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RiverPark Short Term High Yield (RPHYX) . . . nice, but closed
MFO did a nice job of featuring RPHYX on November 1st, and it is surely a fine fund. Just one problem: it's closed to new investors. Suggestion to MFO: let the readers know this up-front, not only for this fund, but for any featured fund that is, aaah, closed.
It was featured a long time ago. A Bunch of people invested before it is closed. This was not a fund profile. You have to read the MFO fund profile page which was done when fund was new and still open.
This time it was there to illustrate the issues with Morningstar category assignment and subsequent star rating issues.
Uhhh ... actually the story focused on the limitations of Morningstar's star rating system. RPHYX, which we've been talking about for two years and whose closure we signaled about a month before the event, received its first star rating in October which is why it became the poster child in the story.
You might keep an eye on its newly launched sibling, RiverPark Strategic Income, which we profiled briefly in October as part of a Launch Alert. We'll do a conference call with manager David Sherman and RiverPark president Morty Schaja on December 9 and we'll have a profile of the fund on January 1.
Reply to @RJalpha: Oh, sure. Over the past 30 days, 21% of site visitors were new readers. Indeed, as I write this, 24% of the 18 people on-site are new. The challenge becomes trying to find an appropriate balance between the need to bring new readers up to speed (for an independent site, there's a remarkable amount of stuff that we've been up to - reflected, in part, in the content accessible through the top tabs) and not bogged "the regulars" down with stuff they'd find repetitious.
It's certain that I get that balance wrong from time to time, but I'll keep your concerns in mind and I'll keep trying to get a bit more right than wrong.
Technically, there is (as I read it) a back door into RPHYX. It's just not one that people here would be likely to use.
If you work with an adviser or financial planner who had clients with money in the fund as of June 21, 2013 (the closing date), you're allowed to invest via that adviser. See the prospectus.
There are often back doors to closed funds, ways to avoid loads, that work for some people. This is why I don't join the chorus in saying that sites like this, or M*, should not cover load funds or closed funds. They are still interesting, they may be available (albeit to just a few), they may give insight into strategies or particular managers (who sometimes manage similar funds for other families).
It's also why I take a notice that a fund is closed not as a rejection, but as a challenge. It's also why I'm not sure there's too much value in adding such a notice on the site - depending upon your situation, YMMV.
for the majority of folks, the notice would be nice. for the backdooring others, they'll know it doesn't apply to them. imo, the notice would be value added.
DFA funds - open or closed? They are generally only open if you invest through limited set of advisers who are already working with the fund. Sounds about the same as the condition for getting into RPHYX.
It's not black or white - that's the problem - a single bit (yes/no, true/false, open/closed) doesn't give enough of the story to tell you that you don't need to look further.
Artisan funds - many are closed, but open if you have $100K invested in their family of funds. That's a back door that could be used by someone rolling over a sizeable long term 401K plan. Buying into some of their open funds (it's a good family), and once qualifying, buy into some of their closed funds. If you didn't have Artisan funds to begin with (e.g. not offered in your 401K) would you know this back door was available to you?
There are certainly back doors that I would expect affected people to know about - like Vanguard Flagship customers being able to get into closed Vanguard funds. But that's because Vanguard heavily promotes this as a benefit of Flagship status. Other back doors, like Artisan, aren't so widely known.
Old Westbury funds - open, $1K min. But ... "Investments in the Old Westbury family of funds must be authorized by Bessemer Investment Management LLC [BIM]". (As near as I can see, one must be a client of BIM - not even a choice of adviser firms - and their min seems to be $10M.)
I've no problem with open/closed being added to the site - I just don't think it's sufficiently precise to be actionable.
If you happen to work with an advisor who can purchase the institutional class shares of the fund - RPHIX, that is a way in. Often times, fund companies allow non-commission advisors to aggregate multiple client purchases to reach the I shares minimums, or sometimes even allow the minimum to be reached over a short time period.
I don't want to make a big deal over this . . . it is really "small beer." I have the same beef with Morningstar. I am not suggesting that you change your narratives at all, or the context, but the first time you mention a ticker, like RPHYX, you could easily add, parenthetically, a single word -- RPHYX (closed) -- which requires eight key strokes and little space. Value IS added, particularly for new readers, or regular readers (like me) who sometimes miss an edition.
But this is your website. I'm going to dig and find out anyway, here or elsewhere, when authors fail to mention that a fund is closed. (Full disclosure: each time I get mad when I realize a fund is closed.)
Others have said you can sometimes get in the "backdoor" with closed funds. True. I have done this myself. It's a bit of a hassle, but, it can be done. I've done this by calling Vanguard and regarding a closed T. Rowe Price fund.
David, you have an excellent website here, and offer a great deal of value and insight, with or without indicating if a fund is closed in every article you write. So carry on!
I don't have any problem adding a bit to say a fund is closed or limited. I agree it's not a big deal. I just don't see the value in it.
To David's credit, he qualified his monthly commentary page to say "Closed (and other related inconveniences)." And M* tells you which share classes have what sort of limitations (see their "purchase" tab) - much more information than simply saying that the access is "limited".
Take OAKIX - Oakmark Int'l - the November commentary says that this fund is closed to most new investors. That's a direct quote from the prospectus.
[Side note to Shadow - this time I got the prospectus link right]
What would one do with this information? Ignore the fund, check whether and how one could buy it, or ...?
As it turns out, that prospectus quote is a misstatement. Channels are limited, access is not. Anyone can open a new account through the front door with a $1000 investment. It's just that one can't get in through a back door such as a third party broker.
It seems to me that saying this fund is closed actually subtracts value from its listing. You might stop looking at a good fund anyone could buy.
Think about OAKIX - here is a fund open to all investors who come to the distributor to invest. That's the only channel that's open to new investors. Compare that to Bruce fund (BRUFX) - a fund open to all investors who come to the distributor to invest. That's the only channel that's open to new investors. (Bruce fund never sells through brokers, period.)
Are they both "open"? If so, when should we say a fund is "limited" or "closed"? Or is OAKIX "closed" or "limited"? Then what's the value added by that tag - what will you do with that information that is different from the "open" tag attached to BRUFX?
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Here's my point - I think I can come up with definitions for "open", "limited", "closed" (and perhaps I'd need "hard closed") that make some sense. But I can't come up with definitions that help me take (or refrain from taking) action. Sure, "limited" puts me on notice that I might have to work harder to find a way to get into a fund than in the past, but it doesn't tell me not to try (see OAKIX). And it doesn't tell me that finding a way in will be harder than for other funds (see BRUFX). So I act the same way whether the fund is "open" or "limited". Hence there doesn't seem to be value added by the label.
Comments
This time it was there to illustrate the issues with Morningstar category assignment and subsequent star rating issues.
You might keep an eye on its newly launched sibling, RiverPark Strategic Income, which we profiled briefly in October as part of a Launch Alert. We'll do a conference call with manager David Sherman and RiverPark president Morty Schaja on December 9 and we'll have a profile of the fund on January 1.
As ever,
David
It's certain that I get that balance wrong from time to time, but I'll keep your concerns in mind and I'll keep trying to get a bit more right than wrong.
As ever,
David
If you work with an adviser or financial planner who had clients with money in the fund as of June 21, 2013 (the closing date), you're allowed to invest via that adviser. See the prospectus.
There are often back doors to closed funds, ways to avoid loads, that work for some people. This is why I don't join the chorus in saying that sites like this, or M*, should not cover load funds or closed funds. They are still interesting, they may be available (albeit to just a few), they may give insight into strategies or particular managers (who sometimes manage similar funds for other families).
It's also why I take a notice that a fund is closed not as a rejection, but as a challenge.
It's also why I'm not sure there's too much value in adding such a notice on the site - depending upon your situation, YMMV.
http://www.sec.gov/Archives/edgar/data/1494928/000139834413002870/fp0007468_497.htm
DFA funds - open or closed? They are generally only open if you invest through limited set of advisers who are already working with the fund. Sounds about the same as the condition for getting into RPHYX.
It's not black or white - that's the problem - a single bit (yes/no, true/false, open/closed) doesn't give enough of the story to tell you that you don't need to look further.
Artisan funds - many are closed, but open if you have $100K invested in their family of funds. That's a back door that could be used by someone rolling over a sizeable long term 401K plan. Buying into some of their open funds (it's a good family), and once qualifying, buy into some of their closed funds. If you didn't have Artisan funds to begin with (e.g. not offered in your 401K) would you know this back door was available to you?
There are certainly back doors that I would expect affected people to know about - like Vanguard Flagship customers being able to get into closed Vanguard funds. But that's because Vanguard heavily promotes this as a benefit of Flagship status. Other back doors, like Artisan, aren't so widely known.
Old Westbury funds - open, $1K min. But ... "Investments in the Old Westbury family of funds must be authorized by Bessemer Investment Management LLC [BIM]". (As near as I can see, one must be a client of BIM - not even a choice of adviser firms - and their min seems to be $10M.)
I've no problem with open/closed being added to the site - I just don't think it's sufficiently precise to be actionable.
I don't want to make a big deal over this . . . it is really "small beer." I have the same beef with Morningstar. I am not suggesting that you change your narratives at all, or the context, but the first time you mention a ticker, like RPHYX, you could easily add, parenthetically, a single word -- RPHYX (closed) -- which requires eight key strokes and little space. Value IS added, particularly for new readers, or regular readers (like me) who sometimes miss an edition.
But this is your website. I'm going to dig and find out anyway, here or elsewhere, when authors fail to mention that a fund is closed. (Full disclosure: each time I get mad when I realize a fund is closed.)
Others have said you can sometimes get in the "backdoor" with closed funds. True. I have done this myself. It's a bit of a hassle, but, it can be done. I've done this by calling Vanguard and regarding a closed T. Rowe Price fund.
David, you have an excellent website here, and offer a great deal of value and insight, with or without indicating if a fund is closed in every article you write. So carry on!
Best regards,
RJalpha aka "RJ"
To David's credit, he qualified his monthly commentary page to say "Closed (and other related inconveniences)." And M* tells you which share classes have what sort of limitations (see their "purchase" tab) - much more information than simply saying that the access is "limited".
Take OAKIX - Oakmark Int'l - the November commentary says that this fund is closed to most new investors. That's a direct quote from the prospectus.
[Side note to Shadow - this time I got the prospectus link right
What would one do with this information? Ignore the fund, check whether and how one could buy it, or ...?
As it turns out, that prospectus quote is a misstatement. Channels are limited, access is not. Anyone can open a new account through the front door with a $1000 investment. It's just that one can't get in through a back door such as a third party broker.
It seems to me that saying this fund is closed actually subtracts value from its listing. You might stop looking at a good fund anyone could buy.
Think about OAKIX - here is a fund open to all investors who come to the distributor to invest. That's the only channel that's open to new investors. Compare that to Bruce fund (BRUFX) - a fund open to all investors who come to the distributor to invest. That's the only channel that's open to new investors. (Bruce fund never sells through brokers, period.)
Are they both "open"? If so, when should we say a fund is "limited" or "closed"? Or is OAKIX "closed" or "limited"? Then what's the value added by that tag - what will you do with that information that is different from the "open" tag attached to BRUFX?
-----
Here's my point - I think I can come up with definitions for "open", "limited", "closed" (and perhaps I'd need "hard closed") that make some sense. But I can't come up with definitions that help me take (or refrain from taking) action. Sure, "limited" puts me on notice that I might have to work harder to find a way to get into a fund than in the past, but it doesn't tell me not to try (see OAKIX). And it doesn't tell me that finding a way in will be harder than for other funds (see BRUFX). So I act the same way whether the fund is "open" or "limited". Hence there doesn't seem to be value added by the label.