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Professor Snowball's "Best Stock Funds You Never Heard Of" from Bottom Line Personal 10/1/19 publica

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  • It's an excellent article, but I could never bring myself to invest a single penny in LEXCX. It has one of the worst ESG ratings I have yet to see. It should be renamed Voya Corporate Polluters. A true dinosaur of a fund whose relevance in the modern world has become extinct.

    Why invest in a fund which is killing us and causing the catastrophic loss of pristine environments and their habitats? We simply cannot continue destroying the Earth in pursuit of financial gain.

    On a brighter note I really appreciated Dr. Snowball's inclusion in this month's newsletter of a website new to me called asyousow.org. I encourage everyone who cares to see how the environment and wider society are affected by the underlying companies in their mutual funds. Nice one, Dr. S.

    https://www.asyousow.org/invest-your-values
  • edited November 5
    Although I have never owned LEXCX I have owned, in the past, a fund which is the modern day version of LEXCX. It is IACLX (Corporate Leaders 100). It holds and equally weights the top S&P 100 companies and has a value approach as it rebalances quarterly. And, over the past five years IACLX has out performed LEXCX.

    In reducing the number of funds that I owned, several years back, I discarded IACLX. However, I did keep it in my son's (age 33) Roth account which I have oversight over. Although it has not been one of his top producers it is one of his steady Eddie equity funds and carries three stars from M*. It's ten year average total return is better than ten percent which, in gereral and on average, are what stocks are suppose to do.
  • I was interested to see David endorse Homestead Value, or more specifically the firm behind the fund. HOLVX seems to be doing fine at this point, having survived a total management changeover in 2017. At that time, Mark Ashton and his team all stepped down from that fund and also from another former good fund, HSCSX. The small company fund had shot the lights out up until the changes. Both the value fund and the SC fund declared massive distributions for two years, as is often the case when new managers take over and start selling. I would tread cautiously given the disastrous (-26%) 2018 that HSCSX posted under new managers Prabha Carpenter and James Polk, as they are the two running the value fund also. I know Homestead because I used to own HSCSX and now own Homestead Growth, a fine find that is managed by T. Rowe Price.
  • The Bottom Line pieces are distinctly collaborative efforts. Mark Gill says they've been thinking about storyline "X" and asks if I could suggest, say, 10 funds that fit their parameters. Usually the parameters are perfectly sensible, so usually I suggest 10-20 funds - with snippets of commentary - that might be credible. Mark then works with their editors and reader panels to draft a story that meets their incredibly restrictive style guide. I get the draft from his editor with a "let us know if this works for you." I tweak, sometimes suggest caveats, but mostly respect their judgments because mostly they're respected mine.

    That sometimes translates to a situation where the top five funds in my mind aren't the five best suited to the needs of their readers, though three of them might be and the other two were in the discussion.

    On Homestead, I do like organizations (RE in this case) with a mission. There was a generational change in leadership six years ago with Prabha Carpenter's arrival. Two of the three long-tenured managers - in Mr. Morris's case, he'd been managing for RE since the mid 1970s - departed after a short transition, then the last of them - Mark Ashton - retired in 2018. So, not quite a coup so much as a pretty orderly, low-key generational transition. She's been solid at Value. Small Company, not so much but I haven't had occasion to figure out why.

    On LEXCX, it is a very much old-economy fund. That means it's not a green fund. The point that I usually make about it centers on the notion that you're often better off doing nothing than doing something. The Corporate 100, with a 23% turnover and sort of twitchy rules about auto-selling, is a quasi-index which hasn't quite sparkled.

    For what that's worth,

    David
  • @David_Snowball: Thanks for your comments, which do help clarify the situation at Homestead. I did not realize what an important advance rural electrification represented to our country until I read Robert Caro's biography, "The Years of Lyndon Johnson." Caro, aided by his wife Ina, thoroughly researched daily life in Texas in their effort to understand LBJ's contribution in bringing electricity to the Hill Country. So, kudos to Homestead.

    Another small MF company whose story is laudatory is Bridgeway. They contribute well beyond the norm to their community. Their investment results, unfortunately, have not always been stellar.
  • Hi, Ben.

    I agree about Bridgeway. Regrettably, about how halves on Bridgeway.

    I was so impressed with John Montgomery that, back when I ran the college's Institute for Leadership and Service, I invited him to campus to spend an evening talking with a small roomful of my students. More impressed that he go quickly said "yes" and, more still, that he waived the small honorarium that we offered and asked that the money be directed to a student in need.

    David
  • Pretty cool Mr. Montgomery, pretty cool.
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