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.

Updates

By David Snowball

PIMCO pays up

PIMCO has agreed to write to $19.8 million check to resolve a long-running enforcement action initiated by the SEC. The short version: PIMCO launched PIMCO Total Return ETF (BOND), one of the earliest actively-managed ETFs, in 2012. Early performance was eye-opening, since the ETF outperformed PIMCO’s $175 billion flagship Total Return Fund (PTTRX). It turns out that the outperformance was achieved by mispricing 43 of the fund’s 156 holdings and was supported by “other, misleading reasons” offered for the fund’s success.  PIMCO’s description speaks of “43 smaller-sized positions of non-agency mortgage-backed securities using third-party vendor prices, as well as PIMCO’s policies and procedures related to these matters.”

Jaffe on the move

Chuck Jaffe has announced his imminent Continue reading →

Briefly Noted

By David Snowball

SMALL WINS FOR INVESTORS

Effective January 1, 2017, the management fee for AMG River Road Long-Short Fund (ARLSX, formerly ASTON/River Road Long-Short Fund) will be reduced from 1.10% to 0.85% . At the same time AMG River Road Select Value Fund (ARSMX, formerly ASTON/River Road Select Value Fund) drops from 0.9 to 0.75%. In both cases, the total e.r. then falls as well.

AQR Global (AQGNX) and International Equity Funds (AQINX) have reduced their expense ratios by 10 and 5 basis points, respectively.

Ariel has lowered fees on both International (AINTX) and Continue reading →

December 1, 2016

By David Snowball

What a busy month.

On Monday, November 21, four U.S. stock indexes all reached all-time highs: the S&P 500, Dow, Russell 2000 and Nasdaq; it might be that the S&P Midcap 400 did the same, but that’s less clear to me. That feat was last accomplished on December 31, 1999. The coincidence led Chip, our estimable tech director, to launch into a spirited rendition of Prince’s “1999”:

I was dreamin’ when I wrote this
Forgive me if it goes astray
But when I woke up this mornin’
Could of sworn it was judgment day

The sky was all purple
There were people runnin’ everywhere
Tryin’ to run from the destruction
You know I didn’t even care

‘Cause they say two thousand zero zero
Party over, oops out of time
So tonight I’m gonna party like it’s 1999

I was dreamin’ when I wrote this
So sue me if I go too fast
But life is just a party
And parties weren’t meant to last

Continue reading →

The three coolest studies of 2016

By David Snowball

There are scholars whose entire lives are consumed by the need to study mutual funds. Not “study” in the carefree way I do or the deeply-tainted way that marketing-driven organizations do, but “study” with considerable rigor, sophisticated tools and a willingness to struggle with complexity.

While much of the content of these studies is inaccessible to Continue reading →

Tributary Small Company (FOSCX), December 2016

By David Snowball

Objective and strategy

The fund pursues long-term capital appreciation. They invest in a portfolio of 60-70 small-cap stocks, mostly domiciled in the U.S. Their fundamental approach is value-oriented and broadly diversified across economic sectors. In general, each position in the portfolio starts out about equally weighted; 50 of the 65 current holdings are each between 1-2% of the portfolio. They hold minimal cash, currently about 4%. Portfolio turnover is in the range of 25-35%, far below the small cap average.   Continue reading →

Elevator Talk: Colin Symons, Symons Value (SAVIX)

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.

Colin Symons manages SAVIX and has managed it since the fund launched in Continue reading →

Prelaunch Alert: Laura Geritz, Grandeur Peak and the Rondure Funds

By David Snowball

When Laura Geritz left Wasatch Advisors in June after a decade with the firm, there was a clear and understandable sense of loss. Ms. Geritz had three public charges:

Wasatch International Opportunities (WAIOX), : a $635 million international small-growth fund. It’s got a five-star rating from Morningstar. Over the past five years, it’s posted higher returns with lower volatility than its Lipper peer group. The estimable Lewis Braham reports Continue reading →

Funds in registration

By David Snowball

You know it’s a bad month for fund registrations when the most interesting thing out there is a bad idea: The ETF Market ETF (TETF). If you’ve ever thought to yourself, “there’s nothing I want more than to be trapped investing in a very limited universe of companies, almost none of whom have enduring competitive advantages,” you can now not only invest there, you can day trade if you want. (sigh) Otherwise, year-end is a slow time in the fund launch world. Continue reading →

Briefly noted

By David Snowball

In a peculiarly peculiar move, Praxis Small Cap (MMSCX) is becoming Praxis Small Cap Index Fund. Praxis might, charitably, be described as “bad” (its five-year record trails its peers by 600 basis points annually) and “expensive” (1.68% with a 5.25% sales load). In an attempt to be less “bad,” they’re giving up active management but remaining expensive (1.13% with a 5.25% sales load). Here’s advice to prospective providers of index funds: if you can’t make it cheap, you’re going to lose. Praxis is attempting to dodge that ugly truth by being not-quite-an-index funds: its benchmark is the S&P SmallCap 600 but “the Fund seeks to avoid companies that are deemed inconsistent with the stewardship investing core values. In addition, the Adviser uses optimization techniques to Continue reading →

November 1, 2016

By David Snowball

Dear friends,

I walked along today, kicking leaves, marveling at the maples, crunching through my last Golden Russet apple and wondering at the tension between local delight and global despair. Things are good in my life. My classes are full and my students are … hmmm, fascinating in a “bright but so very different from what I recall” way. My son just earned his driver’s license and I bought him a respectable used car. I harvested my first-ever potato crop and the last of my carrots and onions, so roasted root veggies are on the menu this week. I’m happy.

The world beyond mine is less happy. Weather forecasters report that Continue reading →

Ten million miles high

By David Snowball

Technically, 10,315,656 miles high.

The IMF reported in October that global debt, government, corporate and individual, is now $152 trillion. (That’s $152 followed by 000,000,000,000.) That’s historically high, both in absolute terms and relative to global GDP. And it’s not limited to slow-growing developed economies; increasingly emerging markets are issuing debt at a record pace.

Folks at the Endowment for Human Development, who have either spiffy calculators or too much free time, calculate that Continue reading →

Counting on the winners

By David Snowball

There’s a good chance that the next five years will be far more challenging for investors than the past five. It’s rare that a market delivers returns (12% annual returns) greater than its volatility (11% standard deviation). We’ve had five years of extraordinary monetary policy; if the next five years look more ordinary (say, 10 year rates back to their normal 3-4% range), there’s likely to be a “repricing” of assets, possibly dramatic, surely erratic. GMO’s asset class projections, which simply assume a return to normal levels of profits and earnings, say that almost all asset classes are set for negative real returns.

For folks looking for managers well-equipped to handle hostile markets, we used Continue reading →

Elevator Talk: Don Porter, DGHM MicroCap Value (DGMMX/DGMIX)

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 or 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.

Donald Porter leads the team which manages the Continue reading →

Update: RiverNorth Marketplace Lending Corporation (RMPLX) webcast

By David Snowball

In October, we offered a Launch Alert for RiverNorth’s latest fund, RMPLX. It’s a closed-end interval fund which offers institutional investors access to the quickly evolving marketplace lending sphere. The fund has a million dollar minimum initial investment and, structurally, has some similarities to a hedge fund.

In mid-November, RiverNorth will host a webcast helping investors understand the potential risks, returns and distinctive characteristics of this slice of the market. They’ve done good work with their webcasts before, so folks with the interest and wherewithal might Continue reading →

Update: Litman Gregory Alternative Strategies Fund (MASNX) call

By David Snowball

In a February 2012 Wall Street Journal piece, I nominated MASNX as one of the three most-promising new funds released in 2011.  In normal times, investors might be looking at a moderate stock/bond hybrid for the core of their portfolio.  In extraordinary times, there was a strong argument for looking here as they consider the central building blocks for their strategy. Our profile of the fund that year argued

these really do represent the “A” team in the “alternatives without idiocy” space.  That is, these folks pursue sensible, comprehensible strategies that have worked over time.  Many of their competitors in the “multi-alternative” category pursue bizarre and opaque strategies (“hedge fund index replicant” strategies using derivatives) where the managers mostly say “trust us” and “pay us.”  On whole, this collection is far more reassuring.

Continue reading →

Funds in Registration

By David Snowball

Twenty new no-load retail funds are slated to go live by year’s end; most will first trade on December 30 so they’ll first able to report full-year results for 2017. The most immediately intriguing are Rajiv Jain’s new GQG Partners Emerging Markets Equity Fund and Osterweis Total Return., though Polen International Growth Fund has some pretty solid lineage, too. Read on!

ACR International Quality Return Fund

ACR International Quality Return Fund will seek is “to protect capital from permanent impairment while providing an absolute return above the Fund’s cost of capital and a relative return above the Fund’s benchmark over a full market cycle.” After such a build-up, it’s a letdown to report that it appears just to be a global stock fund. It will hold about 20 names, expects to keep less than a third in emerging markets and might hold some cash. Not much stands out there. The fund will be managed by Continue reading →

Briefly Noted . . .

By David Snowball

Herewith are notes about the month’s announced changes in the fund industry: closings, openings, name changes, liquidations and more.

Thanks, as ever, to the anonymous and indefatigable Shadow for his yeoman’s work in keeping me, and the members of MFO’s discussion board, current on a swarm of comings and goings.

On October 3, 2016, Henderson Group PLC merged with Janus Capital Group, nominally “a merger of equals.” The Henderson funds will be reorganized into Continue reading →

October 1, 2016

By David Snowball

Dear friends,

Welcome to autumn. It’s a season of such russet-gold glory that even Albert Camus (remember him from The Stranger and The Plague?) was forced to surrender: “Autumn is a second spring when every leaf is a flower.” It’s the time of apples and cinnamon, of drives through the Wisconsin countryside, and of gardens turning slowly to their rest.

Open the windows, unpack the flannel, raise high the cup of cider. Summon the children, light the bonfires, deploy the marshmallows! Continue reading →

Emerging markets deserve reconsideration: the case for lollipops

By David Snowball

“I’m not saying it’s lollipops and marshmallows in emerging markets but …”

Andrew Foster, 9/5/2016

Twelve months ago, the headlines were apocalyptic:

“Investors pull $1 trillion from emerging markets in a year” (CNN, 8/24/2105)

“Emerging Market rout gathers speed” (Which Investment Trust, 8/25/2015)

“Investors Race to Escape Risk in Once-Booming Emerging-Market Bonds” (New York Times , 8/22/2015)

“The Bubble of Emerging Markets Pops” (History News Network, 8/27/2015) Continue reading →