Dear friends,
Our May updates have been posted. They include:
- a review of cash-heavy funds, both one-star and five-star worthies
- a follow-up to a thread on the board about whether we're building a roach motel
- Charles's new rating of fund family performance
- SeafarerFest, including an updated profile and the conference call story
- a profile of Towle Deep Value, one of the few unambiguously value oriented value funds
- a follow-up to the board discussion of Grandeur Peak (Eric Heufner acknowledged the concerns raised on the board and asked for your patience until he's legally permitted to speak)
- and a host of interesting short items on individual funds. For example, the founding managers have been removed from the four-star LS Opportunity Fund.
We worked hard to manage an early launch today, which might have come at the cost of a few minor typos than usual but we'll try to get them fixed quickly.
David
Comments
The ranking of fund families is interesting. I notice Turner shows up at the top of the pack. It looks to me like 3 of their 6 funds have not yet experienced a full market cycle -- TMSEX (2011), TSPEX (2009), and TTLEX (2011). You mention a “Fund Family Score Card” is in the works. Hopefully, it will separate the jack rabbit fund families from the tortoise fund families. Each have their place. But, its important to note the distinction.
Off to the college!
David
Regards,
Ted
http://quicktake.morningstar.com/fundfamily/turner-funds/0C00001JXQ/snapshot.aspx
David, that's just too funny- a typo in the typo apology!
or
(sih)
A couple of thoughts occurred to me as I was taking a beach walk along the Florida gulf coast this morning (a much simplified version of heading off to the college!). Something like these ideas might help make the rankings easier to interpret:
1. Include a second "APR vs Peer %/yr" column next to the first one to present data restricted to only the funds within each fund family that have been in existence long enough to have gone through the most recent full market cycle (or 10 years if the cycle lasts longer than 10 years). This would help to demonstrate if there reason to think there might be some level of persistence to a fund family's returns.
2. Include a Fund Turnover Statistic that ranks fund families based on the amount of churn there is in their portfolios of funds. Some fund families market funds that focus on themes that are hot within a particular market cycle. Others only market funds that have good prospects of enduring across multiple market cycles. A statistic that helps flesh out this distinction might be useful. This statistic might also shed light on which fund families have proven unable to sustain funds that should have endured through multiple market cycles.
RNDLX= 26% cash (just noticed last night; wondered why the monthly dvd had been a bit depressed as of late; well, wonder no more)
http://www.rivernorth.com/mutual-funds/rnsix-rndlx
BERIX= 30=35% MMkt and cash reserves, since beginning of 2015 (the highest in a decade)
http://www.theberwynfunds.com/biffacts.pdf
Granted, the lifetime metric gives the family the benefit of doubt and for me serves as an initial look.
For the family data, that may be good enough.
We have the full, up, and down cylce evaluation windows, plus the fixed year windows for all fund metrics. So, easy to punch in say "Tuner", pull up the funds and look at the different time periods.
Here's summary of the 6 funds in the family...lifetime eval window:
Turner's alternative funds are rather young but one has very strong over-performance despite sick fees. Emerging Growth has amazing long-term performance, but most of it came during the late '90s. It outperformed in the full cycle from 200009 to 200710, but under-performed somewhat in current cycle since 200711.
Here's the data for last two cycles:
In any case, easy to see these three are volatile funds.
The situation is not unlike CGM...all three Heebner funds have great life time records, but most of out-performance was last decade.
Lifetime, great...
Current cycle, pretty bad...
Similar situation for Berkowitz's Fairholme, rough going near term...
I suppose we could do fund family ranks for all the different time periods, just not sure it would add anything that is not already available in the fund specific screens.
Honestly, my biggest reservation with the score card is impact of survivor-bias for families with a relatively small number of funds. Bad fund? Close it. And the family score goes up overnight. We just don't have dead/merged funds in our database...not yet anyway. Still think the scorecard is insightful though.
The fund family rankings are a great idea! Its important to point the way towards fund families that are successful at helping mutual fund investors achieve their long term goals.
The Turner Investment screen prints you posted above make sense to me. My concern still relates to the proposed “Fund Family Score Card”. The intended audience is not clear to me. That audience might be significantly broader than the audience that routinely views the detailed screens. If so, then some sort of additional data or some kind of qualifying statement in the main body of the score card might be warranted.
Here are my reasons for continuing to think that way. Per my original example, I am looking again at the Turner Investment data. Here are the number of funds that have beaten their respective category averages over various time periods:
Life time: 5 of 6. (This is the basis of the Top Fund Family ranking.) Those funds are:
TSCEX +2.1, Originated in 1994
TMGFX +1.5, Originated in 1996
TMCGX +9.5, Originated in 1998
TSPEX +2.8, Originated in 2009
TMSCX +10.0, Originated in 2011
Here is out performance data based on the other relevant MultiSearch time periods:
Full Cycle 4 (09/00 to 10/07): 1 of 3 (TMCGX +7.7) originated in 1998
Full Cycle 5 (11/07 to 03/15: 0 of 3
Last 20 years: 1 of 1 (TSCEX +1.6) originated in 1994
Last 10 years: 1 of 3 (TSCEX +0.2) originated in 1994
Last 5 years: 1 of 4 (TSPEX +2.1) originated in 2009
Last 3 years: 2 of 6 (TMSCX +14.4, TSPEX +2.4) originated in 2011
Lifetime fund out performance appears in all cases to be based on an initial surge of out performance by each fund. Is this characteristic representative of a "superior" fund family that has been around for over two decades? (I realize the jury is still out on TSPEX and TMSCX.)
Part of this thought circles back to my original comment about Fund Turnover (survivor-bias). I am remembering back to the turn of the century and new Turner funds like TTPOX, TGTFX, TBTBX, and TIWCX. None of those funds are still around. (I wondered if enough long-term survivor-bias data was available to flesh out this characteristic.) But, this issue does relate to the characteristics of a superior fund family.
That's enough....The fund family ranking will definitely be a plus as far as I am concerned!
Did they cease to exist - or am I missing something?
Sorry - Think I answered my own question. You did not attempt to rank all families. I notice Hussman is also conspicuous by his absence from your list (but I can pretty much calculate where he'd go).
Good job. Enjoyed the family rankings.
So, right, Hussman just has four, but everyone has under-performed its peers over their lifetimes, although HSGFX is pretty much a push.
And Permanent Portfolio has three of four under-performers.
Here's the data...
Each has at least one Three Alarm Fund...
In the SV space I've got HUSIX. I don't mind the past year's poor performance (that will happen to any true value fund now and then) but the 1.85% ER has always left me queasy. TDVFX seems like a similar fund, but with a small asset base (about half as big, including both the mutual fund and separate accounts for both fund familiies) and their 1.2% ER strikes me as reasonable. What's not to like?
But I am increasingly wary about funds with a "great" man or woman running them, rather than a team with a deep bench. That probably is true for HUSIX too, but glancing at their website they at least have a bigger team behind Joe Huber.
On the question of benches, Towle has one strategy and five guys. Huber has three strategies and six guys (four PMs, two analysts), according to the Hubercap website.
For what interest that holds,
David
David
The best of luck in getting Primecap Management to say anything of significance.
Regarding their "space" of investing, as a long time investor, I certainly hope they stay with US mid and large cap growth GARP only, where they have been so successful, and and not try to be everything for everybody.
Best Regards,
Mona