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Reading the link that @davidrmoran posted, I think @kevindow is correct. At the end of the first paragraph, it states the adjusted net expense ratio is 1.81%. The other expenses that were not excluded add up to 6.32%.
"The Adj. Net Expense Ratio of 1.81% excludes acquired fund fees and expenses, dividend expenses, borrowing costs and brokerage expense on securities sold short which totaled 6.32% for the prior fiscal year."
Frankly I find the note in the Prospectus confusing. However KevinDow said he CALLED them and they confirmed. What I still don't get is how they are generating 8%+ returns right now minus the ER which has them flat for the year.
Something tells me "Dividend Expense" is not really an ER. It is "Less Return" one would otherwise have. It's just how they have to report it maybe.
Too tired now to think. Will check on the weekend.
Can someone do the simple arithmetic and see whether change in $10k conforms or not? Is this possible to do? It is easy to imagine someone on the phone does not fully comprehend either.
It would seem to me that judging any fund based on a one-week period is very short-sighted. Yes, the premise is that long-short funds should have some upside participation and should have limited downside. Just what those amounts are is certainly open to discussion. A top equity fund manager said this week that the market volatility on Wednesday last week was another 'flash crash' that will result in an investigation, caused by hedge funds and other traders begin caught in the euro/dollar speculation. I would not expect my long-short fund to anticipate something like that. On a longer time horizon, however, I would and do expect L/S managers to navigate the markets reasonably well.
The group of 30+ L/S funds we track use all kinds of strategies, and only about half of them have 3-year records, and fewer than 10 have 5-year records. Those with 10-year records held up much better than the S&P 500. As I look at a handful of L/S funds with long-term records, it would appear that investors should use these with the understanding that they will underperform, sometimes significantly, when markets are in a strong bull trend. For me, that is the trade-off. The crux is how they handle real bear markets. Because we have not had one of these since 2008, it is difficult to evaluate the large number of L/S funds that have come to market in the last 1-2 years. They could look pretty good now, but they could be real stinkers in a long bear market.
Selecting the BEST long-short fund is problematic, therefore. Those with long-term measurable records include GGUIX, CLSIX, GATEX, HEOZX, MFLDX, FMLSX. It is very easy to look at some of the newer funds and assume the current performance is indicative of long-term expectations. That would be a mistake.
Couple of notes if I may. CLSIX/CLVSX is a L/S fund in Real Estate category. So its more narrowly focused.
FMLSX is a DIRECTIONAL L/S fund. I think it sorta tries to capture 80% of upside and 60% of downside and tries to win as a result. I think most other L/S funds are like that too, but do not advertise it that way and claim to "preserve capital" and "provide downside protection" skewing investor perception.
There are some newer L/S funds that have performed well, but largely only being LONG in the bull market. They should be viewed with suspicion. Similarly there are others that have sucked up the place, but may really end up being good long term holdings. It would really help to get some insight into the management of these funds before making any decisions.
I thought I had found a keeper in TFSMX. I have held it for some time and TFSHX I have held since inception, only because of my familiarity with TFS. Now I have to rethink based on what I learnt on this thread.
Comments
http://www.tfscapital.com/products/mutual-funds/tfs-market-neutral-fund/
"The Adj. Net Expense Ratio of 1.81% excludes acquired fund fees and expenses, dividend expenses, borrowing costs and brokerage expense on securities sold short which totaled 6.32% for the prior fiscal year."
Someone correct me if I got this wrong.
Something tells me "Dividend Expense" is not really an ER. It is "Less Return" one would otherwise have. It's just how they have to report it maybe.
Too tired now to think. Will check on the weekend.
The group of 30+ L/S funds we track use all kinds of strategies, and only about half of them have 3-year records, and fewer than 10 have 5-year records. Those with 10-year records held up much better than the S&P 500. As I look at a handful of L/S funds with long-term records, it would appear that investors should use these with the understanding that they will underperform, sometimes significantly, when markets are in a strong bull trend. For me, that is the trade-off. The crux is how they handle real bear markets. Because we have not had one of these since 2008, it is difficult to evaluate the large number of L/S funds that have come to market in the last 1-2 years. They could look pretty good now, but they could be real stinkers in a long bear market.
Selecting the BEST long-short fund is problematic, therefore. Those with long-term measurable records include GGUIX, CLSIX, GATEX, HEOZX, MFLDX, FMLSX. It is very easy to look at some of the newer funds and assume the current performance is indicative of long-term expectations. That would be a mistake.
FMLSX is a DIRECTIONAL L/S fund. I think it sorta tries to capture 80% of upside and 60% of downside and tries to win as a result. I think most other L/S funds are like that too, but do not advertise it that way and claim to "preserve capital" and "provide downside protection" skewing investor perception.
There are some newer L/S funds that have performed well, but largely only being LONG in the bull market. They should be viewed with suspicion. Similarly there are others that have sucked up the place, but may really end up being good long term holdings. It would really help to get some insight into the management of these funds before making any decisions.
I thought I had found a keeper in TFSMX. I have held it for some time and TFSHX I have held since inception, only because of my familiarity with TFS. Now I have to rethink based on what I learnt on this thread.
Are the snide comments really necessary?