Category Archives: Mutual Fund Commentary

Trending Funds by Stage

By Charles Lynn Bolin

Mention of “trending funds” often invokes thoughts of investors pouring into the hottest fund and that is probably true to an extent. This article looks at stages of trends for funds. This is an evolving experiment based on data about trends, moving averages and money flows from MFO Premium. As someone nearing retirement, I own core funds that are buy and hold for extended periods. I also invest a portion to take advantage of the economic and investing environment. Investors should develop storylines of why they own funds such as low valuations, a declining dollar, inflation, and stimulus expectations, but should look for confirming trends before investing.

The first stage of trending funds is after a correction for funds that are starting to recover, which I designated as the Continue reading →

Briefly Noted

By David Snowball

Updates

Eric Heufner, president of Grandeur Peak Global, shares the sad news of the death on January 21, 2021, of one of his colleagues.

It is with great sadness that we announce the death of our dear friend and colleague, Keefer Babbitt. Keefer was not only a great partner and friend, he also set the bar extremely high as it relates to his work. His character, work ethic, depth of thought and the quality of his output were greatly admired by all of us at Grandeur Peak. Keefer joined Grandeur Peak in 2012 as one of our first interns, and over the past 8+ years he has been a true builder of our firm. He made an enormous difference here and he will be greatly missed.

Keefer’s current roles included co-managing the Global Contrarian Fund alongside Mark Madsen and Robert Gardiner, co-managing the Global Reach Fund with six other portfolio managers, contributing on our Industrials team, and of course first and foremost serving as a global research analyst. Given our unique team-based approach, we do not anticipate making any immediate changes to the portfolio management of either fund.

Continue reading →

January 1, 2021

By David Snowball

Farewell to 2020!

The three words that best describe it are as follows, and I quote: “Stink, stank, stunk!” (With thanks to the incomparable Thurl Ravenscroft, 1914-2005, who brought the song to life.)

Unwashed socks? Seasick crocodile? Dead tomato splotched with moldy purple spots? Three decker sauerkraut and toadstool sandwich with arsenic sauce? Got it, got it, got it!

It stunk.

But really, Continue reading →

Things I think I think, early 2021 version

By David Snowball

I’ve been pondering things at year’s end, from elections and intransigence to the possibilities of functional government and transcendence. I’m not at all (not even 1%) sure of what 2021 will bring, and yet I need to plan for it anyway.

So, here’s a sort of think-aloud experiment in which I just share what I’ve learned in the past couple of months and where it might (or might not) lead in the year ahead. I’ll divide the essay into two sections: “stakes in the ground” represent the Continue reading →

21st Century champions

By David Snowball

The second decade of the 21st century has just closed. The third decade promises turbulence in the near-term and disappointment in the longer term. A host of factors drives that pessimism. Interest rates are near-zero and likely to remain there, according to the chairman of the Fed, for years. That means that money market funds will return zero only if their sponsors waive all of their operating expenses. It also means that the long-term returns on US bonds may fall below zero because their advisers are not predisposed to offer their services for free. Investors, in response, are poured into equities and have done so using Continue reading →

As I Age

By Charles Lynn Bolin

I won’t grow up,
I don’t want to wear a tie.
Or a serious expression
In the middle of July.
And if it means I must prepare
To shoulder burdens with a worried air,
I’ll never grow up, never grow up, never grow up
Not me,
Not I,
Not me!

– Peter Pan

Several readers have asked that I expand on a comment I made about aging a few months ago. This is a hard article for me to write because it means looking at investing from a different perspective. The typical American works 30 to 50 years before retiring and must save enough to last another 20 to 30 years, or more. This means saving diligently and investing wisely while Continue reading →

Managers with some serious explaining to do

By David Snowball

There are about 7,000 mutual funds. Of those, 3,800 have been around for 20 years or more. Of these long-lived funds, over 1500 have more than a billion in assets.

You’d think “large and long-lived” were synonymous with “successful.” Not so much. A few of the funds have been consistently top-notch, and the vast majority have been miscellaneously mediocre.

But only twelve have managed to combine huge asset bases with decades of bottom-tier performance. They are

The Roll Call of the Wretched.

Continue reading →

Funds in Registration

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. Fund companies anxious to have a new fund up and running by December 31st need to have it in the hopper by the third week in October at the latest. This month brings a far more sedate pace of launches with 14 new products in the pipeline, most of which will launch in February.

That said, the new funds are being offered by some absolutely A-tier advisers, which might explain their willingness to launch at Continue reading →

Launch Alert: Towpath Technology

By David Snowball

On December 31, 2020, Oelschlager Investments launched the Towpath Technology Fund. The fund will be managed by Mark Oelschlager. The manager anticipates owning 25-40 tech stocks. The plan is to focus on firms with long-term, durable business advantages such as “barriers to entry, pricing power, network effects, limited competition, [or] lock-in effects.” His discipline is much more valuation-sensitive than tech managers generally pursue, and he focuses strongly on the durability of free cash flow metrics. This strategy is the same one the manager used at Continue reading →

Launch Alert: Wasatch Greater China

By David Snowball

On November 30, 2020, Wasatch Global Investors launched Wasatch Greater China Fund (WAGCX/WCCCX). The “Greater” part signals the inclusion of firms located in Hong Kong and Taiwan, as well as in the PRC proper. The fund will feature an all-cap portfolio of 35-50 names. This is Wasatch’s second country-specific fund, after the five-star Wasatch Emerging India Fund (WAINX), which launched Continue reading →

Briefly Noted

By David Snowball

Updates

Bill Gross must be very sad today. Mr. Gross has been involved in an ugly dispute with a neighbor. As part of that dispute, Mr. Gross played The Gilligan’s Island theme, loudly and continuously, night after night. The neighbor complained. In court. Mr. Gross’s partner, Amy Schwartz, testified to loving the “Gilligan’s Island” theme but denied playing it loud or Continue reading →

December 1, 2020

By David Snowball

Dear friends,

The waiting is, mostly, done. The American people have spoken, though I suspect that activists in both major political parties are disappointed and frustrated by what they heard. For better and worse, Republicans did not receive a second term in the White House. For better and worse, Democrats did not enjoy “the blue wave” that they anticipated.

And so we are left where we so often are: in a muddle. The control of the senate, once “the world’s greatest deliberative body” (reputedly President James Buchanan’s judgment), lies in two impending elections in Georgia. Politicians of all stripes woke on the morning of November 4th to ask the all-important question, “how’s our fund-raising for 2022 coming? Are we on track?” At least one candidate is openly mulling the timing of his announcement of his 2024 presidential bid. Miscellaneous state legislators continue to Continue reading →

Preparing for a new world

By David Snowball

The scariest line of the election season appeared on the front page of The Wall Street Journal:

The U.S. stock boom has its roots in tactics that fund managers, small savers and Robinhood traders alike have applied over the past decade:  Don’t hide from markets by hoarding cash.

The Dow Jones Industrial Average closed above 30000 on Tuesday for the first time, extending an eight-month rebound that has taken many analysts by surprise … The run has put the Dow up 62% from its March low, when the U.S. Federal Reserve ended a panic that wiped out trillions of dollars in investments by outlining a plan to counter the pandemic’s economic stress.

The market appears to be in a self-perpetuating upward spiral, defying the pandemic and accompanying economic woes. (“Behind Dow 30000: A Self-Perpetuating Upward Spiral,” Wall Street Journal, 11/25/2020, pg 1).

That sounds only Continue reading →

Enough…in the Coming Lost Decade

By Charles Lynn Bolin

How much is “enough” to retire when there are likely to be multiple decades of low returns due to high starting valuations with low yields and dividends?

  • Section 1 of this article summarizes the investment philosophies of John Bogle, Warren Buffett, Ed Easterling, Charles Ellis, Benjamin Graham, and Howard Marks.
  • Section 2 looks at the benefits of combining actively and passively managed funds to reduce risk.
  • Section 3 shows the impact of high valuations and inflation for over 120 years.
  • Section 4 covers stock and bond performance during secular bear markets with rising inflation and interest rates.
  • Section 5 looks at nearly two dozen lower risk funds for investors seeking “all-weather” funds or safer yield.
  • Section 6 provides estimates of “enough” for retirement in the coming decades.

Readers can skip to Continue reading →

Briefly Noted

By David Snowball

Updates

Guinness Atkinson’s groundbreaking OEF-to-ETF conversion is surging ahead. In early summer, GA filed a plan to convert two of their current funds – the four-star Dividend Builder GAINX and Alternative Energy GAAEX – directly into ETFs. Other firms have launched ETF clones of their funds, and a bunch of strategies that would normally have been launched as funds have instead followed the non-transparent, active ETF route. Guinness was the only firm bold enough to try a switchover mid-flight.

The conversions were slowed by “a thousand thoughtful questions and comments” from the SEC, according to president Jim Atkinson. In the latest round of comments, the agency has asked GA to begin incorporating concrete Continue reading →

November 1, 2020

By David Snowball

And now we wait.

I’m writing this less than 48 hours before the end of the most divisive and likely most consequential presidential election in a hundred or a hundred and fifty years. (It depends on your view of the sea change enacted in 1932 or the tumult of 1860.) I am exceptionally distracted by the unfolding events.

In general, I have faith that things will work out okay. People are, on the whole, sensible when not terrified. And, while many of our fellow citizens are terrified – in part because conditions in many parts of the country are unremittingly hard and, in part, because political parties have learned that it’s in their best interests to enflame our worst fears – we have an okay track record of tempering our fears with Continue reading →

Chuck Akre & the Future of Focus

By David Snowball

Chuck Akre is an iconic investor, the sort of guy whose very existence vexes the efficient market advocates. Some years ago, Mr. Akre managed FBR Focus. After a dispute with the parent company (they, incorrectly, didn’t think he was worth what they were paying him), Mr. Akre left to found his own adviser and launch his own fund.

Akre Focus (AKREX) launched on August 31, 2009. Against all conventional wisdom, it’s grown to nearly $14 billion and continues to generate exceptional absolute Continue reading →

The Rookie Roster

By David Snowball

Each month we chronicle the funds newly in registration with the SEC. You could think of them as akin to all of the players who declare their eligibility for the NFL draft each year. “Put me in, coach,” they cry. “I’m ready to play!”

Here’s the football math: each year, around 3500 players are eligible for the NFL draft. Two hundred fifty-four will actually get drafted. Of the drafted players and undrafted free agents, about a third make it to a training camp. By the calculations in Pro Football Reference, of those making the final roster, only 20% Continue reading →