Dear friends,
Greetings from vacation. We've posted the August update, fyi. In order to accommodate my time away, I shifted content away from longer feature stories and toward more highlights of individual funds: four profiles, two Elevator Talks, a couple updates, a couple highlights from the Funds in Registration and a couple funds that are authorized to go live whenever they want but haven't yet.
Hope you enjoy. I'll be back online next week.
All the best,
David
Comments
Thanks for your August update and the heads up that ARTSX will close tomorrow. It's been on my watch list forever so I put in a foothold today.
Enjoy the rest of your vacation,
Riley
I just read your August commentary. Here are a few observations and thoughts in the order of their place in your commentary:
* I do not see the value of looking since inception returns and qualifying these as beating cash, bonds and stocks in particular each fund has a different inception. Some has not gone thought a single market cycle and others had several. Some might even have gone through different managers, even changed the strategy. Charles is a good guy, he is trying to distill the data to eliminate information overload for some but in the process a lot of detail is lost to the point that some of the stuff presented is not very useful at all. One has to look into the details and is willing to spend time reading, comparing etc. There is no shortcut!
* Even if I am critical of the value of such tables, I think they are not complete in terms of all the funds that David has profiled. Immediately looking at the fund list I do not see funds like GRTVX, WSCVX to name a couple.
* Regarding RTV's category containing only two funds: David, can you get someone to add the number of funds in the category to the Rank in Category column for each year so that we can deal with this sort of situations better? I think you have better influence on M* than I do. And what sort of categorization is that? Do you open a new category for just two funds? What is wrong with placing these funds in some small cap category with many other funds? I can't believe there are not enough small cap funds to sort this fund out.
* Regarding big picture at Grandeur Peak: "International Opportunities, the non-US sub-set of Global." Which global? I think it is the Global Opportunities. I think the word Opportunities has dropped off.
Having said that, if Intl. Opportunities is the International sub-set then why does it have proportionally higher cash holding and slightly different country/region exposure weights? It may be the same stocks but different weights changes the character. Assume that one day, Grandeur Peak will have US Opportunities but you cannot reconstruct Global Opportunities from US and Intl. Opportunities if the allocation of individual securities within sub-slices are different. Can you ask them about this?
* You have two interesting Elevator Talks this month. I like these a lot more and far more useful to investors like me than the one for interval fund. I will be doing more research on these. FRNKX is interesting in its truly all-cap approach. I kind of compare that with FLPSX which has turned to sort of an all-cap fund over time. GAINX is also interesting. I think I will probably compare it to VDIGX, VDAIX and MNDFX. Considering LSOFX that you profiled this month was an elevator talk a couple months ago, perhaps you can profile these in more detail. I am more interested in FRNKX. It looks like its NTF brokerage coverage is limited though.
* Regarding fund name changes: Marsico experience recently reminds me the downfall of Artio. I am watching. That is not a healthy trend for them.
* Regarding funds that are liquidated: Invesco Dynamics. I had invested in this fund at some point in an older 401k. It was a hotrod fund as I remember (back then I did not know much about funds). After the dotcom bust, the fund did not recover.
* In Closing: I would place the links/logos of Amazon and PayPal right here.
* In several places in the article, a space or two needs to be added:
...can get elevated,temporarily at least...
...most of these are positive.But every now...
...Morningstar's peerless AlexAuerbach to check...
Barron'sfeatured a nice story...
...Gardiner and presidentEric Huefner both...
...$2500 minimum investment.3.77%, the only... (I think you dropped ER or Expense ratio before the percentage as well)
...that day to this.JHancock did better...
Also, on Fund Profiles:
* GPROX, GPGOX: Blake Walker's last name is listed as Walters once in each profile.
* GPGOX have expense waiver that reduces the expense to 1.75%. In both profiles there is a reference to 1.88 for GPGOX.
* GPROX profile mentiones that sub-portfolios tilt the portfolio in one way or another. I think GPGOX is not tilting but getting more focused by reducing the number of investments.
* Since GPGOX already have larger number of holdings why they did not just create a new fund for holding a more focused portfolio instead of selling equities from GPGOX and creating unnecessary turnover and tax burden for investors outside of shielded accounts.
* LSOFX Profile: add the word percent after deviation is eight.
* I would also would be very interested in comparing the performance of hedge fund with that of mutual fund (LSOFX) for the period the mutuaI existed. They should be able to provide the record for hedge fund. Maybe it is present on the website. I did not research yet.
* LSOFX Bottom Line: It would have been good to include "How many months it rouse when S&P 500 was down?" I think this is complimentary to the question you answered there but is equally important.
* SGHIX: Their portfolios may invest in up to 505 in equities. I think 505 should be 50%.
Finally David: You have profiled a number of Long/Short and Hedged equity type funds and had interviews for some. Have you invested in any yet personally? If yes, which ones. If not, why not?
I think you will find that once again, the M* front page expense ratio is wrong and does not reflect what investors actually pay, which is a 1.88% expense ratio as detailed in the current prospectus for GPGOX. One must find and not be juked by the parenthetical exclusions:
"Grandeur Peak Global Advisors, LLC (the “Adviser”), has agreed to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement (excluding acquired fund fees and expenses, brokerage expenses, interest expenses, taxes and extraordinary expenses) to 1.75% of the Fund’s average daily net assets."
Kevin
The error is occasioned by a policy decision on their part: they report the figure in the prospectus and annual report. Reductions that take place in between those particular filings don't get reported, presumably because they were concerned about companies gaming the system with temporary fee reductions.
For what it's worth,
David
As for the informative value of how well a profiled fund has performed since inception against basic indices, I humbly disagree with you. It's certainly the kind of ballpark "at-a-glance" comparison I'd like to know, before pulling-up the in-depth profile and current ratings.
I did debate whether to include the actual relative return numbers in the shaded columns, but felt it would be overkill for a top-level dashboard, but that's an easy mod for future if you think helpful for readers.
I agree. It is a valuable service and I enjoy and care. That is exactly why I spent my time to document each case I've detected. I find it interesting that you used one of your only 4 postings to criticize me.
Sorry about the delayed response. Just returned yesterday and faced a surprisingly large pile of stuff of the "why didn't you do this before vacation?" variety. Since Chip and Charles have weighed-in on copy edits and the database, respectively, I just wanted to pick up on four points:
Royce Value (RVT) and its peer group. RVT is categorized as a "small blend" fund. The CEF universe is tiny and filled with niche products, which presumably explains why there are only two small core funds in the bunch. I'm guessing Morningstar felt compelled to have a category for each stylebox but I agree with your concern, that it's really misleading not to disclose the number of funds when they're small enough to seriously distort the rankings. I've passed your query along to the Morningstar folks.
Long/short funds and my portfolio. I'll do a snapshot of my (incredibly dull) portfolio for September. I don't have any long/short funds, at least in part because most of the portfolio was set before I found attractive options. There are two funds that particularly interest me (ASTON/River Road Long-Short ARLSX and RiverPark Strategic Income, which is not yet launched) and which might worm their way in as substitutions (ARLSX for BBALX, RiverPark for Price Spectrum Income).
Interesting "Elevator talks". I'm trying to use the ET feature as a way of broadening my own horizons. Left to mine own devices, I'd ignore an awful lot of stuff. My hope was to offer folks whose strategies didn't immediately grab me the opportunity to slap some sense into me. And so I'm not predisposed to buy an interval fund but I do find the logic fascinating (well-chosen liquid investments have a poorer risk/return profile than well-chosen illiquid ones) and I was glad for the opportunity to learn about them. The feature's a surprising lot of work because firms are so worried about running afoul of FINRA/SEC regs, but we'll keep at it.
On being criticized. I'm deeply grateful for it and, especially, for the careful reading that folks like you, Charles and Chip offer. By the moment it comes for us to publish a piece, I tend to view it with such a combination of dread, loathing and embarrassment that I've ceased to be a great reader of my own work. They, and you, are and it makes a huge difference in the quality of the Observer. So, thanks!
As ever,
David
Finally got around to reading the August update. Good thing too, next week is September. I was taken aback to see Invesco Dynamics being merged away. It certainly has seen better days, with a history going all the way back to Sept 15, 1967. My recollection also is of a go go fund (what used to be classified as "aggressive growth"). No, my recollections of funds don't go back to the Nifty Fifty, but I think it's always been that type of fund. Not often one sees a nearly half century old fund vanish without at least a footnote.
Best I have read in many a moon here and my problem to a tee. And I have worried about the daily gyrations since like forever.