February 1, 2018

By David Snowball

Dear friends,

It’s a Tale of Two Parties, one rather healthier than the other. My students, slowed by a surprisingly cold month and end-of-term stress (Augustana is finishing a Winter trimester that began a bit after Halloween and ends near Valentine’s Day), have taken to launching spontaneous little parties in hopes of gathering that last burst of energy needed to make it through a last set of research presentations and reflective essays. Lionel Ritchie (whose name they barely recognize) captures the late winter moment: “Party, Karamu, Fiesta, Forever. Come on and sing along.” On whole, that strikes me as joyful, appropriate and, ultimately, productive.

The other party rather Continue reading →

What You See …

By Edward A. Studzinski

“If you can’t annoy somebody, there’s little point in writing.”

       Kingsley Amis

These days, given the continuing march of new highs in the market indices, coupled with the ongoing extremes of most valuation metrics on individual securities, there is not a lot for a conservative investor to say that hasn’t been said before. What is different this time is the continuing flight from higher fee investment vehicles by both retail and institutional investors. And that money is flowing either into exchange-traded Continue reading →

great horned owl

AlphaCentric Income Opportunities Fund (IOFIX), February 2018

By Charles Boccadoro

“Timing, perseverance, and ten years of trying

will eventually make you look like an overnight success.”

        Biz Stone

Objective and Strategy

The AlphaCentric Income Opportunities Fund seeks to provide current income. Presently, it invests in often overlooked (some call “pejorative”) segments of non‐agency (private label) residential mortgage-backed securities (RMBS), specifically in seasoned (2007 or earlier) subprime mortgages with floating rate coupons.

The irony is that 10 years after the housing collapse these bonds, once highly discounted if not feared worthless, represent one of the more sought after asset classes, as described nicely in Claire Boston’s Bloomberg Continue reading →

Launch Alert: CrossingBridge Low Duration High Yield (CBLDX)

By David Snowball

CrossingBridge Low Duration High Yield launched on February 1, 2018. The fund seeks “high current income and capital appreciation consistent with the preservation of capital.” The plan is to invest in junk bonds and loans, mostly CCC or better. Their investable universe includes corporate bonds, zero-coupon bonds, commercial paper, ETNs, distressed debt securities, bank loan assignments and/or participations, private placements, mortgage- and asset-backed securities, U.S. Government obligations and bank loans to corporate borrowers. While most of the portfolio will be domestic, up to 25% might be foreign fixed-income securities. They’ll generally have a duration of three years or less. There’s also some (limited) ability to Continue reading →

Elevator Talk: Parker Binion, KCM Macro Trends Fund

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200 word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more about interesting funds.

KCM Macro Trends Fund (KCMTX/KCMIX) launched in Continue reading →

old license plates on a wall

Funds in Registration

By David Snowball

The SEC requires advisers to give them 75 days to review and comment upon any proposed new fund offering. During those 75 days, the advisers aren’t permitted to say anything about the funds except “please refer to our public filing with the SEC.” At peak times of the year, there might be a couple dozen no-load retail funds and active ETFs in registration. Midwinter, not so much. Fidelity’s ESG bond index might be a useful option for investors looking to express their concerns about shaping a more humane world. Beyond that, mostly nice people who don’t yet have a public track record or striking competitive advantage. They might do very well, but we’ll have to watch for a bit. Continue reading →

old alarm clock

Manager changes, January 2018

By Chip

Ahh … it’s a quiet month on the manager change front. Forty-eight funds saw partial turnover in their management teams but no high profile manager stalked off or was shown the door, and no rising star was awarded a new charge. Despite the pressure for cost containment, 11 of the funds were simply adding to the size of the management team. The month’s sole highlight occurred when Chip encountered Harding Loevner manager Ferrill Roll, declared it “feral” and began wondering about whether he might be a candidate for managing a fund in Westeros. (Note in passing: don’t succumb to the temptation, the penalties for underperforming your benchmark there involve Continue reading →

fountain pen writing a note

Briefly Noted

By David Snowball

Updates (and notes from careful readers)

Several MLP funds – including Center Coast MLP Focus Fund (CCCAX) and Global X MLP ETF (MLPA) – have announced that the recent tax law changes affects them. They’re treated as “a regular corporation” for the purpose of tax law, which means that the statutory tax rate that affects them has dropped from 35% to 21%. It is not yet clear that the rate change will have any appreciable effect on shareholders or the funds’ returns because of the complexity of calculating corporate taxes, then or now.

FPA U.S. Value Fund (FPPFX) has affirmed the proposition that Continue reading →