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.

January 1, 2022

By David Snowball

Dear friends,

Merry Christmas and Happy New Year!

Let’s hope it’s a great one.

If you think I’m a bit late on the former, it’s because you think of Christmas as a day rather than as a season. Not so! In 567, the Council of Tours established that the twelve days between Christmas and Epiphany – also sometimes known as “Chip’s son’s birthday” – were to be treated as a single holiday. (Her sister was born on Christmas Day so it makes sense she waited to give David a reason to celebrate the other end of the holiday.) In England, in Continue reading →

Investing in 2022: The Indolent Portfolio

By David Snowball

Each year, usually in our February issue, I walk through my portfolio. It gives some folks the shivers, and others, a nice sense of superiority. On the whole, it seemed like a good idea to accelerate the schedule this year. I’ll walk through it using the same five-part process that we’ve urged on others.

Step One: Assess my goals and resources

My overarching goal is to have a portfolio that I don’t have Continue reading →

Terrific twos: Intriguing funds not yet on your radar

By David Snowball

Most funds don’t show up on investors’ radar until they have at least a three-year record, which is also the point at which they receive their inaugural Morningstar rating. That’s a generally sensible, sometimes silly constraint since many funds that have been operating for fewer than three years are actually long-tested strategies managed by highly experienced professionals, which are just coming to market in a new form. Relatively recent examples of such funds include Andrew Foster’s Seafarer Overseas Growth & Income (SFGIX), Rajiv Jain’s GQG Partners Emerging Markets Equity (GQGPX), Abhay Deshpande’s Centerstone Investors (CETAX), and Amit Wadhwaney’s Moerus Worldwide (MOWNX). Collectively, those four managers had overseen more than Continue reading →

Morningstar isn’t very good at mutual funds … and that’s a good thing

By David Snowball

Running them, not assessing them.

Morningstar runs a booming, global asset management business. They have $255 billion under management and advisement (as of 9/30/21).

Of that, $50.5 billion are assets under management, primarily through their Managed Portfolios and Institutional Asset Management services.

They also have 116,627 Morningstar.com Premium members and 17,182 Morningstar Direct licensees.

The managed portfolios traditionally used outside, actively managed funds. In 2018, Morningstar decided Continue reading →

Launch Alert: Grandeur Peak Global Explorer

By David Snowball

On December 16, 2021, Grandeur Peak Global Advisors launched its 10th fund, Grandeur Peak Global Explorer (GPGEX). The fund will pursue long-term capital appreciation through investments in a global portfolio of micro- to mid-cap stocks. Because of its focus on tiny names, the adviser has set a strategy capacity of $35 million for the fund and will close it rather than compromise the ability to execute the strategy.

As a practical matter, Global Explorer pursues Global Reach’s strategy with a management twist. The fund has Continue reading →

Funds in Registration

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. This month brings 24 new products in the pipeline, most of which will launch in March 2022.

Including in the funds in registration are funds that are being converted from open-end funds to ETFs and those which have been purchased by new advisers, often with minor tweaks. Two funds in the latter camp which Continue reading →

Briefly Noted

By David Snowball

Updates

As part of Heartland Advisors’ succession plan, founder William (“Bill”) J. Nasgovitz intends to transfer a controlling interest in Heartland Advisors to Will Nasgovitz, the Chief Executive Officer of Heartland Advisors, in 2022. The elder Mr. Nasgovitz launched the firm, and the Heartland Value Fund, in 1984. The younger Mr. Nasgovitz joined the firm in 2006 and co-manages the Heartland Value and Mid Cap Value funds.

On the continuing theme of “rules are for the little people,” the Wall Street Journal reports

Sens. Pat Toomey (R., Pa.) and Cynthia Lummis (R., Wyo.) sit on the powerful Senate Banking Committee and have been advocates for Continue reading →

The Younger Defenders

By David Snowball

A handful of young funds, by luck or design, have managed the rare feat of peer beating returns since inception with risk-rated, risk-adjusted returns (MFO rating, Ulcer rating) and risk metrics (downside deviation, bear market deviation, down market deviation).

The US stock market is approaching the most extreme valuation levels of the past 150 years, at least as measured by Continue reading →

Life in the Jungle: Terrific at Two, Dead at Four

By David Snowball

Our last review of “the Terrific Twos” ran in January 2019. We highlighted 10 funds. Here’s what became of them.

Four of the ten were liquidated: Ladder Select Bond (LSBIX), which earned fours stars but never drew over $20 million; BlackRock Emerging Markets Equity Strategies (BEFAX) died in April 2020; WisdomTree Dynamic Long/Short US Equity (DYLS) was Continue reading →

Osterweis Growth and Income Fund (formerly Osterweis Strategic Investment Fund), (OSTVX)

By David Snowball 

At the time of publication, this fund was named  Osterweis Strategic Investment Fund.

Objective and strategy

The fund pursues the reassuring objective of long-term total returns and capital preservation. Osterweis starts with a strategic allocation that’s 50% equities and 50% bonds. In bull markets, they can increase the equity exposure to as high as 75%. In bear markets, they can drop it to as low as 25%. Their argument is that “Over long periods of time, we believe a static balanced allocation of 50% equities and 50% fixed income has the potential to provide investors with returns rivaling an equity-only portfolio but with less principal risk, lower volatility, and greater income” achieved through the compounding of reasonable gains and the avoidance of major losses.

Both equity and debt are largely unconstrained, that is, the managers can Continue reading →

Launch Alert: Brown Advisory Sustainable Small-Cap Core (BIAYX)

By David Snowball

On September 30, 2021, Brown Advisory launched their Sustainable Small-Cap Core Fund which is based on their Sustainable Small-Cap Core Strategy, which targets high-net-worth individuals and institutions, launched in July 2017. The goal is long-term capital appreciation. The strategy is to create a concentrated, ESG-screened “best ideas” portfolio populated by small-cap growth and value stocks.

Brown Advisory describes the strategy this way: Continue reading →

Emerging Markets Without China

By David Snowball

China has long been the driver of returns in the emerging markets, both because it is the largest emerging market and because the fortunes of other emerging economies are inextricably linked to China through trade, investment, and direct competition.

After a substantial correction which, at its worst, wiped $1.5 trillion in market cap off the books, China’s cheerleaders are speaking up. In August, BlackRock argued that China wasn’t really emerging and that investors should triple their exposure to Chinese equities. They then launched a mutual fund for Chinese investors, which Continue reading →

Elevator Talk: Scott Gates, Friess Small Cap Growth Fund (SCGNX)

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 Continue reading →

The Briefly Noted Omnibus

By David Snowball

Artisan Partners has filed to launch two new funds: Artisan Emerging Markets Debt Opportunities Fund and Artisan Global Unconstrained Fund. Artisan routinely interviews 10-20 management teams a year, folks interested in becoming partners. Their rule has always been, “only hire category-killers.” In this case, the assassins (or defectors, according to a colleague) in question, formerly managed Eaton Vance Global Macro Absolute Return Fund. That fund, curiously, didn’t appear to be killing anything but Continue reading →

Standpoint Multi-Asset Fund: Forcing Me to Reconsider

By David Snowball

I have a deep distrust of managed futures funds. The logic is simple: isolate asset classes that are uncorrelated, invest only in the uptrending assets, ignore (or short) the losing classes, and you get a long, smooth ride to prosperity.

The research behind them is so beautiful and compelling. Various backtests suggest that a managed futures strategy would have returned 13.5% annually for the period 1972-2010.  During that same period, the equity market would have returned Continue reading →

Red flags over China

By David Snowball

There is an ongoing debate about whether Chinese President Xi’s economic reforms fundamentally threaten the investment case for China (and, by extension, for the emerging markets universe which China dominates). The Economist warns that “China’s new reality is rife with danger” (10/2/2021):

His campaign is remarkable for its scope and ambition. It started to rumble in 2020, when officials blocked the initial public offering of Continue reading →

Elevator Talk: Amy Greer and Jennifer Klass, Baker McKenzie

By David Snowball

MFO’s Elevator Talks serve as a way of introducing you to smart people who (a) we’ve only recently met and (b) we’ve become convinced that you should hear from. In the usual course of events, that translates to a fund manager whose approach seems promising and intriguing but whom we’re still learning about (and from). Elevator Talks aren’t recommendations. They’re invitations: to hear from impressive folks, deepen your understanding of important issues and strategies.

In the normal course of things, we interview fund managers. Continue reading →