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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.
  • Ignoring Energy Transition Realities as We Greenify
    Aside from the environmental waste disposal problem and labor/community radiation exposure problem, the cost advantages of nuclear don't appear to be there. From the previous link:
    Existing nuclear plants have relatively low operation, maintenance, and fuel costs compared to many fossil fuel plants; however these routine costs still make nuclear power economically uncompetitive in comparison with natural gas, wind, and solar.
    New nuclear plants are another matter altogether; their continuing high construction costs make them uneconomical. Between 2002 and 2008, cost estimates for new nuclear plant construction rose from between $2 billion and $4 billion per unit to $9 billion per unit, according to a 2009 report by the Union of Concerned Scientists. In reality, even those astronomical projections have been surpassed. The two new units at the Vogtle Plant in Georgia, the only new nuclear construction in the United States, are now years behind schedule and projected to cost more than twice their original budget of $14 billion. Similarly, it was estimated that Duke Energy’s proposed Levy County Nuclear Power Plant in Florida would cost $5 billion, but projections ballooned to $22 billion. The project was canceled in 2017, and Duke Energy decided to focus on solar energy expansion instead.
    Reactors also typically require a long period of planning, licensing, and building. The 2019 World Nuclear Industry Status Report (WNISR) estimates that since 2009 the average construction time for nuclear reactors worldwide was just under 10 years.
    The WSINR report also estimates that the cost of generating nuclear energy ranges between $112 and $189 per megawatt-hour (MWh), while solar power costs between $36 and $44 and onshore wind power comes in at $29 to $56.
  • Highland Socially Responsible Fund to be reorganized
    update:
    https://www.sec.gov/Archives/edgar/data/891079/000119312521065141/d128745d497.htm
    497 1 d128745d497.htm HIGHLAND FUNDS II
    HIGHLAND FUNDS II
    Highland Socially Responsible Equity Fund
    Supplement dated March 2, 2021 to the Summary Prospectus, Prospectus and Statement
    of Additional Information (“SAI”) each dated January 31, 2021, as supplemented from time to time
    This Supplement provides new and additional information beyond that contained in the Summary Prospectuses, Prospectus and Statement of Additional Information and should be read in conjunction with the Summary Prospectuses, Prospectus and Statement of Additional Information.
    IMPORTANT NOTICE
    The following information supplements and supersedes any information to the contrary contained in the Summary Prospectus, Prospectus and/or Statement of Additional Information of Highland Socially Responsible Equity Fund, a series of Highland Funds II (the “Trust”), each dated and supplemented as noted above.
    As previously disclosed on October 28, 2020, and as supplemented on January 31, 2021, the Board of Trustees (the “Board”) of Highland Funds I (the “HFI”) and Highland Funds II (the “HFII”) unanimously approved an Agreement and Plan of Reorganization (the “Plan”) for the reorganization of Highland Socially Responsible Fund (the “Acquired Fund”) into NexPoint Merger Arbitrage Fund (the “Acquiring Fund,” and together with the Acquired Fund, the “Funds”).
    The shareholders of the Acquired Fund approved the reorganization at a special meeting of shareholders held on February 26, 2021. The reorganization will take effect on March 2, 2021. Effective immediately, the Acquired Fund will be closed to new and existing investors.
    Please contact the Adviser at 1-877-665-1287 if you have questions about the Reorganization or your account.
    For more information regarding the Acquired or Acquiring Fund please call 1-877-665-1287 or visit the Funds’ Web site at https://www.highlandfundadvisors.com/.
    INVESTORS SHOULD RETAIN THIS SUPPLEMENT WITH THE SUMMARY PROSPECTUS,
    PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR FUTURE REFERENCE.
    HFII-HPE-SUPP-0321
  • the March issue is live ... and thanks!
    Hi, guys.
    Shared a Launch Alert for the Humankind US Equity ETF in your honor. I thought the discussion of it was thoughtful and productive, and so decided to share. Thanks for it!
    It also spurred, in part, the article on the fallacies of a "green bubble." It is the panic du jour among those scraping for clickbait articles. At base, the argument is "all of that money flowing into green investments" is creating a bubble. There are a couple problems with the argument. One is that the numbers underlying the bubble argument are sort of invented, which is why I stayed with the conservative $50 billion in inflows angle. The other is that funds are just a vehicle for accessing investments, they aren't the investments themselves. As a result, the funds can't be in a bubble ... though fund managers can choose whether or not to invest in wildly priced stocks.
    Part of the question for next month is whether it's even worth mentioning the fallacy of the underlying stats? Depending on what you read, the amount investing in ESG sorts of ways might be $10 trillion ... or $20 trillion, $30 trillion or just north of $40 trillion which does sort of imply some methodological problems in the calculations.
    Lots of "A" tier managers retiring, Fuss, Browne and Puglia among them. Much greater shift in the industry away from liquidation and toward M&A activity. You could, I think, make the argument that the mid-market is actually the death zone. Niche managers with distinctive products (Seafarer, Grandeur Peak) have a chance. Mega-firms have a chance. But all of those guys with 20-50 funds seem to be folding, mostly by selling to guys with 50-70 funds.
    Wishing you a joyful month,
    David
  • "Take Deposits Elsewhere": What is money really worth if banks don't want it?
    It seems like an alternative to a bank for Germans would be a Money Market fund, perhaps in a brokerage account.
    Unless the MM will also charge to hold your money.
    David
    (a) In order to avoid a negative yield, Fidelity Management & Research Company LLC (FMR) may reimburse expenses or waive fees of Fidelity® Government Cash Reserves. Any such waivers or expense reimbursement would be voluntary and could be discontinued at any time. There is no guarantee that Fidelity® Government Cash Reserves will be able to avoid a negative yield.
    FDRXX Summary Prospectus
    The only reason why most MMFs in the US aren't already charging investors money is that they're being subsidized. What's the motivation to subsidize returns in a country where the banks are charging savers to hold their cash?
    Even in the US, I've seen small company 401(k)s offering MMFs with negative yields. These were 401(k) annuities. Though the MMFs themselves had a positive return, once the annuity wrapper fee of the 401(k) was added in (or should I say subtracted out), the net return was negative.
  • "Take Deposits Elsewhere": What is money really worth if banks don't want it?
    Note that in general, Germans do not invest heavily in the stock market, rather they invest very little, more like on average 15% of their wealth
    Most invest in insurance type products from Allianz etc or regular savings
    Stock market is considered very risky and goes against the practical german approac
    I believe Lewis B had a recent comment where he stated he found it interesting that many americans put their life savings into the stock market and its unknown, non guarantee return
    Best,
    Baseball Fan
  • Tax Q - Remember you have two different basis-ies for the average cost method.
    I first asked about this in 2011, when the "covered" vs "non-covered" reporting legislation came into effect. It seemed clear that I needed to divide my transactions into two bins, one for "non-covered" and one for "covered" going forward. But, I never did so since I hardly sold anything in a taxable account. Now for 2020 tax season this is biting me big time:
    Remember, even if you use the average cost method, the mutual fund companies all seem to calculate two different bases - one for "non-covered" (pre-2012) shares and one for "covered" (2012 and later.) For example:
    2010: Buy 100 sh XYZZX at $10 (non-covered)
    2015: Buy 100 sh XYZZX at $30 (covered)
    2020: Sell 100 sh XYZZX at $50 (will be non-covered shares, the non-covered bin is emptied first)
    2021: Sell 100 sh XYZZX at $50 (will be covered shares)
    They are going to report your sale from the uncovered bin first - so the basis for your 2020 sale will be $1000, for a $4000 gain. For 2021, the shares are covered; they will report a basis of $3000 to the IRS and a $2000 gain.
    If you mistakenly combined both purchases into the same bin and calculated the average basis, you might be tempted to report each of the sales with a $2000 ($20 per share) basis. Since the 2020 sale is not covered, you might report a $2000 basis for it, for a $3000 gain, which the IRS won't know about. But for 2021, you will also need to report a $2000 basis, for a $3000 gain, which is different from what you will get on your 1099-B. This could get you a letter from the IRS.
    For some reason how this two-bin basis calculation works is not documented or explained anywhere online, or by any of the fund companies' tax guides. Best bet: just assume that all the numbers on your 1099-B are right, even for non-covered shares you have had a long time. You might want to break out non-covered vs covered bases now, before you exhaust your un-covered shares. Those can probably be fudged a little, as log as all the bases you have used for all the sales in each bin add up to the amount that you paid in to the fund.
    Another way is to use FIFO or some other method. In retrospect, that might have been easier than average cost.
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    @Derf No fishing yet. Wifey wants to go after the big fish. Maybe I'll join her, I dunno. Catfish out of the pond are my speed. But there's just one place on Oahu for freshwater fishing. I looked into it. The requirements and arrangements are silly, ridiculous. I just want to buy a license and GO. But no, that's not enough... ORK! But I sure am enjoying some fabulous sashimi, since getting here. :). Ahi, mostly.
    https://www.istockphoto.com/photo/hooked-yellow-fin-tuna-fish-underwater-gm173315513-25525805
  • "Take Deposits Elsewhere": What is money really worth if banks don't want it?

    Banks in Germany Tell Customers to Take Deposits Elsewhere
    Below are a few edited excerpts from a current article in the Wall Street Journal:
    Interest rates have been negative in Europe for years. But it took the flood of savings unleashed in the pandemic for banks finally to charge depositors in earnest.
    Germany’s biggest lenders have told new customers since last year to pay a 0.5% annual rate to keep large sums of money with them. That is creating an unusual incentive, where banks that usually want deposits as an inexpensive form of financing, are essentially telling customers to go away.
    The pandemic has changed the equation. Savings rates skyrocketed with consumers at home. And huge relief programs from the ECB have flooded banks with excess deposits. Banks also have used the economic dislocation of the pandemic to make operational changes they have long resisted.
    According to price-comparison portal Verivox, 237 banks in Germany currently charge negative interest rates to private customers, up from 57 before the pandemic hit in March of last year. Charges range between 0.4% and 0.6% for deposits beginning anywhere from €25,000 to €100,000.
    The ECB’s deposit rate, which it charges banks, is minus 0.5%. The central bank has signaled it is unlikely to change that level anytime soon.
    Banks in Germany are particularly hit by negative rates because Germans are big savers. About 30% of all household deposits in the eurozone are in Germany, according to the ECB. Last year, deposits in the country rose 6% to a record €2.55 trillion as people became wary of spending under the pandemic or simply had nowhere to spend, with restaurants closed and travel restricted.
    In Denmark, where interest rates were cut to below zero two years before the eurozone, banks have gone from charging wealthier clients to smaller ones over the past year. The Danish central bank estimates about a quarter of the country’s depositors are currently being affected.
    Nordea Bank Abp recently lowered the deposit threshold for a 0.75% charge to 250,000 danish krone, equivalent to $41,000, from 750,000 danish krone as the pandemic will likely prolong the era of negative rates.
    The flip side for customers there, is that in some cases, while they pay to deposit money, they don’t have to pay anything to borrow. Nordea in January started offering 20-year mortgages at 0%.
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    @AZRph : For the older folks, one should surely keep an eye on their 2025 & earlier funds as far as bond return is concerned.
    @Crash : To my thinking you are receiving part of your distribution from bonds as you're removing the funds from a balanced fund.
    I was wondering if you'd had a chance to wet a line lately.
    stay safe,Derf
  • Gold down / Settles below the key $1,800 mark in 2nd day of losses
    Linking some analysis from today. (Published before the price turned and headed south again.)
    LINK
    Hard to figure out. It’s a rocky investment most of the time and hasn’t done as well as equities over the years. Still, some find it appealing as a small holding in a diversified portfolio. Others have an almost spiritual fascination with it and have loaded up mightily.
    - Rising interest rates tend to spook metals markets.
    - Perceptions the Fed will keep rates very low tend to support metals markets.
    - The bitcoin craze has, as others noted, impacted the metals markets for the worse.
    It should be noted that metals & miners did very well during 2019-20. Some mining funds sported one year gains of around 50%. To some extent, dues are being paid today for that immense run-up.
    LINK to miners ETF (shows current price)
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    As of 2018 according to Cerulli Associates, 2/3 of all 401(k) contributions and 1/3 of assets were in Target Date Funds. One can speculate that those invested in shorter maturity vehicles (2025 or earlier) with higher bond percentages (by design) in an environment of escalating rates may find their quarterly statement does not reflect the level of return and/or principal preservation they had expected.
    Interested in reading other perspectives.
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    How do you managed on the bond portion of the equation as a retiree?
    I've never yet actually USED any of my bond funds' dividends. I'm still reinvesting all of that. ... Luckily, we don't need that money. What I take from the IRA, I've been taking from my biggest holding--- which is PRWCX. It's a balanced fund, though. Because of its size in my portfolio, it's easier to grow back the chunk I take. I plan for that chunk-taking to be an annual ritual. Done it only twice, so far. And what am I talking about? Just $4-5K. The bond dividends help keep the portf. stable in weird, "interesting" times.
  • Pimco Funds changing the names of four municipal bond funds and other change
    update to institutional shares (GCMFX, GNMFX):
    https://www.sec.gov/Archives/edgar/data/810893/000119312521062769/d124234d497.htm
    497 1 d124234d497.htm 497
    PIMCO Funds
    Supplement dated March 1, 2021 to the Municipal Value Funds Prospectus (the “Prospectus”), and to the Statement of Additional Information (the “SAI”), each dated July 31, 2020, each as supplemented from time to time
    Disclosure Related to the PIMCO California Municipal Opportunistic Value Fund and PIMCO National Municipal Opportunistic Value Fund (each a “Fund” and collectively the “Funds”)
    As previously disclosed, PIMCO may from time to time determine to close either or both Funds to initial purchases by new investors or to initial purchases by new investors and subsequent purchases by existing shareholders and will provide notice regarding such closures.
    Effective March 3, 2021 (the “Effective Date”), the Funds will close to initial purchases by new investors and subsequent purchases by existing shareholders. Such closure will not affect the rights of existing shareholders with respect to shares of the Funds held as of the Effective Date. The purchase of additional shares of the respective Fund through dividend reinvestments will continue to be permitted.
    Notice will be provided regarding any future reopening of a Fund to subsequent purchases by existing shareholders or to initial purchases by new investors and subsequent purchases by existing shareholders.
    Investors Should Retain This Supplement for Future Reference
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    @WABAC, you may want to review River Park Short Term High Yield, RPHYX. David has provided a detail analysis of the fund.
    https://mutualfundobserver.com/2017/05/riverpark-short-term-high-yield-fund-rphyxrphix/
    YTD return is +0.3% while vast majority of bond funds are in red for the year.
    Thanks for the tip. I did read your link. And I did look into RPHYX on other sources.
    I like the duration. The ER is too high for me to get into a B-rated bond fund. I don't think anything could get me into a B-rated fund.
  • Momentum Last Seen in 2000 Puts U.S. Stock Party at Risk
    With growth ETFs off 5-6% in the last 2 weeks. (OK, that’s nothing). But here’s a guy that has predicted they will slow.
    https://theonedave.substack.com/p/momentum-last-seen-in-2000-puts-us
    The originator is actually: Jonathan Krinsky, Bay Crest Partners LLC , but I can’t seem to locate his original work.
  • IQDAX- If it's opaque, just maybe there's a reason?
    fmsdx cfiax azanx hold a lot of non investment grade bonds so they dont compare well to hblix, wbalx or bampx. they are all classified as conservative allocation funds. but fmsdx cfiax and azanx loose a lot more when the market melts down. I would rather buy moderate allocation funds with more stocks. such as lkbax,msfrx,mapox.Which I own.
    Hmmm...Many believe non-investment grade bonds is the place to be right now and for the near-to-intermediate future.
    Not sure about the volatility of the respective funds but "Volatility is the price you pay for growth" is the wisest and most profitable investment advice I ever received.
    In the 50%-70% cat, I have long owned PRWCX, FBALX, and VBIAX. All 5* funds that all have better TR performance for just about every period than 4*/3* LKBAX, MSFRX and MAPOX.
    Never heard of LKBAX before you posted about it. MFS is a worthy family but MSFRX clearly ain't their best fund. Used to own MAPOX long ago but do not like their overall strategy.
    Based on this post of yours, I trust you'll have something negative to say about my three, but not sure it will make any sense to me. To wit, if I only owned three funds, it would be these three.
    Really don't care to discuss this any further. Good luck to you.
  • IQDAX- If it's opaque, just maybe there's a reason?
    Well as they say hindsight is 20-20 right?
    Should note that the fund did have a nice pedigree and backing, David Bonderman, chair and founder of TPG, private equity firm w/~$85B in assets backed (per WSJ, TPG/Bonderman had no day to day participation in the mgmt or valuation of investments in the fund") InfinityQ and per the WSJ article, according to people familiar with the matter had approx $100MM invested in the fund.
    To the Monday morning QBs...Please show me any other fund that was around since Oct 2014 and had the same combo of low drawdown, volatility and return and zig when the SPY zagged downward...(potential fraud and make believe numbers not withstanding)
    @Wabac, noting that the return of the fund was after paying the high fee, still not a bad return...dunno, I get it that expenses eat into returns, but if I'm going to the Doc, Dentist, auto mechanic, I look for the most experience, value and quality etc...not low price necessarily. If he was not cooking the numbers, I would argue that this fund was worth the high cost.
    Just be careful, you might be next...we might be talking about the wisdom of those who put their monies into a SPY index fund that includes Tesla and the Cathie Wood funds as something that in hindsight looked really foolish...let's be intellectually honest with each other as why not, we don't know each other anyways...but I'd argue that the ARK funds could easily go down another 50% from here...we know they are way overvalued but some pour money into them until maybe last week. That to me, seems like a way crazier investment that putting monies into a fund with an over 5 year track record and backed by a very experienced private equity founder.
    So, anyways, let's hope it all works out and no one loses too much monies for this financial lesson....as always, respect, good health and good luck to all,
    Baseball Fan
  • 10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
    @WABAC, you may want to review River Park Short Term High Yield, RPHYX. David has provided a detail analysis of the fund.
    https://mutualfundobserver.com/2017/05/riverpark-short-term-high-yield-fund-rphyxrphix/
    YTD return is +0.3% while vast majority of bond funds are in red for the year.
  • Buffett says 'never bet against America' in letter noting company's U.S. assets
    There is a lot more information in Buffett's interview with respect to bonds in general.
    “Bonds are not the place to be these days,” Buffett said. “Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future.”
    Buffett noted that the benchmark 10-year Treasury yield had fallen drastically to 0.93% at the end of 2020 from 15.8% in September 1981. Meanwhile, investors earn a negative return on trillions of dollars of sovereign debt in Germany and Japan, he added.
    If US investment opportunties are so great, why is he buying back $9 billion worth of Berkshire Hathaway stock? The answer is that he have had hard time buying them within his metrics and this is consistent with his investment pattern for a number of years. Recent purchase in drug and telecommunication stocks is a reflection of his forward looking view in post-pandemic scenario.
    In addition, Buffet also made many mistakes just like other investors or fund managers. His value investment approach exposes him to the value-trap stocks. At least he owed up to his mistakes and moved on.
    https://reuters.com/article/us-berkshire-buffett-precisioncastparts/warren-buffetts-10-billion-mistake-precision-castparts-idUSKCN2AR0MZ