In everyday language, we use “chaos” to mean complete disorder or randomness – like a toddler’s playroom after a long afternoon or a desk buried under scattered papers. This kind of chaos implies there’s no underlying order or pattern at all. It suggests a temporary state of disarray that can be resolved or brought back to order.
There is, however, a second use of the term. In chaos theory, “chaos” has a precise and quite different Continue reading →
FundAlarm (1996-2011), for which I penned a monthly column, was the site that gave rise to MFO. I was drawn to Fund Alarm long ago by the voice of its founder, Roy Weitz. During the lunatic optimism and opportunism of the 1990s (who now remembers Alberto Vilar, the NetNet and Nothing-but-Net funds, or mutual funds that clocked 200-300% annual returns?), Mr. Weitz and Morningstar’s John Rekenthaler spent a lot of time kicking over piles of trash – often piles that had Continue reading →
It’s November!
Had you noticed?
That means so many things, so many changes. It’s the onset of The Golden Quarter, aka Fourth Quarter Holiday Retail Season when an inexplicable sense of panic and social obligation separates consumers from Continue reading →
On November 1, 2024, the former AlphaCentric Strategic Income Fund was rebranded as AlphaCentric Real Income Fund with a new sub-advisor, broader strategy, and new expense ratio to accompany its new name.
CrossingBridge Advisors will manage the investment strategy by employing a team approach. Portfolio managers are T. Kirk Whitney, CFA, who joined the firm as an analyst in 2013, Spencer Rolfe, who first joined in 2017, and David Sherman, CIO. CrossingBridge, with over $3.2 billion in assets as of 8/31/24 was Continue reading →
On October 15, 2024, Bridgeway Capital launched Bridgeway Global Opportunities Fund (BRGOX), a long/short equity fund that will pursue long-term positive absolute returns while limiting exposure to general stock market risk. Using advanced quantitative modeling, the fund will hold 250-300 long positions and 250-300 short positions. The portfolio is designed with a bias toward quality, value, and sentiment. It will otherwise be neutral as to country, size, sector, and beta. That is, it will shoot for a beta of zero, a net China exposure of zero, and so on.
The fund will be managed by a Bridgeway team led by Co-Chief Investment Officer Jacob Pozharny, PhD. He joined Continue reading →
Dear friends,
Welcome to the Samhain / the coming of the dark edition of the Mutual Fund Observer!
October is an interesting month. Traditionally perilous for the financial markets. It begins with the sullen remnants of summer and ends with festivals of the harvest (even for those of us in cities) and of the coming season when nature slips into dormancy. Halloween, whose sales now begin in August and whose iconic ghouls now Continue reading →
On October 1, 2024, CrossingBridge Advisors launched CrossingBridge Nordic High Income Bond Fund (NRDCX). The fund will invest in high-income bonds issued, originated, or underwritten out of Denmark, Finland, Norway, and Sweden. Those might be fixed or floating rate bonds, zero-coupon bonds and convertible bonds, and bonds issued by corporations and governments. It will be solely managed by CrossingBridge Advisors.
The managers will seek high current income, and the prospect of some capital growth, within the Nordic bond universe. Within that space, they operate with few externally imposed constraints beyond Continue reading →
Dear friends,
Welcome to the September (aka “back to school”) issue of the Mutual Fund Observer. The joyful tumult of which has slightly delayed our launch.
Despair is easy. If you ever want an antidote, drop by Augie at the beginning of September. As many of you know, in my day job, I am a professor of communication studies and director of the Austin E Knowlton Honors Program at Augustana College. I am also an advisor to first-year students. I’ve spent much of the last week meeting with and learning about my new charges. I am amazed by them, defying as they do all of the hysterical media headlines about Continue reading →
An indolent portfolio is an investor’s best friend. It is a portfolio designed to be ignored for a year at a time. Why is that a good idea? Two reasons, really. First, almost everything you do with your portfolio will be a mistake. Morningstar’s long-running series of “Mind the Gap” studies looks at the difference between investor’s actual returns and the returns of the funds in which they are invested.
Those annuals routinely show that investors’ returns Continue reading →
On September 10, 2024, Research Affiliates will launch its first ETF. Research Affiliates was founded in 2002 by Rob Arnott to provide professional and institutional investors with innovative research and product development. Mr. Arnott is iconic, having published 150 or so research articles that received both attention and rewards. His most extensive work is The Fundamental Index: A Better Way to Invest (2008). Most traditional indexes are capitalization-weighted, so they lock in a large/growth/momentum bias. Arnott notes that the bias may Continue reading →
“It’s a sure sign of summer if the chair gets up when you do.” Walter Winchell
Walter who? O tempora! O mores!
At the height of his popularity, in the late 1930s, 50 million people—two-thirds of American adults—read Winchell’s syndicated column and listened to his 15-minute Sunday-night radio broadcast. He positioned himself as a champion of “Mr. and Mrs. America,” and was the most powerful – or, at least, most Continue reading →
In July 2024, Morningstar.com published a promising but ultimately disappointing article entitled “The Best Small-Cap Funds” (7/18/2024). “Content development editor” Tori Brovet has been publishing a series of “The Best” articles (Energy Stocks, Value Funds, Bond ETFs). The article promises there are
You can do Continue reading →
On May 17, 2024, Otter Creek Advisors launched the Otter Creek Focus Strategy ETF (OCFS). In doing so, they are providing an existing separately managed account strategy which launched on May 29, 2020, as an ETF. Otter Creek was founded in 1991 to manage a long/short hedge fund and, in 2013, launched a long/short mutual fund. That four-star fund Continue reading →
I love a good mystery. WPG Partners Select Hedged is one. It is live, tracked by Morningstar, and available through Schwab, but appears on neither the Boston Partners nor WPG websites. Here’s what to know.
On May 31, 2024, Boston Partners launched WPG Partners Select Hedged, a long/short small-cap fund from its WPG Partners subsidiary. Boston Partners manages Continue reading →
On July 10, 2024 – T. Rowe Price launched T. Rowe Price Intermediate Municipal Income ETF (TAXE), an actively managed ETF. Price has 16 other ETFs, including semi-transparent and transparent equity and income funds but this is the first that does not directly mirror an existing fund.
The fund is co-managed by James Lynch and Charlie Hill, who collectively have 53 years of investment experience, and have served Continue reading →
Dear friends,
Welcome to Really, Really Summer … and to the July issue of Mutual Fund Observer.
Summertime is an especially blessed and cursed interval for those of us who teach. On the one hand, we’re mostly freed from the day-to-day obligation to be in the classroom. Some of us write, some travel, and some undertake “such other duties as may from time to time be assigned” by our colleges. On the other hand, we hear the clock ticking. All year long, as we try to face down a stack of 32 variably literate essays at 11 p.m. Sunday night, we think “If I can just make it to summer, I’ll Continue reading →
Briefly brilliant performance isn’t all the tough. It requires rather more luck the skill and it can be wildly profitable for the adviser, though deadly for the investors. ARK Innovation ETF is, of course, the current poster child for boom-then-bust. The fund posted triple-digit returns in 2020, saw its assets explode then promptly (and predictably) crashed. Anyone who bought five years ago and has devoutly held on has lost 1% annually and has trailed 99.9% of all similar investors. Those who bought at the peak three years ago have clocked annual Continue reading →
No liquidations, no mergers, and 100% of funds posted above-average returns. Of the 68 firms with a 100% 10-year success rate, 41 also have a perfect five-year record.
| Firm Success Ratio 10-Year | Firm Success Ratio 5-Year | # of funds | |
| Appleseed | 100 | 100 | 1 |
| Auer | 100 | 100 | 1 |
| Bretton Fund | 100 | 100 | 1 |
| Caldwell & Orkin | 100 | 100 | 1 |
| Cantor Fitzgerald | 100 | 100 | 2 |
| Changing Parameters | 100 | 100 | 1 |
| Channel Investment Partners | 100 | 100 | 1 |
| Clark Fork | 100 | 100 | 1 |
| Cook & Bynum Capital | 100 | 100 | 1 |
| Disciplined Growth Investors (DGI) | 100 | 100 | 1 |
| Dodge & Cox | 100 | 100 | 6 |
| Equity Investment | 100 | 100 | 1 |
| First Foundation | 100 | 100 | 2 |
| Freedom | 100 | 100 | 1 |
| Hamlin Capital Management | 100 | 100 | 1 |
| Hillman | 100 | 100 | 1 |
| Hood River Capital Management | 100 | 100 | 1 |
| Investment House | 100 | 100 | 1 |
| Ironclad Funds | 100 | 100 | 1 |
| Kopernik | 100 | 100 | 2 |
| Lyrical Partners | 100 | 100 | 1 |
| MainGate Funds | 100 | 100 | 1 |
| Matisse Funds | 100 | 100 | 1 |
| Meehan Focus | 100 | 100 | 1 |
| Moncapfund | 100 | 100 | 1 |
| Needham | 100 | 100 | 3 |
| New Alternatives | 100 | 100 | 1 |
| OCM | 100 | 100 | 1 |
| Otter Creek | 100 | 100 | 1 |
| Payson | 100 | 100 | 1 |
| Performance Trust Asset Management | 100 | 100 | 3 |
| Port Street Investments | 100 | 100 | 1 |
| Private Capital Management | 100 | 100 | 1 |
| Seafarer | 100 | 100 | 1 |
| Smead | 100 | 100 | 2 |
| Sound Shore | 100 | 100 | 1 |
| Sparrow | 100 | 100 | 1 |
| Stringer Asset Management | 100 | 100 | 1 |
| Teberg | 100 | 100 | 1 |
| Terra Firma Asset Management | 100 | 100 | 1 |
| Vericimetry | 100 | 100 | 1 |
Inevitably some of the 10-year winners have tailed off more recently. It’s reassuring that only 17 of 68 funds (25%) have tailed off badly, with fewer than half of their 10-year funds still thriving.
| Firm Success Ratio 10-Year | Firm Success Ratio 5-Year | |
| Fuller & Thaler | 100 | 83 |
| WCM Investment Management | 100 | 75 |
| Bridge Builder | 100 | 75 |
| Grandeur Peak | 100 | 71 |
| Trillium | 100 | 50 |
| Prospector | 100 | 50 |
| Medalist Partner | 100 | 50 |
| Jensen | 100 | 50 |
| Campbell & Company | 100 | 33 |
| Oakhurst | 100 | 25 |
| Swan Wealth Advisors | 100 | 20 |
| YCG FUNDS | 100 | 0 |
| Reaves | 100 | 0 |
| Polen Capital | 100 | 0 |
| Polaris Capital Management | 100 | 0 |
| MP 63 | 100 | 0 |
| MAI | 100 | 0 |
| Long Short | 100 | 0 |
| Lisanti Capital Growth | 100 | 0 |
| JAG Capital Management | 100 | 0 |
| EIP Funds | 100 | 0 |
| Edgewood | 100 | 0 |
| Copley | 100 | 0 |
| Conestoga | 100 | 0 |
| Clifford Capital | 100 | 0 |
| BBW Capital | 100 | 0 |
| Akre | 100 | 0 |
Our colleague Devesh Shah has been in search of a reason to have any direct international exposure. That is, for an answer to the question, “Why should I invest one cent in an international equity fund?” He notes that the default for many endowment portfolios is 18% international, but that – over the course of the 21st century so far – the actual efficient frontier portfolio held only 5% international equity.
International stocks are 40% of the total global capitalization. They are Continue reading →
Dear friends,
It’s been a whirlwind month for us. In just about 30 days, I got married (waves to Chip!), finished my 68th trip around the big ball o’ fire in the sky, bade farewell to my 40th group of seniors (just a heads up, world. They’re coming for you!), visited with the managers from FPA (really, if you put Mr. Scruggs in a cardigan he’d totally rock the Mr. Rogers’ look), watched the Dow hit 40,000 and visited my brothers and sisters in Pittsburgh for the first time in two years.
