Hi Guys,
Great stuff! Yet another insightful article from the fertile mind of Ben Carlson. The graph that compares the S&P 500 with the Russell 2000 drives the main point home with conviction.
No pain, no gain is applicable in the investment world. Small Caps have delivered higher historical returns than their big brothers for a reason. The high Small Cap volatility and failure rates signal the risk that is coupled to their excess returns.
There are always costs when squeezing that little extra out of the marketplace. Is the reward worth the incremental risk? Each investor's assessment is reflected in his portfolio construction.
In the design of a new product, the successful Lockheed-Martin leader Norn Augustine had a law. It seems as if he had a law for most everything. His law said that "the last 10% of performance generates one-third of the costs and two-thirds of the problems". It doesn't take much imagination to extend that bit of wisdom to investing.
If you are motivated, you might want to check Augustine's book that summarizes his numerous insights. The book was published in the 1980s, but is still relevant. It is titled, not surprisingly, "Augustine's Laws". It is a breezy read being full of interesting stories told in a very humorous way. I recommend it. Enjoy.
Best Wishes.

I don't think this article helps too much, but here's a 2013 article describing Capital Group's reorganization into multiple groups:
http://www.fa-mag.com/news/capital-group-will-restructure-based-on-investment-objectives-13699.html
Ignoring for the moment that little of the verbiage in the article or prospectus is particularly clear, what I would have guessed is: many mutual fund companies have multiple equity teams where each team manages multiple funds. Those teams tend to be theme based, e.g. large cap, small cap, international, etc. While the names of Capital's equity groups don't suggest that, it is at least consistent with the FA article, that talks about organizing these groups around particular investing objectives.
Regarding AF having "now" introduced no-load shares. They've had no-load shares for many years. What changed is that you're now finding a way to purchase them. But no-load R4 and R5 shares for retirement plans have been around for what seems like forever, with R6 and R5E being added more recently. The F share class (renamed F-1 in 2008) has been around for a couple of decades.
You can get F-2, and sometimes even cheaper R5 or R6 shares through HSA accounts. For example, the HSA Authority offers RERFX.

I think I read a Matthews Asia commentary recently that said dividends are more common for small Asian companies and GPMCX has half their investments in Asia.
For all intents and purposes the fund was hard closed before it opened. You had to 'apply' to invest at inception and GP allocated the $25MM or so they were willing to take to those who applied. After that existing investors were able to add $6K per year and they increased that to $6500 a few months ago. I'm not sure why the prospectus says the fund will hard close at the end of this year because previous ones said it was officially hard closed at the end of 2015 but regardless... it was never really open.

update:
https://www.sec.gov/Archives/edgar/data/890540/000113542816001881/frost-497.txt
497
1
frost-497.txt
THE ADVISORS' INNER CIRCLE FUND II (THE "TRUST")
FROST KEMPNER TREASURY AND INCOME FUND (THE "FUND")
SUPPLEMENT DATED NOVEMBER 29, 2016
TO THE INSTITUTIONAL CLASS SHARES PROSPECTUS AND THE INVESTOR CLASS SHARES
PROSPECTUS, EACH DATED NOVEMBER 28, 2016 (THE "PROSPECTUSES") AND THE STATEMENT
OF ADDITIONAL INFORMATION, DATED NOVEMBER 28, 2016 (THE "SAI")
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT CONTAINED
IN THE PROSPECTUSES AND SAI, AND SHOULD BE READ IN CONJUNCTION WITH THE
PROSPECTUSES AND SAI.
The Board of Trustees of the Trust, at the recommendation of Frost Investment
Advisors, LLC (the "Adviser"), the investment adviser of the Fund, has approved
a plan of liquidation providing for the liquidation of the Fund's assets and the
distribution of the net proceeds PRO RATA to the Fund's shareholders. In
connection therewith, the Fund is closed to new investments. The Fund is
expected to cease operations and liquidate on or about December 30, 2016 (the
"Liquidation Date").
Prior to the Liquidation Date, shareholders may redeem (sell) their shares in
the manner described in the "How to Redeem Fund Shares" section of the
Prospectuses. For those Fund shareholders that do not redeem (sell) their shares
prior to the Liquidation Date, the Fund will distribute to each such
shareholder, on or promptly after the Liquidation Date, a liquidating cash
distribution equal in value to the shareholder's interest in the net assets of
the Fund as of the Liquidation Date.
The liquidation distribution amount will include any accrued income and capital
gains, will be treated as a payment in exchange for shares and will generally be
a taxable event. You should consult your personal tax advisor concerning your
particular tax situation. Shareholders remaining in the Fund on the Liquidation
Date will not be charged any transaction fees by the Fund. However, the net
asset value of the Fund on the Liquidation Date will reflect the costs of
liquidating the Fund.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
FIA-SK-040-0100

I agree that it's percentages that matter, not absolute numbers.
It looks like the fund has taken in almost no money in the past six months (thus failing to broaden the base receiving those early realized gains).
AUM at the end of April was $30.735M @$10.38/sh; currently it is $32.5M (5.7% increase) @ $10.90 (5.0%), showing that virtually all the increase in AUM came from appreciation, not inflows.
(Current data as of 11/28/16 from M*; April 30 data from annual report.)
Two things that strike me as curious, since Derf is pointing out oddities:
- 1/3 of distribution coming from income; I thought microcaps don't often generate dividends;
- Despite having no inflows and just modest appreciation, the fund will have a hard close at the end of this year (prospectus)

FYI: Last week my colleague Michael Batnick pointed out that small cap stocks have seen the equivalent of both a bear and bull market this year alone:
The people that use all-time highs to scare you are the same people who told you that the 27% selloff in the Russell 2000 earlier this year was the canary in the coalmine. Small-cap stocks are now at all-time highs and 40% off their February lows.
It seems like a distant memory now, but the S&P 500 was basically the only stock market that didn’t go into a bear market — as defined by a 20% or greater loss — during the early-2016 selloff.
Regards,
Ted
http://awealthofcommonsense.com/2016/11/the-agony-of-investing-in-small-cap-stocks/

I don't think it matters whether they have a lot of AUM or a little, the percent of AUM is more relevant. One-third of the distribution is income and they apparently took net gains equal to roughly 1% of AUM this year for a total distribution of roughly 1.5%. I don't think that's particularly surprising, especially considering they were still getting original cash invested at the end of last year, probably took advantage of some of the low prices early in the year and must have taken some of those gains.

I came across estimate last week, here at MFO, & thought someone else would ask this question ,but to no avail.
So I'll lay it out & see if I can get any answers. Why would this fund with so little aum, $28 million (?) be giving distribution of $.1625 from a micro cap fund. I believe most of their other funds distribution were (0) or less than $.1625 by quite a lot.
I realize these are estimates only.
Happy investing,
Derf

@David_Snowball said in May, 2016 "Small/Mid Cap Value Options" discussion.
Intrepid Endurance (formerly Intrepid Small Cap, ICMAX) - absolute value which means huge cash holdings until compelling valuations appear. Up 4% YTD despite 67% cash which implies that equity portion was up 12%. Lost 18% in the 2007-09 crash.
http://www.mutualfundobserver.com/discuss/discussion/comment/77466/#Comment_77466
Yes Indeed!
3Q 2016 Fact Sheet
ICMAX ICMZX September 30, 2016
SECTOR allocation (% of net assets)
Cash Equivalents and Other 79.5%
Industrials 5.4%
Materials 4.7%
Information Technology 3.6%
Consumer Discretionary 3.3%
Financials 2.3%
Health Care 1.2%
http://www.intrepidcapitalfunds.com/media/Intrepid_Endurance_Fund_3Q16.pdf
Fact Sheets and 3rd Q Manager Commentaries
http://www.intrepidcapitalfunds.com/funds/fact_sheets.html

IF I wanted Hussman to control some of my money (which I do not), I'd be more incline to go with a 50:50 mix of HSRTX:HSRTX... but only if I thought Hussman was a decent fund manager (which I do not).

Reminds me of the time (long ago) when I asked the bartender for another "Squirt & 7-Up". Cut me off immediately. (But we agree on Hussman) :)

It hit about $7.50 today, way below the $14 it hit when resumption of diplomatic relations was announced in 2014. Any way I look at it, this fund has not made anyone much dough over its lifespan. It remains an "idea" investment for me and believe me, my attempts to make money off idea stocks and funds has not worked.

IF I wanted Hussman to control some of my money (which I do not), I'd be more incline to go with a 50:50 mix of HSRTX:HSRTX... but only if I thought Hussman was a decent fund manager (which I do not).
Different strokes for different folks.

HSTRX - are you kidding me? It has been so long since that one came up, I thought perchance it had been liquidated. Not only has it lost almost 85% of its assets since 2011, it has increased its expenses by about 8% from that year, too. I really had no problem with the other 9 recommendations (oops, not recommendations, really), but Hussman? Would have picked QMNIX or VMNFX for some kind of hedging, but definitely not Hussman.

RE: TRBUX
What is the difference between "Annualized Dividend" and "SEC Standardized"?
Which of the two is a better predictor of what an investor might expect to earn going forward?
(Excerpted from T Rowe Price's website on 11/27/16):
"Benchmark Definitions
30-Day Yield
Annualized Dividend as of 11/25/2016 1.32%
SEC Standardized w/ Waiver as of 10/31/2016 1.21%
SEC Standardized w/o Waiver as of 10/31/2016 1.06%"
(I think the 3rd line re waiver is pretty easy to understand.)

FYI: Do you need a financial adviser?
It is a simple question, but many investors are not sure about it. New changes in law (the fiduciary standard) and technology (robo-advisers) have added layers of complication to the answer.
To know, you must evaluate your financial situation. Let’s work through it together, so you have a better understanding of your circumstances and can decide what sort of financial services you need.
Let’s begin with the deceptively simple question: How much help do you need? It depends on several factors:
Regards,
Ted
https://www.washingtonpost.com/business/get-there/do-you-need-a-financial-adviser/2016/11/22/82258064-b003-11e6-8616-52b15787add0_story.html

FYI: (Dodge & Cox Stock Fund is also having a great year !)
ome Back on Track
T
Regards,
Ted
http://news.morningstar.com/articlenet/article.aspx?id=782075

:) I appreciate the response, @DanHardy. Wouldn't you know? I already own quite of bit in PRSNX (TRP Global multi-sector bonds) and PREMX (EM bonds.) My smallest bond holding is in DLFNX (2.55% of portf, domestic "core-plus.") All proceeds continue to be reinvested. And my two biggest holdings are balanced funds, so there's a big slug of bonds in there... But I'm not about to switch out of them: PRWCX and MAPOX. They run neck-and-neck for the top spot in category.

Thanks for the input. Both Scott Burns and Merriman have shown splitting up the 60% equity side into US Large, US small, Reits, International and Emerging Mkts will outperform the CRSP US Total Mkt Index over time (VBIAX equity side of 60/40). My data shows this portfolio 60/40 will produce 9.32% CAGR since 2002 while VBIAX had 7.62%. That would compound greatly over time. Max drawdown was 4 percentage points higher than VBIAX and beta appeared to be 15% higher. So.....its a matter of personal choice I guess but not a bad option. Not sure which way I will go. Simplicity with VBIAX costs you a little. VBIAX made changes to their benchmark index equity side that has improved their performance around 2006. AOR looks good with limited track record but it is outperforming near term but needs a big down market to properly test it. Put AOR on watch list. This might be in the vein of what K O'Reilly is doing.

Good morning,
It is for certain my small/mid cap sleeve found in the growth area of my portfolio has been the bread winner thus far this year with a year-to-date return of better than 25%. My second best performing sleeve is my domestic equity sleeve found in the growth & income area with a year-to-date return of 10.1% and is followed by my domestic hybrid sleeve which is also a member of the growth & income area with a return of 9.6%. Overall, my investment return for the portfolio as a whole, according to Morningstar's Portfolio Manager, is 8.0% which betters the year-to-date return of the Lipper Balanced Index at 6.3%. Thus far, my better performing sleeves have more than offset my laggards.
As of my last Morningstar Instant Xray analysis (11/25/2016) my asset allocation bubbled at 20% cash, 25% bonds, 33% domestic stocks, 17% foreign stocks and 5% other. This is a little different from my last report of equities being a total of 52%. Seems, my hybrid funds which make up about 40% of my portfolio must have made some asset adjustments for this equity allocation to change. I find it interesting to follow their changing asset movements and how these changes effect my portfolio's asset allocation. I believe, some of my hybrid type funds help keep me positioned in the more faster moving market currents as their investment spectrum encompasses a wide range and variety of assets.
Since, December will soon be here, in only a few days, I don't plan to do any buying until the first part of the new year, if then. During December, I'll collect most of my fund distributions and build cash. I'm not certain what will transpire should the Fed's raise interest rates in December, or January, and it's resulting effects on equities. I do believe it certain that bond prices, for the most part, will continue to adjust downward as interest rates rise. It will be interesting to see what shakes out with the fast money crowd. Since, I am well diverisfied I am most likely to benefit from the fast money crowd's forever changing positioning. I am thinking of adding to my bank loan fund in the near term along with some select stock funds ... but, looking to see how December goes. Looking out, as interest rates rise and when I can get a CD yield in the 2.5% range I'll start to rebuild my CD ladder ... but, CD rates will have to become higher than the average total return I have achieved, thus far, with my short term and limited term bond funds.
To quote a strategy found in baseball ... I am not looking to hit the long ball just play short ball and advance the runners. And, if the long ball should come, perhaps it will score some runners just as the outsized returns of my small/mid cap sleeve, in essence, did.
I hope all had a great Thanksiving ... and, I wish all Happy Holidays as December arrives along with continued "Good Investing."
Old_Skeet

FYI: (Click On Article Title At Top Of Google Search)
Perhaps nowhere else in financial markets is speculation on the ultimate success of Trompononics more rampant than in shares of small U.S. stocks.
Small company shares on Friday notch their longest winning streak in 20 years on a shortened Black Friday trading session. The Russell 2000 Index rose 0.4% in in the shortened session to book its 15th advance in row. This streak ties a run last seen in February 1996. The longest ever streak, 21, was hit back in 1988.
Regards,
Ted
https://www.google.com/#q=Unsinkable+Small+Caps:+Russell+2000′s+Winning+Streak+Longest+in+20+Years+wsj