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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • Warren Buffett Bet 10 Years Ago On the S&P 500 And Wins A Million Dollars
    Now, that would have been some bet --- forget SPX, gimme $10M if a savvy-managed bond fund beats your group of hedge funds.
    (PIMIX beat SPX by 50%!)
    Ivascyn is an even bigger bfd than many already know. The last four bullish years (actually a bit less), PDI has beat SPX by almost 11%.
  • SEC Plans To Approve Vanguard Request To List Actively Managed ETFs
    Here's the filing, clear as mud:
    https://www.sec.gov/Archives/edgar/data/34066/000093247117005317/activeetfapp_clean.htm
    I see no reference to Vanguard's patent that enables a shares of an individual fund to be sold both directly to investors (OEF shares) and in the secondary market (ETF shares).
    The marketing section of the filing says that an ETF "Fund will not be advertised or marketed or otherwise 'held out' as shares of a traditional open-end investment company or a mutual fund." That seems to be different from what Vanguard does now with its ETFs.
    For example, the web page for VOO holds it out as shares of a Vanguard 500, a traditional open-end investment company: "Also available as Admiral™ Shares and Investor Shares mutual funds."
    So I'm guessing (as I said, clear as mud) that these are not going to be ETF shares of existing funds.
  • Active Managers Are Getting To Work
    "Vanguard economist Joe Davis kicked off the conference with his view of the future of work. In the next five to 10 years, studies suggest, 50% of jobs in the U.S. are projected to be lost to automation. India could lose 69% of its jobs, and more than 75% of China’s jobs could be wiped out. But Davis is optimistic: “We need to change our mind-set about technological change. Jobs do not get automated away, tasks do.”
    Based on Vanguard’s analysis, tasks have changed for every occupation since 2000. Chefs, astronomers, and photographers saw the most change. (Economists the least, Davis joked.) He sees this as a positive, because automation means that workers can farm out repetitive tasks and devote more time to uniquely human ones, such as information analysis, communication, relationship management, and creative thinking.
    Active shops have responded to this technological threat by putting those “uniquely human” tasks into an automated form—strategic-beta ETFs "

    He sees this as positive because workers can farm out repetitive tasks. That's assuming the worker owns the technology and has a choice which tasks are farmed out. It is the business and technology's owners that make that decision and they will choose to fire many workers and replace them with tech. In the money management industry that means only those workers with skills that are uniquely human, that are so specialized that a computer algorithm which picks stocks can't replace them will survive. The terrible irony is many financial analysts and money managers who boast of "capitalist creative destruction" are about to see their jobs creatively destroyed by the technology they once invested in and celebrated. The question for every worker becomes what can you do a computer program, algorithm or robot can't?
  • T. Rowe Price Capital Appreciation & Income Fund Summary prospectus
    0.74% ER (with waiver) looks a tad on the high side for this type of fund. Their 40/60 TRRIX carries a .57% ER. The slightly more aggressive TRRFX, is at .60%. It's also higher than the .70% they currently charge for PRWCX.
    Looks in part like an attempt to profit from PRWCX's sterling reputation and from Giroux's high-profile name (He'll be lead manager.) *Deleted cheap. :)
    What does opening a new fund at a time of extremely high market valuations (both equity and fixed income) do to the metrics? I'd think that puts a new fund at a disadvantage, having to buy initially at very high prices. For new investors, however, probably no different than buying into an established fund at high valuations.
    ---
    Added: At a glance this doesn't appear to be simply an "allocation" between PRWCX and some income funds. Appears to be a stand-alone. However, there's sure to be overlap in many assets.
    Why a new fund? I'd like to say it's because many of Price's funds have grown very large, presenting obstacles to managers. Just a guess. But this conclusion wouldn't appear consistent with the broader trend away from active management and into indexing. Another thought - It may pull some assets away from PRWCX (due to having a similar name and the same manager). If so, that could ease some of the bloat Price is surely dealing with in PRWCX.
  • T. Rowe Price Capital Appreciation & Income Fund Summary prospectus
    This offering makes me think of comparing it to Vanguard's VWINX (Conservative Allocation) which 40/60. Time will tell.
    Maybe this fill a niche between some of TRP's more conservative funds like PRSIX (35/65) and PRWCX (80/20) which tends to be a more aggressive allocation fund.
  • Champlain Mid Cap Fund to close to new investors
    VintageFreak
    You mention the possibility of the fund liquidating, however the fund webpage is indicating about $1.5 billion in assets, do you see any indication that liquidation is being considered.
    Thanks
    I was lamenting aloud :-). Thanks for making me feel better. I owned another fund of theirs that closed because no one would invest in it. So wondered if a big investor pulled out assets out of CIPMX and is why the fund closed.
  • Champlain Mid Cap Fund to close to new investors
    M* article of 12/2015 predicted this find might close soon.
  • Driehaus Micro Cap Growth Fund to close to new investors
    https://www.sec.gov/Archives/edgar/data/1016073/000119312517278810/d456584d497.htm
    497 1 d456584d497.htm 497
    Driehaus Mutual Funds
    Driehaus Micro Cap Growth Fund *DMCRX
    (the “Fund”)
    Supplement dated September 7, 2017 to
    Prospectus for the Fund dated April 30, 2017 and
    Summary Prospectus for the Fund dated April 30, 2017
    The Board of Trustees of the Driehaus Mutual Funds has approved the closure of the Driehaus Micro Cap Growth Fund (the “Fund”) to new investors, except as described below. The closure will be effective immediately after 4:00 pm Eastern Time on September 29, 2017.
    You may purchase Fund shares and reinvest dividends and capital gains you receive on your holdings of Fund shares in additional shares of the Fund if you are:
    • A current Fund shareholder;
    • A participant in a qualified retirement plan that offers the Fund as an investment option or that has the same or a related plan sponsor as another qualified retirement plan that offers the Fund as an investment option; or
    • A financial advisor or registered investment adviser whose clients have Fund accounts.
    You may open a new account in the Fund if you:
    • Are an employee of Driehaus Capital Management LLC (the “Adviser”) or its affiliates or a Trustee of Driehaus Mutual Funds;
    • Hold shares of the Fund in another account, provided your new account and your existing account are registered under the same address of record, the same primary Social Security Number or Taxpayer Identification Number, the same name(s), and the same beneficial owner(s); or
    • Are a financial advisor or registered investment adviser whose clients have Fund accounts.
    These restrictions apply to investments made directly through Driehaus Securities LLC, the Fund’s distributor, as well as investments made through intermediaries. Intermediaries that maintain omnibus accounts are not allowed to open new sub-accounts for new investors, unless the investor meets the criteria listed above. Once an account is closed, additional investments will not be accepted unless you meet the criteria listed above. Investors may be required to demonstrate eligibility to purchase shares of the Fund before an investment is accepted. The Fund reserves the right to (i) eliminate any of the exceptions listed above and impose additional restrictions on purchases of Fund shares; and (ii) make additional exceptions that, in the Adviser’s judgment, do not adversely affect its ability to manage the Fund.
    PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
    For more information, please call Driehaus Mutual Funds at (800) 560-6111.
  • Josh Brown: When The Hedge Is Worse Than The Thing Being Hedged; Black Swans & John Hussman
    I think LB makes a good case for holding cash or high quality bonds along with equities.
    But, holding short equity positions is inherently hazardous. (Theoretically, a stock can continue to rise forever.) It boils down to the skill of the manager to effectively implement a short selling strategy - and avoid losing his shirt in the process. Not to say using short positions to hedge equity risk is a bad approach - just that John Hussman hasn't demonstrated the capacity to execute the approach effectively. And, while he somewhat vehemently denies shorting equities, Hussman's HSGFX often behaves as if (effectively) short the market.
    Alternatives like gold, foreign currencies, commodities, real estate, etc. constitute another form of hedging. Personally, I like to keep a small hold in funds which include those types of assets. I fully recognize that that dilutes my returns as compared to being invested only in equities. Much disagreement exists on the board re the subject - and I've no desire to become a spokesman for PRPFX or any other fund investing in such alternatives.
    BTW: The brains at TRP have held for several years now that we're in the midst of a cyclical bear market in commodities. They would probably say that we're in the 5th or 6th inning. While I've disagreed a bit with that bearish outlook, I suspect they're mostly correct in the call. It's relevant here only in that commodities are often viewed as an alternative investment to equities.
    Yes. Agree with LB that equity markets don't always rise. They can (and do) experience significant multi-year periods of negative performance. And I fear very much that our instant-touch media (24-hour financial reporting and internet access) have magnified the always present human herd instinct. If correct, that implies both stronger bull markets and worse bear markets ahead than have occurred historically.
  • Josh Brown: When The Hedge Is Worse Than The Thing Being Hedged; Black Swans & John Hussman
    "Here’s another beauty, also at the Journal, about a fund manager who is currently in a 52% drawdown from the peak and still has the chutzpah to be lecturing others ... "
    Grandma stashing her savings in a cookie jar over the past decade would be ahead of this renowned investor.
    Rule# 1: "Don't lose money." (Perhaps not applicable in the world of sophisticated investing?)
  • Big Critic Of ETFs Planning To Launch One Of His Own
    FYI: Like many active managers, Mark Yusko of Morgan Creek Capital Management LLC has some serious gripes about the rise of exchange-traded funds and the ascendancy of passive investing.
    And like many of those managers, he’s also starting his own ETF to cash in on their popularity -- but with a twist.
    Regards,
    Ted
    http://www.fa-mag.com/news/big-critic-of-etfs-planning-to-launch-one-of-his-own-34517.html?print
  • Late? That’ll Cost You 50%: (RMD)
    @bee - we've had exchanges on these things before. If these particular strategies work for you, more power to you. They do seem to carry some assumptions that may not apply to some other people, so they're worth pointing out.

    I have a few personal strategy for dealing with RMDs. Consider strategically spending down these taxable IRA dollars first rather than raiding taxable accounts, Roth accounts or Health Savings Accounts, especially between the years of 59.5 and 70.5.
    I'm guessing you're doing this to keep RMDs manageable, i.e. not growing so large that they kick you into a higher tax bracket.
    Say you need $20k/year. You seem to be suggesting that you withdraw approx $23.5K (so that after paying 15% tax, you've got your $20K for expenses). If your taxable account is generating no income (just cap gains when you sell), that works fine for you, since you'd be paying no cap gains tax in that tax bracket.
    An alternative for some would be to tap the taxable account for the $20K in expenses, withdraw the same $23.5K from the IRA (pay the same $3.5K taxes on that), and put the rest ($20K) into a Roth as a conversion.
    Comparing the two strategies - either way, you get $20K to spend, and you've reduced your traditional IRA by $23.5. The difference is that the first way left you with $20K in the taxable account (you spent the IRA distribution), the second way let you move $20K into a Roth (you spent money from a taxable account).

    Fund an H.S.A:
    -Between the age of 59.5 and 65 (when you become medicare eligible) distribute a portion of your tax deferred IRA yearly equal to your maximum H.S.A contribution. This will provide a funding source for my H.S.A as well as make these IRA distributions tax free since there tax liability will be offset by the H.S.A contribution (income tax credit) for that same year.
    You're get an income reduction for the HSA contribution regardless of what's generating the income. That taxable income could be coming from taxable investments or from IRA distributions, or even from a Roth conversion. What matters is that you've got a fixed size "deduction" (the HSA contribution). So the IRA distribution is tax-free (due to the HSA) only to the extent that you have no other ordinary (taxable) income.
    For example, if you contribute $4K to your HSA, and have $1K in taxable income, then only the first $3K of IRA distributions will be tax-free. If you withdraw $4K, then your total taxable income is $5k, and $1k of that is taxable after subtracting off the $4K HSA contribution.

    Fund Itemize Medical Expenses:
    - Between ages (65 -70.5) track medical expenses that are eligible as an itemized tax deduction. Do not use your H.S.A dollars during this time frame to pay for these medical costs. Instead, pay all of these medical expenses with yearly IRA distributions. Using IRA distributions as the funding source for medical related expenses may potentially lowering your taxes on these taxable distributions.
    You can use medical expenses as itemized deductions (subject to a floor of 7.5% or 10% of AGI). To do that, you're right, you can't pay them out of an HSA. This works for some people, but only if they've got really high expenses (relative to their AGI), and if they've got enough other itemized deductions to get them above the standardized deduction. At least I think that's what you're writing about here.
    Each person's situation is different. This strategy seems to work fine for yours.
  • Late? That’ll Cost You 50%: (RMD)
    From a recent read:
    Roth IRAs (as well as H.S.A.) aren’t subject to the required minimum distributions (RMDs) that apply to most retirement accounts starting at age 70½, so you can let any Roth (and H.S.A) assets continue to benefit from potential tax-free growth for the rest of your life. (T Rowe Price quote).
    FYI:
    -Roth IRAs are inherited tax free.
    -H.S.A are taxable when received as a non-spousal inheritance.
    -Interestingly, Roth 401K account do have RMDs.
    I have a few personal strategy for dealing with RMDs. Consider strategically spending down these taxable IRA dollars first rather than raiding taxable accounts, Roth accounts or Health Savings Accounts, especially between the years of 59.5 and 70.5.
    Fund an H.S.A:
    -Between the age of 59.5 and 65 (when you become medicare eligible) distribute a portion of your tax deferred IRA yearly equal to your maximum H.S.A contribution. This will provide a funding source for my H.S.A as well as make these IRA distributions tax free since there tax liability will be offset by the H.S.A contribution (income tax credit) for that same year.
    Fund Itemize Medical Expenses:
    - Between ages (65 -70.5) track medical expenses that are eligible as an itemized tax deduction. Do not use your H.S.A dollars during this time frame to pay for these medical costs. Instead, pay all of these medical expenses with yearly IRA distributions. Using IRA distributions as the funding source for medical related expenses may potentially lowering your taxes on these taxable distributions.
    Here's a debatable strategy:
    Defer 25% of your IRA well beyond 70.5 by purchasing a QLAC:
    why-a-qlac-in-an-ira-is-a-terrible-way-to-defer-the-required-minimum-distribution-rmd-obligation/
  • Josh Brown: When The Hedge Is Worse Than The Thing Being Hedged; Black Swans & John Hussman
    Hi Guys,
    "The future is uncertain, so investors should always think in terms of probabilities, never guarantees. What this data tells me is that the longer your time horizon, the higher your probability of seeing a gain in the stock market."
    That's not me writing. It's a quote from an article by Ben Carlson. Here is the Link to that article that summarizes market returns winning statistics:
    http://awealthofcommonsense.com/2015/11/playing-the-probabilities/
    Not much has changed statistically since this article was published. It's a simple matter of just playing the odds. That's always a good strategy.
    The equity marketplace is up 54% of the time on a daily basis. It is up 74% of the time annually. As the investment timeframe expands, the winning statistics keep increasing. In the investment world, time is your ally. Once again simplicity trumps complexity.
    Best Wishes