Towle is a deep value / small cap fund. It's about the purest deep value play around, which is attractive because the academic research says that the "value effect" is most apparently in really deep value just as the small cap effect is most visible in really small caps.
Nice people doing hard stuff.
They're currently a one-star fund in Morningstar's system. Charles's rating of them since inception (2011) is comparable: 1 (lowest 20% in the peer group based on risk adjusted returns). Which made their quarterly report pop, as they noted that their SMA composite for their strategy returned just over 19% annually for the past three years. Morningstar's three-year numbers, which by default at the last 36 months from today, are far lower. Curious, I checked.
What a difference 10 days makes: the fund loses one-third of its trailing three-year returns when you shift from 9/30/23 as your end date to 10/13/2023. That's about 10 trading days. But the opposite effect is seen in the five year returns, which improve by 50%.
Three year returns (per Morningstar)
As of 9/30/23: 19.18%
As of 10/13/23: 12.74% - a 33% decline
Five year returns
As of 9/30/23: 2.47%
As of 10/13/23: 3.76% - a 50% rise
Ten year returns
As of 9/30/23: 6.43%
As of 10/13/23: 5.86% - a 10% decline
One reason that MFO traditionally pushed "full market cycles" as the metric rather than arbitrary windows (what is the significance of "three years"?) is that you need to find a way to avoid being misled by performance reports that might reflect one performance bubble rolling off just as a drawdown rolls on.
Which is to say: look long and hard (looking at you, Ms. Woods) before concluding "those numbers are sweet! Here's my money!"
Comments
https://www.morningstar.com/funds/xnas/tdvfx/performance