Sound Point Floating Rate Income Fund until it was acquired by American Beacon. First Eagle Alternative Credit, LLC’s (FEAC) investment advisory agreement ended on June 20, 2025, at which time DoubleLine Capital commenced managing the fund, and the name of the fund was changed to American Beacon DoubleLine Floating Rate Income Fund.

DoubleLine Income Fund and DoubleLine Infrastructure Income Fund will change their names to DoubleLine Securitized Credit Fund and DoubleLine Select Income Fund, with predictable rewrites to their prospectuses, on October 28th.

Off to the Dustbin of History

The hottest trend in prospectus writing? “The fund may terminate and liquidate at any time without shareholder approval,” a phrase now used by the AIM, Amplify, Collaborative Investments, ETF Opportunities, Innovators, Northern Lights, REX, SCM, Truth Social, and Ultimus ETF trusts, among others. Sub-text: “We’re just tossing s**t against the wall to see what sticks, we got no commitment to any of this stuff and want to be able to flush it as quickly and easily as possible! Welcome aboard!”

2x Daily Software Platform ETF will be liquidated on October 10, 2025. The fund launched on July 1, 2025, and no one, including the managers, cared.

September 25, 2025, was a big day for the AXS Real Estate Income ETF! It managed to cease operations, liquidate its assets, and prepare to distribute proceeds to shareholders of record.

Battleshares TSLA vs F ETF (ticker: ELON) will be liquidated on October 10, 2025, because “the Fund could not conduct its business and operations in an economically efficient manner over the long term due to the Fund’s inability to attract sufficient investment assets to maintain a competitive operating structure.” Here’s the strategy: short Ford, long Tesla, trust Elon. If the Morningstar charting is correct, it seems to have lost 50% in its first two weeks. Apparently, the fund, which launched in mid-February 2025, somehow lost faith and only drew $1.1 million in assets. Per Morningstar, neither of the managers risked their own money on the fund.

BlackRock Sustainable High Yield Bond Fund is closing to new purchases on November 12, 2025, and will be liquidated on December 12, 2025.

Franklin Sustainable International Equity ETF will liquidate and dissolve on or about January 16, 2026. One-star fund that was wildly successful from 2017-2021 and hasn’t been able to find its butt with both … well, it has trailed 95-100% of its peers over the past 1, 3, and 5 year periods.

Harding, Loevner Chinese Equity and Emerging Markets ex China have begun the process of liquidating their assets, which the managers expect to complete by November 19, 2025. Same team, negligible assets.

Johnson International Fund, which was launched in 2008, will be liquidated on November 21, 2025. A curious development, really. The fund has had the same manager since inception. He’s been very successful as the lead manager on the Johnson Opportunity Fund, but international has managed to pretty consistently trail 80-100% of its peers and has attracted negligible assets.

Kempner Multi-Cap Deep Value fund will be liquidated on or about October 15, 2025.

Penn Mutual AM Strategic Income Fund and Penn Mutual AM 1847 Income Fund will cease operations and liquidate on or about November 14, 2025.

Themes Airlines ETF and Themes European Luxury ETF closed and liquidated on September 12, 2025.

T Rowe Price Global Consumer Fund will be liquidated on November 14, 2025.

T Rowe Price Multi-Strategy Total Return Fund will experience liquidation and dissolution on or about January 23, 2026. No reason given, though performance sort of sucks. It’s a Price fund whose five-year records (1.89%) barely exceed its expense ratio (1.19%). The mandate was to outperform cash with low volatility and low correlation to the stock and bond markets. The “edge” was that the managers had immediate and ongoing access to other T Rowe Price managers, which gave them exceptional insights into movements across asset classes. The system may have broken down when Price had an internal restructure, which impeded the managers’ daily strategy pipeline.