Category Archives: Mutual Fund Commentary

September 1, 2023

By David Snowball

Dear friends,

Welcome to the end of the summer. And to the beginning of … the weakest month of the year for the stock market, with an average monthly loss of about 0.7%. And the threshold of the most volatile month of the year, October, which sees an intramonth movement of 8.3%; that is, since 1928, the record says that your portfolio will bounce 8.3% in October (but only 5.2% in February). My inbox overflows with apocalyptic forecasts and also of celebrations of The New Bull. Recognizing that it’s all bull of a sort, I move on.

Augustana welcomes the largest first-year class in its 163-year history, materially (and disconcertingly) fed by the Augustana Possible scholarships that Continue reading →

In Conversation with Rakesh Bordia, Portfolio Manager of the Pzena Emerging Markets Value Fund (PZIEX/PZVEX)

By Devesh Shah

Rakesh Bordia co-manages Pzena Emerging Markets Value Fund (“the fund”) with tenured co-managers Caroline Cai, Allison Fisch, and (recently added) Akhil Subramanian. The strategy has approximately $1.35 billion under management and has been around just since 2014. Investing in emerging markets has been no cakewalk for this window. The passive Vanguard FTSE Emerging Markets ETF (VWO), over the past 15 years, has earned just south of 3% annualized.

Pzena EM Value Fund has earned just north of 4% a year since its inception. The interesting Continue reading →

Evaluating Tax-Exempt Funds

By Charles Lynn Bolin

With yields at high levels and inflation falling, I sold a poor-performing stock to buy two Tax-Exempt bond funds. In this article, I look at municipal money market and bond funds for tax-efficient accounts. I began this search by looking at funds that are available at Fidelity or Vanguard with no transaction fees. I further based the selection on both longer and shorter performance relative to peers, Fund Family Rating, Fidelity Fund Picks, and Morningstar Ratings among other factors.

This article is 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 →

August 2023

By David Snowball

Dear friends,

Thanks so much for your patience. Chip and I spent a couple of weeks in the Scottish Highlands and Shetland Islands, and we knew in advance that that would slightly delay our August launch. Little did we understand the depth of Scottish generosity, as our hosts shared a case of COVID with us as we left the country. (It felt just like 2021 again!) The illness left us completely drained and endlessly exhausted, respectively. But we’ve now rallied and are delighted to share August with you. Continue reading →

The Unfortunate Manager, the Ill-timed Bus, and You

By David Snowball

On June 23, 2023, Robert B. Bruce (1931-2023) passed away. It diminishes a rich life and generous soul to describe him merely as “one of the portfolio managers of the Bruce Fund.” A Wisconsin graduate, he had a long-time friendship with Ab Nicholas, another renowned investor, and namesake of the Nicholas Fund, with whom he created an endowment for Wisconsin athletics. His obituary celebrates “a model of hard work, generosity, and unpretentious success” who passed away “in the embrace of his family.” From 1965-1972, Bob helped manage the Mathers Fund (MATRX) to phenomenal success, then set out on his own in 1972. He eventually purchased a small mutual fund in 1983, brought on his eldest son, Jeff, as partner and co-manager, and crafted a 40-year record of distinction and success. Continue reading →

Okay, perhaps a Third Cheer as a Veteran Manager Returns to the Field

By David Snowball

(Original essay from FundAlarm, Jan. 2010, revised August 2023)

Have you ever wondered what it would be like to win The Jackpot? The Big One. The one that pays tens of millions? Mike Fasciano knows, and based on his experience, you might want to steer clear of the opportunity. I’ve followed Mike’s career for 25 years now – ever since the days when I maintained “The List of Funds for Small Investors” for the old Brill/Mutual Funds Interactive site, one of the most prominent and well-respected online communities of mutual fund investors in the 1990s. It was a collection of good no-load funds that an investor with fifty bucks and a bit of discipline could get into. Early on, something called Fasciano Fund (FASCX) became a centerpiece of the “small core” fund grouping. Tiny but mighty, it posted a series of strong, steady performances. The December relaunch of Fasciano’s fund gave me an excuse to call and speak with him at his Chicago office.

I’ll divide the story into four sections.

Act One: Small but Mighty. Fasciano launched his fund in August 1987 with a million dollars raised by friends and family. His plan was to invest in small companies that shared several important characteristics: they were well-managed, they generated substantial free cash flow, and they avoided going deeply into debt. That combination meant that the companies could finance their own growth with their own money – which cuts way back on the silly empire-building that occurs when you’re using someone else’s money — and it decoupled the firms’ fate from the whims of banks and bonds. The fund grew slowly and steadily over its first decade, posting consistently strong returns with consistently below-market risks. By 1997, the fund held a modest $56 million in assets. And then he won the damned lottery.

Act Two: The Perils of Prosperity. Leah Modigliani, strategist at Morgan Stanley, is the co-creator (with her Nobel prize-winning grandfather) of the M-squared metric, which allows for a more accurate assessment of risk-adjusted investment performance. In late 1998, she completed a study of 82 small cap funds. That study, which was picked up by The Wall Street Journal, named Fasciano Fund as the decade’s best small cap fund. Modigliani found that Fasciano Fund produced an average return of 17.6% per year over the previous ten years, compared with 11.2% for the Russell 2000 Index. Even without the risk adjustment, Fasciano outpaced 95% of his peers over the decade. Two months later, Money magazine published “Six Funds You Need Now,” which concluded, “few managers have been more adept at weighing risk and reward than Michael Fasciano.”

All of which opened the floodgates. Mr. Fasciano reports that by mid-1999, he had $450 million under management. And that half of that money then “left as fast as it came.” That rush in and out corresponded with a market increasingly frothy and hostile to conservative investing. Fasciano had friends at Neuberger-Berman, then a storied no-load fund firm and investment advisor founded in the 1930s. It was, he reports, “a place with a wonderful culture and history” where the legendary Roy Neuberger still dropped by from time to time.

In March 2001, he became an employee of Neuberger, and Fasciano Fund became Neuberger-Berman Fasciano. At peak, he was managing about $2 billion in assets. That happy partnership was disrupted by two developments that no one could foresee:

  1. Careful” stopped working as well as it had. Fasciano’s discipline led him to companies that did not borrow wildly, did not attract venture capitalists, and did not celebrate debt. The easy availability of money in the 2000s made that discipline (temporarily) irrelevant, and the fund lagged its peers and benchmark. At the same time, it did maintain consistently low levels of risk, which were the hallmark of its first decade.
  2. Lehman Brothers bought Neuberger. Supported by the same debt-happy culture that affected small cap investing, Lehman acquired Neuberger in 2003, bringing with it sales loads and a trader’s mindset. Funds kept flowing in even as Lehman’s own finances, driven by its earlier embrace of sub-prime mortgages, deteriorated. In 2008, Lehman ordered a new set of expense reductions and ordered a wave of layoffs – 10% of the workforce – across its empire. Despite a top percentile performance in early 2008 and a $1.0 billion portfolio, Mr. Fasciano was “right-sized” with 1500 of his colleagues. By July, rumors were floating that Lehman was in line to be purchased by South Korean investors. By August, NB-Fasciano was merged into NB Genesis amidst rumors that Lehman was trying to sell Neuberger to raise cash. A month later, Lehman itself filed for bankruptcy.

Intervallo. Mr. Fasciano had no doubt about his next steps following his separation from Neuberger Berman. He was going back into the fund business as an independent and back to the discipline of building his fund one position – and one new investor – at a time. He filed registration papers with the SEC for FascianoFunds Small Cap. Then, as the market downturn morphed into a blind panic, decided to stay on the sidelines a bit. In the following year, he “did some things to remind me of life beyond small cap stocks.” He took up the discipline of black-and-white photography and embraced the need to spend a lot of time seeing the different grays that lie between those two poles. He took Italian language immersion training and achieved a B-2 level of proficiency (“Can interact with a degree of fluency and spontaneity that makes regular interaction with native speakers quite possible without strain for either party” – a level I haven’t yet achieved even in English), which was followed by two months spent visiting his family’s native land.

Act Three: Renaissance. On December 22, 2009, Mike returned to the field with the launch of Aston/Fasciano Small Cap (AFASX). He counted on the Aston organization to provide him with essential sales and back-office support so that he could concentrate on the portfolio itself. Aston’s recent acquisition by AMG – the Affiliated Managers Group – buoyed his spirit still further since AMG had a great record of nurturing and supporting its affiliated fund families (think “Third Avenue Value”) and had the financial heft to make important contributions to the funds.

And so he began again, “rebuilding relationships with individual investors” and “sticking with the discipline” of buying the stocks of well-managed, fiscally-responsible companies in pursuit of “consistently good” – if rarely spectacular – results for the folks who had entrusted their investments to him. In some ways, he’s a million miles away from the 1987 start-up with its 20 investors. In some ways, he’s come home again.

The Curtain Falls. Michael Fasciano decided in October 2010 to liquidate the new Aston/Fasciano SmallCap Fund (AFASX). Mike explained it as a matter of simple economics: despite respectable returns in its first three-quarters of operation, Aston was able to attract very little interest in the fund. Under the terms of his operating agreement, Mike had to underwrite half the cost of operating AFASX. Facing a substantial capital outflow and no evidence that assets would be growing quickly, he made the sensible, sad, and painful decision to pull the plug. The fund ends its short life having made a profit for its investors, a continuation of a quarter-century tradition of which Mike is justifiably proud.

Exactly one year after launch, having drawn just over $2 million in assets and burdened by a 15% expense ratio, Aston/Fasciano was liquidated. Since then, Michael has managed Fasciano Associates LLC from his home in lovely Lake Forest, Illinois, and has mostly kept out of the public eye.

Life is, indeed, a work in progress.

Looking Ahead with Vanguard

By Charles Lynn Bolin

Vanguard’s clients have grown from about 20 million with $3.8 billion in assets in 2016 to 30 million now with nearly $8 billion in assets. Vanguard is the world’s largest mutual fund company with more market share of mutual funds than the next three competitors combined. For this article, I read Inside Vanguard: Leadership Secrets from the Company That Continues to Rewrite the Rules of the Investing Business by Charles D. Ellis, a longtime director of Vanguard. I want to know Continue reading →

In Conversation with Scott Barbee, Portfolio Manager at Aegis Value Fund (AVALX)

By Devesh Shah

“Small value” is one of the market’s most inefficiently priced corners, and it has long been the home of famously successful and iconoclastic investors, from Joel Tillinghast with his love of low-priced stocks to Chuck Royce, who obsessed with tiny blue chip companies. So here’s an easy question:

Over the past quarter century, what has been the most successful small value fund you could have bought?

Continue reading →

Your Word of the Week: Greenhushing

By David Snowball

“Greenhushing” is greenwashing’s psychotic twin. “Greenwashing” is the practice of pretending to care about the environment; in fund terms, it occurs when marketers jam an inconsequential, mealy-mouthed sentence into a fund’s prospectus (“will consider ESG factors in all portfolio decisions to the extent they reflect financially material concerns”) and then marketing them as a sign of 21st-century sensibilities, notwithstanding the fund’s extensive coal holdings. DWS is in the spotlight currently as it tries to resolve charges from both the US SEC and German investigators that arose from claims by their former sustainability chief that the investor “made false statements” about sustainability actions. Continue reading →

In conversation with Andrew Foster @ Seafarer Funds (SIGIX & SIVLX) : On Emerging Markets

By Devesh Shah

Introduction: Trouble in the Emerging Market Equities asset class

Emerging Market Equities (EM Eq), as tracked by the iShares MSCI Emerging Market ETF, are up almost 10% this year. That would generally be welcome news for the ignored asset class. But the news is not good enough. I have the distinct sense that investors of multiple stripes are “giving up” on EM Eq. There isn’t a wholesale liquidation as much as the flow of money in EM has slowed down. The long-held conviction that EM Eq is an asset class where one has to be involved has now Continue reading →

Catching Up with Amit Wadhwaney @ The Moerus Worldwide Value Fund

By Devesh Shah

Our profile of Moerus Worldwide Value ended with the note, “Moerus offers a rare and intriguing opportunity to invest alongside (in another of legendary value investor Marty. Whitman’s phrases) a distinguished ‘aggressive conservative investor.’” In the years since that profile first appeared, Moerus has posted top tier returns for the past one-, three- and five-year periods. After rising 6.4% last year (2022), the fund is up another 20.6% through July 30, 2023 which about doubles the returns Continue reading →

Launch Alert: RiverPark Next Century Growth Fund

By David Snowball

On June 30, 2023, RiverPark Funds launched the RiverPark/Next Century Growth Fund (RPNCX/RPNIX) in collaboration with Next Century Growth Investors, LLC. The Fund’s stated objective is to seek long-term capital appreciation by investing primarily in small-capitalization U.S. equity securities.  NCG was founded in 1998, is headquartered a bit northwest of the Twin Cities in Plymouth, Minnesota, and manages $1 billion in assets. About 40% of those assets are Continue reading →

Briefly Noted . . .

By TheShadow


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 →

Battle of the Titans for Portfolio Management – Fidelity vs Vanguard

By Charles Lynn Bolin

Asset Manager Titans Fidelity and Vanguard have options for portfolio management that vary allocations across asset classes over time which include assessments of long-term market trends. Fidelity has the Business Cycle Approach while Vanguard has the time-varying-asset approach based on the Vanguard Capital Markets Model (VCMM). In this article, I briefly describe Continue reading →

Fire-and-Forget Gone Wrong: The Rise of GoodHaven Fund

By David Snowball

In the military realm, “fire and forget” designates a weapon that you don’t need to think about once it’s been launched. In investing, “fire and forget” could be used to describe several sorts of mistakes centering on our impulse to look away once we’ve made a decision. One of those mistakes is to buy a fund (presumably for a good reason) then sell it (presumably for a good reason) and then never re-examine your decision.

Managers – both corporate and fund – make Continue reading →

Is Bigger Better?

By Charles Lynn Bolin

I have often heard that smaller funds are able to outperform larger ones because they can be nimbler. This article started as a search for the best performing “core” funds over the past fifteen years, but I started over several times as I challenged my own search criteria to select only large funds. My assumption was that success builds upon success and investors invest more in funds that are doing Continue reading →

Briefly Noted…

By TheShadow


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 →