https://www.sec.gov/Archives/edgar/data/1318342/000139834417000539/fp0023990_497.htm
497 1 fp0023990_497.htm
Towle Deep Value Fund
(Ticker Symbol: TDVFX)
A series of Investment Managers Series Trust (the “Trust)
Supplement dated January 13, 2017 to the
Prospectus, Statement of Additional Information and Summary Prospectus, dated February 1, 2016.
IMPORTANT NOTICE ON PURCHASE OF FUND SHARES
Effective as of the close of business on January 27, 2017 (the “Closing Date”), the Towle Deep Value Fund (the “Fund”) will be publicly offered on a limited basis.
After the Closing Date, only certain investors will be eligible to purchase shares of the Fund, as described below (the “closure policy”). In addition, both before and after the Closing Date, the Fund may from time to time, in its sole discretion based on the Fund’s net asset levels and other factors, limit the types of investors permitted to open new accounts, limit new purchases into the Fund or otherwise modify the closure policy at any time on a case-by-case basis.
The following groups will be permitted to continue to purchase Fund shares after the Closing Date:
1. Shareholders of record of the Fund as of the Closing Date may continue to purchase additional shares in their existing Fund accounts either directly from the Fund or through a financial intermediary and may continue to reinvest dividends or capital gains distributions from shares owned in the Fund.
2. Existing registered investment advisor (RIA) and bank trust firms that have an investment allocation to the Fund in a fee-based, wrap or advisory account may continue to add new clients or purchase shares.
3. New shareholders may open Fund accounts and purchase shares directly from the Fund (i.e. not through a financial intermediary).
4. Certain financial intermediaries may continue to open new underlying customer accounts provided the platform on which they offer access to the Fund has an existing funded position.
5. Group employer benefit plans, including 401(k), 403(b), 457 plans, and health savings account programs (and their successor, related and affiliated plans), which make the Fund available to participants on or before the Closing Date, may continue to open accounts for new participants in the Fund and purchase additional shares in existing participant accounts. New group employer benefit plans, including 401(k), 403(b), and 457 plans, and health savings account programs (and their successor, related and affiliated plans), may also establish new accounts with the Fund, provided the new plans have approved and selected the Fund as an investment option by the Closing Date and the plan has also been accepted for investment by the Fund by the Closing Date.
6. Members of the Fund’s Board of Trustees, persons affiliated with the Advisor and their immediate families will be able to purchase shares of the Fund and establish new accounts.
In general, the Fund will rely on a financial intermediary to prevent a new account from being opened within an omnibus account established at that financial intermediary if the account would not otherwise satisfy the conditions outlined above. The Fund’s ability to monitor new accounts that are opened through omnibus accounts or other nominee accounts is limited and the ability to limit a new account to those that meet the above criteria with respect to financial intermediaries may vary depending upon the capabilities of those financial intermediaries. Investors may be asked to verify that they meet one of the exceptions above prior to opening a new account in the Fund. The Fund may permit you to open a new account if the Fund reasonably believes that you are eligible. The Fund also may decline to permit you to open a new account if the Fund believes that doing so would be in the best interests of the Fund and its shareholders, even if you would be eligible to open a new account under these exceptions. If all shares of the Fund in an existing account are redeemed, the shareholder’s account will be closed. Such former shareholders will not be able to buy additional shares of the Fund or reopen their account.
Please file this Supplement with your records.

Closed out JOHAX after another disappointing year. Adding to FMIJX in foreign large cap allocation. BTW, M* still has OAKIX as gold, 5 star but FMIJX has truly clocked it for three years.

From the talk by Deshpande a month ago:
"Finally, and most importantly the employees of Centerstone have invested eight figures
in total into the Funds. There can be, in my mind, no other greater alignment of interest
than investing alongside one’s client base."
Eight figures means more than $10M. The total AUM of the two funds is approximately $60M. In other words, unless I am mistaken, he says that more than 15% of the AUM of the two funds is due to the investment of the employees of Centerstone.

I want to add to DSEEX but see that I am ~75% equities, which is too high, so I don't know what to do. (I know what to do, just don't want to.) I just read the detailed and carefully substantiated Goldman analyses of conditions for 2017, which are optimistic. I will move some more cash into PONDX, PDI, and FRIFX, though not FNMIX.

Of course, it helps to know which end of the horse is selecting the investments.
Seems I have a horse in most of these races. Should I divest if they win?

First part: (easiest to address): Let's hope that the horse is being fed and stable cleaned by some good research and analytical people underneath. (no pun intended)
Second part: Dunno. I wouldn't sell - but wouldn't be pleased either. I've worried about the "popularity effect" for several years with PRWCX. Haven't sold, but keep only a small % of assets in that fund. Lagged noticeably last year. The ingredient that's hardest to figure out when thinking about the effect of money flows on a fund is how much of the AUM is relatively stable (committed for the long term) and how much will flee when things turn south. It's the rapid flow out during hard times that can really ding a fund and damage those who remain behind.
As an aside: If you like timing, one might try to ride a fund higher as the popularity grows and than bail about the time the popularity begins to wane. I'm pretty sure I've seen evidence in the past that some big investors do follow fund flow data with precisely this intention.

@kevindow Your point was that the fund will not close anytime soon because the manager's intention is "looking for assets like First Eagle," which the manager has stated is false.
The manager has between 50-100K in the domestic fund; he has none in the international fund. I like to see managers have some meaningful stake in their products, but at the same time I don't conclude that they "don't have confidence" in their own ability.
You are very correct in stating that it may take "5 or more years" for the fund to reach 10B at its present pace!
OTOH, I'm unconvinced that if the fund reaches that amount that "greed will overcome principle like it usually does," especially when the manager has stated that he will limit assets. What I have seen in my past investment experience is that managers who have said that they will close the cash windows do follow through, and so I'm making a judgment in the case of Mr. Deshpande that he will do the same. Based on what he has said and written publicly indicates that his goal is to produce superior returns, not accumulate assets, and so I will take him as a man of principle rather than as someone following his own selfish interests.
I have a very favorable opinion of FMIJX but do not own it.
Best.

@openice,
OK, let me be clear. The current AUM is a measly $53M for a fund which began collecting assets 8 months ago in May 2016. Like I said, this fund will not close to new investors anytime soon.
Also, Mr. Deshpande only has a paltry $100K or less invested of his own money in this fund, according to the latest SAI. Why should I have confidence in this fund if the manager doesn't ??
And if the AUM get near $10B, which may take 5 or more years at this pace, I predict that greed will overcome principle -- like it usually does -- and the fund will stay open to ALL investors.
Again, in this space, FMIJX would be my choice and not Mr. Deshpande's fund.
Kevin

@Javelina
https://www.msci.com/market-classification
MEASX I own this fund.
Asian orientated. 50 % Frontier although Pakistan will move "up" to Emerging this year.Both managers spent time in Frontier Countries in early careers.
https://us.matthewsasia.com/our-funds/f-24/matthews-emerging-asia-fund/investor/composition.fs#PortfolioBreakdown
https://us.matthewsasia.com/our-funds/f-24/matthews-emerging-asia-fund/investor/managers.fs

Here are two sites that I follow for global valuations:
Global Stock Market Valuations and Expected Future Returns
Global Stock Market Valuation Ratios
The following article demonstrates how CAPE and P/B reliably predict future market returns and market drawdowns in both domestic and foreign equity markets:
Predicting Stock Market Returns Using The Shiller Cape

Excellent excerpt from this last article:
"Existing research indicates that the cyclically adjusted Shiller CAPE has predicted long-term returns in the S&P 500 since 1881 fairly reliable for periods of more than 10 years. Furthermore, the results of this paper indicate that this was also the case for 16 other international equity markets in the period from 1979 to 2015, and in addition to this, CAPE also enabled equity market risks to be gauged. In this manner, low market valuations were not only followed by above average market returns but also lower drawdowns. On the contrary, high market valuations led to lower returns and faced higher market risks."
As far as investing, what does all this mean to me. Since CAPE matters globally, I am inclined to consider the ETF CAPE (however, average daily trading volume is too low for me), the ETF GVAL, and the mutual funds DSEEX/DSENX and DSEUX/DLEUX.
In our portfolio, I am confident in using CAPE and P/B for investment selection, and have an 18% position in DSEEX and a 10% position in PXH.
Kevin

It sounds like an advertisement, because the first two sentences were copied from the web, but the end of it was mine: First Eagle funds are famous for their stability, safety and growth. I always wanted to have a chance to invest with them, but their funds either require 5% load, or 1 M for the institutional shares. Right now First Eagle Overseas has 15B AUM, and First Eagle Global has 51B AUM. Some of their leaders such as Jean-Marie Eveillard and Abhay Deshpande left. Meanwhile AUM of Centerstone funds is 1000 time smaller.

@Old_Skeet - You did well and stuck with your methodology. I like a bond-only portfolio because of the lower maximum draw down, which was 0.8% vs 8.5% for the S&P in Feb 2016.
I hope we all do well in 2017.

Some strong candidates. Its only for 2016 but I have been invested in twvlx since 1994 and tweix since 2006. IMO Mr. Davidson and team consistently have provided good risk/return performances over multiple time frames and cycles.
http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=174.xml&filter=PR5719

Since, the topic has move to portfolio and investment performance Morningstar reports my investment return for 2016 at 10.1% while my brokerge house reports my combined account(s) returned 8.3% for the year which includes my sizeable cash position of about 20%. My bogey, the Lipper Balanced Index, is being reported to have returned 7.0% for 2016. With this, I score myself successful for the past year although my return fell short of my five year average return of 9.0%. I use my five year average return rate to help set my portfolio's annual distribution rate. Generally, I take no more than a sum equal to one halve of my five year average return.
My best performing sleeve for 2016 was my small/mid cap sleeve found in the growth area of my postfolio with a return of 38.7%. The next two best were found in the growth & income area of my portfolio with my domestic equity sleeve which returned 16.8% which edeged out my domestic hybrid sleeve with a return of 16.6%.
Seems though some of you active bond fellas (Junkster & SlowLane) left me snockered with your returns. I am happy with my return so I know you two have to be excitied with yours.
For infromation purposes and according to Instant Xray my portfolio bubbles at 20% cash, 25% bonds, 34% US stocks, 16% foreign stocks and 5% other as I open 2017.
Wishing everyone "Good Investing" as we move through 2017.
Again, nice going @Junkster & @SlowLane!
Old_Skeet

Fidelity will accept $2500 for QUSIX in an IRA.
Fidelity will likely let you transfer in shares (e.g. from Vanguard) to a taxable account even if you don't have $1M. But you should check to be sure, and also make sure that they'll let you buy more once you transfer the shares in.

A shares make sense if you hold them for long periods of time ( usually 7 years or longer) to take advantage of their generally lower ER, even factoring in the opportunity cost of not investing the 5.75% immediately. ... If you use a broker whose advice you find excellent, this is a small price to pay and probably a better deal than the 1% of all assets Merrill Lynch is reportedly going to charge their customers yearly. ... There are some brokers whose advice is excellent. Advisers, fee only or in wrap accounts or whatever, will not work for nothing. I would rather know what I was paying them than find hidden fees buried in the prospectus

John Rekenthaler, Vice President of Research at M* would seem to agree with you. He makes essentially the same point in Barron's ("The View From 30,000 Feet" - Jan. 9, 2017). Rekenthaler adds: "I think A shares, in which you pay a one time commission (known as a load) are underappreciated."
---
(This is from the print edition. However, Ted's recent link, "How to Pick Great Funds", should take you to the online version.)

Two trades late December:
Sold remaining shares of PRNEX - up 25% in 2016.
Bought PIEQX - up 1.43% in 2016.
Sell high. Buy low.
"Nobody's ever made money in commodities."

55% in bank loan fund BXFYX and 45% in junk corporate IVHIX. Bank loans are overloved and overbought while junk corporates are just overbought. Since 12/08 my goal has been to beat the S&P total return trading bond funds and with minimal drawdown. Except for 2013 made my goal. Something tells me unless 2017 is a bear market for stocks, I will fall short of my goal this year.

I am not sure there is a compelling reason to own smallcap value or smallcap growth per se. Why not look at the entire Intl smallcap space? QUSIX has been a good option for actively-managed funds. I would compare it to DLS even though DLS is a lot more dividend oriented. Expenses are a big deal. You will pay 73 bps more for active management that won a bit over five years, broke even over three, and lagged by 600 bps over last 12 months. Will management be able to match the 5-year comparison going forward? SCZ is a blend of value and growth. It has similar numbers with expenses of only 40 bps. Also note that QUSIX has about 20% in EM small caps, so the potential volatility is higher. Maybe the bigger question is whether you need an international small cap at all. Will this really bump your returns or just increase the potential risk?

In addition to having no alternatives in Annuities and some 401k, some of us have worked with brokers in the past who only have access to A or C shares. I have done the math many times, and old_skeet is correct... A shares make sense if you hold them for long periods of time ( usually 7 years or longer) to take advantage of their generally lower ER, even factoring in the opportunity cost of not investing the 5.75% immediately.
If you use a broker whose advice you find excellent, this is a small price to pay and probably a better deal than the 1% of all assets Merrill Lynch is reportedly going to charge their customers yearly.
There are some brokers whose advice is excellent. Advisers, fee only or in wrap accounts or whatever, will not work for nothing. I would rather know what I was paying them than find hidden fees buried in the prospectus