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MFO, February 2020 Issue

Welcome to the “It’s not the Super Bowl without the Steelers, but it’s great that Troy was recognized as a first-ballot Hall of Famer” edition of the Mutual Fund Observer which is posted at Highlights include:

  • my publisher's letter takes a swipe at robo-writers, and reports on an unusually fervent hug between Rob Arnott and Cliff Asness. Good news: the long-time sparring partners have agreed on something important. Bad news: it’s that 10-year returns look uniformly low. Both point you toward the long-unloved emerging markets, while Mr. Asness offers a version of “it’s time to be a bit grown-up” financial advice.

  • a long-overdue profile of FAM Dividend Focus (FAMEX). Over the past year, we’ve done a series of data-driven articles that focused on equity-oriented funds that thrive when all others falter, but that still make decent returns. FAM Dividend Focus has earned its way into more of those articles than any other single fund. It was time to say just a bit more about it.

  • Edward Studzinski has been meeting with, and sparring with, some very fine independent fund managers. He shares what he's learned about researching management strategies, the changing landscape, hubris and managers' insistence on tripping themselves up.

  • “Getting More Bang” explores high capture / low downside capture equity funds. Capture ratio is a sort of “bang for the buck” measure: funds with a capture ratio over 1.0 are delivering more of the market’s upside than its downside. By picking a downside target (“I’m willing to take 90% of the market’s losses, but no more”), you can use the capture ratio to identify the funds which offer the greatest return for the risk you endure. It’s a simple and intuitive way to create your due diligence list. We offer the top 20 domestic and international funds.

  • Lynn Bolin continues to explore the six rules of successful investing. This month: knowing your investment environment.

  • Charles Boccadoro has responded to user requests for more fund portfolio data at MFO Premium; traditionally, we were analytics-rich but portfolio-poor. As he explains, that changed on February 1st.

  • on a bright note, several first-rate funds have reopened to new investors, including RiverPark Short-term High Yield (RPHYX). RPHYX seems forever maligned because its portfolio doesn’t fit neatly in any box. RPHYX had the distinction of having the highest Sharpe ratio of any fund in existence for years. It's a low volatility / low-risk fund that's best used as a strategic cash fund. (I've owned it for a long time and use it in lieu of a savings account.) It has averaged 3.1% annually with a maximum drawdown, lifetime, of 0.6%. David Sherman's current reading of the market, bond as much as equity, is that it's time to maximize caution and his funds are positioned commensurately.
Liquidations, 74 manager changes, a dozen new names, two retirements and more …

The long scroll version is available at

As ever,


  • Thank you Chip and David.

    For what it's worth, as of today, you can now purchase RPHYX at Charles Schwab. I put some of my MM cash in there today. I know Fidelity and some others opened it to new investors a couple weeks ago, so Schwab was a little behind on making it available.
  • Matt Kelly, one of the RiverPark folks, wrote to confirm that and to lament the amount of time it took Schwab to register the change. "Schwab has told us that RPHYX and RPHIX will finally be reopened there tomorrow. Apparently they are experiencing a “backlog” at the moment and that’s why it took so long."
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