BlackRock gets bitten: Jason Zweig of The Wall Street Journal published a TMZ-
worthy piece on a scandal involving BlackRock Income Trust (BIT). BIT is a closed-end fund with $750 million in assets and which, in Jason’s judgment, charges “an arm and a leg” for its services. The fund invested $75 million in “a small, privately held movie company, Aviron Capital LLC.” BlackRock underwrote six of Aviron’s seven films that latest of which, After (2019) cast one of the daughter of one of BlackRock fund’s managers in a lead role.
That does not appear to have been a decision triggered solely by the actor’s on-screen abilities. Mr. Zweig reports:
[Manager Randy] Robertson couldn’t be reached for comment. His daughter, actress Rebecca Lee Robertson, declined to comment.
BlackRock first invested in Aviron with a $12 million loan in 2015. Soon after, “we arranged for [Ms. Robertson] to meet with casting agents and managers,” says [Aviron’s owner William] Sadleir. “Anytime there was an opportunity to put her in a movie, we considered her.”
The entire $75 million investment was lost, Mr. Robertson was internally investigated and discharged and the fund finished 2019 behind 99% of its peers. Mr. Zweig’s rich article is “The Hollywood Drama That Cost a BlackRock Fund $75 Million” (accessible only to WSJ subscribers but well worth the time).
The staff of NASDAQ’s Listing Qualifications Department recently notified Invesco that Invesco RAFI Strategic Developed Ex-Us Small Company ETF (ISDS) does not appear to be in compliance with the continued listing standards of the Exchange, which requires, among other things, that a listed security maintain at least 50 shareholders
Trillium Asset Management (Trillium), a relatively young ESG firm, is being acquired by the Australian enterprise Perpetual Limited, which sounds a lot like a firm invented for an Addams Family movie. Trillium manages their own funds (Trillium ESG Small/Mid Cap TSMDX which is pretty weak and Trillium P21 Global Equity PORTX which is exceptionally solid) as well as John Hancock ESG All Cap Core Fund and John Hancock ESG Large Cap Core Fund. Given the change, Hancock has put the agreement with Trillium under review.
SMALL WINS FOR INVESTORS
Effective March 1, 2020, the management fees, operating expense limitation cap, and subadvisory fee for both the Investor Class Shares and Institutional Class Shares of the five-star Hilton Tactical Income Fund (HCYAX) will be reduced by about 11 bps. Interested readers might want to hear from the manager, Alex Oxenham, in our 2019 Elevator Talk.
Effective April 1, 2020, the T. Rowe Price Global Technology Fund (PRGTX) which was closed to new investors on September 29, 2017, will resume accepting new accounts and purchases from most investors who invest directly with T. Rowe Price. The fund lagged its peers in 2018, saw billions in outflows, got a new manager in 2019, had T Rowe Price-like performance (it booked 34% which was great, though it trailed its peers) and saw additional, though more modest, outflows.
CLOSINGS (and related inconveniences)
Vanguard PRIMECAP Fund (VPMCX), Vanguard PRIMECAP Core Fund (VPCCX) and Vanguard Capital Opportunity Fund (VHCOX) closed to new accounts for investors not enrolled in Vanguard Flagship Services or Vanguard Personal Advisor Services. Current shareholders of the Fund may invest up to $25,000 per Fund account per year in the Fund.
OLD WINE, NEW BOTTLES
Effective as of March 1, 2020, Berwyn Income (BERIX) will change its name to Chartwell Income Fund. In some ways, that’s a real service to shareholders who might otherwise think that by buying shares in the Berwyn Income fund they were … well, buying shares in the Berwyn Income fund. In reality, they were not: long-term Berwyn managers George Cipolloni and Mark Saylor unexpectedly resigned in February 2019 and the fund’s new adviser created an entirely new strategy by creating a 70/30 blend of Chartwell’s midcap value strategy and its core-plus bond strategy. While that might turn out to be a very fine fund, it has no similarity to the historic Berwyn Income fund and now that name, too, is gone. Over its short history the new strategy has noticeably trailed its Morningstar peer group, but 11 months is too short a time to say anything useful.
Effective May 1, 2020, BlackRock Credit Strategies Income Fund will change its name to BlackRock Income Fund.
Effective February 11, 2020, GAMCO International Growth Fund changed its name to Gabelli International Growth Fund.
Lateef Focused Growth Fund, a fund whose portfolio wasn’t particularly marked by its commitment to sustainable investing, has become Lateef Focused Sustainable Growth Fund
Effective February 28, 2020, Duff & Phelps replaced Rampart Investment Management on the Virtus Rampart Alternatives Diversifier Fund (PDPAX). The name is now Virtus Duff & Phelps Real Asset Fund
I learn a new word today: “demerged.” As in, “The Investec Group’s asset management business is expected to be demerged from the Investec Group, and separately listed, on March 16, 2020.” Subsequent to which, their two funds get new handles:
| Current Name | New Name |
| Investec Global Franchise Fund | Ninety One Global Franchise Fund |
| Investec Emerging Markets Equity Fund | Ninety One Emerging Markets Equity Fund |
VanEck Vectors ChinaAMC CSI 300 ETF will soon be receiving: (i) a new name; (ii) new benchmark index; (iii) new investment objective;(iv) new diversification status and (v) some new principal investment strategies. After May 1, 2020 it becomes VanEck Vectors China Growth Leaders ETF (GLCN).Effective March 2, 2020, VanEck Vectors NDR CMG Long/Flat Allocation ETF (LFEQ) are hereby deleted and replaced with VanEck Vectors Long/Flat Trend ETF.
OFF TO THE DUSTBIN OF HISTORY
AMF Ultra Short Mortgage Fund (ASARX) will be liquidated on April 20, 2020.
Barings Global High Yield Fund (BXGIX) will be liquidated on March 19, 2020. It was a very fine fund – four star, Bronze-rated, substantially above average returns – for which there was no demand (not even from the six managers, none of whom invested a dollar in the fund).
The tiny five-star BlackRock Emerging Markets Equity Strategies Fund (BEFIX) will, with unusual precision, be liquidiated at 4:00 p.m. (Eastern time) on April 14, 2020. BlackRock investors will still have access to BlackRock Emerging Markets Investor (MDDCX) which has about a billion in assets, lower volatility and a better record.
Columbia, has seen a relatively $1.5 billion in outflows across its 100 funds over the past year, has decided to trim the fund list by merging away ten funds and liquidating three others. The target date for the mergers is sometime in the third quarter of 2020.
| Target Fund | Acquiring Fund |
| Columbia Contrarian Europe Fund | Columbia Overseas Core Fund |
| Columbia Disciplined Small Core Fund | Columbia Small Cap Value Fund I |
| Columbia Global Strategic Equity Fund | Columbia Capital Allocation Aggressive Portfolio |
| Columbia Select Global Growth Fund | Columbia Select Global Equity Fund |
| Columbia Small/Mid Cap Value Fund | Columbia Select Mid Cap Value Fund |
| Columbia Global Energy and Natural Resources Fund | Columbia Global Equity Value Fund |
| Columbia Global Infrastructure Fund | Columbia Global Equity Value Fund |
| Columbia Select International Equity Fund | Columbia Acorn International Select |
| Columbia Acorn Emerging Markets Fund | Columbia Acorn International |
| Columbia Acorn Select | Columbia Acorn Fund |
| Target Fund | Acquiring Fund |
| Columbia Contrarian Europe Fund | Columbia Overseas Core Fund |
| Columbia Disciplined Small Core Fund | Columbia Small Cap Value Fund I |
| Columbia Global Strategic Equity Fund | Columbia Capital Allocation Aggressive Portfolio |
The Cutler Fixed Income Fund (CALFX) and the Cutler Emerging Markets Fund (CUTDX), assuming shareholder approval, will close and liquidate on or about May 28, 2020.The Columbia Sustainable Global Equity Income ETF (ESGW), on the other hand, is simply being liquidated on March 20, 2020. Columbia Inflation Protected Securities Fund will cease to protect us from … well, anything, on April 24, 2020. Columbia Contrarian Asia Pacific Fund will be sunk beneath the waves on July 20, 2020.
DFA U.S. Large Cap Value II (DFCVX) will be liquidated by March 5, 2020. Curious. Four-star fund with a Silver rating. $170 million in assets. Money has dribbled out the door, but there’s been no torrent. Fortunately, DFA offered a section labeled “Rationale for Liquidating the Portfolio.” Ready?
Based upon information provided by DFA, the Board determined that it is in the best interests of the Portfolio and its shareholders to liquidate and terminate the Portfolio … the Board considered factors that have adversely affected, and will continue to adversely affect, the ability of the Portfolio to conduct its business and operations in an economically viable manner.
At the end of that paragraph, we know precisely as much as we did at the beginning: zero.
Effective on or about April 7, 2020, the ETFMG Drone Economy Strategy ETF ceases to exist and the Wedbush ETFMG Global Cloud Technology ETF rises from its ashes. This is sort of a poster child for the practice of covert liquidation; there is roughly zero overlap between the two funds and zero reason to believe that “drone” investors were hopeful of “cloud” exposure.
First Trust Value Line 100 Exchange-Traded Fund (FVL) is getting eaten by the First Trust Value Line Dividend Index Fund (FVD) and First Trust Exchange-Traded Mega Cap AlphaDEX® Fund is merging into First Trust Dow 30 Equal Weight ETF (EDOW).
The First Trust Australia AlphaDEX Fund (FAUS), the First Trust Canada AlphaDEX® Fund (FCAN), the First Trust Hong Kong AlphaDEX Fund (FHK), and the First Trust South Korea AlphaDEX Fund (FKO) are all disappearing into the First Trust Developed Markets ex-US AlphaDEX Fund (FDT).
The excellent-but-microscopic Franklin Liberty International Opportunities ETF (FLIO) will be liquidated and dissolve d occur on or about March 23, 2020.
“After careful consideration,” Good Harbor Tactical Core U.S. Fund (GHUAX) will be merged into the Good Harbor Tactical Select Fund (GHSAX). More careful consideration might well have concluded that a more complete liquidation will warranted.
Harbor Funds’ Board of Trustees has approved the reorganization of the Harbor Small Cap Growth Opportunities Fund (HASOX) into the Harbor Small Cap Growth Fund (HASGX) on or about the close of business on April 24, 2020
The Hartford Quality Bond Fund (HQBAX) is being merged in The Hartford Total Return Bond Fund (ITBAX), managed by Wellington, on or about June 5, 2020.
Eight ICON funds will be merged out of existence in conjunction with the transfer of ICON’s fund business to the SCM Trust. The handoff will occur “in the second quarter” of 2020.
| Current ICON Fund | Acquiring SCM Fund |
| ICON Fund | ICON Equity Fund |
| ICON Long/Short Fund | ICON Equity Fund |
| ICON Opportunities Fund | ICON Equity Fund |
| ICON Equity Income Fund | ICON Equity Income Fund |
| ICON Risk-Managed Balanced Fund | ICON Equity Income Fund |
| ICON Consumer Discretionary Fund | ICON Consumer Select Fund |
| ICON Consumer Staples Fund | ICON Consumer Select Fund |
| ICON Financial Fund | ICON Consumer Select Fund |
| ICON Energy Fund | ICON Natural Resources Fund |
| ICON Industrials Fund | ICON Natural Resources Fund |
| ICON Natural Resources Fund | ICON Natural Resources Fund |
| ICON Information Technology Fund | ICON Health and Information Technology Fund |
| ICON Healthcare Fund | ICON Health and Information Technology Fund |
| ICON Utilities Fund | ICON Utilities and Income Fund |
| ICON Flexible Bond Fund | ICON Flexible Bond Fund |
| ICON Emerging Markets Fund | Shelton Emerging Markets Fund |
Invesco BLDRS Asia 50 ADR Index Fund (ADRA), Invesco BLDRS Developed Markets 100 ADR Index Fund (ADRD) and Invesco BLDRS Europe Select ADR Index Fund (ADRU) were terminated and wound down on February 26, 2020. ADRs are “American Depositary Rights,” a vehicle that allows foreign securities to be traded on US exchanges. Traditionally they’re used only by large, well-established corporations which implies that the dying ETFs were a form of international blue chip fund.
On February 3, 2020, the Loomis Sayles Multi-Asset Income Fund was liquidated. The firm’s announcement contained the helpful explanation, “The Fund no longer exists, and as a result, shares of the Fund are no longer available for purchase.” Well, yes, Packard Automotive likewise.
The Board of Trustees has determined that it is in the best interest of shareholders to liquidate the Miles Capital Alternatives Advantage Fund (the “Fund”) following the resignation of the Fund’s portfolio manager. As of the date of this supplement, the Fund is no longer accepting purchase orders for its shares and it will close effective March 27, 2020.
Pacific Advisors Income and Equity Fund (PADIX), Balanced Fund (PAABX) , Large Cap Value Fund (PAGTX), Mid Cap Value Fund (PAMVX) and Small Cap Value Fund will be liquidated on March 30, 2020. The funds weren’t particularly good, but I always have liked the breaching whale logo – and videos – that are used by their parent company, Pacific Life.
Pinnacle Dynamic Growth Fund (PADGX) will plunge from the pinnacle, lose dynamism and cease growth, all on March 25, 2020.
Putnam International Growth Fund (PINOX) is being merged into Putnam Emerging Markets Equity Fund (PEMMX). The justification typically given for mergers is “really, we were just scammin’ you all along, these funds we’re merging are practically clones” is particularly strained here. PEMMX has under 3% exposure to the US, Japan and developed Europe; PINOX sits at 77%. The inverse is true of their EM exposure: PINOX has very little (under 20%) which makes it very unlikely that the PINOX investors signed up for an EM adventure. Nonetheless, they’re about to get one unless they bestir themselves to ditch their shares.
The microscopic Segall Bryant & Hamill Micro Cap Fund (WTMIX) will be liquidated on or about April 8, 2020; reflecting the limited liquidity of microcap names, the process of liquidating the portfolio will begin about five weeks prior to that date.
We ridiculed them when they launched, we ridiculed the few investors who signed up and now we bid the last of them of fund farewell. Janus’s Board of Trustees approved the liquidation of The Organics ETF (ORG) and The Obesity ETF (SLIM) on or about March 18, 2020. They were preceded in death by their sibling The Health and Fitness ETF (FITS).
- Rowe Price Institutional Frontier Markets Equity Fund (IEMFX) will be liquidated on April 17, 2020. I have not the slightest idea of why; it’s a four star, $1.8 billion fund.
Templeton Global Equity Series (TGESX) will be liquidated on or about April 24, 2020 with the dual provisos: “sooner if at any time before the liquidation date there are no shares outstanding in the Fund” and “the liquidation may also be delayed if unforeseen circumstances arise.”
At a meeting held on February 19-20, 2020, Wells Fargo Funds Trust considered whether to liquidate Wells Fargo Factor Enhanced Emerging Markets Fund, Wells Fargo Factor Enhanced International Fund, Wells Fargo Factor Enhanced Large Cap Fund and Wells Fargo Factor Enhanced Small Cap Fund. Six days later, they were gone.
The covert liquidation of ETFs continues. On May 12, 2020, Xtrackers Emerging Markets Bond – Interest Rate Hedged ETF (EMIH), Xtrackers High Yield Corporate Bond – Interest Rate Hedged ETF (HYIH) and Xtrackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH) will gain (i) a new names and ticker symbols; (ii) a new investment objectives; (iii) a new underlying indexes; (iv) principal strategies; and (v) a reduction in the fund’s unitary advisory fee. While such changes are not tracked as “liquidations” in the Morningstar database, it’s hard to view the painfully common practice of “repurposing” ETFs in any other way.
