Category Archives: Mutual Fund Commentary

February 1, 2020

By David Snowball

Dear friends,

Focus, people! Focus!

It’s never wise to focus on just a single trading day, especially one like the last day of January 2020:

Goodness, no. That will surely lead you to all sorts of bad decisions: selling your portfolio, readying Yahoo Finance, rending your garments, drinking a Keystone (or a Natty Bo, a Natty Lite, a Genny Cream…).

God forfend.

One alternative is to focus on stuff that Continue reading →

Rule #2: Know the Short and Long Term Investment Environment

By Charles Lynn Bolin

While writing this article, I am reminded of Alan Greenspan’s comment about “irrational exuberance” in 1996 and Ben Bernanke coining the phrase “global savings glut” in 2005. Roughly three years later we had the bursting of the Technology Bubble and the Housing Crisis. We now have inflated asset prices due to nearly of decade of “Quantitative Easing”. The CNN Fear and Greed Index is a Continue reading →

Biggest Bang for your Buck

By David Snowball

20 Equity funds with the best capture ratios over the entire market cycle

Capture ratio is a sort of “bang for your buck” summary. It’s calculated by dividing a fund’s upside capture (a fund that typically rises 1.1% when the market rises 1% has an upside capture of 1.10) by its downside capture (a fund that typically falls 1.1% when the market falls 1% has a downside capture of 1.10). Capture ratios greater than 1.0 reflect funds that produce more gains than losses; all other things being equal, high capture ratio funds are offering you the greatest reward for every unit of risk you’ve been subjected to.

Capture ratios even the playing field for cautious and aggressive investors. A cautious investor might look for a fund with a downside capture of no more than 0.80. Given that constraint, anything above Continue reading →

Briefly Noted

By David Snowball


Effective December 31, 2019, founder Bill Nasgovitz resigned as president of the Heartland Funds and retired from its Board of Directors. He was succeeded, on January 1, 2020, by his son Will.

On December 31, 2019, founder James Oelschlager and his wife Vanita, the owners of Oak Associates, completed the transaction to sell substantially all of their ownership interest to a group led by members of their management team

A quick congratulations to Dennis Baran for being sharp-eyed and active. In December, our Elevator Talk focused on Joe Shaposhnik of the entirely-excellent TCW New America Premier Equities (TGUSX). Dennis, the author of several fine fund profiles for us, was intrigued by what he read, investigated and discovered that while Continue reading →

January 1, 2020

By David Snowball

Dear friends,

Welcome to the New Year. May it be blessed and joyful, full of mirth and mischief (really, what’s life without a bit of mischief?) for us all.

As I finish this essay on New Year’s Eve Day, the stock market is handing out returns with the enthusiasm (and responsibility) of a politician handing out tax cuts or a central banker handing out liquidity boosts. The Vanguard Total Stock Market Index (VTSMX) stands to end the year with a 30% gain.

Heck, it was almost impossible Continue reading →

“We’re here because you’re looking for the best of the best of the best, sir!”

By David Snowball

When I first started writing regularly about funds and investing, it was as an analyst for FundAlarm, a site whose publisher proclaimed

Our view of the mutual fund industry is slightly off-center. We help you decide when it’s time to sell a fund, instead of when it’s time to buy. The mutual fund industry is full of broken promises, arrogance, greed, hypocrisy — the list goes on. We try to shine a light in the darker corners, and poke holes in balloons that could use some poking.

In honoring that heritage, we routinely Continue reading →

In celebration of Ted Didesch (1937-2019)

By David Snowball

On 9 December 2019, the longest-tenured member of the MFO Discussion Board passed away. Theodore J. Didesch, universally known as “Ted” though he dearly wished for the sobriquet “The Linkster,” died of congestive heart failure.

We mourn his passing even as we celebrate his life. I’d like to share a few words about Ted, interspersed with the comments left by other members of our community on a memorial thread.

FundAlarm launched its “moderated Bulletin Board” in 1998. Ted arrived Continue reading →

Vanguard – I can get it for you retail!

By Ira Artman

By Ira Artman, December 2019

Do we pay attention to the competitive environment? Absolutely. Are we reactive to what one competitor does? Absolutely not…

Investors always have to ask themselves when they see an offering like this [zero fee expense ratio mutual funds], ‘What’s the catch?”‘ The question becomes what else are investors going to be charged in other products? … Continue reading →

Launch Alert: Harbor Robeco US Conservative Equities

By David Snowball

On December 2, 2009, Harbor Funds launched six new offerings, including four overtly “conservative equities” funds. Those funds are:

  • Harbor Robeco US Conservative Equities
  • Harbor Robeco International Conservative Equities
  • Harbor Robeco Global Conservative Equities
  • Harbor Robeco EM Conservative Equities

All four are being advised by a team from Continue reading →

Briefly Noted

By David Snowball


Seafarer thrills! Russ Kinnel, anyway. Russ’s December 30thThe Thrilling 34” article sought to create “a short list of outstanding funds accessible to individual investors.” The plan was to screen for the more important investment factors, “and let them do the weeding for me.”  They are

  • Expense ratio in the category’s cheapest quintile.
  • Manager investment of more than $1 million in the fund.
  • Morningstar Risk rating below the High level.
  • Morningstar Analyst Rating of Bronze or higher.
  • Parent rating better than average/neutral.
  • Returns above the fund’s benchmark for a minimum of five years.
  • Must be a share class accessible to individual investors

On a list dominated by Continue reading →

December 1, 2019

By David Snowball

Dear friends,

Welcome to the last 2019 issue of Mutual Fund Observer. Thanks for being here.

There’s rather a lot going on with this month’s issue whose theme might be “get some perspective while it’s still possible.” We’ll talk a bit about preparing for less hospitable markets. Vanguard’s Total Stock Market Index is up 27% YTD without a notable stumble along the way; it simply doesn’t get more hospitable. Since the economy, earnings and CPI didn’t grow by anywhere near that much, most of the gain comes from “multiple expansion,” the willingness of investors to pay more today than they did yesterday for the same thing. Vanguard itself is not Continue reading →

MFO’s Portfolio Pruning Primer

By David Snowball

We’re near year’s end, decade’s end, and quite possibly the bull market’s end and the economic expansion’s end. It’s been easy to be a bad investor for the past 10 years: the market’s relentless rise, fueled by enormous amounts of fiscal (hello, trillion-dollar deficits!) and monetary (hello, negative real interest rates!) stimulus, had made it likely that even a badly constructed portfolio booked acceptable – perhaps even double-digit – returns.

Do not bet your future on a repeat of that happy pattern.

The Observer’s core beliefs are (1) valuations Continue reading →

Liquidity Risks and Warnings

By David Snowball

What’s the worst that could happen? Managers’ own words on liquidity risks

Liquidity seems like an awfully esoteric concern, something akin to “coverage ratios” or “yield to call calculations.” In general, it feels like background noise.

Your fund managers disagree. New research estimates that 50% of high-yield funds and, more importantly, 15% of all fixed-income funds are vulnerable to a liquidity crunch. To understand what that means, you first need to understand that “liquidity” means. If you need to polish up your understanding of the term – or your ability to explain it to clients – start with the section entitled What’s Liquidity? If you’re rock solid on the concept, then jump ahead to Welcome to a Liquidity Crisis. Continue reading →

Business Cycle Portfolio Strategy

By Charles Lynn Bolin

The mere fact that a belief is common and comfortable does not make it true. Accepting such beliefs makes you part of “the herd,” which is good only when the herd is thriving. But when the herd faces serious threats from hostile changes in their environment, whether it’s drought or wolves, the last thing you want is to have your survival tied tightly to the herd’s.

That holds true in investing, as well as in pastures.

Two such errors animate this month’s essay. First, there appears to be Continue reading →

Small-Cap Dividend Options

By David Snowball

We’ve written in November and December about two excellent options for investors interested in small-cap funds with a dividend focus. Those are Crawford Small Cap Dividend (CDOFX) and North Star Dividend (NSDVX). What might interest you about such funds?

    1. Over the long term, small caps outperform large caps
    2. Over the long term, dividends bolster returns and dampen volatility
    3. There are hundreds of small stocks which pay dividends, but they’re mostly underfollowed and rarely included in passive ETFs / index funds

Readers who would like to Continue reading →

Launch Alert: Virtus KAR International Small-Mid Cap Fund

By David Snowball

On October 1, 2019, Virtus launched Virtus KAR International Small-Mid Cap Fund (VKIAX). The fund is managed by the KAR of the title: Kayne, Anderson Rudnick Investment Management, Virtus’s largest wholly-owned subsidiary. KAR, based in Los Angeles, manages rather more than $17 billion in assets. Across all of their portfolios, KAR emphasizes two core attributes Continue reading →

Funds in Reg

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, Funds in Registration gives you a peek into the new product pipeline. Most funds currently in registration will not become available until January, which is a really bad problem for those trying to market the funds. Because these funds won’t be trading on the first day of the year, they’re not eligible for “year-to-date” returns reports and reporting services such as Morningstar won’t give them “credit” for Continue reading →