Author Archives: TheShadow

About TheShadow

The Shadow here! Like Mark, I’m a long-time member of the MFO community. I’ve started over 2300 discussion threads, most focusing on developments in the fund industry. I am a personal investor that was introduced to mutual funds when I was young to fund my college education. As I have grown older, I have expanded my mutual funds holdings to a point where I probably have too many; however, this year they all did extremely well due to the overall performance of the market. I work in the financial industry regulating the consumer finance industry in my state. My hope for the months ahead is that I might share word of developments in the finance industry – the comings and goings, launches and liquidations, the fun and the follies – with you.

Briefly Noted

By TheShadow

Updates

Matthews Asia has named Sean Taylor as its incoming chief investment officer, taking over from Robert Horrocks at the start of next year. Taylor was CIO for Asia Pacific and head of emerging markets at DWS and will assume his new role at Matthews on January 1, 2024. Mr. Horrocks, who has been with Matthews Asia since 2008, will retain his portfolio management responsibilities, which include Matthews Asia Dividend and Matthews Asian Growth & Income.

Matthews hired a new CIO, Cooper Abbott, in the summer of 2022. Since then, the firm has undergone Continue reading →

Briefly Noted . . .

By TheShadow

One of the two managers at Akre Focus (AKREX), Chris Cerrone, has resigned. Effective September 27, 2023, John Neff is listed as the sole manager of the consistently excellent, $13 billion large-growth fund. The fund has seen steady performance, but also steady outflows, since the retirement of founder Chuck Akre. Morningstar has placed the fund “under review,” which is certainly sensible and appropriate. That said, Mr. Neff has been co-managing the strategy since 2014. The portfolio holds fewer than 20 stocks, and the historic turnover ratio is 1%. The fund has trailed its large-growth peers on two occasions (2020 and 2023). In both cases, the market was narrow and frothy, and the fund produced entirely respectable absolute returns (20% and 10% YTD) for its investors. We do not believe that’s any immediate cause for concern.

Keith Long, co-founder Continue reading →

Briefly Noted . . .

By TheShadow

The AXS 1.25X NVDA Bear Daily ETF underwent a 1-5 reverse stock split on or about August 14.

The Champlain Strategic Focus Fund is in registration. The fund invests primarily in securities of mid- to large-capitalization companies. Annual fund expenses will be 1.10% for the advisor share class and 0.85% for the institutional share class. The fund will utilize several portfolio managers with Champlain Investment Partners, LLC.

The GMO U.S. Quality ETF is in registration.  Expenses have not Continue reading →

Briefly Noted . . .

By TheShadow

Updates

Our condolences to the family and friends of Robert B Bruce, co-portfolio manager of the Bruce Fund, who passed away on June 23. The Bruce Fund will continue to be managed by his son, R. Jeffrey Bruce. Morningstar rates the Bruce Fund four stars.

Stuart Rigby, one of the portfolio managers of the Grandeur Peak Emerging Markets Opportunities, Global Reach, and US Stalwarts Funds, has decided to Continue reading →

Briefly Noted…

By TheShadow

Updates

Fido’s conversion

Fidelity converted its “disruptive” funds to ETFs. They are Fidelity Disruptive Automation (FBOT), Fidelity Disruptive Communications (FDCF), Fidelity Disruptive Finance (FDFF), Fidelity Disruptive Medicine (FMED), and Fidelity Disruptive Technology (FDTX). As a group, they are not terribly compelling. They began trading this week. 

Next up: the Continue reading →

Briefly Noted . . .

By TheShadow

Jamie Cuellar, CFA, passed away unexpectedly and tragically on May 8. He was the co-portfolio manager of the Buffalo Small Cap Fund from 2015 and of the Buffalo Discovery Fund from April 2020. Our condolences to his family, friends, and co-workers.

Capital Group, parent of the American Funds and, with $2.6 trillion AUM, one of the world’s largest investment managers, has registered two exchange-traded funds, Capital Group Core Bond ETF and Capital Group Short Duration Municipal Income ETF. Management and operating expenses have not Continue reading →

Briefly Noted

By TheShadow

Updates

In a “less than meets the eye” kind of way, the headline is “ESG funds lose $5.2 billion in assets in 2023.” The story behind the story: the Republican temper tantrum had led to outflows from BlackRock, whose ESG Aware MSCI USA ETF alone dropped $6.4 billion. In a defensive reaction, BlackRock reduced the ESG allocation in its model portfolios, which Continue reading →

Briefly Noted…

By TheShadow

Updates

Vanguard launched its Short-Term Tax-Exempt Bond ETF on March 9th. The ETF will optimize tax efficiency for investors seeking to allocate to the shorter end of the municipal bond market. It predominantly invests in short-term investment grade municipal bonds and will track the S&P 0-7 Year National AMT-Free Municipal Bond Index. It has an expense ratio of Continue reading →

Briefly Noted

By TheShadow

Updates

Ariel Funds picks up a new team and two new strategies. Henry Mallari-D’Auria, previously the CIO of emerging markets value at AllianceBernstein, will join the firm in April. Four of his colleagues have moved with him, and they have plans to build the team out more. Ariel’s co-CEOs note that “a dedicated EM strategy became our next natural product extension.”

In addition, Ariel intends a most un-Ariel move in launching a global long/short strategy led by Micky Jagirdar, who is already the firm’s head of global equities.

Driehaus Funds has filed an SEC registration filing for Continue reading →

Briefly Noted

By TheShadow

Updates

The sad saga of Phaeacian Global Value and Phaeacian Accent International Value funds rolls on long after the funds’ liquidation. As MFO readers know, both started life as (entirely excellent) FPA funds. FPA and the managers negotiated a deal with London-based Polar Capital for the funds and their teams to be adopted by Polar under the Phaeacian brand. In principle, the deal made sense for both parties, with the funds receiving broader distribution and FPA receiving a revenue-sharing agreement and a chance to refocus on their core products.

In reality, the partnership Continue reading →

Briefly Noted . . .

By TheShadow

Disruptors disrupted: the suite of Fidelity Disruptive funds is being converted to ETFs in June 2023. 

The funds are approaching their three-year anniversary, but only one has reached to $100 million AUM threshold. Fidelity offers that the conversion might provide “lower net expenses, additional trading flexibility, increased portfolio holdings transparency, and the potential for enhanced tax Continue reading →

Briefly Noted . . .

By TheShadow

Bridgeway’s Omni Tax-Managed Small-Cap Value Fund will be converted into the Omni Small-Cap Value ETF. The conversion will require the approval of existing shareholders. If the conversion is approved, it is expected to take effect on or about during the first quarter of 2023.

Fidelity, likewise, is moving more funds into an ETF wrapper. Two and a half years ago, Fido launched a series of trendy funds which promises to find the disruptors, not just the innovators, and profit from them.

To date, the funds have gathered Continue reading →

Briefly Noted . . .

By TheShadow

Aristotle Capital Management is to buy Pacific Asset Management, the specialist credit manager with about $20 billion AUM from Pacific Life. Afterward completion, Aristotle will be renamed Aristotle Pacific Capital.

Lazard US Convertibles Portfolio is in registration. The principal investment strategy is to invest in convertible securities economically tied to the United States. The portfolio managers/analysts will be Arnaud Brillois, Andrew Raab, Emmanuel Naar, and Zoe Chen. Open share total annual portfolio operating Continue reading →

Briefly Noted

By TheShadow

Not a major surprise, but there are a load of active ETFs in the pipeline.  Fidelity has launched Fidelity Tactical Bond ETF. John Hancock will have John Hancock International High Dividend, and Hartford is launched Hartford Sustainable Income, managed by a team from Wellington. iShares is launched an active U.S. Consumer Focused ETF, but such funds have always felt a bit gimmicky to us. Finally, Neuberger Berman Commodity Strategy Fund is becoming an ETF on or about October 21, 2022.

Akre ups international flexibility. Effective November 28, 2022, Continue reading →

Briefly Noted . . .

By TheShadow

Fallen angels: “The Securities and Exchange Commission today charged Atlanta-based Angel Oak Capital Advisors, LLC and its portfolio manager Ashish Negandhi for misleading investors about the firm’s fix-and-flip loan securitization’s delinquency rates. Angel Oak and Negandhi have agreed to settle charges and pay a penalty of $1.75 million and $75,000, respectively” (sec.gov, 8/10/22). Angel Oak advises a series of mutual funds whose activities, so far as we can tell, are completely unaffected by the SEC action. That said, Continue reading →

Briefly Noted . . .

By TheShadow

ARK Transparency ETF will liquidate on or about July 26. Poster/Contributor Yogibear noted that the official reason for the closure was due to the Transparency Index provider, Transparency Global, discontinuing the index utilized for the ETF. ARKK was unable to find a replacement. The ETF was launched approximately eight months ago when it commenced operations on December 8, 2021.

Champlain Emerging Markets Fund was closed to Continue reading →

Briefly Noted…

By TheShadow

Note to our readers:

On June 3, AlphaCentric and Garrison Point, investment advisor and sub-advisor respectively, to the AlphaCentric Income Opportunities Fund, were fined by the SEC for failing to implement its compliance policies and procedures concerning its role in valuing fund securities. From May 2015 through July 2015 and from January 2017 through February 2019, AlphaCentric failed to implement policies requiring it to assist with the process of determining the fair value of the fund holdings. According to the order, Continue reading →

Briefly Noted…

By TheShadow

Allianz Global Investors admitted to one count of criminal securities fraud in relation to its Structured Alpha Funds. This admittance resulted in a 10-year ban on Allianz advising on any mutual funds in the U.S.

AllianzGI has agreed to pay more than $1 billion in penalties and $5 billion in compensation to investors.  The Structured Alpha funds suffered huge losses during the Covid episode in March 2020.  The funds offered complex hedge strategies that were intended to Continue reading →

Briefly Noted . . .

By TheShadow

Artisan Partners launched its Artisan Global Unconstrained and Artisan Emerging Markets Debt Opportunities Funds on April 7. Michael Cirami will be the Lead Portfolio Manager while Sarah Orvin will serve as the Portfolio Manager of both funds. Both Mr. Cirami and Ms. Orvin previously worked for Eaton Vance Management.

Charles Schwab has filed filings to offer Direct indexing, which involves direct ownership of securities and thus can involve a greater level of tax management, sometime in April. Schwab’s direct indexing will have an account minimum of $100,000 and will charge a fee of 40 basis points. Initially, investors will have access to Continue reading →

Briefly Noted . . .

By TheShadow

DoubleLine Capital, Jeffrey Gundlach’s $137bn asset management firm, has received approval from the Securities and Exchange Commission (SEC) to launch two active non-transparent ETFs.

The company initially filed for the strategies – the DoubleLine Opportunistic Bond ETF and the DoubleLine Shiller CAPE US Equities ETF – in October 2021. The funds have expense ratios of 0.5% and 0.65%, respectively.

The funds will not disclose assets Continue reading →