the February 2017 issue is live Dear friends,
There's always a balance between broader issues and discussions of individual funds. This month tilted in the direction of funds.
AMG Chicago Equity Partners Balanced (MBEAX): a singularly low-profile, low-risk balanced fund. US equities, including a larger serving of small and mid-caps than most, plus high-grade bonds. For any comparison period that takes down cycles into account, it has gold performance. For comparison periods that look narrowly at periods marked by rising markets (the easy-to-find 1/3/5 year stuff), it's a notch down. Even in those markets, it's risk-adjusted returns are better than its peers or Vanguard STAR.
T. Rowe Price Global Multi-Sector Bond (PRSNX): formerly TRP Strategic Income, we profiled it in 2011 and I own it in my retirement portfolio. It's the first in a series of profiles labeled "left behind by Morningstar." As Morningstar focuses more resources on passive products and big funds, bunches of funds that it once recognized by meritorious get dropped from coverage. In 2011, their final word was "promising but it needs a longer track record before we upgrade it." Five years later and it's a consistently top 10 fund but still no notice.
GQG Partners Emerging Equities (GQGPX): An Elevator Talk with Rajiv Jain about his new fund.
Symons Concentrated Small Cap Value, Institutional: an interesting possibility. It'll be by far the most concentrated small cap fund out there and is based on a successful small SMA cluster. $1 million minimum, so it's mostly FYI.
Osterweis Emerging Growth (OSTGX): just wanted to share word of Jim Callinan's return with the rest of the world.
My essay mostly focused on the wisdom of keeping your head when all those about you are losing theirs. Ed addresses the ugly reality that a number of big name firms are likely in their last decade. And Bob C begins walking folks through the decisions to be made in the transition to retirement.
For what interest all that holds, and with thanks for your patience and good spirits,
David
Mark Hulbert: Harvard Teaches Investors A Lesson In What Not To Do sma3,
Please order me a white clam well done from Modern.
Richard C. Lee 1973
Mona
Mark Hulbert: Harvard Teaches Investors A Lesson In What Not To Do Harvard is having problems attracting good in house talent to mange the money because the faculty and students go ballistic when they hear that someone who can deliver market beating returns will not work for less than 2 or 3 million a year. Add to that the fact that every faculty member thinks s/he can do a better job
Yale' David Swensen figured this out years ago. Run a low key inexpensive shop. The Investment manger scouts for talent and then hires the best to run the money independently. It is hard for all the lefties to complain when all they see is 8 to 12% returns year after year... They do not know that the outside manger is getting 2 and 20
Swensen however is a Prince. For years he worked for $1,000,000 ( which goes farther in New Haven than Boston .. I should know I live in New Haven) I think they finally gave him a raise
Mark Hulbert: Harvard Teaches Investors A Lesson In What Not To Do FYI: Don’t fire your investment manager just because he failed to beat the stock market last year.
I can already hear the howls of protest: If trailing the market isn’t a fireable offense, then what is?
My answer: It’s not that past performance doesn’t count; what’s irrelevant is performance over the recent past. Calendar-year performance, for example, tells you next to nothing about whether your manager is a good bet for future returns.
This is an exceedingly difficult lesson for us to take to heart. Even Harvard University, with the largest endowment fund in the world, apparently is having trouble with it.
The university in late January laid off more than half its investment-management staff. Though the institution’s press release announcing this didn’t mention it, the layoffs come on the heels of a disappointing fiscal year in which the endowment actually lost money, lagged behind its benchmark by 3 percentage points, and trailed the total return of the S&P 500 Index SPX, +0.73% by 6 percentage points.
Regards,
Ted
http://www.marketwatch.com/story/harvard-teaches-investors-a-lesson-in-what-not-to-do-2017-01-31/print
American Funds - first timer @msf I get what you are saying about loads. However, for the longest time American funds retailed only through loads. So if you didn't have an institutional account, you were out of luck.
I did see the SAIs, and saw $
1MM investements of its lead manager in all funds. Other managers however own around $
100K. Given the asset size of these funds, I want to do a little more research.
Comparing with Vanguard - if they are anything like Vanguard, I would be silly to worry. I'm also looking at Franklin Mutual funds that may be available without load to me. Thanks for the endorsement on American funds.
American Funds - first timer Let me second what rforno wrote. They are a solid, conservatively manged fund house without esoteric funds. In other words, boring like Vanguard. Similarly solid. Not quite as low cost, but as noted above, fairly priced.
While you may not appreciate M*'s opinions, its star ratings (backward looking) are more objective. M* shows
American Funds' asset-weighted (I think) fund ratings to be: 4.0 (domestic), 4.3 (international), 4.2 (muni), 2.4 (taxable bond). That compares favorably with
Vanguard at 4.0, 3.
1, 4.0, and 3.3. It probably looks good compared with any large fund house.
With respect to load families, keep in mind that PIMCO, Loomis Sayles, American Century, etc. are load families. According to
M*'s data, even T. Rowe Price sells some load shares (
1.9% of its AUM) as does
Doubleline (0.2% AUM).
IMHO what matters is how much
you pay for access, not how much others pay.
American Funds - first timer So now that American funds are available NTF, I've been toying with DCAing a small amount every month in them. Needless to say I will do so opportunistically, not regularly. Low minimum is attractive. However, I'm still distressed from the fact they used to be a load shop and from M* over the top praise for this fund family.
Given my age, I was thinking about the following funds instead of all equity funds. Thinking these are a little less aggressive and since I still have some hair left, reasonably steady.
BALFX, IFAFX, CIBFX, GBLEX.
The idea is to start with $250 in each = $1000, and then repeat $1000 multiple times. Eventually I would stop at $10K in each fund invested over time. This was money I was keeping aside for my daughter's college, and I'm happy to say it does not look like we will need as much as I thought we would (good I married smart and there was appropriate gene transfer). Now I don't want to buy more funds than I need so if only one or two would likely achieve the same outcome, I would rather do that. Starting this post with the hope those who have invested in American funds can offer some insight/opinion.
What the Safe Part Of Your 401(k) Still Can, And Can't, Do FYI: Investors have long taken comfort in the steady returns their bond funds have provided, particularly when stocks go on another of their gut-wrenching drops. But the safety blanket is getting more threadbare, a result of simple math. Bonds don't pay as much interest as they used to, following a decades-long drop in interest rates. That means bonds pay less in income and also raises the threat of a rise in interest rates. Higher rates mean prices for bonds, whether individual ones in your brokerage account or the ones in a bond fund you own, will fall because their payouts look less attractive than those of newly issued bonds.
Even though bond funds provide less cushion than before, they still are the best defense for a 40
1(k) account, fund managers say. Bond funds will still hold up better than stocks during downturns. And investors may be in need of some safety soon. U.S. stocks are more expensive relative to their earnings after more than tripling since early 2009, and Wall Street questions how much more they can rise without strong growth in profits. President Trump's promise to shake up the status quo could also mean big swings for stocks.
Regards,
Ted
http://bigstory.ap.org/article/f669cd236fa0432495631608bc0cde83/what-safe-part-your-401k-still-can-and-cant-do
Hi, Ted. +1 Best post of the year so far
Betting On The Dogs Of The S&P 500 At most intervals over the last 3y-plus (except for a hair at 1y), it's outperformed by the much smaller CAPE.
Yes, hope you're breathing easier.
Distressed Investing, Not Investors Today, he sees the most opportunity in bank loans and asset-backed securities.
Is there anybody that does not like bank loans?? They have been stellar now for the past year along with junk corporates and emerging markets bonds. But this universal consensus worries me to death. From being 100% bank loans in late fall I am now 55% junk and 45% bank loan which is the reverse of where I was last week.
Of course junk worries me to death too. At least there I am comforted by the fact that the ultimate junk bond guru on the planet is still saying they are ridiculously overpriced. Something he has been saying for the past 15% on the upside. Then again, in this game it pays to always worry and not be complacent. That way you don't get blindsided by the likes of a 2000-02 or 2008.
Edit; Being a stickler for detail make that 58% junk bonds 42% bank loan
MFO is being rolled back, some comments may disappear Hi, guys.
We suffered minor vandalism on the site at about 6:00 a.m. CST today. Apparently a fairly prolific hacker, perhaps an Indonesian hacking consortium, tagged us. In response, we've changed all of our internal passwords (they're now, Chip assures me, "mile-long strings of characters") and our ISP has completed security scans of the site. In short order, they're going to rollback the site to what existed last night. That means that any changes (both posts and hidden code) over the past 12 hours or so will disappear. We regret the inconvenience, but we're trying to be exceedingly careful.
I'll ask Chip to update you once we have more complete info.
David
