Category Archives: Mutual Fund Commentary

May 1, 2024

By David Snowball

Dear friends,

Welcome to the May issue of Mutual Fund Observer. We’re glad you’re here.

May marks the end of my 40th year of teaching at Augustana College. (And no, they’re not free of me yet. I’m back again in the fall!) It’s an amazing place that has grown a lot over the course of my career. We were founded in 1860 by educated immigrant parents who were anxious to preserve the traditions of their (Scandinavian) homelands while Continue reading →

The Quality Anomaly

By David Snowball

There’s so much we can’t explain:

What’s the universe made of? (Hint: it doesn’t actually seem to be “matter and energy”)

What lives in the ocean’s “twilight zone”? (“It’s remote. It’s deep. It’s dark. It’s elusive. It’s temperamental,” according to Woods Hole … perhaps the most mysterious and vital space on the planet)

What killed Venus? (The planet, not the goddess. Best guess is that it Continue reading →

Briefly Noted

By TheShadow

Fidelity Investments is planning to charge a $100 servicing fee when placing buy orders on exchange-traded funds issued by nine firms. The new servicing charge, which may be imposed on ETFs issued by Simplify Asset Management, AXS Investments, Day Hagan, Sterling Capital, Cambiar, Regents Park, Rayliant, Adaptive, and Running Oak, is set to take effect on June 3. The new fee will apply to ETFs that do not participate in a maintenance arrangement with Fidelity.  Fidelity may update its “Surcharge-Eligible ETF” list again.    

Poster Rforno noted that Calamos Investments LLC announced the launch of 12 structured protection exchange-traded funds which seek to provide 100% protection and equity upside to a predetermined cap over one-year outcome periods (before fees and expenses). The ETFs are Continue reading →

April 1, 2024

By David Snowball

Dear friends,

It’s April. I spent much of the Easter weekend wearing a t-shirt out to work in the gardens. It was glorious. Today, the forecast is for hail. Tomorrow? Snow.

Next week? Oh, I don’t know … dragon fire?

And still, it behooves us to be grateful for what we have. The world’s most corrosive force is not greed. It’s envy, which is driven by the sense that what we have just isn’t enough, and bitterness that others have more. That’s a theme that Charlie Munger reflected on repeatedly: “I have conquered envy in my own life. I don’t Continue reading →

Funds For Long-Term Tax-Efficient Investment (VTCLX, DGRW)

By Charles Lynn Bolin

It’s a good practice to take a thorough review annually of investment performance including fees and taxes. A dual-income household may accumulate a half dozen or more accounts because of tax characteristics, ownership, and goals. A good way to start is to list the accounts in order of planned withdrawals. The next step is to make sure that each account has the appropriate amount of risk and that the assets within are tax-efficient for the type of account. I am in the process of converting Traditional IRAs to Roth IRAs and the conversion is taxed as ordinary income. Municipal Bonds are included in Modified Adjusted Gross Income and may impact Continue reading →

Options Based Funds – a deeper dive

By Devesh Shah

Introduction:

In the March 2024 MFO, I introduced the two main developments in Options in recent years.

Zero-Day Options and Options-Based Funds. We learnt about the history of options, the market players involved and benefitting from Options, and started getting deeper into the Funds.

In April MFO, through the 2nd and 3rd articles in the series, I hope to Continue reading →

The Options Conundrum: Fund Comparisons, Performance, and Risk

By Devesh Shah

Having looked at the qualitative rationale for why options-based funds are offered by fund managers and sought by some investors, it behooves us to quantitatively analyze options funds’ performance. There is no ONE BENCHMARK that can be used to compare ALL the options funds. That may be a good thing. It’s made me think of what a good way to create a customized benchmark for each fund might look like. The benefit of keeping things focused on the small picture is we can look at one fund at a time, in detail, without drawing too Continue reading →

Mystery Solved: Fidelity Actively Managed ETFs (FMIL >= FFLC)

By Charles Lynn Bolin

I wrote Outperforming Actively Managed ETFs last month in the Mutual Fund Observer Newsletter and described Fidelity New Millenium Fund (FMIL) in my “Short List of Great Owl Funds”, but before the newsletter was published, FMIL just up and disappeared! Several members brought it up in the Discussion Board – FMIL Confusion. Fortunately, Charles Boccadoro has solved the mystery by finding “Q&A: Fidelity to Introduce Fundamental Active ETF Suite”.

Fidelity New Millennium ETF (FMIL) has gotten Continue reading →

March 1, 2024

By David Snowball

Dear friends,

In like a lion, out like a lamb? The Total Stock Market Index has risen 12% in the past three months, as has the S&P 500. Nvidia stock is up 76% in the same period while semiconductor stocks inched up … 48%.

The thermometer in Davenport today topped 76 degrees, just a bit warm for a late winter day. We heard that participants in the March 1st Polar Plunges at locations across the upper Midwest had to be Continue reading →

We breathe rarified air

By David Snowball

As we go to press, the S&P 500 is at its highest level in history: 5137. It set a record by passing 5000 for the first time on February 12, then another record high of 5100 two weeks later.

In reality, of course, the S&P is not rocketing upward. The S&P 7-to-10 is, with the other 490-493 stocks as an afterthought. The top 10 stocks contributed 93% of the index’s 2023 gains. Goldman Sachs declares that the “S&P 500 index is more concentrated than it has ever been,” while Amundi, Europe’s largest Continue reading →

Outperforming Actively Managed ETFs

By Charles Lynn Bolin

David Snowball wrote The Rise of the Active ETFs in the July 2019 Mutual Fund Observer newsletter describing actively managed exchange-traded funds as:

“Active ETFs are a sort of hybrid between more traditional ETFs and actively managed mutual funds. Like traditional ETFs, they trade on the secondary market which means that the advisor doesn’t need to keep cash on hand in order to meet day-to-day withdrawal needs. Some of the expenses traditionally borne by the advisor either don’t exist (ETFs have fewer shareholder reports than, by law, mutual funds do) or are shifted to the brokerage firm. They also offer a structural tax advantage: shareholders aren’t responsible for the yearly tax consequences (and record-keeping) of the manager’s moves; shareholders are taxed only when they sell their shares.”

Continue reading →

Briefly Noted

By TheShadow

Updates

Beware of big promises! Several articles have been written recently about BOXX ETF. Alpha Architect 1-3 Month Box ETF which tries to outperform an ultra-cheap vanilla ETF by using an option swap strategy. In theory, the game will allow investors to pay the long-term capital gain rate on their games rather than the ordinary income rate.

Here’s the advisor’s description of their Continue reading →

February 2024

By David Snowball

Dear friends,

February is a fraught month, historically. For Romans, it once did not exist. And then it did, as the last month of the year, with the new year beginning when the crops were first sewn and all eyes looked to the future. Februalia, the festival of purification, was the last chance to put the misdeeds of the past behind us and to be prepared to build a future upon a solid foundation.

It’s also the month in which Augustana launches its Spring semester; as I ponder the snow piles on campus, I could imagine a more Continue reading →

No, The 60/40 Portfolio Is Not Dead

By Charles Lynn Bolin

The reported death of the 60/40 portfolio is premature. It did suffer some serious illness as the stock market fell and interest rates rose last year. I help family and friends work with Financial Advisors to set up managed portfolios of mutual funds and exchange traded funds at Edward Jones, Fidelity, and Vanguard. Jeff DeMaso from The Independent Vanguard Advisor was kind enough to provide a Moderate Portfolio for this article. In this article, I am describing Continue reading →

Financial Discoveries: 10 Cool Things I Learned in January

By David Snowball

College professors are, quintessentially, learning machines. Give us 15 minutes of peace, and we’ll sink happily into piles of data, stacks of books, beckoning journal articles, or quiet processing.

And the reality of the matter is that almost no one gives anyone 15 minutes of peace these days.

Why 15 minutes? Read Mihaly Csikszentmihalyi, Flow: The Psychology of Optimal Experience (2008). Flow is a state of complete immersion in a project, and it seems to take us 15 minutes or so to get in the flow. Every “do you have just a minute?” kicks us back out and costs us another 15 minutes to get back.

Augustana’s January Term is Continue reading →

Patriotic Millionaires and the Uncertainty of Taxes

By Charles Lynn Bolin

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.

Benjamin Franklin, in a letter to Jean-Baptiste Le Roy, 1789

I read  Tax the Rich!: How Lies, Loopholes, and Lobbyists Make the Rich Even Richer by Morris Pearl and Erica Payne at the Patriot Millionaires. They are a Continue reading →