Category Archives: Mutual Fund Commentary

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 →

Snowball’s Indolent Portfolio, 2023

By David Snowball

Someone will always be getting richer faster than you. This is not a tragedy.

I’ve heard Warren say a half a dozen times, “It’s not greed that drives the world, but envy.”

Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?

Charles Thomas Munger (1924-2023)

Each year I share Continue reading →

Devesh, “My friends think I’m (a little) crazy” 2023 portfolio review

By Devesh Shah

In this article, I would like to talk about how I am allocating my portfolio. I want to note that every single fund I have positively highlighted in my MFO articles is also one of my portfolio holdings. My money is where my mouth is, and you, the reader, get the good with the bad. Take what’s useful to you and throw away the rest.

Market background in Q4 2023

For 18 months, from Feb 2022 and Oct 2023, it was Continue reading →

Briefly Noted . . .

By TheShadow

Updates

Vanguard is introducing new and enhanced intergenerational wealth and legacy planning capabilities through a partnership with Vanilla, an innovative provider of digital estate planning tools and solutions. The offer was successfully piloted to a small group of eligible advised clients in Vanguard Personal Advisor Wealth Management over the past year and will Continue reading →

January 1, 2024

By David Snowball

Dear friends,

Welcome to the January issue of Mutual Fund Observer.

January was named after Janus, the tutelary deity of the year’s first month. As tutelary, he was guardian, patron, and protector. Absent from the Greek pantheon, Janus was the Roman god of beginnings, transitions, and endings. It was the “transitions” part that led Romans to place the two-faced god near entries and passageways, where he oversaw their comings and Continue reading →