The fund invests primarily in non-US growth companies that they believe are innovators in their sectors or industries. Nominally the managers can invest in “domestic and foreign … companies of any size.” As a practical matter, they invest in international small-cap companies. That’s reflected in the first four words atop their homepage:
While retaining the flexibility of Continue reading →
Harbor Global Leaders targets firms, worldwide, that are capable of generating sustainable, above-average, and relatively stable rates of earnings per share growth and strong free cash flows. The manager looks for companies that are leaders in their country, industry, or globally in terms of products, services, or execution.
Their ideal business has six Continue reading →
On September 24, 2020, Vanguard launched Vanguard ESG U.S. Corporate Bond ETF (VCEB) which tracks the Bloomberg Barclays MSCI U.S. Corporate SRI Select Index. The expense ratio is 0.12%. The ETF does not advertise a target maturity, other than to say that the maturities on portfolio securities will be “more than one year.” It also excludes small (under $750 million) bond issues.
There are about a dozen ESG-screened, fixed-income ETFs already in operation from BlackRock, DWS, Inspire, Nuveen, and PIMCO. Between them, assets are low Continue reading →
On September 9, 2020, Evolutionary Tree Capital Management launched the Evolutionary Tree Innovators Fund (INVNX). The plan is to invest in 25-35 domestic growth-oriented companies that qualify as “leading innovative businesses” (hence the ticker symbol). The fund will be managed by Thomas M. Ricketts, formerly a senior portfolio manager on Sands Capital’s flagship Select Growth US Large-Cap Growth strategy, a $20+ billion Continue reading →
This month’s profile of Harbor Global Leaders (HGGIX) mentions “the top 10” global large-cap funds on several occasions. The argument for such funds is simple: in steady rising markets, almost – but not quite – everyone gets to win. In stagnant or declining markets, almost – but not quite – everyone suffers. Index funds work best when they can cheaply and efficiently capture the gains offered by rising markets. Concentrated growth funds hold out the prospect of identifying the small fraction of companies that can grow even when the world doesn’t. Those are companies that Continue reading →
We are beginning of the annual insanity. The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Fund companies anxious to have a new fund up and running by December 31st need to have it in the hopper by mid-October at the latest. The late September filings – we found 34 active funds and ETFs in registration – are the beginning of the annual flood.
Every month the ETF industry breathlessly trots out a few ideas designed to seize the moment. Think: “Virtual Work Continue reading →
FPA has filed to launch FPA Queens Road Small Cap Value Fund. As we noted a couple of months ago, Bragg Capital, an adviser to the Queens Road Funds, entered into an agreement with FPA to have FPA take responsibility for marketing the funds. That allowed FPA to leverage their marketing group and allowed Bragg to focus on running two really exceptional funds: Value and Small Cap Value. This partnership is likely a substantial win for all involved, investors and advisors alike.
FPA, meanwhile, will no longer be managing the Continue reading →
Dear friends,
Another school year has begun, likely the most fascinating in my 35 years as a college professor. My students were in class this morning, cheerful and masked. When asked about their summers, they did not say what the rest of us might: “it sucked.” To the contrary, they were uniformly positive about the experience (“I had a good summer! We didn’t get to travel anywhere, but I put in a lot of hours on my job and spent a bunch of time with my family!”) and hopeful for the year ahead.
The number of students was, quite understandably, reduced: Augustana welcomed something like 550 first-years when we’d normally see 700, with a lot of the deficit coming from international students – well more than a tenth of the college – not able (or willing) to travel Continue reading →
Writing in The Wall Street Journal, Simon Cable declared “‘Long-Short’ Funds Missed Their Moment” (8/9/2020, paywall). His argument: “The stock-market volatility in the first half of 2020 should have been a near-perfect period for ‘long-short’ mutual funds and exchange-traded funds to make a killing. Unfortunately, less than one in three such funds made money for investors during this tumultuous period.” His analysis was that the market’s moves were too quick for most investors to capitalize on them (even if they recognized the opportunity).
He notes that Neuberger Berman Long-Short (NLSIX) raked in the most cash and that the ProShares Long Online/Short Stores ETF had the top YTD performance.
“Most funds are mediocre” is not a terribly Continue reading →
On August 24, 2020, Matthews Asia announced a long set of manager changes and one fund liquidation. While they appear in a single document, there are at least two distinct triggering events behind them.
Event One: The departure of managers Tiffany Hsiao and YuanYuan Ji. Ms. Hsiao managed Matthews China Small Companies (MCSMX, since 2015) and, with long-time lead manager Michael Oh, Matthews Asia Innovators (MATFX, since 2018). Ms. Ji was the second manager of China Small Companies. Their departure was, so far as I can tell, a surprise to all. There is no word on their reason for leaving or their Continue reading →
On August 26, I added Palm Valley Capital Fund (PVCMX) to my non-retirement portfolio.
Why does this make sense?
My portfolio has a simple, static asset allocation: 50% stocks, 50% not. Within stocks, the default is 50% here, 50% there plus 50% larger, 50% smaller. When we calculated the likely downside of my portfolio in a 2008-like event, the loss was in the range of 25%. That’s not catastrophic.
Currently, my portfolio is Continue reading →
On August 31, I added T. Rowe Price Multi-Strategy Total Return (TMSRX) to my non-retirement portfolio. I funded that position by transferring about half of my stake in T. Rowe Price Spectrum Income (RPSIX).
Why does this make sense?
I traditionally have minimal savings, in the sense of money in a savings account at the bank. That decision makes sense for me because my income is incredibly predictable (a perk of being a tenured senior member of the faculty at a strong college), though it grows minimally. Because savings accounts have for so long offered near-zero to negative real returns, I chose to keep the money otherwise destined for savings in exceedingly low volatility funds that offered the prospect of low- to mid-single-digit returns. RiverPark Short Term High Yield (RPHYX, 3% annual returns, 0.8% standard deviation, 1% maximum Continue reading →
On August 5, 2020, T. Rowe Price launched ETF versions of four of its largest actively-managed domestic equity funds.
Those are:
T. Rowe Price Blue Chip Growth ETF (TCHP)
On December 31, 2019, Oelschlager Investments launched the Towpath Focus Fund (TOWFX). The fund invests in 25-40 domestic stocks regardless of market capitalization. The fund is managed by Mark Oelschlager.
In general, we intend Launch Alerts to occur within six weeks of a fund’s launch. We entirely goofed up the Launch Alert for Towpath because we were looking for it under its preliminary name, Oelschlager Equity. As a result, we entirely missed the launch and the fund’s first eight months of existence. Regrets for the slip!
What do they do?
Towpath is a concentrated, all-cap equity fund. The portfolio currently holds 38 securities. About 11% of the portfolio is invested in non-US stocks. Portfolio construction begins with macro-level Continue reading →
OSTGX pursues long-term capital appreciation. Their target universe is high quality, small- to mid-cap companies with the ability to generate rapid, sustainable revenue growth. The markers of quality include: (1) a distinct proprietary advantage; (2) a leading position in the industry; (3) potential for margin expansion; and (4) the presence of a strong management team. “Rapid revenue growth” translates to organic growth that averages 30% annually. It invests primarily in domestic companies; as of June 30, 2020, 11% of the portfolio is invested internationally though the prospectus permits up to 30%. As of June 30, 2020, just over 50% of the Fund’s assets were invested in securities within the health care and information technology sectors, slightly lower exposure than the Continue reading →
The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Each month, Funds in Registration gives you a peek into the new product pipeline. We found 20-some active funds and ETFs in registration. (I hedge on the number because one of the entries covers an entire line of funds which is likely to grow over time.) Expect them to launch by the end of October 2020.
Every month the ETF industry breathlessly trots out a few ideas designed to seize the moment. Think: “Virtual Work and Life ETF.” This month’s leading candidate is Continue reading →
As of August 13, 2020, SouthernSun Asset Management bought Affiliated Managers Group’s interest in SouthernSun. As a result, SouthernSun is no longer affiliated with AMG; it’s now wholly owned by its employees.
AdvisorShares Vice ETF (ACT) has amended its prospectus to allow that “companies that derive at least 50% of their net revenue from the food and beverage industry” are sinful while, at the same time, “the Fund will no longer invest in cannabis or Continue reading →
Welcome to our annual summer-lite edition of Mutual Fund Observer.
It’s the summer in which things might be … hmmm, a little lighter than usual. It’s normally a time when we quiet down for a month while you folks are off doing sensible and wonderful things, like hanging out at the beach with friends and family. Except, now, well … Continue reading →
Jimmy, Freddy the magic flute and Mayor Pufnstuf (right).
H.R. Pufnstuf was the answer to the question, “Who’s your friend when things get rough?” Pufnstuf starred in a Sid and Marty Krofft cult classic TV show which debuted during “the summer of love” in 1969 and continued in reruns as late as 1999. The show’s theme song assured us that Pufnstuff, Mayor of The Living Island, was “your friend when things got rough” because “he knew just what Continue reading →
In the spring of 2019, MFO ran a two-part series on the investment implications of climate change: The Investor’s Guide to the End of the World and The Investors Guide to the End of the World, Part 2: Concrete advice. The former laid out the scientific consensus behind the human role in climate change and explained the four ways in which even the broad perception of climate change would affect your portfolio through a combination of physical, biological, regulatory, and reputational risks. We finished with three investment strategies (divest, invest, innovate) and two fund recommendations: Brown Advisory Sustainable Growth Fund (BIAWX) and Green Century Balanced (GCBLX). Since then, Brown returned 27% (versus 7% for its peers) and Green Century made 8.8% (versus 4% for its peers).
Our second article reviewed the investing recommendations of Continue reading →
