This headline makes the accusation sound like a new thing. They've been blocking such proposals for years while claiming to be eco-friendly. It's a classic case of short-term thinking failing to address long-term problems which will affect everyone including Wall Street and the companies these index funds invest in. Yet they claim to think long-term because they index and must buy and hold companies forever. Their failure to support more of these proposals suggests otherwise.

I am surprised and a bit baffled by the suspicion and worry. In doing research on companies that fit the profile and mandates of their existing funds Grandeur Peak would discover quality companies that do not. I don't see that creating a suitable package in the form of a new fund is in any way troublesome, or trying to do too much, especially because The Global Contrarian Fund has been in the works since "Day One". If anyone would like to explain the danger I would be most grateful. Perhaps I am missing something. But at the moment given the (limited ) information I have, the creation of this fund does not seem to me to be reckless or ill advised or worrisome.
I found the following on einnews.com:
Randy Pearce, Chief Investment Officer, provided additional background: “The Global Contrarian Fund has been on our product plan since the inception of the firm. Finding high quality undiscovered and undervalued companies is part of our daily work. Some of these opportunities don’t fit neatly into our growth-focused funds, so we tread lightly or wait for growth to return before buying. The Global Contrarian Fund will allow us to concentrate a portfolio in these kinds of very interesting long-term investments. The general market shift towards passive investing (ETFs and Index Funds) makes this product additionally interesting because there are plenty of good small/micro-cap companies that aren’t captured by passive products and are trading at even more appealing valuations. We’ve waited eight years to launch this fund. The timing feels right both for our team and the market opportunity. When we get a contrarian position right, we believe it will lead to greater price appreciation due to the dual effect of earnings growth and Price/Earnings expansio

Candidly, I do not believe this was in their plan since "day one." In my professional capacity I have talked with GP since the early days and this and the Micro Cap fund were never discussed with investors before. If the plan had been shared at launch, my take would be different, but this just seem like product proliferation and they will lose sight of the ultimate goal - generate returns for clients.

I am surprised and a bit baffled by the suspicion and worry. In doing research on companies that fit the profile and mandates of their existing funds Grandeur Peak would discover quality companies that do not. I don't see that creating a suitable package in the form of a new fund is in any way troublesome, or trying to do too much, especially because The Global Contrarian Fund has been in the works since "Day One". If anyone would like to explain the danger I would be most grateful. Perhaps I am missing something. But at the moment given the (limited ) information I have, the creation of this fund does not seem to me to be reckless or ill advised or worrisome.
I found the following on einnews.com:
Randy Pearce, Chief Investment Officer, provided additional background: “The Global Contrarian Fund has been on our product plan since the inception of the firm. Finding high quality undiscovered and undervalued companies is part of our daily work. Some of these opportunities don’t fit neatly into our growth-focused funds, so we tread lightly or wait for growth to return before buying. The Global Contrarian Fund will allow us to concentrate a portfolio in these kinds of very interesting long-term investments. The general market shift towards passive investing (ETFs and Index Funds) makes this product additionally interesting because there are plenty of good small/micro-cap companies that aren’t captured by passive products and are trading at even more appealing valuations. We’ve waited eight years to launch this fund. The timing feels right both for our team and the market opportunity. When we get a contrarian position right, we believe it will lead to greater price appreciation due to the dual effect of earnings growth and Price/Earnings expansio

In the case of this ETF, I would say that a negative return over the fund's lifetime (6½ years) and just $13.90M AUM would be good reasons to close down the fund. More likely the latter.
https://www.vaneck.com/library/vaneck-vectors-etfs/ymli-fact-sheet-pdf/

Yes, I think MarketWatch lost it a few years ago.

I too am concerned this is illiquid. The NAV of funds like these as mentioned is estimated at fair value daily, and you have to take the funds word for it. If everyone wants out at the same time watch out. The fund has an incentive to fiddle with the fair value.
I owned a Catalyst fund a few years ago. I sold it at the M* and broker published NAV one day but then when the trade settled I got a lower price. Neither the broker nor the fund would acknowledge the difference. It was only a couple of cents but it was a stark example of how the funds can manipulate things to their advantage.

I wasn’t aware “qualifications” are required for publishing financial news & opinion. Mr. Dias appears to be a fee-based financial advisor based in Florida with 12 years experience, but no certifications.
https://money.usnews.com/financial-advisors/advisor/carlos-dias-jr-5315390
@Catch - A week’s stay at his ocean-side condo in Florida in March would be even better than the proverbial steak dinner. Yes, we have on-air “financial advisers” up here pitching annuities. Stay far away.

@Junkster
R
I'm not sure where they're still finding non-agency debt trading at 70 cents on the dollar of par value today. One of their major competitors, Angel Oak, at the end of 2018 said they were buying at 86 cents on the dollar: https://angeloakcapital.com/wp-content/uploads/2018/4Q/Seeking_to_Improve_Quality_While_Maintaining_Income_Whitepaper-web.pdf
Here's what Angel Oak says:

For example, the prime, Alt-A, and option ARM legacy NA RMBS we target at the top of the capital structure are still at deep discounts relative to par at approximately 86 cents on the dollar.

So if it's 70 cents, I assume it is probably lower credit quality, which could be fine so long as one is willing to accept the additional default risk. I see the distinction in your post is sub-prime so that must be it.
Update: OK, I see here for AlphaCentric's own data, the portfolio is at 75 cents on the dollar and the entire market they say is 81 cents on the dollar: alphacentricfunds.com/funds/IncomeOpp/presentation.pdf
Yet it is interesting--one word for it, scary is another--how far down the capital structure with regard to collateral and credit quality you have to go to get to such discounts now. See page 19 to look at their example of the debt tranches. I'm not saying this strategy won't work, but clearly there are risks here.

These subprime borrowers have now been in their homes 12 to 16 years and have built up equity instead of being upside down when the housing market cratered in 07/08. Dan Ivascyn mentioned in his recent interview how unlikely these borrowers would be to default now even if they their economic situation worsens. There may be another economic crisis but next time it may finally be the much ballyhooed corporate credit crisis. From my experience investors always want to relive the previous crisis not realizing they never immediately repeat. A classic example is the inflation crisis of the 70s. How many times have we heard since then another inflation crisis is just around the corner.

@Charles, Safari has served me well over the years just as IE, Chrome and Firefox on the Windows OS. So far Portfolio tool has been very useful while in exploring less correlated asset classes and lowering the overall risk over time.
The Recovery time of each fund is another insightful parameter to consider during portfolio construction with respect to the drawdown. Vanguard Total International Stock Index has one of the longest recovery time - 114 months or 9.5 years after 2007 recession.
Once again, thank you for making this tool available to MFO Premium members. I look forward to the next phase of development.

You are correct, PV has 2 choices monthly or yearly performance. This means the -0.87 is per one whole month.
I looked carefully (I hope) and that day last Nov was the worse one day decline in 3 years, I found several more days with -0.6 to -0.8%

Yes, that was by far it’s worst one day performance. That was during the period when both stocks and bonds were being pummeled by rising rates. The current rise in the 10 year Treasury has me a bit spooked although it hasn’t impacted IOFIX much or its cousin DPFNX at all. The later holds less subprime. I may lighten up on IOFIX albeit not drastically. Me lightening to any degree works well as a contrarian indicator.
@Charles, talked with Brian Loo yesterday. They still feel their holdings in their subprime non agency ( I don’t believe they hold any prime or alt-a non agency) has many more years of life left. Trading around 70 cents on the dollar. An ever shrinking asset class equals scarcity value.
A lot more we discussed but you can give us more details when you update your report after visiting with the other principals in the firm. Of course when speaking with any fund managers how often will you hear anything but a rosy forecast, IOFIX being a niche fund has some unique things going its way. That is unless there is some major collapse in home prices and all those subprime borrowers get upside down on their loans again and this time decide to walk away.
.

You are correct, PV has 2 choices monthly or yearly performance. This means the -0.87 is per one whole month.
I looked carefully (I hope) and that day last Nov was the worse one day decline in 3 years, I found several more days with -0.6 to -0.8%

@johnN You noted: "Equities maybe still too high imho"
From a technical view, and only one view type; as technical folks have their own favorite views of the numbers and what they mean, I offer two charts. These charts are set for 5 years of pricing data. One theory is that Relative Strength below 30 is oversold (buy, buy, buy) and over 70 is overbought (handle with caution). This RSI is shown near the top of the chart, and should appear as TEAL in color when over 70. BAGIX (a plain intermediate bond fund), in theory; should be sold, and at the least, not purchased at this point. BUT, what the heck do I/we know. The RSI is merely a gauge of buys and sells to obtain a price point over time. Obviously, the bond types in this fund have had folks buying for awhile, yes?
As to ITOT (U.S. market etf), which is a twin of Vanguard's VTI for returns; one does not find at this time a RSI that suggests this market area is overbought (not too hot too handle at this time).
I need to leave this as is for now..... other time commitments; but wanted to offer a view regarding your above statement.
BAGIX , 5 year chart
ITOT , 5 year chart

I don't believe it. This must be the first time in at least ten years that Ted has actually approved of a post by catch22!

WELL.......
Negative rates are supposed to stimulate the economy, incentivising investment by making it less attractive to hold cash and spurring demand by making credit cheaper. But evidence of the theory working in practice is far from conclusive. Certainly Europe’s bankers are squealing, as they feel margins squeezed by low rates on lending and a reluctance to pass on negative rates to depositors.

Why did Europe promote negative interest rates?
Our Federal Reserve system and Treasury may operate within boundaries that are not available to the ECB (European Central Bank) functions, as the euro area's fiscal and financial rules are not similar. I will not expand this difference here. One may readily discover facts of their choice.
Suffice to note that the U.S. moved to Quantitative Easing, while the Euro Zone remained with a policy of austerity after the market melt in 2008. Many here will recall the rough times in Europe for several years following the melt.

As to investment grade bonds today. IMHO, one can not (yet) invest in bond funds that will allow for the steady eddy yield and pricing from the days of yesteryear; to take one's investment into the future without a care and the feeling of protection against the nasty's. Keeping in mind, that as long as there are buyers, don't be concerned with the yield; as your pricing/capital appreciation will out perform the yield expected.
My own question(s) to these type of bonds, is how long will purchases remain in place; IF the yields continue to trend to the negative zone??? Purchasers being the big investment houses, hedge funds, pension funds, insurance companies, sovereign wealth funds and individuals, etc.
With some of this in mind, this house has not been inclined to purchase investment grade bond fund(s) for any sake of yield; as this is third place in thought. First and second place belong to a cushion against the current political strains globally and what this may also bring for global equity(s). Yes, a protective place generating some yield and more so; since the mini melt in December of 2018, decent price appreciation. Early 2018 found a U.S. equity blip in February and a few rough patches until the mini melt in December. Early equity market tremors? I won't begin to suggest this knowledge; but money continues to run to IG bonds.
IF U.S. yields continue downward for whatever reason(s), what are the impacts?
--- CD's.....the folks who do not and/or will not invest in the markets, and maintain monies in CD's
--- financial institutions.....will they be able to maintain a proper spread (deposits/loans) to obtain a profit?
--- consumer loans.....mortgage, auto, etc.; would consumers take on too much cheap debt?
--- corporate bond issuance..... more or too much debt, and for what purpose?
--- private pension funding
--- insurance company(s) products, including annuities
and more.
I remain with the thought, as from 2009; This Time Is Different, at least for my investing period.
Your thoughts please.
Thank you for allowing my self therapy. :)
Catch

FYI: Major U.S. stock indexes swung between small gains and losses Monday as investors looked ahead to meetings later this month where central bankers are expected to cut interest rates.
The Dow Jones Industrial Average rose 38 points, or 0.4%. The S&P 500 was down 0.1%, while the Nasdaq Composite fell 0.19%.
Monday’s move puts a pause on major indexes’ advance after two consecutive weeks of gains for stocks. Analysts said there was little new information to drive shares Monday.
Last week’s weaker-than-expected August jobs report reinforced expectations that the Fed would cut interest rates by at least a quarter of a percentage point next week. Lower interest rates tend to spur investors to buy riskier assets, such as stocks, over bonds, gold and other havens. This time is no different, with expectations of looser monetary policy contributing to most of the stock market’s gains this year, analysts have said.
Still, there is disagreement over how much the Fed should cut rates, leaving the stock market potentially vulnerable if the Fed fails to enact a more aggressive pace of rate cuts.
Treasury yields pared some of their gains after the Federal Reserve Bank of New York said Monday that inflation expectations a year and three years from now fell in August.
Rising yields helped lift the S&P 500’s financials sector, which was one of the biggest gainers Monday, rising 1.4%.
Beyond Monday’s broad gains, some individual stocks outpaced the broader market. Shares of AT&T jumped 2.7% after the activist investor Elliott Management disclosed a $3.2 billion stake in the company and released a letter to the board laying out a series of potential changes that it said could boost the stock.
Elsewhere, the Stoxx Europe 600 slipped 0.3%. Data released Monday showed German exports unexpectedly rose in July, a bright spot following a string of negative economic data from Europe’s biggest economy, though analysts said concerns remained that U.S.-China trade tensions could affect the German economy.
In commodities, Brent crude oil rose about 1.8% to $62.64 a barrel after Saudi crown prince Mohammed bin Salman appointed Prince Abdulaziz bin Salman, an experienced oil official and son of the country’s king, as head of the powerful energy ministry. Prince Abdulaziz is expected to continue OPEC’s efforts to bolster energy prices by cutting production.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-09-09/your-evening-briefing
MarketWatch:
https://www.marketwatch.com/story/stock-futures-point-higher-as-investors-look-to-central-banks-for-stimulus-2019-09-09/print
WSJ:
https://www.wsj.com/articles/global-stocks-tick-higher-on-china-stimulus-11568016549
Bloomberg:
https://www.bloomberg.com/news/articles/2019-09-08/asian-stocks-set-for-muted-start-to-the-week-markets-wrap?srnd=premium
IBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-extends-win-streak-5-big-stocks-rally/
CNBC:
https://www.cnbc.com/2019/09/09/dow-futures-move-higher-investors-wake-to-new-chinese-exports-data.html
Reuters:
https://uk.reuters.com/article/us-usa-stocks/stimulus-hopes-buoy-wall-street-financials-lead-gains-idUSKCN1VU17Y
U.K:
https://uk.reuters.com/article/uk-britain-stocks/uk-bluechips-give-up-gains-as-sterling-strengthens-idUKKCN1VU0KU
Europe:
https://www.reuters.com/article/us-europe-stocks/european-stocks-close-down-as-london-lags-banks-shine-idUSKCN1VU0L6
Asia:
https://www.cnbc.com/2019/09/09/asia-markets-september-9-us-china-trade-china-economy-currencies.html
Bonds:
https://www.cnbc.com/2019/09/09/us-treasury-yields-higher-ahead-of-new-data.html
Currencies:
https://www.cnbc.com/2019/09/06/forex-markets-us-economic-data-in-focus.html
Oil:
https://www.cnbc.com/2019/09/09/oil-markets-saudi-arabia-in-focus.html
Gold:
https://www.cnbc.com/2019/09/09/gold-markets-monetary-policy-in-focus.html
WSJ: Markets At A Glance:
https://markets.wsj.com/us
Major ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitor
SPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker
SPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectors
Current Futures:
https://finviz.com/futures.ashx

IOFIX 10.44% 2.69% 14.04% 3.49% -0.87% 3.16 13.47
@FD1000, you and Morningstar must have a different definition of maximum drawdown than me. -0.87% over the past three years?? I mean it declined 1.29% on just one day alone last November.

Any chance that D&C will offer a money market fund?

Don’t hold your breath waiting. Have seen no indication.
On that question, not sure what their gig is. Seemingly, being the savvy investors they are, they’d rather folks park cash in DODIX. That bothers me a bit. However, DODIX is quite conservatively run - probably out only about 3 years on the maturity curve at present. I don’t doubt that it will beat any money market fund hands-down over 5 and 10 year periods. But shorter term, has the potential for a couple lousy (negative) years.

I was thinking you were going to say T Rowe Price. They are great!

No argument from me on that!
I’m probably rare in that I’ve never owned a Vanguard fund. Our workplace offered (initially) load-based Templeton and than later TRP as 403B options. Since the 90s TRP has managed about 50% of my funds.
Using custodian-to-custodian transfers some money was moved to others. D&C has about 25% - another highly respected house. The remainder is divided between Invesco ($$ formerly with Oppenheimer) and Permanent Portfolio. Re Oppenheimer / Invesco - I’ll grade them C overall based mostly on higher fees. But they offer some niche funds I use that Price doesn’t.
Price has always run a first-rate shop. Their problem today, IMHO, is too many funds. Obviously they’re fighting for market share. Geez - 25 years ago I might have named every fund in their stable and told you how it invested. Today that’s hopeless.

Thank you @msf
From Mr. Merriman's web site:
"There’s a lot of money to be made from financial newsletters that give investment advice. But the money comes from selling the newsletters, not from taking the advice.
Literally anybody can start and publish an investment newsletter. The key to success is to have a period of successful predictions that can be promoted as if it’s a sign that the publisher has talent, insight and an accurate handle on future performance.
You can claim almost anything
Despite their slick appearance, many investment newsletters are run from home. It’s easy to start a newsletter. You don’t need a college degree. You don’t need a license. You don’t need a track record. You can claim almost anything you want to as long as you aren’t actually being paid to manage money."
>>> Some of his above would suggest some amount of due diligence, a self code of discovery.
NOTE: I'm surely not in an intellectual position to discredit his years of work and sharing of information; but disappointed with this current write. His newsletter is free, although one may suspect some form of monetizing his work. I'm not inclined to give my time to such an investigation.
Mr. Merriman's web site
Perhaps too much coffee, for me, this A.M.
Take care,
Catch

FYI: Six years ago, my life was fairly normal. I taught full-time at a high school. Most of my colleagues had similar interests and values. They shared teaching strategies and how to help kids. Most of them, politically, leaned to the left.
Other jobs attract more right-leaning folk. That became apparent when I quit teaching and began to give investment presentations. Right wing capitalism has a lot of fans. People packed auditoriums to hear me speak about making money. But these people weren’t drawn to my handsome face or my colorful jokes. Instead, they came for the topic. They wanted to increase their wealth.
Regards,
Ted
https://assetbuilder.com/knowledge-center/articles/why-my-bohemian-friend-hates-how-i-invest