August 1, 2025

By David Snowball

Dear friends,

Welcome to the August issue of the Mutual Fund Observer! We just completed one of the five rainiest Julys in the city’s history, with three torrential downpours (the garden celebrates) and roll expectantly into August.

For those of us who teach for a living, August is the season of watchful waiting, a phrase lifted from the Christian celebration of Advent. The faithful are waiting for … you know, Continue reading →

Portfolio Risk Assessment

By Charles Lynn Bolin

In my former life in the private sector prior to retiring, part of my role was risk mitigation; identifying potential bad things that might happen and minimizing their impact in case they do happen. I have carried that practice into investing. The financial landscape is constantly changing, but these changes are extreme this year. In preparation for the known unknown, I lowered my stock-to-bond allocation from 65% to 55% by changing what I manage. I desired to lower my stock-to-bond ratio even further to 50% within a range of 50% to 60% and was able to do so by changing my profile with my Financial Advisor at Fidelity.

I use Vanguard to manage a portion of my investments and enjoy reading Vanguard Capital Markets Model forecasts for insights about long-term returns. In January of this year, Isabel Wang described Vanguard’s view that investors could Continue reading →

When Reality Bites: Preparing for Market Turbulence Ahead

By David Snowball

I’m struck by the near unanimity of Informed Commentary on the direction of the US stock market. People seem to agree that “the magic number” is 15%.

The disagreement comes in the query: but 15% in which direction? There, there’s about a 50/50 split among the people paid to pretend to know the future. Both growth and recession, market melt-up and market meltdown scenarios are broadly represented. “The melt-up in risk assets continues,” saith HSBC, the global bank based in London. Remember that markets spiked about Alan Greenspan’s original warning about “irrational exuberance.”

We’ll offer a snippet Continue reading →

Trending Funds at Mid-2025

By Charles Lynn Bolin

My strategy involves looking at what is trending according to my rating system, and buying what fits into my portfolio if I can build a storyline behind it. My rating system of nearly a thousand funds is based mostly on data from Mutual Fund Observer to reflect my assessment of short and intermediate-term trends. I selected the funds using MFO Family ratings, assets under management, risk, and risk-adjusted performance, and availability without loads and transaction fees through Fidelity and Vanguard.

From the S&P 500 PE Ratio – 90 Year Historical Chart by Macrotrends, I estimate that the price-to-earnings ratio today is at the Continue reading →

Enduring Principles, Evolving Markets: The Next Chapter for Akre Focus

By David Snowball

In December 2020, Chuck Akre (1941 – today) concluded a 56-year investing career. During much of that time, he built an unassailable reputation for discipline, independence, and excellence. The core of his investment strategy was captured by “the three-legged stool.” He looked for (1) extraordinary Continue reading →

Launch Alert: Rainwater Equity ETF

By David Snowball

On June 17, 2025, Rainwater Equity launched their first fund called, well, Rainwater Equity ETF.  The actively managed ETF will pursue long-term capital appreciation by investing in a portfolio of “recurring revenue businesses led by exceptional management teams for the long run.” As an example, almost 10% of the fund is invested in the Canadian firm, Constellation Software, Inc. Constellation acquires and manages business software firms which tend to have a recurring revenue (monthly subscription) model and are “sticky” by nature (changing software, especially at the enterprise level, is hugely painful so companies try to avoid it). They believe such businesses offer more durable growth, fewer surprises, and greater long-term wealth creation potential.

Rainwater is led by, and the fund is managed by, Joseph R. Shaposhnik, former portfolio manager Continue reading →

Three years on: Guarding against complacency

By David Snowball

Blessed are the forgetful, for they “get the better” even of their blunders. Friedrich Nietzsche, “Our Virtues,” Beyond Good and Evil (1886)

Our summer tradition is to update you on our ruminations and recommendations from three (or five) years ago.  That exercise serves three purposes:

  1. It provides a reality check on whether our recommendations for options to consider bear fruit. (Or are bare of fruit.)
  2. It provides a reminder of how much chaos you’ve already experienced. If we did a pop quiz (quick: the market three years ago this week was a. crashing, b. flat, c. soaring, d. huh? The best answer is “d” but the historic pattern for 2022 was crash into a bear in spring, soar into a bull in summer, crash again in fall.)
  3. It provides focus. For me, mostly. Summers are some combination of lazy, hazy, and crazy. The discipline of looking back precisely three years and reassessing our lead story keeps me from spending time obsessively cataloging the types of bees (at least eight species, including two distinct sets of bumblebees) swarming the garden.

Continue reading →

fountain pen writing a note

Briefly Noted . . .

By TheShadow

Launches and Reorganizations

Akre Focus Fund will be reorganized into an active ETF, pending shareholder approval. They vote in mid-August. If approved, this will be the largest fund-to-ETF conversion (at $12+ billion) ever. Read more in this month’s article, Enduring Principles, Evolving Markets.

ARK ETF Trust Crypto Active ETF is in registration. The fund is an actively managed exchange-traded fund that will invest in domestic and foreign equity securities of companies that invest in, or create investment exposure to one or more “Crypto Assets.” Cathie Wood will be the portfolio manager. Expenses have Continue reading →