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Marketfield MFLDX: What will happen after the takeover?

edited July 2012 in Fund Discussions
In David's profile of MFLDX this month, he mentions that MFLDX has been sold to New York Life and will almost certainly get a sales load in October 2012. Couple of questions relevant to a potential investor:

1. If I buy no-load shares of MFLDX now, will I be able to continue buying no-load shares after October? Or is it likely that after October, only shares with load will be offered?

2. MFLDX is "no transaction fee" (NTF) at my brokerage now, but New York Life's MainStay funds are not. Is it likely that MFLDX will similarly lose NTF status after October?

Comments

  • edited July 2012
    1. Probably not, unless maybe some sort of separate, grandfathered share class is created and that seems doubtful.

    2. Double check if Mainstay funds are TF funds at your broker. I see them as load funds, but not load + TF.

    I'm very surprised that the fund has been sold - one of the bigger independent fund success stories in recent years, as people flee mutual funds - certainly no trouble attracting AUM. Why sell?

    Edited to add: some answers here - http://www.mfwire.com/article.asp?template=article&storyID=40485&wire=MFWire&wireID=2
  • I will sell my entire MFLDX position before October. I don't believe anything good happens when an insurance company or bank buys a no load fund and slaps a load on. With the load, their sole interest will be to build AUM. I also believe the insurance company will likely meddle with the decisions of the fund's managers, affecting future performance. David raised a huge red flag in his commentary on this.
  • I disagree that New York Life will meddle with the management decisions of Aronstein. Michael made it pretty clear that one of the key points in the decision was that the management team will remain intact and will retain all investment management power. Knowing Michael, I take him at his word. He is no naive lamb, as a veteran private money manager and now fund manager, so I take him at his word. Could NYL try something down the road? Sure, but there is no evidence that this will happen...yet.

    To be honest, I was surprised by the decision, since the fund has grown substantially in assets, simply because it has provided shareholders with terrific results. Perhaps it is just the success of growing assets that has caused this change. When a fund with a very small total management team grows from less than $50 million (when we first started using it in early 2009) to more than $2 billion in only 3 years, there must be some real growing pains.

    For me, this is absolutely not a reason to liquidate. In fact, if I was an individual investor and did not already own MFLDX, I would certainly open a minimum position prior to the merger. It's hard to imagine that Aronstein & co will suddenly take dumb pills the minute NYL absorbs the fund. Are there concerns? Yep. I am always concerned.
  • edited July 2012
    Definitely NOT dumping the fund, although I have taken some profits in recent months. May add back some if market comes down.
  • Reply to @scott:

    Re: 1 Why do you say, "probably not, ... and that seems doubtful"? z-class shares are pretty common.
  • Reply to @scott:
    NYL/Mainstay took over the ICAP funds (e.g., ICSLX, ICEUX) a few years ago. Existing shareholders were grandfathered in to the NL institutional class. NYL committed to keeping the expense ratio the same for a certain period of time. After that period, they did raise the ER.

    GLTA,

    BWG
  • Link to proxy statement:

    http://www.sec.gov/Archives/edgar/data/1141819/000089418912003675/mrktfld-tpm_pre14a.htm

    (middle to bottom of page 20)

    ...Shareholders of the Fund (Marketfield fund) will receive Class I shares of the Acquiring Fund in connection with the Reorganization. Following the Reorganization, you will be eligible to purchase Class I shares, to the extent available, in any other fund that is part of the Mainstay Group of Funds, provided you continue to hold Class I shares in your account, including current accounts maintained at financial intermediaries. Because of the Class I eligibility requirements, Class I shares are not available for all financial intermediary firms, investment platforms or investment accounts. Therefore, if you move to a different financial intermediary, or the policies of your current financial intermediary change you may not be able to hold and/or purchase Class I shares of any fund in the MainStay Group of Funds or you may be subject to certain investment minimums or other restrictions, in addition to those found in the Acquiring Fund’s prospectus. Alternatively, you may maintain your account directly with the Acquiring Fund in order to continue to hold and purchase Class I shares. Please see the Acquiring Fund’s prospectus and SAI for additional information regarding Class I eligibility.
  • Reply to @TheShadow: Thanks for this. I see that my brokerage does have no-load Class I shares of several MainStay funds, but they are not NTF. So I would expect that if I buy MFLDX, future investments will be no-load but be subject to a transaction fee (at least at my brokerage).
  • I am so very disappointed to learn about Marketfield getting bought. On top of that by NY Life - a company I have had a tryst with when I had hair (details withheld since it will upset me greatly) - and furthermore likelyhood of fund getting loaded.

    MFLDX was my substitute for SARIX (which used to be NARFX). Where do I go from here? Any suggestions? I don't see myself holding MFLDX beyond end of this year.
  • Call me a purist, but I don't buy load funds, period. If a no-load becomes load, it's gone from my portfolio. There is so much out there in no-load world that I can't be bothered with loads.
  • Reply to @tgeno: totally agree. load = against my religion
  • Whenever this happens to good funds from smaller boutiques I relate it to what has gone on at Royce since they were bought by Legg Mason.......especially the past 5 years. It will take a few years for investors to feel the effects. Royce was bought in 2001 and at about 2007 you started to see the negative effects of asset bloat, needless and repetitive new funds, and high expense ratios REGARDLESS of performance. I see the same happening for MFLDX in the next few years.....primarily with asset bloat, difficult to efficiently execute that kind of strategy with too much money and especially a lot of hot money.
  • Reply to @VintageFreak: David has been discussing a number of long-short funds in the June and July commentaries and in particular I thought ARLSX sounded quite promising: http://www.mutualfundobserver.com/2012/06/aston-river-road-long-short-arlsx-june-2012/

    Personally I am not convinced by this asset class, due to the high fees and inconsistent performance. I am putting some money in PAUIX instead since I think these kinds of multi-asset, tactical allocation funds are a better vehicle for making bets on sweeping macro generalizations.
  • Reply to @Heathbob: I pulled out of Royce earlier this year. The performance was not bad but yes, assets kept increasing, there was style drift out of small caps, and they just kept opening up new funds. The kicker was the despite all the influx in assets, expenses were not going down.

    Royce Special Equity was an interesting fund that closed earlier this year, but even that manager is now running a separate Royce Special Equity Multi-Cap Fund. And once that fund closes I expect we'll see a new Royce Special Equity Global Fund and so on.
  • Reply to @Heathbob: I can corroborate what you say about Royce. Wife and I were both long-time holders of Royce funds, and generally quite pleased. Now it seems that every Royce manager is being put on duplicate/"copy cat" funds; and Royce is constantly throwing stuff against the wall to see what fits. I'd be very upset if I was a holder of Royce Premier, only to find out that Royce 100 had just been released.

    And then there's the Royce benchmarking scam: many of Royce's funds can hold up to 20% (or more) of international equities -- yet the benchmark is still the Russell 2000.

    Based on Royce, I am very distrustful of fund buyouts, and will not be looking at MFLDX. Frankly, the only holding company that I think does a "good enough" job is Affiliated Manager's Group (wife holds Tweedy, Browne funds; which were bought out by AMG a while ago). If Tweedy's offerings start getting too clever for their own good, she's out. We're actively looking for replacements for our Royce holdings (will probably keep the micro cap fund since it is -- by necessity, sadly for LM -- closed to new investors.
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