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.

Standpoint Multi-Asset Fund (BLNDX / REMIX)

By David Snowball

Objective and strategy

The Standpoint Multi-Asset Fund seeks positive absolute returns through an “All-Weather strategy.” The fund holds a global equity portfolio built from regional equity ETFs. The strategy also invests, both long and short, in exchange traded futures contracts from seven sectors: equity indexes, currencies, interest rates, metals, grains, soft commodities, and energy. The managers attempt to participate in medium- to long-term trends in global futures markets and to produce a reasonable return premium in Continue reading →

Elevator Talk: Jeff Wrona, One Rock Fund (ONERX)

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 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. 

One Rock Fund (ONERX) launched on Continue reading →

December 1, 2023

By David Snowball

Dear friends,

Welcome to December. Welcome to Winter. It’s my favorite time of the year, despite the post-Covid haze that has enveloped me all week. Augustana is increasingly festive, ringing with the sounds of holiday concerts and celebrations, as well as the definite “click” of another semester coming to its close. My students, with their hummingbird-like metabolisms, are loathe to surrender their shorts and sandals even now.

We annually share the same simple reminder. Winter has always been a dark and drear span. The weather turns against us, and we retreat inward for protection. Gardens lay frozen. Workdays are framed by darkness: dark when we arise, dark when we Continue reading →

Launch Alert: T. Rowe Price Capital Appreciation & Income

By David Snowball

On November 29, 2023, T. Rowe Price launched the T. Rowe Price Capital Appreciation and Income Fund (PRCFX) after the longest gestation period in fund history. Normally, there’s a lag of 70 days between a fund’s initial SEC filing and its clearance to launch. In this case, the lag is 2,590 days. The fund was organized in October 2016, filed a full prospectus in September 2017, at which point T Rowe Price bought 10,000 shares, and appeared in all of the subsequent Statements of Additional Information filed annually with the SEC.

It’s clear this has been on the adviser’s mind and Continue reading →

Launch Alert: GMO US Quality Equity ETF

By David Snowball

On November 13, 2023, the Boston-based institutional investment firm GMO, founded in 1977 as Grantham, Mayo, and Van Otterloo, launched their first retail product: GMO US Quality Equity ETF (QLTY). The actively managed fund will invest in a focused portfolio of “companies with established track records of historical profitability and strong fundamentals – high quality companies – are able to outgrow the average company over time and are therefore worth a premium price.” Expect a portfolio of about 40 names, with a 75% weighting in large-cap stocks and 25% in mid-caps. At 0.5%, the ETF charges the same expenses as the Continue reading →

Artisan and the Emerging Markets Debt Universe

By David Snowball

My colleague Devesh Shah sat down with Artisan’s Michael Cirami for a long conversation. Mr. Cirami is a managing director of Artisan Partners, a portfolio manager on the EMsights Capital Group, and lead portfolio manager for the Artisan Emerging Markets Debt Opportunities, Global Unconstrained, and Emerging Markets Local Opportunities Strategies. Two of those three strategies, Debt Opportunities and Global Unconstrained, are manifested in mutual funds.

Prior to joining Artisan Partners in Continue reading →

November 1, 2023

By David Snowball

Dear friends,

Happy New Year! And oíche Shamhna shona duit!

November 1st is Samhain (pronounced “sow-in” in case you’re curious), the traditional beginning of the new year in Gaelic culture. It’s proceeded not only by Samhain Eve but also by … well, three days of drinking. And then followed by three days of regretting it, at least a little.

Samhain marked the end of the harvest season and the onset of “the darker half” of the year, a time of increasing isolation and decreasing food stocks. It made all the sense in the world to do what people do in the face of adversity: throw a big communal gathering, feast, and dress up in scary costumes, and tell the agents of darkness to go Continue reading →

Investing Beyond The Great Distortion

By David Snowball

Devesh Shah and David Sherman engaged in a free-range conversation that touched on benchmark-free investing over hot drinks and fresh pastries. Benchmark-free investing starts with the question, “If you simply didn’t care about ‘the conventional wisdom’ concerning which assets you were supposed to own, what assets would you own?”

Mr. Sherman and Oaktree’s Howard Marks seem to endorse the same conclusion: “likely high-yield bond, surely not stocks.” That’s certainly contrary to conventional wisdom, which is centered on Continue reading →

Fire-and-Forget Gone Wrong: First Foundation Total Return

By David Snowball

In the military realm, “fire and forget” designates a weapon that you don’t need to think about once it’s been launched. In investing, “fire and forget” could be used to describe several sorts of mistakes centering on our impulse to look away once we’ve made a decision. One of those mistakes is to buy a fund (presumably for a good reason), then sell it (presumably for a good reason), and then never re-examine your decision.

Managers – both corporate and fund – make mistakes. You can’t avoid it. They can’t. The best of them realize it, learn from it, correct it, and return to doing fine work. After inheriting Continue reading →

October 1, 2023

By David Snowball

Welcome to October, a fierce month!

It’s a month of apple harvests and Atlantic hurricanes (214 of them). Of a temperature roller coaster and of market crashes (1907, 1929, and 1987 – days with the word “Black” attached to their names, stand out). Of bonfires and of Great Fires (Mrs. O’Leary and her cow were framed, I tell ya). Of wars (from the Battle of Hastings in 1066 through the Second World War, October was always seen as your last chance for a quick land grab before wintry weather closed you down for the season) and rumors of wars (the Cuban Missile Crisis which, happily, didn’t trigger a global war in part because of President Kennedy’s familiarity with the political intransigence and misunderstanding that triggered the First World War). Of a thinning wall between the Here and the There and of Continue reading →

The 25 Year Tempest: Emerging market investing through three cataclysms

By David Snowball

Who now remembers Long-Term Capital Management, the failure of genius, the price of hubris, and the lesson that the innocents bear the cost of their elders’ folly?

Too few, judging from investor behavior.

The collapse of LTCM was the first of three global financial crises over the past 25 years that erupted primarily in the developed world, but whose consequences were primarily borne by emerging markets economies and Continue reading →

Funds worth watching for

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, we survey actively managed funds and ETFs in the pipeline. Summer’s trickle of new funds becomes autumn’s torrent as advisers rush to have new products on the market by December 31. That’s because a fund launched after that date won’t get to report annual or year-to-date results for 2024, which is a serious marketing problem.

Many new funds, like many existing funds, are bad ideas. (Really, you want the latest “anti-woke” ETF or a new way to invest with Bill Miller’s son?) Most will flounder in rightful obscurity. That said, each month brings some promising options that investors might choose to track.

Two, or perhaps two point five, to add Continue reading →

September 1, 2023

By David Snowball

Dear friends,

Welcome to the end of the summer. And to the beginning of … the weakest month of the year for the stock market, with an average monthly loss of about 0.7%. And the threshold of the most volatile month of the year, October, which sees an intramonth movement of 8.3%; that is, since 1928, the record says that your portfolio will bounce 8.3% in October (but only 5.2% in February). My inbox overflows with apocalyptic forecasts and also of celebrations of The New Bull. Recognizing that it’s all bull of a sort, I move on.

Augustana welcomes the largest first-year class in its 163-year history, materially (and disconcertingly) fed by the Augustana Possible scholarships that Continue reading →

Artisan International Explorer (ARDBX/ARHBX)

By David Snowball

Objective and strategy

The investment team seeks to invest in high-quality, undervalued businesses with the potential for superior risk/reward outcomes. The investment universe is generally non-US equities with market caps below $5 billion. The portfolio is typically 25-50 holdings, with individual holdings capped at about 10% and cash generally under 15%.

Adviser

Artisan Partners, L.P. Artisan is a remarkable Continue reading →

August 2023

By David Snowball

Dear friends,

Thanks so much for your patience. Chip and I spent a couple of weeks in the Scottish Highlands and Shetland Islands, and we knew in advance that that would slightly delay our August launch. Little did we understand the depth of Scottish generosity, as our hosts shared a case of COVID with us as we left the country. (It felt just like 2021 again!) The illness left us completely drained and endlessly exhausted, respectively. But we’ve now rallied and are delighted to share August with you. Continue reading →

The Unfortunate Manager, the Ill-timed Bus, and You

By David Snowball

On June 23, 2023, Robert B. Bruce (1931-2023) passed away. It diminishes a rich life and generous soul to describe him merely as “one of the portfolio managers of the Bruce Fund.” A Wisconsin graduate, he had a long-time friendship with Ab Nicholas, another renowned investor, and namesake of the Nicholas Fund, with whom he created an endowment for Wisconsin athletics. His obituary celebrates “a model of hard work, generosity, and unpretentious success” who passed away “in the embrace of his family.” From 1965-1972, Bob helped manage the Mathers Fund (MATRX) to phenomenal success, then set out on his own in 1972. He eventually purchased a small mutual fund in 1983, brought on his eldest son, Jeff, as partner and co-manager, and crafted a 40-year record of distinction and success. Continue reading →

Okay, perhaps a Third Cheer as a Veteran Manager Returns to the Field

By David Snowball

(Original essay from FundAlarm, Jan. 2010, revised August 2023)

Have you ever wondered what it would be like to win The Jackpot? The Big One. The one that pays tens of millions? Mike Fasciano knows, and based on his experience, you might want to steer clear of the opportunity. I’ve followed Mike’s career for 25 years now – ever since the days when I maintained “The List of Funds for Small Investors” for the old Brill/Mutual Funds Interactive site, one of the most prominent and well-respected online communities of mutual fund investors in the 1990s. It was a collection of good no-load funds that an investor with fifty bucks and a bit of discipline could get into. Early on, something called Fasciano Fund (FASCX) became a centerpiece of the “small core” fund grouping. Tiny but mighty, it posted a series of strong, steady performances. The December relaunch of Fasciano’s fund gave me an excuse to call and speak with him at his Chicago office.

I’ll divide the story into four sections.

Act One: Small but Mighty. Fasciano launched his fund in August 1987 with a million dollars raised by friends and family. His plan was to invest in small companies that shared several important characteristics: they were well-managed, they generated substantial free cash flow, and they avoided going deeply into debt. That combination meant that the companies could finance their own growth with their own money – which cuts way back on the silly empire-building that occurs when you’re using someone else’s money — and it decoupled the firms’ fate from the whims of banks and bonds. The fund grew slowly and steadily over its first decade, posting consistently strong returns with consistently below-market risks. By 1997, the fund held a modest $56 million in assets. And then he won the damned lottery.

Act Two: The Perils of Prosperity. Leah Modigliani, strategist at Morgan Stanley, is the co-creator (with her Nobel prize-winning grandfather) of the M-squared metric, which allows for a more accurate assessment of risk-adjusted investment performance. In late 1998, she completed a study of 82 small cap funds. That study, which was picked up by The Wall Street Journal, named Fasciano Fund as the decade’s best small cap fund. Modigliani found that Fasciano Fund produced an average return of 17.6% per year over the previous ten years, compared with 11.2% for the Russell 2000 Index. Even without the risk adjustment, Fasciano outpaced 95% of his peers over the decade. Two months later, Money magazine published “Six Funds You Need Now,” which concluded, “few managers have been more adept at weighing risk and reward than Michael Fasciano.”

All of which opened the floodgates. Mr. Fasciano reports that by mid-1999, he had $450 million under management. And that half of that money then “left as fast as it came.” That rush in and out corresponded with a market increasingly frothy and hostile to conservative investing. Fasciano had friends at Neuberger-Berman, then a storied no-load fund firm and investment advisor founded in the 1930s. It was, he reports, “a place with a wonderful culture and history” where the legendary Roy Neuberger still dropped by from time to time.

In March 2001, he became an employee of Neuberger, and Fasciano Fund became Neuberger-Berman Fasciano. At peak, he was managing about $2 billion in assets. That happy partnership was disrupted by two developments that no one could foresee:

  1. Careful” stopped working as well as it had. Fasciano’s discipline led him to companies that did not borrow wildly, did not attract venture capitalists, and did not celebrate debt. The easy availability of money in the 2000s made that discipline (temporarily) irrelevant, and the fund lagged its peers and benchmark. At the same time, it did maintain consistently low levels of risk, which were the hallmark of its first decade.
  2. Lehman Brothers bought Neuberger. Supported by the same debt-happy culture that affected small cap investing, Lehman acquired Neuberger in 2003, bringing with it sales loads and a trader’s mindset. Funds kept flowing in even as Lehman’s own finances, driven by its earlier embrace of sub-prime mortgages, deteriorated. In 2008, Lehman ordered a new set of expense reductions and ordered a wave of layoffs – 10% of the workforce – across its empire. Despite a top percentile performance in early 2008 and a $1.0 billion portfolio, Mr. Fasciano was “right-sized” with 1500 of his colleagues. By July, rumors were floating that Lehman was in line to be purchased by South Korean investors. By August, NB-Fasciano was merged into NB Genesis amidst rumors that Lehman was trying to sell Neuberger to raise cash. A month later, Lehman itself filed for bankruptcy.

Intervallo. Mr. Fasciano had no doubt about his next steps following his separation from Neuberger Berman. He was going back into the fund business as an independent and back to the discipline of building his fund one position – and one new investor – at a time. He filed registration papers with the SEC for FascianoFunds Small Cap. Then, as the market downturn morphed into a blind panic, decided to stay on the sidelines a bit. In the following year, he “did some things to remind me of life beyond small cap stocks.” He took up the discipline of black-and-white photography and embraced the need to spend a lot of time seeing the different grays that lie between those two poles. He took Italian language immersion training and achieved a B-2 level of proficiency (“Can interact with a degree of fluency and spontaneity that makes regular interaction with native speakers quite possible without strain for either party” – a level I haven’t yet achieved even in English), which was followed by two months spent visiting his family’s native land.

Act Three: Renaissance. On December 22, 2009, Mike returned to the field with the launch of Aston/Fasciano Small Cap (AFASX). He counted on the Aston organization to provide him with essential sales and back-office support so that he could concentrate on the portfolio itself. Aston’s recent acquisition by AMG – the Affiliated Managers Group – buoyed his spirit still further since AMG had a great record of nurturing and supporting its affiliated fund families (think “Third Avenue Value”) and had the financial heft to make important contributions to the funds.

And so he began again, “rebuilding relationships with individual investors” and “sticking with the discipline” of buying the stocks of well-managed, fiscally-responsible companies in pursuit of “consistently good” – if rarely spectacular – results for the folks who had entrusted their investments to him. In some ways, he’s a million miles away from the 1987 start-up with its 20 investors. In some ways, he’s come home again.

The Curtain Falls. Michael Fasciano decided in October 2010 to liquidate the new Aston/Fasciano SmallCap Fund (AFASX). Mike explained it as a matter of simple economics: despite respectable returns in its first three-quarters of operation, Aston was able to attract very little interest in the fund. Under the terms of his operating agreement, Mike had to underwrite half the cost of operating AFASX. Facing a substantial capital outflow and no evidence that assets would be growing quickly, he made the sensible, sad, and painful decision to pull the plug. The fund ends its short life having made a profit for its investors, a continuation of a quarter-century tradition of which Mike is justifiably proud.

Exactly one year after launch, having drawn just over $2 million in assets and burdened by a 15% expense ratio, Aston/Fasciano was liquidated. Since then, Michael has managed Fasciano Associates LLC from his home in lovely Lake Forest, Illinois, and has mostly kept out of the public eye.

Life is, indeed, a work in progress.

Your Word of the Week: Greenhushing

By David Snowball

“Greenhushing” is greenwashing’s psychotic twin. “Greenwashing” is the practice of pretending to care about the environment; in fund terms, it occurs when marketers jam an inconsequential, mealy-mouthed sentence into a fund’s prospectus (“will consider ESG factors in all portfolio decisions to the extent they reflect financially material concerns”) and then marketing them as a sign of 21st-century sensibilities, notwithstanding the fund’s extensive coal holdings. DWS is in the spotlight currently as it tries to resolve charges from both the US SEC and German investigators that arose from claims by their former sustainability chief that the investor “made false statements” about sustainability actions. Continue reading →

Funds worth watching for: T Rowe Price Capital Appreciation & Income and Vontobel Global Environmental Change Fund

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 we survey actively managed funds and ETFs in the pipeline. Summer is a slow time for new fund launches, with the pipeline filling up in November in anticipation of reaching the market by December 30.

Many new funds, like many existing funds, are Continue reading →

Launch Alert: RiverPark Next Century Growth Fund

By David Snowball

On June 30, 2023, RiverPark Funds launched the RiverPark/Next Century Growth Fund (RPNCX/RPNIX) in collaboration with Next Century Growth Investors, LLC. The Fund’s stated objective is to seek long-term capital appreciation by investing primarily in small-capitalization U.S. equity securities.  NCG was founded in 1998, is headquartered a bit northwest of the Twin Cities in Plymouth, Minnesota, and manages $1 billion in assets. About 40% of those assets are Continue reading →