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This is a tough decision for me. Andrew Foster has set up a rather intriguing new fund. His new website is very informative as was his last conference call. I still have some slight reservations.
1. Research staff 2. Fees
Does he have any analyst on payroll besides himself and the co-manager?
It is a tough decision, so much so that I've got both for now, with SFGIX in audition mode as a small position.
I agree with you on the pros and cons ... he made a good case for his approach, I thought, in the conference call, and the diversification benefit (small as it is, outside Asia) is attractive too, but there's not much of a bench on the team, it's expensive, and it's slightly underperforming MACSX so far, as well as being a bit more volatile. I want to follow it pretty closely, which for me is much easier to do with a small position, but I'm definitely not ready to go all-in with AF on this one.
Tough call to make. I own MAPIX, MACSX and the Seafarer Fund. Yes I know there's considerable overlap but I still felt that there's enough differences between MAPIX and MACSX to hold both --- the country makeup are still different enough to hold both. As an example, MAPIX holds substantial Japanese stocks whereas MACSX much much less. MAPIX is much more value tilted whereas MACSX is more of a cross between value & growth oriented firms.
As of 7/31 - Seafarer has 70% in Asia, 14% in Eastern Europe, 9% in Latin America and 3% in Middle East/Africa. When I look at just the top 10 holdings of the Seafarer fund versus that of MACSX, the holdings look completely different. So that plus the more global nature of the Seafarer fund was enough for me to decide to add this fund. There's no right or wrong answer to this. I'm sure some people find the fund a tad too expensive and if that's the case then go for MACSX now and consider the Seafarer fund later on to see how it performs and if the fees come down but I do like the fact that they will try hard to lower expenses as the fund grows.
If I didn't think so highly of Mr. Foster this would be a no brainer. There was a time when i'd avoid small mom and pop shops. However, this has changed over time. Small fund managers like Jeff Auxier speak my kind of language >
I already own MAPIX and have a much smaller position in - MACSX. Mr. Foster definitely made a good impression during his conference call. So much for not collecting mutual funds.
Reply to @AndyJ: Until there is more information on his research support, this fund is reserved for wait-and-see. In light of expanding into new terrorities, he needs more support than what was available to him in the past.
In addition, there is the public relation duty he now takes on as he grow his business. Question is how much this activities detract from stock picking.
FEO (Aberdeen First Trust EM) remains an interesting EM balanced fund, although it is a bit leveraged. It does provide a very nice yield (over 6%), although continues to sell at a discount to NAV. Pimco's multi-asset EM fund (PEAEX) has been completely disappointing.
FEO is going likely be more volatile than the Seafarer or Matthews funds and could sell at a further discount - in 2008, FEO's NAV dropped 35% vs MACSX's 32%, but the price on FEO dropped 41%.
The Seafarer fund is - I think - potentially very interesting but it still sort of seems a little bit like it was launched before everything was really fully in place. That's not saying it isn't good, can't perform well, etc but that it just feels a little bit like it was launched without everything quite in place.
I think my main concern on EM is the effect of rising food prices later this year into next year.
Rising food prices could be a problem. But i don't think developed countries are immune to rising food prices either. It could be said that several EM countries still promote growth where rising food & energy cost may be less of a burden compaired against developed Europe and US. And it should be said that EM countries might even be more business friendly too.
Seafarer may not have the financial reserves for hiring staff currently ? Perhaps that is one reason why he's sticking with what he knows - asia. I'm also mindful that other managers ( Bruce Berkowitz, etc ) had great success without much staff either.
Grandeur Peak went down the other road - they had a whole team in place
At the same time, I'm invested in the global ARTGX fund with 2 strong co-managers and I really don't know much about how deep their analyst bench are?
The Seafarer fund has Andrew, the co-manager William and analyst/researcher Kate. So not as deep of a bench as Matthews Asia but again, I don't see much of an analyst bench at the Yacktman funds nor Artisan Global Value funds. So if Seafarer is staying focused on a small # of core holdings then they might be fine with a 3-person team plus a 4th person, Michelle, who is the CFO and handles the Fund administration and was previously at Litman/Gregory Asset Management and a Principal at iShares.
I have heard of many investors jumping on Eric Cinnamond's new smallcap value fund as soon as it debuted but I didn't hear anything about a co-manager nor analysts on his new team despite the fact that there are thousands and thousands of smallcap companies out there.
Comments
It is a tough decision, so much so that I've got both for now, with SFGIX in audition mode as a small position.
I agree with you on the pros and cons ... he made a good case for his approach, I thought, in the conference call, and the diversification benefit (small as it is, outside Asia) is attractive too, but there's not much of a bench on the team, it's expensive, and it's slightly underperforming MACSX so far, as well as being a bit more volatile. I want to follow it pretty closely, which for me is much easier to do with a small position, but I'm definitely not ready to go all-in with AF on this one.
Good luck, AJ
As of 7/31 - Seafarer has 70% in Asia, 14% in Eastern Europe, 9% in Latin America and 3% in Middle East/Africa. When I look at just the top 10 holdings of the Seafarer fund versus that of MACSX, the holdings look completely different. So that plus the more global nature of the Seafarer fund was enough for me to decide to add this fund. There's no right or wrong answer to this. I'm sure some people find the fund a tad too expensive and if that's the case then go for MACSX now and consider the Seafarer fund later on to see how it performs and if the fees come down but I do like the fact that they will try hard to lower expenses as the fund grows.
I already own MAPIX and have a much smaller position in - MACSX. Mr. Foster definitely made a good impression during his conference call. So much for not collecting mutual funds.
In addition, there is the public relation duty he now takes on as he grow his business. Question is how much this activities detract from stock picking.
FEO is going likely be more volatile than the Seafarer or Matthews funds and could sell at a further discount - in 2008, FEO's NAV dropped 35% vs MACSX's 32%, but the price on FEO dropped 41%.
The Seafarer fund is - I think - potentially very interesting but it still sort of seems a little bit like it was launched before everything was really fully in place. That's not saying it isn't good, can't perform well, etc but that it just feels a little bit like it was launched without everything quite in place.
I think my main concern on EM is the effect of rising food prices later this year into next year.
Seafarer may not have the financial reserves for hiring staff currently ? Perhaps that is one reason why he's sticking with what he knows - asia. I'm also mindful that other managers ( Bruce Berkowitz, etc ) had great success without much staff either.
Grandeur Peak went down the other road - they had a whole team in place
The Seafarer fund has Andrew, the co-manager William and analyst/researcher Kate. So not as deep of a bench as Matthews Asia but again, I don't see much of an analyst bench at the Yacktman funds nor Artisan Global Value funds. So if Seafarer is staying focused on a small # of core holdings then they might be fine with a 3-person team plus a 4th person, Michelle, who is the CFO and handles the Fund administration and was previously at Litman/Gregory Asset Management and a Principal at iShares.
I have heard of many investors jumping on Eric Cinnamond's new smallcap value fund as soon as it debuted but I didn't hear anything about a co-manager nor analysts on his new team despite the fact that there are thousands and thousands of smallcap companies out there.