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.

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 →

Launch Alert 1: RiverNorth Marketplace Lending Corporation (RMPLX)

By David Snowball

RiverNorth Capital Management launched RiverNorth Marketplace Lending Corporation (RMPLX), a closed-end interval fund dedicated to marketplace lending (a/k/a “online lending”) asset class. They’re in pursuit of high current income.

“Marketplace lending” are all of those companies that allow small borrowers to get quick access to loans for unconventional (that is, non-bank) lenders. Lending Club would be a familiar example for most of us. The volume of lending has increased 700% in four years to about $17 billion a year. Continue reading →

Launch Alert 2: RiverPark Commercial Real Estate Fund (RCRIX)

By David Snowball

On Monday, October 3, RiverPark Funds launched RiverPark Commercial Real Estate Fund (RCRIX). Like several of RiverPark’s funds, RCRIX began life as a hedge fund. Unlike any of its predecessors, though, it is being structured as an interval fund.

What does that mean? Morty Schaja explains the investment case:

The Fund’s objective is to seek current income and capital appreciation consistent with the preservation of capital by investing predominantly in the approximately $600 billion commercial mortgage backed securities (“CMBS”) market that is secured by income-producing commercial real estate assets predominantly in the United States.

Continue reading →

Funds in Registration

By David Snowball

Ten new funds are in the queue, ready to launch somewhere between Thanksgiving and New Years. Several high-profile firms are launching new funds, including DoubleLine, Northern, Osterweis and TIAA-CREF. (We also snuck in a small handful of institutional launches from AMG and AQR.)

U.S. Quality ESG strikes me as particularly interesting. Northern Trust has made a major commitment to responsible investing.  This fund will be the latest in a series of launches by Northern Trust, which has offered a global ESG index fund, Global Sustainability Index Fund (NSRIX) and added FlexShares STOXX US ESG Impact Index Fund (ESG) and FlexShares STOXX Global ESG Impact Index Fund (ESGG) on July 14, 2016. Northern’s passive products are consistently 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.

Effective mid-January, 2017, the AB Wealth Appreciation Strategy (AWAAX) and AB Balanced Wealth Strategy (ABWAX) will no longer invest in other AllianceBernstein funds. Instead, they’ll invest directly in equities. Color me “confused.” The funds currently seem to hold shares of just one AB fund (Multi-manager Alternative Strategies) along with a ton of individual equities. Continue reading →

September 1, 2016

By David Snowball

Dear friends,

It’s fall. We made it!

The leaves are still green and there are still tomatoes to be canned (yes, I do) but I saw one of my students pull on a sweater today. The Steelers announce their final roster this weekend. The sidewalks are littered with acorns. It’s 6:00 p.m. and the sun outside my window is noticeably low in the sky. I hear the distant song of ripening apples. Continue reading →

Certificate in ETF Punditry

By David Snowball

The latest vogue in higher education, an industry rife with voguishness, is stackable certificates. Stackable certificates are academic credentials certifying your ability to complete some specific task. Some of the certifications (Craft Brewing) seem modestly more concrete than others (Dream Tending). Since they’re relatively easy to obtain in relatively short periods, students can accumulate a bunch of them while still earning a conventional degree. That’s the “stackable” part.

In order to shore up the Observer’s finances, we’ve decided to capitalize on the trend and launch our new Certificate in E.T.F. Punditry program. Continue reading →

Mairs and Power Small Cap Fund (MSCFX), September 2016

By David Snowball

Objective and strategy

The fund seeks “above-average” long-term capital appreciation by investing in 40-45 small cap stocks. For their purposes, “small caps” have a market capitalization under $3.4 billion at the time of purchase. The manager is authorized to invest up to 25% of the portfolio in foreign stocks and to invest, without limit, in convertible securities (but he plans to do neither). Across all their portfolios, Mairs & Power invests in “carefully selected, quality growth stocks” purchased “at reasonable valuation levels.” Continue reading →

Seafarer Overseas Growth & Income closing

By David Snowball

Seafarer Overseas Growth & Income (SFGIX/SIGIX) closing to new investors

On August 31, 2016, Seafarer announced the imminent closure of its flagship Seafarer Overseas Growth & Income fund. The closure is set to become effective on September 30, 2016.

Highlights of the announcement:

    • The fund will soft-close on September 30, so that existing investors will still be able to add to their accounts. There are the usual exceptions to the closure.

      • Continue reading →

Elevator Talk: Michael Willis, Index Funds S&P 500 Equal Weight (INDEX)

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. Continue reading →

Funds in Registration, September 2016

By David Snowball

It’s been a quiet month for new registrants. There’s the usual collection of trendy ETFs (e.g., Pacer US Cash Cows 100 ETF) and Mr. Greenblatt is launching more Gorham-branded institutional funds (Gotham Neutral 500 at 1.4%, Defensive Long at 2.15%, and Defensive Long 500 at 1.65%). Other than that, we found just four new no-load, retail funds. Folks interested in social impact investing might want to put Gerstein Fisher Municipal CRA Qualified Investment Fund on their radar. Low minimum, relatively low expense, it provides individual investors a tool to support affordable housing and community development. Otherwise, the new options peaked out at “meh.” Continue reading →

Briefly Noted . . .

By David Snowball

New questions to ask your potential fund manager: “so, how did your high school lacrosse team do? And how was the cuisine in the cafeteria?” If the answers were anything close to “great” and “scrumptious,” run away! Run away! As it turns out, new research shows that managers who come from relatively modest, perhaps even challenged, backgrounds tend to surpass their J. Crew wearing peers. So if you can find a kid whose forebears were, say, poor Tennessee farmers, he probably deserves your money. (Especially if his fund is closing to new investors, say, at the end of September.) Thanks to Ira Artman, longtime reader and friend of the Observer, for the heads-up!

After 35 years with Legg Mason, Bill Miller bought himself and his funds free of them. Continue reading →

August 1, 2016

By David Snowball

Dear friends,

aAugust, famously “summer’s last messenger of misery,” is upon us. It’s a month mostly celebrated by NFL fans (for the start of training camp and the endless delusion that this might be the year) and wiccans (who apparently have a major to-do in the stinkin’ heat). All of us whose lives and livelihoods are tied to the education system feel sympathy for the poet Elizabeth M. Taylor:

August rushes by like desert rainfall,
A flood of frenzied upheaval,
Expected,
But still catching me unprepared.
Like a match flame
Bursting on the scene,
Heat and haze of crimson sunsets.
Like a dream
Of moon and dark barely recalled,
A moment,
Shadows caught in a blink.
Like a quick kiss;
One wishes for more
But it suddenly turns to leave,
Dragging summer away.

I could, I suppose, grumble again about the obvious (the combination of repeated stock market records with withering corporate fundamentals isn’t good), but Ed bade me keep silent on the topic. So we’ll try to offer up a bunch of lighter pieces, suitable to summer. Continue reading →

Morningstar’s “undiscovered” funds

By David Snowball

In case you’re wondering, here is the Observer’s mission:

The Mutual Fund Observer writes for the benefit of intellectually curious, serious investors— managers, advisers, and individuals—who need to go beyond marketing fluff, beyond computer- generated recommendations and beyond Morningstar’s coverage universe … Our special focus is on innovative, independent new and smaller funds. MFO’s mission is to provide readers with calm, intelligent arguments and to provide independent fund companies with an opportunity to receive thoughtful attention even though they might not yet have drawn billions in assets. Its coverage universe has been described as “the thousands of funds off Morningstar’s radar,” a description one fund manager echoes as “a Morningstar for the rest of us.”

Morningstar is in the business of helping investors. Since most investors have most of their money in large funds, Continue reading →

Bill Gross goes commando again

By David Snowball

Janus has announced the departure of Kumar Palghat from Janus Unconstrained Global Bond Fund (JUCAX). Mr. Palghat, a very accomplished investor with a long record of success at PIMCO and elsewhere, will become the manager of Janus Short Duration Income ETF. Mr. Palghat worked with the fund for just over one year. In his absence, Bill Gross returns to complete control. Continue reading →

Third Avenue seeks a buyer

By David Snowball

The disaster of Third Avenue Focused Credit (TFCVX) rolls on. For those not following December’s drama, TFCVX offered the impossible: it would invest in illiquid securities (that is, stuff that couldn’t be sold at the drop of a hat) but provide investors with daily liquidity (that is, act as if portions of the portfolio could be sold at the drop of a hat). That worked fine as long as the market was rising and no one actually wanted their money back, but when the tide began to go out and investors wanted their money, the poop hit the propeller. Continue reading →