Posted yesterday 7 June, please find all MFO ratings and fund metrics updated on
MFO Premium site through month ending May.
I continue to marvel at results of
Fund Family Scorecard. How do poor performing fund management companies persist? Could be that absolute return is not a concern, that it's all about risk adjusted return. Could be that some of the funds did well initially, then went south but investors are too stuck to change. Could be that these firms just have strong marketing and, my friend Ed offers, "write good newsletters." Could be that they are just having a run of bad luck and stuck in an uncooperative and "irrational" market ... but given enough time and a return to sanity, the Great Pumpkin will appear.
There are 30 fund families that have failed to beat their peers with every fund they manage ... 135 funds (oldest share class only) that underperform against their category averages on an absolute return basis since inception, measured from first full month of offering through May 2016.
Three of these families each manage assets of $1B or more ... Dunham, Hussman, and Domini.
Dunham & Associates Investment Counsel, Inc. is a San Diego based firm with a line-up of of 16 funds that "...operate on performance-based advisory fees, also commonly known as Fulcrum Fees, and feature objectives ranging from capital preservation to aggressive growth." Average age 9 years. Average annual expense ratio 1.90% (all share classes). These 16 funds have nearly $1B in assets under management (AUM). None of the 16 have beaten their category averages. How can that be ... ? One clue: 1.9% across 9 years represents a drag of 18%.
Another is Hussman Strategic Advisors Inc. Four funds. $1.1B AUM. I suspect in this case, Dr. Hussman would argue it's about risk adjusted return: "Investing for long-term returns while managing risk". Certainly that appears to be the case with its Strategic Total Return Fund (HSTRX), but what about the other three funds? Like, its flagship Strategic Growth Fund (HSGFX) ... it has been underwater for 92 months now and counting.
Here are some risk profile metrics for HSGFX since inception and across various time frames, including the last two business cycles ... something appears to have gone terribly wrong this cycle.
Finally, at $1.7B AUM ... "Invest in a greener, more peaceful future with Domini Social Investments." Three funds. Average age nearly 17 years.
Its front-loaded, 9-year-old International Social Equity A (DOMAX) has done pretty well the past three and five years, so Amy Domini is quick to post its five star status on her web site ...
Here's a closer look ...
As always, if you see anything amiss with this month's update or have recommendations for improvements, please do not hesitate to email us.
Comments
As for Hussman, I can speak from personal experience. He called the 2008-2009 meltdown right on and had ( and continues to write) attractive and extensive discussions on his web page about his investment philosophy and economic outlook, making HSGFX an attractive candidate for bear markets.
However, Hussman failed to anticipate the bull market from the 2009 low, obviously. He reminds me of Henry G. Van der Eb who runs the Mathers fund. He had wonderful intellectual defenses of why he was in cash throughout the 1990s and 2000s while he lost more and more money.