Category Archives: Mutual Fund Commentary

Launch Alert: T. Rowe Price active ETFs

By David Snowball

On August 5, 2020, T. Rowe Price launched ETF versions of four of its largest actively-managed domestic equity funds.

Those are:

T. Rowe Price Blue Chip Growth ETF (TCHP)

  • The strategy targets mid- to large-cap, blue-chip companies that have the potential for above-average earnings growth and are well established. About 90% US stocks.
  • The strategy is managed by Larry Puglia, who has run it for 26 years.
  • The mutual fund version of the same name (TRBCX) is a five-star fund with a Silver analyst rating from Morningstar. It has $92 billion in assets.
  • The net expense ratio for the ETF is 0.57%, lower than the 0.69% charged by the fund.

Continue reading →

Launch Alert: Towpath Focus Fund

By David Snowball

On December 31, 2019, Oelschlager Investments launched the Towpath Focus Fund (TOWFX). The fund invests in 25-40 domestic stocks regardless of market capitalization. The fund is managed by Mark Oelschlager.

In general, we intend Launch Alerts to occur within six weeks of a fund’s launch. We entirely goofed up the Launch Alert for Towpath because we were looking for it under its preliminary name, Oelschlager Equity. As a result, we entirely missed the launch and the fund’s first eight months of existence. Regrets for the slip!

What do they do?

Towpath is a concentrated, all-cap equity fund. The portfolio currently holds 38 securities. About 11% of the portfolio is invested in non-US stocks. Portfolio construction begins with macro-level Continue reading →

Briefly Noted

By David Snowball

Updates

As of August 13, 2020, SouthernSun Asset Management bought Affiliated Managers Group’s interest in SouthernSun. As a result, SouthernSun is no longer affiliated with AMG; it’s now wholly owned by its employees.

Briefly Noted . . .

AdvisorShares Vice ETF (ACT) has amended its prospectus to allow that “companies that derive at least 50% of their net revenue from the food and beverage industry” are sinful while, at the same time, “the Fund will no longer invest in cannabis or Continue reading →

August 1, 2020

By David Snowball

Welcome to our annual summer-lite edition of Mutual Fund Observer.

It’s the summer in which things might be … hmmm, a little lighter than usual. It’s normally a time when we quiet down for a month while you folks are off doing sensible and wonderful things, like hanging out at the beach with friends and family. Except, now, well … Continue reading →

H.R. Pufnstuf: 10 funds to buy when things get rough.

By David Snowball

Jimmy, Freddy the magic flute and Mayor Pufnstuf (right).

H.R. Pufnstuf was the answer to the question, “Who’s your friend when things get rough?” Pufnstuf starred in a Sid and Marty Krofft cult classic TV show which debuted during “the summer of love” in 1969 and continued in reruns as late as 1999. The show’s theme song assured us that Pufnstuff, Mayor of The Living Island, was “your friend when things got rough” because “he knew just what Continue reading →

Between here and the end of the world: Ten things to know

By David Snowball

In the spring of 2019, MFO ran a two-part series on the investment implications of climate change: The Investor’s Guide to the End of the World and The Investors Guide to the End of the World, Part 2: Concrete advice. The former laid out the scientific consensus behind the human role in climate change and explained the four ways in which even the broad perception of climate change would affect your portfolio through a combination of physical, biological, regulatory, and reputational risks. We finished with three investment strategies (divest, invest, innovate) and two fund recommendations: Brown Advisory Sustainable Growth Fund (BIAWX) and Green Century Balanced (GCBLX). Since then, Brown returned 27% (versus 7% for its peers) and Green Century made 8.8% (versus 4% for its peers).

Our second article reviewed the investing recommendations of Continue reading →

Investing in the Coming Decade

By Charles Lynn Bolin

I listened to Peter Navarro’s lecture, “The Modern Scholar: Principles of Economics: Business, Banking, Finance, and Your Life” (2005) on a recent return flight to the U.S. The discussion on budget deficits was timely. The planes, airports, and hotels had very few travelers. The hotel shuttle to the airport was not running. Coronavirus cases are increasing with vaccines not expected until early 2021. For reasons described in this article, I reduced my exposure in July for stocks from 25% to 20% by trading higher-risk funds that have risen this year for less popular funds such as value as well as Continue reading →

July 1, 2020

By David Snowball

Dear friends,

Welcome to the summer of our discontent.

I admit to being a bit distracted this month. My son, Will, was exposed last week to an individual who subsequently tested posted for the coronavirus. Neither she nor he was… uh, optimally cautious during their interaction and she’s subsequently fallen ill. We promptly sought a test from the State of Iowa’s preferred provider, only to learn that they couldn’t see him for four days and weren’t sure how quickly they’d have results. We turned, instead, to our local hospital which administered the test immediately, promising the results “in two to three days.” Four days later, we’ve been told that actually means Continue reading →

Behind the Curtains – Building A Ranking System

By Charles Lynn Bolin

It has taken me nearly two decades to unlearn what I thought I had learned during my first two decades of investing. I started studying business cycles about 15 years ago which helps me determine how aggressive or defensive I want to be based on risks and trends in the economy and investment environment. This month, I describe how to create a Ranking System that requires about one or two hours per month to update and evaluate funds. The May results and composition of the Model Portfolios can be found in Continue reading →

Launch Alert: Driehaus Small/Mid Cap Growth Fund

By David Snowball

On May 1, 2020, Driehaus Capital Management launched Driehaus Small/Mid Cap Growth Fund (DSMDX).

The Fund is managed by Jeff James and Michael Buck, along with assistant portfolio manager Prakash Vijayan. The fund uses the same strategy used since 2012 for Driehaus Small/Mid Cap Growth separately managed account clients. Messrs. James, Buck, and Vijayan also Continue reading →

Briefly Noted . . .

By David Snowball

Effective on October 1, 2020, all of the Alpha Architect funds will transition from index funds to actively-managed ones, though the change will likely be undetectable to investors since “the adviser’s methodology will be substantially unchanged from the current approach it uses.” The funds in question are

  • Alpha Architect U.S. Quantitative Value ETF (QVAL)
  • Alpha Architect International Quantitative Value ETF (IVAL)
  • Alpha Architect U.S. Quantitative Momentum ETF (QMOM)
  • Alpha Architect International Quantitative Momentum ETF (IMOM)
  • Alpha Architect Value Momentum Trend ETF (VMOT).

On June 30, Trillium Asset Management was Continue reading →

June 1, 2020

By David Snowball

Dear friends,

Welcome to summer.

All of us hope that it’s not going to be a long, hot one.

Some months it’s easy to write a welcome note, some months not. This is one of those latter times. Over the night just passed there were ongoing instances of “civil unrest” (the police chief’s term) with a caravan of 100 cars proceeding from one shopping plaza to the next. Four people – including a police officer simply driving his car – were shot; two, not including the officer, died. Many of the caravanning cars bore Minnesota plates. That followed a Continue reading →

Rules Based Investing – Rule #6 Develop a Simple Investment Process Based on Rules and Guidelines

By Charles Lynn Bolin

Wow! What a year it has been so far! Coronavirus is at the top of the list. For me personally, there was a diagnosis, uncertainty, denial, surgery, and then recovery. After recovery, I took an assignment involving significant travel with less time to spend researching and investing for a couple of months followed by lots of free time. These two life events did not impact how I invest as much as the last rule, to “Develop a Simple Investment Process Based on Rules and Guidelines”. First, I wanted portfolios that were stable enough that I would be comfortable holding them unattended for months at a time during a bear market. For this reason, I created three relatively simple model portfolios that I follow with Continue reading →

The Mice that Roared: How Two Small Funds Threaten to Disrupt Two Large Industries

By David Snowball

On May 15, 2020, an unassuming filing with revolutionary potential appeared in the Securities and Exchange Commission’s EDGAR database. It was an N-1A, initial prospectus, filing for two ETFs: SmartETFs Dividend Builder ETF and SmartETFs Asia Pacific Dividend Builder ETF. Both unremarkably offered “to provide investors with dividend income and long-term capital growth.”

The real news appeared on Continue reading →

Launch Alert: ClearBridge Focus Value ETF (CFCV)

By David Snowball

On May 27, 2020, ClearBridge Investments launched ClearBridge Focus Value ETF (CFCV), one of the first active, non-transparent ETFs launched under the so-called Precidian protocol.

Precidian Investments, like ClearBridge, is an affiliate of Legg Mason. Legg paid $25 million in January 2020 to acquire the majority ownership of Precidian. It had been a minority owner since 2016. Precidian received approval from the SEC for a process that allows fund managers to evade the traditional ETF rule requiring constant, real-time portfolio transparency. Precidian now licenses its “technologies” to other advisers, allowing them to offer active funds with limited portfolio visibility.

ClearBridge Investments, a 50-year-old firm, manages $120 billion in assets. It merged in 2013 with Legg Mason Capital Management. Each of Legg’s nine affiliates managers – including Royce and Brandywine – maintains its investment autonomy while Legg handles marketing and distribution.

Sometime in the third quarter of 2020, Franklin Resources will complete Continue reading →

Launch Alert: Jensen Global Quality Growth

By David Snowball

On April 15, 2020, Jensen Investment Management launched the Jensen Global Quality Growth Fund (JGQSX).  This new fund is a global version of Jensen Quality Growth: the same discipline, same managers. Jensen Quality Growth Fund (JENSX) is, at least from the perspective of those who look at long-term accomplishments, one of the best domestic large-cap core funds in existence.

What do they do? Continue reading →