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.

Liquidity Risks and Warnings

By David Snowball

What’s the worst that could happen? Managers’ own words on liquidity risks

Liquidity seems like an awfully esoteric concern, something akin to “coverage ratios” or “yield to call calculations.” In general, it feels like background noise.

Your fund managers disagree. New research estimates that 50% of high-yield funds and, more importantly, 15% of all fixed-income funds are vulnerable to a liquidity crunch. To understand what that means, you first need to understand that “liquidity” means. If you need to polish up your understanding of the term – or your ability to explain it to clients – start with the section entitled What’s Liquidity? If you’re rock solid on the concept, then jump ahead to Welcome to a Liquidity Crisis. Continue reading →

North Star Dividend Fund (NSDVX), December 2019

By David Snowball

Objective and strategy

For North Star Dividend, generating dividend income is the primary goal. Capital appreciation comes second. They pursue that goal by investing primarily in dividend-paying small- and micro-cap stocks. They typically target stocks under $1 billion in market cap, which is quite low even for a small-cap fund. Their preference is for stocks yielding over 3%.

The fund’s strategy has them seeking companies with market capitalizations of less than $1 billion that pay dividends, have a history of paying and increasing dividends, and have high free cash flow and attractive values, as measured by their Continue reading →

Elevator Talk: Joseph Shaposhnik, TCW New America Premier Equities (TGUSX/TGUNX)

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.

Joe Shaposhnik manages TGUSX which launched January 29, 2016. The underlying strategy, launched on Continue reading →

Small-Cap Dividend Options

By David Snowball

We’ve written in November and December about two excellent options for investors interested in small-cap funds with a dividend focus. Those are Crawford Small Cap Dividend (CDOFX) and North Star Dividend (NSDVX). What might interest you about such funds?

    1. Over the long term, small caps outperform large caps
    2. Over the long term, dividends bolster returns and dampen volatility
    3. There are hundreds of small stocks which pay dividends, but they’re mostly underfollowed and rarely included in passive ETFs / index funds

Readers who would like to Continue reading →

Launch Alert: Virtus KAR International Small-Mid Cap Fund

By David Snowball

On October 1, 2019, Virtus launched Virtus KAR International Small-Mid Cap Fund (VKIAX). The fund is managed by the KAR of the title: Kayne, Anderson Rudnick Investment Management, Virtus’s largest wholly-owned subsidiary. KAR, based in Los Angeles, manages rather more than $17 billion in assets. Across all of their portfolios, KAR emphasizes two core attributes Continue reading →

Funds in Reg

By David Snowball

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. Most funds currently in registration will not become available until January, which is a really bad problem for those trying to market the funds. Because these funds won’t be trading on the first day of the year, they’re not eligible for “year-to-date” returns reports and reporting services such as Morningstar won’t give them “credit” for Continue reading →

Briefly Noted

By David Snowball

This is a first for us. Aspiriant Defensive Allocation Fund (RMDFX) will be reorganized as a newly created closed-end fund called (ready?) Aspiriant Defensive Allocation Fund that will operate as an interval fund.  The change should occur by the end of the first quarter of 2020.

Closed-end funds? Hard to remember that they’re alive and well. That slice of the industry originated in the 1890s and they’re sort of an open-end mutual/active ETF Continue reading →

November 1, 2019

By David Snowball

Dear friends,

It’s November 1, the traditional beginning of the holiday avoidance season. It’s the time of year when I program-out the local radio stations (not listening to you, Mix96) that switched to the 24/7 Christmas music today and the big box retailers who have declared that November 1 is Black Friday. (Looking at you, Kohls.) I will, with all my might, avoid their tinsel-festooned commercial caverns all of this month, and as much of next as I might.

That’s not because I dislike the year-end holidays. No, quite to the contrary: I’ve always embraced the communal spirit of celebration, the defiance Continue reading →

Elevator Talk: Jonathan Brodsky and Waldemar Mozes Harbor International Small Cap (HIISX)

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 300 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 a few hundred 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.

On May 23, 2019, Harbor Capital Advisors did a Continue reading →

Your holiday shopping list starts here: 15/15 funds

By David Snowball

The S&P500 posted, and the DJIA approached, new all-time highs at the end of October while unemployment remained at half century lows. And yet the health of the economy is so fragile that the Federal Reserve felt compelled to cut interest rates for a third time. Skeptics believe that effectively zero-to-negative interest rates is more likely to encourage corporate financial engineering than it is to encourage productive investment. Rupal Bhansali, manager of Ariel Global and Ariel International and now a member of the Barron’s Roundtable, warned that “the market, which had been on steroids, is now on Continue reading →

Ariel Global (AGLOX), November 2019

By David Snowball

Objective and strategy

Ariel Global Fund’s fundamental objective is long-term capital appreciation. The manager pursues an all-cap global portfolio. The fund is, in general, currency hedged so that the returns you see are driven by stock selection rather than currency fluctuation. The manager pursues a “bottom up” discipline which starts by weeding out as much trash as humanly possible before proceeding to a meticulous investment in both the fundamentals of the remaining businesses and their intrinsic value. The fund is diversified and will Continue reading →

Castle Focus (MOATX), November 2019

By David Snowball

Objective and strategy

Castle Focus Fund seeks long-term capital appreciation. They have a bottom-up, absolute value focus, which means a ready willingness to hold substantial amounts of cash when they’re not able to find good companies selling at substantial discounts. The portfolio is typically comprised of 15 to 30 positions. Currently about 30% of the portfolio is in cash and about 30% is invested in non-US companies.

Adviser

Castle Investment Management, which is Continue reading →

Launch Alert: Avantis International Small Cap Value (AVDV)

By David Snowball

Between September 17 – September 24, 2019, Avantis Investors launched a series of five actively-managed ETFs. They are:

Avantis Emerging Markets Equity ETF AVEM, e.r. 0.33%

Avantis International Equity ETF AVDE, e.r. 0.23%

Avantis International Small Cap Value ETF AVDV, e.r. 0.36%

Avantis U.S. Equity ETF AVUS, e.r. 0.15%

Avantis U.S. Small Cap Value ETF AVUV, e.r. 0.25%

Because of the fundamental Continue reading →

Funds in Registration

By David Snowball

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. Most funds currently in registration will become available by year’s end, which is the reason for the surge now

Our list contains 30 new funds and active ETFs. We don’t usually track passive ETFs but did want to mention two this Continue reading →

Briefly Noted . . .

By David Snowball

Updates

GMO is now urging you to get comfortable with being uncomfortable. In a new GMO Insights piece titled “Emerging Market Stocks: Getting Comfortable with the Uncomfortable,” they look at how lackluster emerging market equity returns in recent years have led many to write off the asset class. They note that” value stocks within emerging markets are particularly cheap, trading at their largest discount since December 2001.” Profitably remains solid about EM corporations, despite the obvious headwinds.

Effective October 11, 2019, Inbok Song ceased Continue reading →

October 1, 2019

By David Snowball

Dear friends,

We live, indeed, in interesting times.

You might think you hear in that statement an echo of “an ancient Chinese curse, ‘may you live in interesting time.’” Yes and no. I was thinking of the phrase but it’s not ancient. Also not Chinese. It appears to have been invented in 1936 by a member of the British foreign service who was trying to sound … uh, profound.

The sentiment remains, though the source is not Continue reading →

Getting What You Paid For: High capture ratio funds

By David Snowball

Investors are interested in returns: the answer to the question, “how much are you going to make me?” Sophisticated investors are interested in how those returns are delivered.

Over the current market cycle, Fidelity Blue Chip Growth (FBGRX) has returned 10.7%, among the best of all funds. AMG Yacktman Focus (YAFFX) trails it at 10.5% and costs a lot more to boot (1.27% versus 0.72%). On surface, that’s pretty clear: Fido offers Continue reading →

Emerging Market Value investing revisited

By David Snowball

About a year ago we identified emerging markets value funds as one of the market’s few bright spots, at least if valuations are important. (And they are.) Since we published that story, three things occur to us.

  1. Some emerging markets value funds have, indeed, done well.
  2. The long-term case for emerging market value remains strong.
  3. The options for prospective EM value investors have become clearer

Continue reading →

Crawford Small Cap Dividend Fund (CDOFX), October 2019

By David Snowball

Objective and strategy

Crawford Small Cap Dividend pursues attractive long-term total return with below-market risk. They pursue that goal by investing in a portfolio of small-cap US companies that demonstrate a consistent pattern of earnings and dividend growth. Their discipline is bottom-up, value-oriented and focused on company fundamentals. There are currently Continue reading →