Author Archives: David Snowball

About David Snowball

David Snowball, PhD (Massachusetts). Cofounder, lead writer. David is a Professor of Communication Studies at Augustana College, Rock Island, Illinois, a nationally-recognized college of the liberal arts and sciences, founded in 1860. For a quarter century, David competed in academic debate and coached college debate teams to over 1500 individual victories and 50 tournament championships. When he retired from that research-intensive endeavor, his interest turned to researching fund investing and fund communication strategies. He served as the closing moderator of Brill’s Mutual Funds Interactive (a Forbes “Best of the Web” site), was the Senior Fund Analyst at FundAlarm and author of over 120 fund profiles. David lives in Davenport, Iowa, and spends an amazing amount of time ferrying his son, Will, to baseball tryouts, baseball lessons, baseball practices, baseball games … and social gatherings with young ladies who seem unnervingly interested in him.

May 1, 2018

By David Snowball

Dear friends,

If you’re ever had cause to poke around MFO, perhaps “About Us” or “Support Us,” you’ll have spotted the younger me and the younger version of my son, Will. We were poking around England seven years ago, around the time we launched MFO, and we wanted to give folks a peek at the people behind the text. Continue reading →

New York AG forces fund companies out of the indexing closet

By David Snowball

(with special thanks to rforno of MFO’s Discussion Board for the title)

The New York State Attorney General’s office has weighed-in on behalf of investors, and active share. Active share is a measure of the extent of the difference between what’s in fund’s portfolio and what’s in the fund’s benchmark index. If your fund holds all the same stocks in all the same percentage as its benchmark, then its active share is zero. A zero active share is good if you’ve bought – and are being charged for – an index fund. A zero active share is bad is you were sold – and are being charged for – something masquerading Continue reading →

The Morningstar Minute

By David Snowball

Morningstar’s plan to roll out their own family of mutual funds, for use with their managed portfolio service, is becoming more concrete. In an April 23, 2018 filing with the SEC, Morningstar notes that they’re in “the quiet period” required by the SEC; nonetheless their filing says a lot.

Morningstar will offer nine funds to their Morningstar Managed Portfolio clients. That’s a booming Continue reading →

It’s going to get worse before it gets better

By David Snowball

Not the stock market. I have no earthly clue about what it’s going to do, when, or why. I mean the headlines.

On April 24, the Dow dropped by 425 points. That’s 1.7%, which isn’t large and isn’t saying “the market” dropped by 1.7%. The Dow is a narrow and quirky construct. The broader market is reflected in the performance of the Vanguard Total Stock Market Index Fund (VTSMX), which declined Continue reading →

Prospector Opportunity (POPFX)

By David Snowball

Objective and strategy

The Opportunity Fund seeks capital appreciation. They apply a value-oriented discipline to micro-, small- and mid-cap stocks in the US and other developed markets. In general, the managers look for companies with long, consistent, predictable track records of free cash flow yield generation and healthy organic growth. They identify undervalued securities by starting with balance sheet strength but they also consider qualitative factors (e.g., quality of the management) and the presence of a Continue reading →

Funds in Registration

By David Snowball

Proposed new funds and ETFs have to be submitted for review by the Securities and Exchange Commission, which has 75 days to raise any concerns. During those 75 days, the so-called “quiet period,” advisors are forbidden from discussing the fund in registration. Advisors hoping for a fund launch by New Years have their funds in registration by October; those seeking a mid-year launch get the papers filed in April. A lot of the filings were rushed and incomplete. That said, the BBH and Metropolitan West income funds are apt to be entirely reasonable additions; for income-seeking investors, they bear Continue reading →

Briefly Noted . . .

By David Snowball

Update

Two notable updates from the folks at Zeo.

Our 2014 profile of Zeo Strategic Income celebrated their “extraordinarily thoughtful relationship between manager and investor. Both their business and investment models are working. Current investors – about a 50/50 mix of advisors and family offices – are both adding to their positions and helping to bring new investors to the fund, both of which are powerful endorsements. Modestly affluent folks who are looking to both finish ahead of inflation and sleep at night should likely make the effort to Continue reading →

April 1, 2018

By David Snowball

Dear friends,

It’s spring.

It’s snowing.

Happy Easter.

Or Happy Eostre, if you prefer. The timing of Easter appears to be another instance of religious plagiarism, as early Christians borrowed a pagan spring festival as the (endlessly variable) date on which to celebrate the Resurrection. We don’t know that Eostre actually was a pagan goddess, since only the Venerable Bede testifies to her existence. Still, it makes sense and would be a great time to be hopeful.

So, Felices Pascuas and/or chag Continue reading →

Snowball’s portfolio

By David Snowball

Roy Weitz, founder of FundAlarm and sort of godfather to MFO, annually shared his portfolio, and his reflections on it, with his readers. He owned up to his mistakes, talked through his logic and revealed his plans. When I began contributing to FundAlarm, he encouraged me to do likewise. This essay, then, is an annual “think aloud” exercise that might help you imagine how to make more informed, satisfying decisions for yourself. In constructing it, I drew on my reading and conversations with managers as well as the tools available at Morningstar and MFO Premium.

I’ve thought long and hard to create a portfolio that allows me to be dumb and lazy. My overarching goal is to have a portfolio that lets me Continue reading →

The Morningstar Minute

By David Snowball

Morningstar’s analysts can cover a limited number of funds, “those investments that are most relevant to investors and that hold a significant portion of industry assets.” When analysts cover a fund, they issue a forward-looking rating based on five research-driven “pillars.” Those ratings are described by medal assignments: Gold, Silver, Bronze, Neutral and Negative. The analyst ratings are distinct from the iconic star ratings; the star ratings are backward looking (they tell you how a fund did based on risk and return measures) while the analyst ratings are forward-looking (they aspire to tell you how a fund will do based on a broader set of Continue reading →

The 15 / 15 Funds

By David Snowball

It was ridiculously easy to make 15% total returns in 2017. 3,406 funds managed the feat.

And it was not particularly hard to hold 15% cash in 2017, though it was certainly unpopular with investors. 970 funds held that level of cash, either as collateral on derivative purchases, as a defensive move, or from the inability to find suitable investments.

Making 15% is good. It’s about 50% above the Continue reading →

Guinness Atkinson Global Innovators (IWIRX)

By David Snowball

Objective and strategy

The fund seeks long term capital growth through investing in what they deem to be 30 highly innovative, reasonably valued, companies from around the globe. They take an eclectic approach to identifying global innovators. They read widely (for example Fast Company and MIT’s Technology Review, as well as reports from the Boston Consulting Group and Thomson Reuters) and maintain ongoing conversations with folks in a variety of industries. That leads them to identify a manageable set of themes (from artificial intelligence to clean energy) which seem to be driving global innovation. They then identify companies substantially exposed to those themes (about 1000), then weed out the financially challenged (taking the list down to 500). Having identified a potential addition to the portfolio, they also Continue reading →

Launch Alert: T. Rowe Price Multi-Strategy Total Return Fund

By David Snowball

On February 23, 2018, T. Rowe Price launched Multi-Strategy Total Return (TMSRX / TMSSX) which combines six liquid-alt strategies in a single package. These multi-strategy or multi-alternative funds function in the way that hedged funds were originally envisioned to: they combine strategies whose returns are not dependent on the movements of the broad equity and bond markets and, ideally, are not correlated with each other. The goal is to produce the Continue reading →

Funds in Registration

By David Snowball

The SEC requires advisers to give them 75 days to review and comment upon any proposed new fund offering. During those 75 days, the advisers aren’t permitted to say anything about the funds except “please refer to our public filing with the SEC.” This month there are 17 no-load retail funds and actively managed ETFs in the pipeline. I’m most intrigued by two funds that aren’t actually new: Seven Canyons Strategic Income and Seven Canyons World Innovators are the rechristened versions of two Wasatch funds, both managed by Wasatch founder Samuel Stewart. Mr. Stewart, now 75, appears to be distancing himself from the firm, though we don’t know the circumstances behind it. The Wasatch website, including Mr. Stewart’s most recent shareholder letter, offers no hints concerning the change. Wasatch has seen steady outflows every quarter since Q2 2014, with a net outflow of around $5.5 billion. One could imagine the departure of these funds, and the merger of Wasatch Long/Short into Wasatch Global Value (see this month’s “Briefly Noted” for details), as attempts to Continue reading →

March 1, 2018

By David Snowball

Dear friends,

I’m often a bit confused. Sometimes it’s as simple as the stuff in my pantry. Why, for instance, is cranberry sauce canned upside down? Look! The part you’ve supposed to open is on the bottom.

Sometimes it’s the challenge of figuring other people out. What was Snap’s board thinking when they gave their CEO at $637 million (an amount equal to 75% of the company’s revenue) bonus? Someone named Kylie Jenner shared the following 19 words on Twitter: “”so does anyone else not open Snapchat anymore? Or is it just me? Ugh, this is so sad.” How on Earth did that convince investors to trim $1.6 billion in Snap’s market value in 24 hours? Continue reading →

Funds for the Gun-Shy

By David Snowball

I grew up in western Pennsylvania where even the elementary schools let out classes on the first day of small game season. I’m the son of a veteran and a hunter, and the grandson of a sheriff. I spent a lot of mornings, just after dawn, in blaze orange, walking as quietly as a seven-year-old could. I owned a single-barrel 20 gauge Remington and cared for it well. (I also owned a .22 with a scope I never quite mastered.) I was thrilled when I got to stay overnight in a hunting camp with “the men,” though I modestly regretted both the jar of Limburger cheese that someone had left the season before and the creepy sounds you heard when visiting the outhouse at night. I’ve sheltered in the eerie calm of a Continue reading →

Elevator Talk: Ali Motamed, Balter Invenomics (BIVIX)

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200 word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more.

Ali Motamed manages Balter Invenomic Fund (BIVIX), which Continue reading →

FAM Value (FAMVX/FAMWX), March 2018

By David Snowball

Objective and strategy

The managers seek to maximize long-term return on capital. They can invest in firms of any size, but mostly invest in mid- to large-cap US firms and invest through both common stocks and convertibles. They pursue a patient value approach to investing which favors companies which meet at least one of these three criteria Continue reading →

Launch Alert: JOHCM Global Income Builder

By David Snowball

On November 29, 2017, J.O. Hambro Capital Management launched JOHCM Global Income Builder (JOFIX/JOBIX) managed by the firm’s Multi Asset Value Team. It seeks to achieve a reliable stream of meaningful monthly income distributions, coupled with some capital growth and a vigilant concern for limiting investor losses. It is a multi-asset fund but it is largely unconstrained: it targets US and international income-producing securities including common stock, high-yield and investment grade debt, preferred shares and convertibles, and a variety of hedges including gold, precious metals, currency forward contracts, and inflation-linked vehicles. Continue reading →