Chicago Equity Partners Balanced (MBEAX) no more. MBEAX has been a splendid performer that mixed high-quality, larger US stocks (93% mid- to mega-cap) with investment-grade bonds (99.5% BBB or above, at last reading). Effective April 17, 202, it became the AMG GW&K Global Allocation Fund (MBEAX) with a new name, new team, and new discipline. The portfolio shifts from domestic to global in both its equity and bond sleeves.
Investors should treat this as Continue reading →
Dear friends,
When I say, “I hope you’re well,” it’s far more than an opening formality.
Did you blink?
If so, you missed it. The Great Bull Market of 2020. In perhaps the shortest-lived bull market in history, the DJIA rebounded by over 21.4% in three days after The (First) Bear Market of 2020. The latter growled from 19 February – 23 March, while the latter charged from 23 – 26 March after which we had a sharp down, a sharp up, a wimpy down and Continue reading →
Long-short funds generally position themselves as “the new 60/40,” that is, as funds appropriate as a core holding for a reasonably conservative investor. Their argument is that 60/40 funds work only when both the stock and bond markets are in a relatively good mood. A fund that simultaneously bets against wobbly companies with overvalued stocks and bets in favor of high-quality companies with undervalued ones has the prospect of earning money, or at least minimizing pain, even when markets are behaving poorly.
There are two problems with such funds. First, they Continue reading →
First Pacific Advisers, the adviser to the FPA funds, has reached an agreement with London-based Polar Capital. Under the agreement, FPA’s International Value and World Value teams – headlined by Pierre Py and Greg Herr – will operate as Phaeacian Partners, an independent subsidiary of Polar Capital. The transition from FPA to Polar would play out over six to nine months.
Phaeacian? Mysterious race, much discussed in Homer’s works. Highly advanced, great seafarers, generally hospitable. Their king was Continue reading →
One Rock Fund (ONERX) launched on March 6, 2020, the only public offering by – and only client of – Wrona Investment Management of Pinehurst, NC.
One Rock will invest in the stocks of corporations with “business momentum.” Here’s a description of the Continue reading →
In real estate, it’s all about location.
In investing, it’s all about timing.
On February 5, 2020, which the Dow at 28,807, Direxion launched the Direxion Flight to Safety Strategy ETF (FLYT). The passive fund tracks an index comprised of gold, large-cap utility stocks, and long-dated US Treasury bonds. It rebalances quarterly, with the least volatile component of 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. Most funds currently in registration will not become available until June.
The month’s SEC pipeline saw filings for Direxion U.S. Hyper Growth ETF (HIPR) and Direxion U.S. Fallen Knives ETF Continue reading →
Fidelity has disclosed plans to underwrite their money market funds in order to keep their yield from going negative. They have also closed Fidelity Treasury Only Money Market Fund, FIMM Treasury Only Portfolio, and FIMM Treasury Portfolio, which have cumulative $85.5 billion AUM. Fidelity was concerned about the yields on T-bills which, briefly, looked like Continue reading →
Dear friends,
Welcome to spring. Meteorological spring, anyway, that brief interval when the Quad Cities are wedged between end of snow and the beginning of flood, between the end of hockey and the start of minor league baseball, between the days when you can’t imagine the end of winter and the ones where you can nearly taste the arrival of spring.
Celebrate it all, since it’s Continue reading →
A tradition dating back to the days of FundAlarm was to annually share our portfolios, and reflections on them, with you.
Four rules have governed my portfolio for the past 15 years or so.
For any goal that’s closer than 10-15 years away, stock investing is speculation. Stocks rise and fall far more dramatically than other investments and, once they’ve fallen, it sometimes feels like they can’t get up. Equity income funds are typically very conservative vehicles, and yet they took four years to regain their October 2007 peaks. International large cap core funds took seven years to reach break-even while domestic large-cap core funds were underwater for five-and-a-half years. The worst-hit categories languished for nine years.
Research conducted by T. Rowe Price and shared here, on several occasions, led me to conclude that I wouldn’t gain much from a portfolio that exceeds 50% stocks. My target allocation is 50% income (half in cash-like investments, half in somewhat riskier ones) and 50% growth (half in firms domiciled in the US and half elsewhere). Based on a review of 70 years of returns (1949-2018), this allocation would typically Continue reading →
The YCG Enhanced Fund seeks to maximize long-term capital appreciation consistent with reasonable investment risk. The portfolio consists of an equity component and an options component. The equity component attempts to identify and invest in the world’s best companies, which they designated “global champions.” The central characteristic of such firms is that they’re among the very few with long-term pricing power; that is, the nature of their industry and business is that they can consistently dictate prices to their users in exchange for irreplaceable services. The equity component ranges from 15-50 names, mostly large cap, mostly domiciled in the US. The median market cap of $80 billion because “global champions” aren’t small. The managers may also write put options and covered call options on a substantial portion of the equity portfolio to generate additional income and heighten tax efficiency. They do not use options to generate leverage. Continue reading →
On February 28, 2020, Artisan Partners launched Artisan Select Equity Fund (ARTNX / APDNX / APHNX). The fund is managed by Artisan’s Global Value team.
The Global Value team managers are Daniel O’Keefe, Justin Bandy and Michael McKinnon. The senior member of the team is Mr. O’Keefe who joined Artisan from Harris Associates (advisers to the Oakmark funds) in May, 2002. Up until October 2018, Mr. O’Keefe was paired with David Samra on running the International Value and Global Value strategies. They, to put it gently, were awesome. Artisan notes that O’Keefe and Samra “were nominated six times (in 2008, consecutively from 2011-2014 and again in 2016) for Morningstar’s International-Stock Fund Manager of the Year award in the US. Mr. O’Keefe and Mr. Samra won the award for their joint management efforts in 2008 and in 2013 for the management of international-stock funds.” In October 2018, the team was split, with Mr. Samra maintaining custody of Artisan International Value (ARTKX) and Mr. O’Keefe overseeing Artisan Global Value. The funds have outperformed their peers by 4.7% and 4.3%, respectively, since launch. The translation, in both cases, is that the funds have very nearly doubled the returns of their peers over the long-term.
Artisan’s précis of the team’s approach:
The investment team seeks to 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. Most funds currently in registration will not become available until late April.
We found 14 funds in the pipeline. Two stand-out opportunities: an active, non-transparent ETF version of Continue reading →
Every month we track changes to the management teams of equity, alternative and balanced funds, along with a handful of fixed-income ones. Why “a handful”? Because most fixed-income funds are such sedate creatures, with little performance difference between the top quartile funds and the bottom quartile, that the changes are not consequential. Even in the realms we normally cover, the rise of management committees dilutes the significance of any individual’s departure or arrival.
We tracked down 40 funds with manager changes this month. Special thanks to the folks at Morningstar for sharing their monthly spreadsheet of all major changes in the fund industry with it; it’s an invaluable double-check on the work that Chip, The Shadow and others do in tracking movements in the industry.
Most of the changes are low-key, though it is interesting that Continue reading →
BlackRock gets bitten: Jason Zweig of The Wall Street Journal published a TMZ-
worthy piece on a scandal involving BlackRock Income Trust (BIT). BIT is a closed-end fund with $750 million in assets and which, in Jason’s judgment, charges “an arm and a leg” for its services. The fund invested $75 million in “a small, privately held movie company, Aviron Capital LLC.” BlackRock underwrote six of Aviron’s seven films that latest of which, After (2019) cast one of the daughter of one of BlackRock fund’s managers in a lead role.
That does not appear to have been a decision triggered solely by the actor’s on-screen abilities. Mr. Zweig reports: Continue reading →
Dear friends,
Focus, people! Focus!
It’s never wise to focus on just a single trading day, especially one like the last day of January 2020:
Goodness, no. That will surely lead you to all sorts of bad decisions: selling your portfolio, readying Yahoo Finance, rending your garments, drinking a Keystone (or a Natty Bo, a Natty Lite, a Genny Cream…).
God forfend.
One alternative is to focus on stuff that Continue reading →
Capture ratio is a sort of “bang for your buck” summary. It’s calculated by dividing a fund’s upside capture (a fund that typically rises 1.1% when the market rises 1% has an upside capture of 1.10) by its downside capture (a fund that typically falls 1.1% when the market falls 1% has a downside capture of 1.10). Capture ratios greater than 1.0 reflect funds that produce more gains than losses; all other things being equal, high capture ratio funds are offering you the greatest reward for every unit of risk you’ve been subjected to.
Capture ratios even the playing field for cautious and aggressive investors. A cautious investor might look for a fund with a downside capture of no more than 0.80. Given that constraint, anything above Continue reading →
The strategy attempts to provide current income as well as long-term capital appreciation by investing primarily in stocks that pay dividends. The managers think of themselves as value investors and attempt to answer the question, “if I could buy the whole company at these prices, would I?” That means calculating its “true business worth” and comparing that to the current stock market cap. They attempt to remain fully invested in stocks and convertibles. They tend to buy mid-caps, though their willingness to let winners run means that Continue reading →
The funds in registration with the SEC in January will launch right around April Fool’s Day. For some, that’s probably foreshadowing.
Two particularly interesting sets of launches:
American Century has debuted two actively-managed, non-transparent ETFs, both with ESG screens.
WCM is launching three new funds, all international, all quality-focused, two explicitly ESG-focused. WCM has a really outstanding, off-the-radar record. The non-ESG versions of these funds are both Continue reading →
Effective December 31, 2019, founder Bill Nasgovitz resigned as president of the Heartland Funds and retired from its Board of Directors. He was succeeded, on January 1, 2020, by his son Will.
On December 31, 2019, founder James Oelschlager and his wife Vanita, the owners of Oak Associates, completed the transaction to sell substantially all of their ownership interest to a group led by members of their management team
A quick congratulations to Dennis Baran for being sharp-eyed and active. In December, our Elevator Talk focused on Joe Shaposhnik of the entirely-excellent TCW New America Premier Equities (TGUSX). Dennis, the author of several fine fund profiles for us, was intrigued by what he read, investigated and discovered that while Continue reading →
