Today I was reviewing Wasatch's Strategic Income (WASIX) fund and I realized there are a lot of funds with the word strategic in them. There's even a mutual fund company named after this term (Strategic Advisors), but they don't have any strategic funds. Hmm.
Here are a few Stategic Income funds:
OSTIX - Osterweiss Strategic Income
FSICX - Fidelity Strategic Income
NEFZX - Loomis Sayles Strategic Income
TSIIX - Thornburg Strategic Income
Then there's are also:
VSEQX - Vanguard Strategic Equity
What's your take on this fund descriptor?
The only thing that seems consistent with all of these strategic funds is the use of the word strategic.
Comments
Old_Skeet
"Strategic asset allocation is an investment theory based on the principles of a Nobel prize winning dissertation. At the inception of the portfolio, a base policy mix is established, founded on expected returns and risk. Then the asset class mixes are rebalanced to target weights according to the original mix, usually at regular intervals such as monthly or quarterly, to maintain a long-term goal for asset allocation.
In other words, there is no attempt on the part of the managers to purposely deviate from the original determined weights. The emphasis is on preserving the fixed weights because they ultimately relate to a larger performance objective based on historical data.
Tactical Asset Allocation
The objective of tactical asset allocation is to move among various asset classes within a risk-controlled framework to seek to create an additional source of return. An attempt is made to take advantage of short and intermediate term market inefficiencies as a means of managing investors’ exposure to market risk.
Managers normally do this by evaluating the relative attractiveness of equity and fixed income markets through financial valuation, growth and sentiment measures. They will then use a systematic process to evaluate the different asset classes.
The investment philosophy is usually based on the belief that investor psychology and market forces can lead to periods of misevaluation. A tactical allocation process attempts to capture these misevaluations. It is not a fixed asset weight mix and the allocation and the risk level of a portfolio may change quite dramatically."
Thanks for the references.
As in: "I sometimes attempt to capture misevaluations, but consistently misjudge expected returns and risk."
I trust none of us buys any fund because they see the word Strategic in the name. The irony is sometimes good fund manager may have to use some qualifier to distinguish one fund from another. e.g. Riverpark uses Strategic for its Cohanzick income funds.
It is quite funny how GMO uses I, II, III to denote separate funds. What will be really funny is if GMO has GMO Value, GMO Value 1, GMO Value II, GMO Value III, and then GMO Strategic Value I, GMO Strategic Value II, and so on. Just in case this is true, I'm sealing all my windows tight so if I get the urge to jump out one of them, I'm not able. My family needs Vintage Freak. There is only Vintage Freak I, there is no Vintage Freak II, or Vintage Freak Strategic. I hasten to add, this was not a Tactical decision either, but how nature intended it to be.
Sorry, but Vintage Fund management is already taken:
vintage-vfm.com/
The Vintage Tactical Strategy Fund.
Scroll down a bit to the Mutual Funds listings.....a whole bunch; in spite of redundant class types.
https://www.google.com/finance?q=strategic+fund&ei=yXftU5j0KoekqwGmooCYDA
Maybe you could add the words "Total Return" between "Unconstrained" and "Fund"
Thanks Jerry for the explanation. I learned something new today.
@VintageFreak So, based on your musings, are we to assume there is nothing "strategic" in your modus operadi ('cause you'll have none of that; 'cause you're au natural)? Ha, viva la difference--- Haute Vintage!
This is a terrible example, but it's like slapping a Lamborghini label on a Fiat Jolly (which was featured on one of this season's "Comedians in Cars Getting Coffee" episodes - http://comediansincarsgettingcoffee.com/louis-c-k-comedy-sex-and-the-blue-numbers) and then wondering why its slow, not at all nimble, has wicker freaking seats, looks generally ridiculous and generally isn't anything like a Lamborghini. The investment version of the Fiat Jolly appears to offer as much protection as the real one, which...has no doors.
I still think alternative funds have a lot of potential, but presenting funds as nimble sportscars that turn out to be something resembling a golf cart for everyday use is not helping the category.
http://en.m.wikipedia.org/wiki/Strategery
In the investment world I think "strategic" can mean about anything they want. But it may carry an underlying connotation that they are smarter and know more than you do. To me it's a little like some of the go-anywhere funds. You pay a manager a little extra to guess which way various market components (stocks, commodities, Treasuries, etc.) will move in the future.
One problem with that approach is that most of us have become very short-term focused nowadays. So, a manager might be "strategically" correct looking 5-10 years ahead and yet see investors flee his fund well before than if it doesn't produce solid near term returns - especially in comparison to whatever market segment(s) are currently hot.