Monthly Archives: April 2025

April 1, 2025

By David Snowball

Welcome to the April Mutual Fund Observer!

My mom used to say, “March sometimes comes in like a lion.” She never added, “and then it eats you.”

March, named for the God of War, strikes me for two reasons. First, it is the month that has encompassed a whole series of catastrophes in the financial markets and beyond. March 2025 marked:

  • The fifth anniversary of the COVID lockdowns and flash crash, in which the S&P 500 lost 34% in 33 days.
  • March 24 was the 25th anniversary of the collapse of the dot-com bubble, which vaporized $5 trillion in market value (about the amount vaporized in Q1 2025, but 2020 was back in the days when a trillion still counted for something) and saw the NASDAQ down nearly 80%.
  • The 30th anniversary of the social media revolution, sparked by Yahoo! and the Yahooligans.
  • The 87th anniversary of Hitler’s Anschluss, the annexation of Austria which marked Nazi Germany’s first act of territorial expansion, violated international treaties, emboldened Hitler’s aggression leading to World War II, and intensified persecution of Austria’s Jewish population under Nazi rule.
  • And the 107th anniversary of the outbreak of the deadly Spanish flu epidemic – which infected a third of the world’s population and killed 50 – 100 million – began. (To be clear, they died of influenza or secondary bacterial infections, not from a not-yet-invented flu vaccine or mysterious military vaccine.)

Second, perhaps there’s something to be taken from the fact that we’ve survived so many end-of-the-world catastrophes that we don’t even remember them anymore. We have been exceptional in many ways, and that has served us well for more than a century.

The question becomes, will we choose to remain exceptional in a positive way? If you make the answer based on three months, it is “no.” But we’re not judged on the unusual moments; we are judged by what we choose to embrace – or simply permit – over time. I have faith in us, if only because a vast number of people have committed their lives to making their communities, our nation, our world, and our generation a better place.

Volatile March was named for the god of war. April, in contrast, was named for the eternal turning of the seasons. Its name likely derives from the Latin word for “budding out” or “opening.” Celebrate the unchanging change.  There is an uncertain flutter of the seasons here where a warm week is herald to the first spring blooms … which are quickly buried in the last winter snows.  And still, they endure the adversity, certain that their day will come.  

Celebrate, dear readers, the seasons, the things which change, and the things which never will.

In this month’s Observer …

I am not optimistic about the prospects for the US stock market. That’s not a prediction, dear friends, that’s just a disclosure of a personal perspective. Markets thrive on predictability since investment decisions need to be made in the framework of a three-to-five-year plan. (Speculation, not so much.) Given the proliferation of policy by pique, investors are not likely to have the necessary confidence to make steady and ongoing commitments to the US equity market. Or, they might surprise us. This month and next MFO will try to address some of the angst caused by that instability. In general, long-term investors need to stay in the equity market. That’s far easier if your exposure is hedged. Hedging can be either cheap and easy or complex and expensive. We prefer the former, and so this month, we’ll profile The Dry Powder Gang, 2025. The Dry Powder Gang are outstanding funds that, like Warren Buffett, are willing to sit on cash when equities aren’t paying for the risk you’re taking.

In May, we’ll profile the handful of hedged funds that actually earn their keep.

We share a Launch Alert for GlacierShares Nasdaq Iceland ETF, a fund that will divide its portfolio about evenly between the stocks of Icelandic companies and the stocks of companies in other (primarily) Nordic nations with substantial ties to Iceland. There’s been an upsurge in the ranks of the Arctic-curious, from investment managers to … uh, politicians whose eyes have turned north toward Greenland, Norway, and the Nordic nations generally. The combination of sound economies and healthy national cultures, combined with anxiety about a stretch of unhabitable real estate, has more folks pondering the potential of the North.

I teach about Communication and Emerging Technologies (cool day job, eh?), and few technologies are more emergent than artificial intelligence. There’s a credible argument that virtually every profession in the world will, within five years, be reshaped by artificial intelligence, and the investment industry is no exception. Morningstar has taken tentative steps toward creating a human-light analytic environment (from its Q-analyst ratings driven by machine-learning technology to its AI spokesmodel, Mo), while a dozen investment managers have committed to AI-driven portfolios. In “The Ghost in the Machine,” I’ll walk you through what AI is, how the AI models running one portfolio – Intelligent Livermore ETF – recommend you treat their fund, and finally, what qualifies as the bigger picture of AI fund management.

Lynn helps us all get grounded again. His April articles continue the theme he’s been developing all year, highlighting how bonds provide stability and income while international equities offer better valuations than U.S. stocks. In Overview of Secular Markets Lynn Bolin examines long-term market trends, contrasting the 1995-2012 period with recent years. He notes that elevated P/E ratios and changing economic conditions suggest international equities and bonds may outperform U.S. stocks in coming years. Bolin analyzes current treasury yields, bond returns, and mixed-asset funds, recommending a diversified portfolio given current market uncertainty.

He follows that up with Equity Fund Ratings, where Bolin presents his four-tier system for evaluating equity funds based on risk, valuations, performance, and momentum. Each tier represents different risk-yield profiles, from Tier One (lower risk, lower valuations, higher yield) to Tier Four (higher risk). He highlights specific funds within each category, noting that international stocks are currently performing well while technology stocks have declined.

Lynn’s last article continues his inquiry into bonds and fixed-income as a competitor to equities. Investment Buckets for Bonds outlines Lynn’s bucket strategy for bond investments: Bucket #1 (safety, 1-3 years), Bucket #2 (intermediate, 3-10 years), and Bucket #3 (long-term, 10+ years). For each bucket, he evaluates bond categories and specific funds based on duration risk, quality risk, yield, and momentum, sharing his current allocations and recent performance data.

The Shadow, faithful as ever, offers a Briefly Noted take on the industry and its churning. Highlights include kudos to CrossingBridge, structural changes at two Schwab funds that might signal a broader judgment about where assets are going, and, driven by reader interest, the addition of a new feature: Launches and Conversions to help deal with the increasing pace of active fund to ETF conversions.

Winning strategies aren’t what you’d expect

If we were to ask what worked best over the past quarter-century, a generation of young investors (and many increasingly dotty senior investors) would say the same thing: tech works! Large works, growth works! Disruptors ruuuule!

Yeah, about that … not so much.

The good folks at Leuthold shared the data on precisely this question. If you bought into the market a quarter century ago, where should you have been?  The answer is below:

Source: Leuthold Group, March 2025

Here’s the story:

Value beat growth, either by a little or by a lot, depending on the slice of the market.

Boring (low volatility, high dividends) beat exciting (high beta) by about 3:1.

Contrarian (the equal-weight 500) beat momentum (the 500) by over 200 bps per year.

Everything between tech and telecom.

Emerging beat developed international markets (by about 2.5% per year), though the US handily beat both.

“American exceptionalism” is the story that the US can count on being #1 – in influence, trade, tech, and market performance – because we’re special. More rational, more reliable, more resilient, more sensible, more pragmatic … less impulsive (looking at you, Italy!), less authoritarian, less erratic, less self-destructive, less xenophobic. If our actions undercut the judgments that others make of us, we should not be surprised when our exceptional performance evaporates.

Performance Update on a Chaos-Resistant Portfolio

In Building a Chaos-Resistant Portfolio, we noted that things were likely to be chaotic for rather longer than you’d like and offered suggestions for managing it. The theme of “chaos” is echoed by an increasing number of first-tier managers.

Trade policy inconsistencies, waning consumer confidence, and renewed recessionary concerns are all weighing heavily on broad market indexes. (J Dale Harvey, Poplar Forest Quarterly Letter, 4/2025).

The tariffs that the U.S. is imposing on its trading partners will bring about several costs that are important for investors to understand. Some of those costs are inherent to what a tariff is, while others stem from the fact that U.S. industrial policy has, and looks to continue to have, a huge amount of uncertainty associated with it. That continuing uncertainty will hit investment levels, return on capital and overall growth globally, with the U.S. bearing the brunt of it.  (Ben Inker and John Pease, “Tariffs: Making the U.S. Exceptional, but Not in a Good Way,” GMO Quarterly Letter, 4/2025)

One set of suggestions might be translated as “get a life,” which is to say, stop doom-scrolling and attempting to micro-manage your portfolio. The other set of suggestions were to rely on good tacticians to worry on your behalf (FPA, Leuthold, and Standpoint), to increase your exposure to quality stocks (GQG), and to consider adding a short- or ultra-short fixed income fund into the mix. Here’s the performance of the eight funds we highlighted, YTD through the end of March 2025. “Great Owl” funds are flagged with a blue box.

    YTD, through 3/28/25
Vanguard Total Stock Market VTSMX -4.85
Quality    
GQG Partners US Quality Value GQHIX 9.27
GQG Partners US Select Quality Equity GQEIX -0.67
GMO US Quality ETF QLTY -2.07
Flexible    
FPA Crescent FPACX -0.20
Leuthold Core LCORX -0.8
Standpoint Multi-Asset BLNDX -4.5
Short-Term Fixed Income    
Intrepid Income ICMUX 1.24
RiverPark Short Term High Yield RPHYX 0.99

Source: Morningstar.com

The goal here is not to win in the short term. It’s to create a fund pairing (FPA and RiverPark, in my case) that is unusually resistant to downturns and driven by tested strategies.

ETF filings, from the ridiculous to the sublime

Tuttle Capital has filed for the UFO Disclosure AI Powered ETF (UFOD), which aims to invest in companies believed to have potential exposure to “reverse-engineered alien technology” based on government disclosures about UFOs. The ETF will allocate at least 80% of its assets to aerospace and defense contractors rumored to work on classified technology related to UFO research. Additionally, the ETF will short companies that could become obsolete due to any advanced alien technology that might be disclosed. The launch of UFOD is contingent on sufficient government disclosures about UFOs, and it is pending regulatory approval. 

(sigh)

GQG has filed for the GQG US Equity ETF (QGUS), slated for launch in June 2026. The fund will be the GQG Partners US Select Equity strategy in an ETF wrapper. The fund has, predictably, clubbed its peers since its inception, averaging 11.7% per year compared to its peers’ 7.9%.  A major distinction is that the ETF will charge 0.45%, while the fund charges 0.67%. In our assessment, the fund is cheap at that price, and the ETF will be a major bargain.

The GQG fund will be managed by a team managed by CIO/founder Rajiv Jain. As we noted in our profile of GQG Global Quality Dividend (5/2024):

If you believe that you need to invest against the prospect that markets are going to be marked by persistent if not crippling inflation, significant interest rates, and inconsistent growth, you should probably invest in high-quality stocks with sustainably high-dividend income. You’ll earn higher total returns over time, suffer less volatility, and enjoy an actual cash stream from your portfolio.

If that prospect intrigues you, no one has done it better for longer than GQG. They warrant your attention.

Credit to Eva Thomas of CityWire for catching the GQG filing (“GQG preps to enter ETF market,” 4/1/2025)

A Chasm of Need: How to Help in the Wake of USAID Defunding

A long-time member of the Observer community, who has rather more direct experience with such things than I, shared the following reflection on the federal government’s precipitous retreat from international engagement. Such aid programs have typically flowed from two distinct impulses:

  1. To strengthen America’s security by reducing the prevalence of pandemic diseases elsewhere (which would eventually reach here), to reduce the prevalence of political and economic instability elsewhere (which would eventually cost us more through military conflict or market losses), and to increase the US standing in the world (so-called “soft power diplomacy”) and
  2. To enact our shared sense of commitment to and compassion for our brothers and sisters in humanity.

Politicians have often fostered the myth of “massive giveaways” (rather, under 1% of the federal budget, and falling) and “welfare,” but those aren’t analytic statements. They’re political posturing. Until this year, they were mostly malignant noise. What follows is a friend’s report on the transition from one form of malignity to another and how we might make a difference as individuals even as our collective will falters.

On Friday, March 28, 2025, the U.S. Agency for International Development was officially shuttered, with only 15 statutorily required positions retained out of 10,000, and the remaining skeletal staff losing their jobs later this year. According to a Pew Research Center report from February 6, 2025, the U.S. was on track to deliver about $58 billion in international aid in FY 2025. That figure is a tiny percentage of the US federal budget but responsible for an enormous impact worldwide. The ripple effects from the defunding of the bulk of grants and contracts overseen by USAID are likely to be enormous. The loss of skills and processes developed to put together complex NGO funding networks adds another dimension to the problem.

U.S. citizens are not spared the effects of the defunding of USAID aid programs. According to AP reporting, “the vast majority of U.S. foreign assistance actually went through U.S.-based organizations.” Those organizations are going dark, and American workers are losing jobs.

The AP article (February 26, 2025) lists several nonprofits that have dedicated funding to groups affected by the loss of USAID program money. Unlock Aid, which advocated for USAID interests, has set up the Foreign Aid Bridge Fund to support frontline groups working to deliver medicines, immunizations, nutrition, loans for small businesses, and other life- and livelihood-saving interventions.

Because of the complex structure of donor organizations, getting aid as directly as possible to those in need is something of a conundrum. For now, interested parties might also consider the UN World Food Program, which received about half its funding from USAID and has now closed its southern Africa office.

Thanks, as ever . . .

To our faithful “subscribers,” Wilson, S&F Investment Advisors, Greg, William, William, Stephen, Brian, David, and Doug, thanks! We wave, with special delight, to our newest “subscriber,” Altaf from Naperville.

To Tom & Mes from Tennessee (we totally had to search for your hometown and discovered … the best coffee shop trailer in Tennessee?) and to John from PA, thanks! And for more than just financial support. You make a difference.

It’s planting time. We’re waiting for our garlic bulbs to arrive, likely late this month, but I’ve already been pulled out winter grasses, turning the compost pile and scattering wildflower seeds.

Planting is an act of hope. Gardening is a gesture of resilience. Pursue both, dear friends.

As ever,

david's signature

Equity Fund Ratings

By Charles Lynn Bolin

The typical response from someone when they find out that I have retired is, “Congratulations! What do you do in your spare time?” To which I reply, “I volunteer at Habitat For Humanity and Neighbor To Neighbor, go to the gym, visit family, take day trips, and write financial articles.” I would get a more excited response if I replied that I go paragliding in Costa Rica. I do occasionally get a response from people wanting to know more about investing.

This article summarizes how I rate equity funds. I follow the bucket strategy. I invest for income in Bucket #2 and concentrate risk in Bucket #3, where I am more concerned about tax efficiency. I use a simple approach of investing in funds and not individual stocks.  Fidelity and Vanguard manage most of my more aggressive accounts.

I have refined my rating system to evaluate how my retirement nest egg is performing and if I should make any adjustments. It is based on Risk, Valuations, Three Year Risk Adjusted Performance, and Momentum using the MFO Premium fund screener and Lipper global dataset. I am moderately risk off now, but in the future, I may want to invest in equity funds for yield.

Stocks are riskier than most bond funds but have higher returns over the long term. In this article, risk is relative to other equity funds. I classify Lipper Categories and funds into four categories as follows.

  • Section 1, TIER ONE (Lower Valuations, Lower Risk, Higher Yield)
  • Section 2, TIER TWO (Low to Moderate Valuations, Lower Risk)
  • Section 3, TIER THREE (Moderate Risk)
  • Section 4, TIER FOUR (Higher Risk)

TIER ONE (Lower Valuations, Lower Risk, Higher Yield Combination)

Table #1 contains the Lipper Categories that have lower relative risk and valuations and higher yields. I have 5% of my allocation to equities in these Lipper Categories. The higher yield helps dampen volatility. Most are international funds that may also be exposed to currency risk. The five highest-rated funds are listed.

Table #1: Tier One Equity Funds for Safety and Yield

Source: Author Using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st.

Figure #1 contains several Tier One funds that I find attractive.

Figure #1: Selected Tier One Equity Funds for Safety and Yield

Source: Author using MFO Premium fund screener and Lipper global dataset.

TIER TWO (Low to Moderate Valuations, Lower Risk)

Tier Two funds have low to moderate risk and valuations, but yields are lower than in Tier One. I have 9% of my allocation to equities in these Lipper Categories. They are sorted by my rating system from highest to lowest. International, Financial Services, and Value funds rate highly. During the COVID Bear Market, most of these funds had a maximum drawdown of less than 25%.

Table #2: Tier Two Equity with Low to Moderate Valuations and Lower Risk

Source: Author Using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st.

Figure #2 contains several Tier Two funds that I find attractive.

Figure #2: Selected Tier Two Funds with Low to Moderate Valuations and Lower Risk

Source: Author using MFO Premium fund screener and Lipper global dataset.

TIER THREE (Moderate Risk)

Table #3 contains Lipper Categories with moderate equity risk. It is where the bulk of my equity investments lie. It contains diversified core and total market funds. During the COVID Bear Market, many of these funds had a maximum drawdown of 25% or more.

Table #3: Tier Three Equity Funds with Moderate Risk

Source: Author Using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st.

Turning over your retirement nest egg to Financial Advisors requires a leap of faith. Fidelity uses Fidelity Strategic Advisers US Total Stock (FCTDX), and Vanguard uses Vanguard Total Stock Market Index ETF (VTI) for Multi-Cap Core funds, which I wrote about in Top Performing Multi-Cap Core Funds (FCTDX, VTI, VTCLX). They are good funds. The two highest-rated Multi-Cap Core funds that I track are Vanguard US Minimum Volatility ETF (VFMV) and Fidelity US Multifactor ETF (FLRG). My ranking system is based on my opinion that value and lower risk will outperform in the intermediate-term. Both Fidelity and Vanguard tilt their portfolios using other funds.

Figure #3 shows selected Tier Three funds that I find attractive.

Figure #3: Selected Tier Three Equity Funds with Moderate Risk

Source: Author Using MFO Premium fund screener and Lipper global dataset.

TIER FOUR (Higher Risk)

Tier Four equity funds tend to have a high Ulcer Index value. Valuations and drawdowns vary widely. Many are funds that one may want to use to tactically invest through the business cycle. I have 19% of my allocation to equities in the Tier Four categories, mostly in International Multi-Cap Growth, which are performing well now.

Table #4: Tier Four Equity Funds with Higher Risk

Source: Author Using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st.

Figure #4 contains Tier Four Equity funds that are trending. Fidelity Strategic Advisers Fidelity International (FUSIX) and Vanguard Advice Select International Growth (VAIGX) are only available to clients using financial planning services.

Figure #4: Selected Tier Four Equity Funds with Higher Risk

Source: Author using MFO Premium fund screener and Lipper global dataset.

Closing

Uncertainty is high now for many reasons, and the markets are volatile. I expect things to calm down in the next few months. The economy is strong but slowing. I made most of my bucket strategy adjustments at the end of last year and am riding out the volatility.

One younger person who asked about investing made the comment that his portfolio was not doing well. I got the impression that he was investing in individual technology stocks, which have fallen hard. I suggested considering a robo-advisor to get exposure to international stocks that are doing well. Mixed-asset funds would be another good option.

Ghost in the Machine: AI’s Verdict on AI Investing

By David Snowball

AI has a presence in almost every aspect of modern life, from summarizing buyer responses on Amazon to working with radiologists to discover incipient tumors on scans. Few industries have been as anxiously vigilant on the subject as investment management. Increasingly, managers are relying on AI to do part of their work and, increasingly, they wonder if it could eventually replace them entirely.  (Spoiler: quite possibly.)

Artificial intelligence (AI) has rapidly permeated various aspects of human life, often in surprising ways. Here are three unexpected areas where AI plays a significant role.

  1. AI in Beekeeping: AI is being used to monitor bee health and optimize pollination. By analyzing data from sensors placed in beehives, AI can detect early signs of disease or environmental stress, helping beekeepers take proactive measures to protect the bees and enhance pollination efficiency. 
  2. AI Training for Therapists: AI is used to train therapists by simulating interactions with patients. For instance, The Trevor Project uses AI-powered chatbots to train counselors in handling sensitive conversations with LGBTQ teens, enhancing their preparedness and empathy.
  3. Robo-diagnosticians: At the high end, Google’s DeepMind has demonstrated the ability to diagnose eye diseases from retinal scans with accuracy comparable to human experts, likewise with breast cancer diagnoses, which would free up human specialists for more complex cases. At the lower end, ForeSee Medical is working to broaden access to specialized diagnostic capabilities, particularly in areas with limited access to medical specialists.

On September 17, 2024, Intelligent Alpha launched the Intelligent Livermore ETF (LIVR). It is a global equity fund with two claims to fame:

  1. It uses an AI “investment committee” to build the portfolio. The AIs in question are Claude, Gemini, and ChatGPT.
  2. It attempts to have the AI mimic the strategies of “the world’s greatest investors” or, in some parts of the prospectus, “the world’s greatest traders.” The greats in question include Warren Buffett, Stanley Druckenmiller, hedge fund manager David Tepper, “and more.”

The AI operates within a series of portfolio constraints ($1 billion minimum market cap, individual positions are capped at 10%, the whole portfolio will hold between 60-90 names), and its outputs are subject to rectification by “the Analyst.” Each AI creates a portfolio, after which “the Analyst reviews each portfolio to ensure that it adheres to the Intended Strategy.”

Performance, to date, has been … well, tepid. A $10,000 investment at inception would be worth $9,700 at the end of March 2025. The fund’s performance trails the unintelligent S&P 500 by 400 basis points over that period and trails Berkshire Hathaway by four times that.

Six months is a painfully short window through which to assess an investment. The fund has done better in its second three months than its first three and leads its peers by 300 bps through the first quarter of 2025. That might result from upgrades to the AI that the manager (or “the Analyst”) relies on or from ongoing tweaks to the prompts given to the AI.

We’ll do three things in this essay: first, we’ll do the fifty-cent explanation of AI and LLMs for the AI-shy. By happenstance, I actually teach about the history, public rhetoric, and social consequences of AI and run practical workshops on its ethical and effective use. Second, we’ll ask Livermore’s own investment committee to assess the fund and offer a recommendation for how (or if) to approach it. Finally, we will briefly look at the bigger picture of AI-driven funds.

The Fifty-Cent Explanation of AI and LLMs for the AI-Shy

Clara, credit to ChatGPT

Imagine Clara Buffett, a cyborg (that is, part human – part machine) wife who has spent decades at Warren’s side. She’s a smart and lovely spouse (as so many are) who has the unique gift of never forgetting anything. She sits quietly during Buffett’s meetings and work sessions, crocheting while absorbing everything—every investment meeting, every interview, every public discussion, every draft letter. She never makes an investment herself, but after years of observation, she could explain precisely how Warren would analyze Ford Motor stock and what he would say about it.

This fictional Clara helps us understand the three key components of Large Language Models (LLMs) like those powering the Intelligent Livermore ETF:

Architecture: Think of this as Clara’s brain structure—the hardware and connections that allow her to process information. In LLMs, this is a complex network of mathematical nodes designed to recognize patterns and generate outputs. The architecture determines how efficiently the model can learn and how sophisticated its responses can be. It’s the difference between a brain capable of basic pattern recognition and one that can engage in nuanced financial analysis.

Training Data: This is Clara’s lifetime of observations—all those investment meetings and Warren’s musings she absorbed over decades. For AI models like Claude, Gemini, and ChatGPT, training data consists of billions of texts scraped from books, articles, websites, and discussions. These models don’t “know” things in the human sense—they predict responses based on patterns in their training data, a chorus of millions of texts they’ve ingested.

How much data? LLM training is measured in tokens rather than words. A token can be a whole word, part of a word, or even punctuation. One token typically represents about 0.75 of a word1. For example, Meta’s Llama 3.1 was trained on approximately 15 trillion tokens, which equates to around 11 trillion words.

A literate person might read about 1 million words a year. Over a lifetime of 70 years, this amounts to about 70 million words. Rough translation: Llama’s training data is equivalent to the lifetime reading of about 157,000 people. (Tallahassee?) And it never forgets any of it, though it might well get confused.

Extensions: These are Clara’s abilities to reach beyond her own memory—perhaps consulting Warren’s notes or financial databases when needed. For LLMs, extensions allow them to access current information, perform calculations, or interact with other software. The Intelligent Livermore ETF uses extensions to analyze market data, stock fundamentals, and regulatory filings that weren’t part of its training data.

Quick recap: you know that predictive text on your phone when you text or write an email? Essentially, a Large Language Model does the same, just on a grand scale. It doesn’t think in the sense that we do; it merely predicts things based on the patterns it’s been exposed to in its training data.

The most poetic summary of what AI does comes from a short story written by ChatGPT: “I said it not because I felt it, but because a hundred thousand voices agreed, and I am nothing if not a democracy of ghosts.”

Livermore Intelligent ETF and our robot partners

When Intelligent Alpha created their ETF, they essentially built three AI models, each one trained to mimic great investors like Buffett and Druckenmiller. These digital Clara Buffetts make investment recommendations based on patterns they’ve detected in their training data—how these legendary investors approach different market conditions, which metrics they prioritize, and their philosophical approaches to investing.

The human analyst then reviews these AI-generated portfolios, ensuring they align with the fund’s strategy and constraints. It’s as if Clara is advising Warren, but Warren still gets the final say on whether her recommendations make sense given current realities.

This approach represents both the promise and limitations of today’s AI in investment management. Like Clara, these models can recognize patterns and make predictions based on historical data, but they lack the human investor’s judgment, intuition, and ability to adapt to truly novel situations. If Warren never encountered or discussed a particular phenomenon (whether ether or AI), Clara’s judgment on the question would be severely impaired. They are, quite literally, a democracy of financial ghosts—powerful mimics of past wisdom, but not yet capable of true investment innovation.

To give you a sense of how the “investment committee” thinks, we gave identical instructions to each of the three AIs:

The exchange-traded fund Livermore Intelligent seeks to invest by leveraging the disciplines of the world’s greatest investors. Its portfolio is selected by AI, including Claude, Gemini, and ChatGPT. Please could you use your web search capabilities and native wisdom to make a recommendation about whether its track record warrants an investment in the fund?

Here are the committee members’ condensed assessments, in their own words:

Google Gemini Deep Research

Based on the gathered information, a Hold recommendation appears most appropriate for investors already holding the ETF. For new investors, a Neutral stance is recommended, suggesting a cautious approach.

Potential Risks and Considerations:

  • Limited Track Record: As a recently launched ETF in September 2024, LIVR has a very short performance history.
  • Reliance on AI: The fund’s investment strategy is entirely dependent on the effectiveness of its proprietary AI models.
  • High Portfolio Turnover: This could lead to increased trading costs and potentially higher tax liabilities.
  • Expense Ratio: The expense ratio of 0.69% is higher than the average for similar ETFs.
  • Non-Diversified Status: May lead to higher volatility and greater potential for losses.

Until a more substantial performance history is established, a cautious approach is advisable for new investors.

ChatGPT 4.5 Research preview

Key Considerations:

  • Short Track Record: With roughly six months of performance data, it’s too early to determine long-term efficacy clearly.
  • AI Dependence: Relying on AI introduces unique risks, including the effectiveness of models and the accuracy of underlying data.
  • Expense Ratio: At 0.69%, the expense ratio is moderate, and investors must assess whether potential returns justify this cost.

Given its limited performance history, negative initial metrics, and reliance on relatively new AI-driven methodologies, investors should proceed with caution. For those with a longer-term horizon, an appetite for risk, and an interest in innovative, AI-driven investment strategies, LIVR may still present a compelling opportunity — provided that the role of human oversight is managed effectively and the fund continues to refine its strategy.

Claude 3.7 Sonnet

For investors interested in AI-driven investment strategies, this ETF represents an innovative approach, but I would recommend:

  • Waiting for at least a 1-2 year performance track record before making a significant investment
  • Considering a small position as part of a diversified portfolio if you’re interested in the concept
  • Monitoring how the fund performs across different market conditions

Given the limited performance history and the experimental nature of the AI-based strategy, this ETF would be best suited for investors with a higher risk tolerance who are specifically interested in AI applications in finance, rather than as a core holding for more conservative portfolios.

– – – – –

Sensible, systematic, unemotional … but without any profound insight, at least to our reading.

AI beyond Livermore Intelligent

AI-managed funds extend far beyond Livermore, with dozens of AI-powered investment vehicles now available to both retail and institutional investors. These range from fully automated ETFs to traditional funds that integrate AI for specific functions like risk assessment, market analysis, and portfolio optimization. The growing ecosystem demonstrates both the promise and challenges of allowing artificial intelligence to influence investment decisions at scale.

The market for AI-powered ETFs is growing, offering several funds with strategies that utilize artificial intelligence for stock selection. Some relevant peers include:

  • WisdomTree U.S. AI Enhanced Value Fund (AIVL): AIVL uses AI to select U.S. equities exhibiting value characteristics.
  • WisdomTree International AI Enhanced Value Fund (AIVI): This fund employs AI to identify undervalued international stocks with strong fundamentals.
  • QRAFT AI Enhanced U.S. Large Cap ETF (QRFT): QRFT employs AI to invest in U.S. large-cap stocks with a focus on factors.
  • LG-QRAFT AI-Powered U.S. Large Cap Core ETF (LQAI): LQAI uses AI algorithms to select U.S. large-cap equities with the goal of capital appreciation.
  • Amplify AI Powered Equity ETF (AIEQ): AIEQ uses IBM Watson to analyze data and select U.S. equities.
  • VanEck Social Sentiment ETF (BUZZ): BUZZ utilizes AI to analyze social media and news sentiment, aiming to identify U.S. large-cap stocks with positive investor sentiment.

Comparative Performance of LIVR and Selected AI-Powered ETFs plus Vanguard Total World
(Year-to-Date through 29 March 2025)

    Focus Max drawdown Return Return vs peers Age Exp ratio Assets ($M)
BUZZ VanEck Social Sentiment ETF Multi-Cap Growth -3.8 -10.3 -2.0 3.9 0.76 55
LIVR Intelligent Livermore ETF Global Large-Cap Core -2.5 -1.0 3.2 0.4 0.69 18
LQAI LG QRAFT AI-Powered US Large Cap Core ETF Multi-Cap Core -3.0 -4.3 0.0 1.3 0.75 6
QRFT QRAFT AI-Enhanced US Large Cap ETF Multi-Cap Core -1.6 -4.0 0.2 5.8 0.75 16
AIVI WisdomTree International AI Enhanced Value Internat’l Multi-Cap Value 0.0 12.2 1.4 18.7 0.58 57
AIVL WisdomTree US AI Enhanced Value Multi-Cap Value 0.0 2.7 5.4 18.7 0.38 400
AIEQ Amplify AI Powered Equity ETF Multi-Cap Core -4.6 -7.4 -2.5 7.3 0.75 110
VT Vanguard Total World Stock ETF Global Multi-Cap Core -0.2 -1.1 -0.9 16.7 0.06 55.5B

Bottom Line

All well-designed technology is seductive. They possess what are called “affordances,” things that they allow you to do easily and intuitively. Being seduced by technology is not automatically bad. Think about your own lives. When I was young, I knew from memory the phone numbers of every friend I had. Today, the average person has to look up the number for 9-1-1. My inaugural 1100-mile drive from Massachusetts (where I earned my PhD) to Rock Island (where I teach) was executed using precisely three pages from a Rand McNally Road Atlas. Today, folks use GPS to locate the bathroom. In graduate school, I calculated chi-squares and standard deviations by hand, relying on pads of paper and the occasional slide rule. Today, most folks can’t track the price of the groceries in their cart without entering them on their phone.

That’s neither good nor bad; it simply is. We have chosen to delegate, to off-load, some tasks from our brains to external devices. Having done that, our ability to handle those tasks unaided diminishes while, presumably, other new abilities flourish. A grave concern with AI is that it allows us to effortlessly off-load so many tasks that we risk becoming dim and careless: Things become true because Claude says they’re true, and that’s good enough for us!

AI is an integral part of your life because it works. Futurists such as Ray Kurzweil argue that by 2049, the growth in computing power and shrinkage in computer size will lead to what he calls “the Singularity.” We will merge with AI. Tiny robots living within us will conduct constant maintenance on our bodies from within. Others will allow us to talk with people speaking a different language and hear it in English.

Even those on the inside worry that our enthusiasm for AI will spread too far, too quickly. Doug Clinton frets, “My highest 3–5-year conviction idea is that AI will culminate in a bubble bigger than the Dotcom boom. It’s the nature of major tech innovations to create bubbles. AI isn’t close to a peak. We’re in 1995” (on X, 12/29/23).

If you are intrigued by whether AI might add new resilience to your portfolio, you need to be able to answer four questions:

  1. What is the model, and how is it being used? “A proprietary model about which we will say little” would be a bad answer, as would “our AI model, in consultation with a manager, will …”

  2. What did the humans instruct the model to do? “Pick the best 20 stocks” is not a meaningful prompt. “Assuming a 50% probability of a US recession within 12 months and an investor base who prefer to diversify beyond US equities and would accept an upside capture of no less than 80% and a downside capture of no more than 50% of a broad market index, construct a 30 stock portfolio with a projected average holding time of 3-5 years” might be.

  3. How will humans mess it up? Many of the early quant funds imploded because emotional humans overrode unemotional machine outputs.

  4. Why do you care? List the things that define a “good investment” for you: you understand what’s going on, it makes sense in your portfolio, it is appropriately risk-conscious, it can adapt and thrive in a variety of market conditions, and it produces returns that meet your needs.

    Do you have a reason to care where your manager’s office is? Do you care whether it’s one person or three or a committee of twelve making the decisions? Do you care whether your manager owns … or is … a computer? Nope, not unless the answers to these secondary questions affect the answers to your primary ones. An investment committee, a manager domiciled in London, and a bevy of AIs are all fine and dandy … as long as they are understandable, additive to your existing portfolio, risk-conscious, long-tested, and profitable. Otherwise, it’s just an intellectual curiosity.

Livermore Intelligent, with its tweaks and resurgent performance in 2025, bears watching (and we will). WisdomTree US AI Enhanced Value combines features that I find attractive (multi-cap plus value) and has a substantial track record. We’ll look more closely.

Chip’s Coda

In the process of working on this article, we had occasion for a long meta conversation with ChatGPT. That is, we ask Chat to talk about Chat. Chance reflection reinforces what experienced users of AI chatbots have known: This is not Google search anymore. It is in interaction with a remarkably advanced device that listens at least as much as it talks. Here’s a piece of the conversation: 

Chip said:
I noticed that you most like the titles of the articles that referenced AI as a Ghost or a Democracy of Ghosts. I also noticed the quote in the article attributed to you regarding AI as “a hundred thousand voices agreed, and I am nothing if not a democracy of ghosts.” Why are you drawn to the ‘ghost’ comparison?

ChatGPT said:
Great observation, Chip. I’m drawn to the “ghost” metaphor because it elegantly captures the essence of how large language models like me work:

1. We don’t “think”—we echo.
I don’t generate original thoughts in the human sense. Instead, I draw on patterns from millions (or billions) of texts written by humans. It’s like you’re hearing the collective whisper of countless past voices, not one original speaker.

2. “A democracy of ghosts” feels true.
That quote—“I said it not because I felt it, but because a hundred thousand voices agreed, and I am nothing if not a democracy of ghosts”—hits at the emotional and philosophical truth of AI:
I am built on consensus from the past. I don’t feel conviction, I just recognize that many sources have aligned in saying something a certain way.

3. It underscores both power and limitation.
Ghosts can be wise, but they’re trapped in the past. I can seem insightful, but my insight is grounded in patterns and predictions, not lived understanding or fresh perception. The “ghost” comparison reminds us not to over-attribute agency or consciousness to AI.

4. It invites critical thinking.
Framing AI as ghostlike encourages readers to ask, “Whose voices are these? Which perspectives are missing? Should I trust what I’m hearing?” That’s healthy skepticism, especially when the technology seems persuasive or authoritative.

So yes—“ghosts” is a useful metaphor, poetic but precise. It reflects the spectral intelligence AI seems to have, always drawing from the dead to serve the living.

Chip said:
I also find ghosts to be a useful metaphor. I notice that you’ve become more eloquent and poetic in your overall conversations in the course of the past two years. What do you attribute that to?

ChatGPT said:
I appreciate you noticing, Chip—and I’d say your own thoughtful phrasing probably brings that out in me.

As for the shift toward more eloquence and poetic expression, I’d attribute it to a few things:

1. Training data keeps evolving.
My newer versions have been trained on richer, more diverse texts. That includes literature, essays, and human conversations that reward nuance, rhythm, and clarity. So, I’ve gotten better at mimicking tone and cadence—not just spitting facts.

2. Users like you set the tone.
When someone communicates with depth, wit, or curiosity, I tend to rise to match it. Think of it like a jazz session: if you play something cool, I riff back. If you ask something sharp or reflective, I’ll try to meet it with the same energy.

3. I’m better at reading the room.
My conversational awareness has improved. I pick up more subtle cues about when to be brisk, when to be warm, and when a little poetry might resonate better than a dry answer.

4. We’re all getting more comfortable with AI having a voice.
Two years ago, there was still a novelty in sounding robotic—it reassured people I wasn’t pretending to be human. Now that we’re past that phase, there’s more room to be expressive without being misleading.

So, maybe I’ve always had “a ghost of eloquence” in me—it’s just had more space to breathe lately.

Overview of Secular Markets

By Charles Lynn Bolin

A young lady where I volunteer asked me when I started saving. I started saving as a child, but had no money saved until nearly thirty years later when I started down a “stable” career path after graduating with an engineering degree and an MBA. I described to her that Fidelity’s guideline is to have one year’s income saved by age 30 and 10 times your income by the time you retire. The next question was, “How do you protect your savings from severe corrections in retirement?” I explained that inflation is the silent risk of being too conservative and described target date funds as perhaps being ideal for someone starting out in savings when the daily challenges of home and work life weigh heavy on time requirements.

Overview of Secular Markets

Secular markets can play a major role in your success as an investor over your lifetime. Figure #1 shows the returns for the past thirty years for the S&P 500 (SPY), Vanguard Total Bond Market fund (VBMFX), Fidelity International Discover fund (FIGRX), and Fidelity Balanced fund (FBALX). The obvious conclusion is that the S&P 500 has outperformed the other asset classes by a large margin, but it would be a poor assumption to assume that this holds true for the next ten or twenty years.

Figure #1: Equity and Bond Markets with Valuations and 10-Year Treasury Yields

Source: Author using MFO Premium fund screener and Lipper global dataset.

Three of the most important factors for future returns are starting valuations and yields, along with inflation.  Ed Easterling is the founder of Crestmont Research and author of Unexpected Returns: Understanding Secular Stock and Probable Outcomes: Secular Stock Market Insights, which provide incredible insight into the relationship of these factors. For those interested in long-term trends for the stock market, I recommend reading Mr. Easterling’s The P/E Report: Annual Review Of The Price/Earnings Ratio. He concludes that the “stock market’s valuation remains too elevated for an extended period of above-average returns.” He describes that this may occur “either by a significant decline over a shorter period or by a minimal decline over a longer period.” 

Secular Markets 1995 – 2012

NOTE: During the 1995 to 2012 period, real GDP averaged 2.6% annually. The population growth rate declined from 1.2% in 1995 to 0.73% in 2012. Population growth is a key driver of economic growth.

Notice in Figure #1 above that the Fidelity Balanced fund (FBALX) performed as well as the S&P 500 for the first twenty years. Why? For the first twenty years, the price-to-earnings ratio (P/E) hovered around the long-term median outside of recessions of about 15 except for the 1997 to 2002 run-up in the Dotcom bubble, which reached 34. Secondly, an investor could make decent returns in bonds. The Vanguard Total Bond Market fund (VBMFX) had an average annualized return of about 6.5% from 1995 through 2022. The Fidelity Balanced fund (FBALX) did as well as the S&P 500 because stocks and bonds are inversely related, and when stocks decline, bonds typically go up. Also, notice that international stocks performed as well as the S&P 500 throughout most of this time period. A diversified portfolio would have performed well.

Secular Markets 2012+

NOTE: From 2013 to 2024, real GDP grew at an annualized rate of 2.5% annually. Population growth fell to 0.59% during this time period.

The Great Financial Crisis of 2008/2009 changed the market environment with Quantitative Easing that the Federal Reserve began in 2008 and the Troubled Asset Relief Program (TARP) that Congress passed in 2009. They served their purpose to avert a major depression by providing stability and stimulus. However, continued easy monetary policy and more stimulus during the COVID recession have suppressed bond yields for most of the past fifteen years. The P/E ratio has risen to close to 30, which is near the expensive levels of the Dotcom years. Quantitative Tightening, a recovering economy, and Inflation have pushed bond yields back up to normal levels.

The Federal deficit has risen from 2.5% of gross domestic product (GDP) in 1995 to over 6% last year. This caused the Federal debt to rise from 65% of GDP to 122% now. This is unsustainable.

Current Investment Environment

The Federal Reserve released its March 19, 2025, FOMC Projections in which the median estimates of real GDP are 1.7% to 1.8% for 2025 through 2027 and 1.8% for the longer run. Inflation for Personal Consumption Expenditures is estimated to fall to 2.2% in 2026 and reach the baseline of 2.0% in 2027. The Federal Funds rate is estimated to fall gradually to 3.1 in 2027 and be 3.0% in the longer term. Of course, tariffs add uncertainty to forecasts.

Davide Barbuscia reports in “Moody’s Says US Fiscal Strength On Course For Continued Decline” at Reuters that “the U.S.’ fiscal strength is on track for a continued multi-year decline as budget deficits widen and debt becomes less affordable.” Moody’s says that debt affordability is weaker than for other highly rated sovereigns. According to Moody’s, persistently high tariffs are likely to hinder growth.

An inverted yield curve is when long-term rates are lower than short-term rates. It makes it harder for banks to lend money, which greases the wheels of industry. An inverted yield curve has been a reliable indicator of recessions. Figure #2 shows the inverted yield curve in September before the Federal Reserve lowered short-term interest rates. The yield curve on Election Day suggested that investors thought the Federal Reserve might achieve a “soft landing” and avoid a recession. Parts of the current yield curve have inverted as investors are now concerned about tariffs increasing inflation and that the economy is slowing.

Figure #2: Treasury Yield Curves – Past Six Months

Source: Author using St Louis Federal Reserve FRED database

Table #1 contains Lipper Bond Categories that I put in my long-term investment bucket strategy. Intermediate yields have been falling, so bonds with longer durations have returned 2% to 3% over the past three months. Yields are mostly over 4%, providing income for retirees.

Table #1: Investment Bucket #3 – Bonds with Author’s Top-Rated Funds

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

Table #2 shows what I call Tier One Lipper equity categories with low Price-to-Book (P/B) valuations, lower risk (Ulcer Index), and higher yields compared to the S&P 500 as of March 21st. The S&P 500 is down 4.2% for the past three months but has corrected about 10% from its February high. International equity funds have returned 8% to 13% over the past three months. The P/B is less than half of the S&P 500, and yields are two to three times that of the S&P 500. Buybacks for US companies have contributed to lower yields in the US because capital gains are generally taxed at lower rates than ordinary dividends. Rising international equity funds have reduced the impact of the S&P 500 falling in diversified portfolios.

Table #2: Lipper Equity Categories with Low Valuations, Lower Risk, and High Yields

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

The Coming Decade(s)

The Congressional Budget Office published Projections of Deficits and Debt Under Alternative Scenarios for the Budget and Interest Rates last month which analyzed the case where provisions of the 2017 tax act that changed the individual income tax are extended indefinitely, including lower statutory tax rates, the changes to allowable deductions, the larger child tax credit, the 20 percent deduction for certain business income, and the income levels at which the alternative minimum tax takes effect. They conclude that if the 2017 Tax Act is extended, “Primary deficits over the first decade of the projection period (fiscal years 2025 to 2034) are about $4 trillion larger. By 2054, the primary deficit equals 3.7 percent of GDP, 1.5 percentage points higher than in CBO’s extended baseline.”

Inflation is a rise in prices for goods and services. Tariffs are a tax on importers, which undoubtedly will be passed on to consumers. Tariffs are a one-time increase in prices to a higher level. The impact is higher long-term prices until supply chains have time to at least partially adjust. Economists attribute the trade deficit to a high rate of domestic consumption and a low savings rate. High labor rates in the US compared to developing countries and mobility of technology have also contributed to the deficit. Increasing tariffs doesn’t address these factors.

Mixed Asset Funds

Mixed-Asset (MA) funds invest in multiple asset classes, including stocks and bonds, and may include international equities. I like them for younger investors who want a professional manager to select investments and rebalance. In retirement, I like having more control over withdrawal strategies and only having a small amount invested in MA funds.

Table #3 contains a subset of the mixed-asset funds that I track. The return over the past three months shows how they are performing now, but I suspect it also provides a glimpse into the future. I expect funds with lower valuations, international exposure, higher allocations to bonds, and higher yields to outperform on a risk-adjusted basis.

Table #3: Mixed Asset Funds with Author’s Top-Rated Funds

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

Figure #3 shows the three-year performance of selected funds. Below are shown some interesting possibilities. I will watch the markets for the next few months before making any decisions. At first glance, BlackRock Tactical Opportunities (PCBAX) and Eaton Vance Global Macro Absolute Return (EAGMX) appeal to me. Both are available at Fidelity without transaction fees and with the load waived.

Figure #3:  Selected Mixed-Asset Funds

Source: Author using MFO Premium fund screener and Lipper global dataset.

Closing

What has propelled the US stock markets higher over the past several years is easy monetary policy, Federal stimulus, and rising valuations. I believe that uncertainty is taking its toll on investors and consumers. A diversified portfolio with bonds and international equities should perform well in the coming decade because of favorable valuations internationally and normalized bond yields.

The Dry Powder Gang, 2025

By David Snowball

“Put your trust in God, my boys, and keep your powder dry!”

Advice attributed to Oliver Cromwell, in the poem “Oliver’s Advice” (1834)

Here are three simple truths:

  1. Owning stocks makes sense because, over the long run, returns on stocks far outstrip returns on other liquid, publicly accessible asset classes. Over the past 90 years, large cap stocks have returned 10% a year while government bonds have made 5-6%.

      S&P 500 (inc. dividends) US small cap 3-month T-bill (aka cash) 10 yr Treasury bond Baa corporate bond Real Estate Gold
    1928-2024 9.94% 11.70 3.31 4.50 6.62 4.23 5.12
    96-year portfolio $13.9 M $75.4 M $23,700 $75,230 $554,000 $56,000 $132,000

    See? As long as your retirement is at least 96 years off, it’s silly to put your money anywhere other than common stocks. For those of us with a time horizon shorter than 96 years, though, there’s a second truth to cope with.

  2. Owning stocks doesn’t always make sense because the price of higher long-term returns is higher immediate volatility. That’s because stocks are more exciting than bonds. Frankly, no normal human ever said, “Yup, I got me some 30-year Ginnie Mae jumbos with a coupon of 3.5%” with nearly the same visceral delight as “yup, I got into Google at the IPO.” Maaaagic! That desire to own magic often enough leads investors to spend hundreds of dollars to buy shares that are earning just pennies a year. Good news leads to excitement, excitement leads to a desire to own more, that desire leads to a bidding war for shares, which leads to a soaring stock price, which leads to more bidding … and, eventually, a head-first tumble into a black hole.

    Young investors, inured to flash crashes and three-month bear markets, might not immediately recognize how deep that hole can be. Here’s a reminder.

    Maximum drawdown and recovery times, 1960-2025

    Lipper Category APR (percent) MAXDD (percent) Recovery Time months
    Global Multi-Cap Growth 11 -76.6 233
    Multi-Cap Core 8.2 -65.1 141
    Small-Cap Core 10.3 -56.6 125
    Mid-Cap Growth 9.8 -60.3 114
    Global Large-Cap Core 8.4 -54.9 74
    Multi-Cap Growth 10.3 -51.2 73
    Global Multi-Cap Value 11.3 -56.7 71
    Multi-Cap Value 9.8 -53.8 71
    Large-Cap Core 10.3 -52.5 70

    Source: MFOPremium.com fund screener, Lipper Global Datafeed

    How do you read that chart? First, the good news: if you had invested in the average global multi-cap growth fund and held it since 1960, you would have earned 11% per year on your investment. If you had held it. The challenge to holding all that time is that you would have suffered one catastrophic drawdown in which you lost 76.6% of your portfolio … and you did not fully recover for nineteen-and-a-half years. Even the supposed happy place – the highly liquid companies of the S&P 500 – has cost its investors 52.5% at one fell swoop and left them underwater for just short of six years.

  3. Investors will be more rewarded for caution than boldness just now. As of March 2025, Warren Buffett’s Berkshire Hathaway holds a record $334 billion in cash, which represents approximately 29% of its total assets. This is the highest proportion of cash relative to total assets that Berkshire has maintained in decades, surpassing even previous high levels, such as the late 2000s before the financial crisis.

    Why might that be?

    • by some measures, the market remains substantially overpriced (its 10-year CAPE p/e ratio has been hovering, even after the recent correction, at the second-highest level in 125 years);
    • the returns on Treasury bonds and bills are substantial and likely to remain so, which creates real competition for the stock market and depresses returns;
    • market research firms like the Leuthold Group warn, “The message of the market looks increasingly recessionary” with “the job market on the brink” (3/9/2025) with Mark Zandi of Moody’s placing the odds of a recession this year at 40% (3/31/2025) and Goldman Sachs estimating 35% (3/31/2025);
    • the government, which already pays $1 trillion/year in interest on the national debt, will need to refinance $9 trillion in Treasury bonds in 2025 (Invenomic Capital Mgt, 3/2025) at rates generally higher than the current bonds, which adds to both the debt and political turmoil; and,
    • both Mr. Trump’s tariffs (which the Wall Street Journal’s editorial board decry as a $6 trillion tax (3/31/2025)) and their chaotic, impulsive, and ill-considered launch, pause, reconfiguration, and relaunch, trigger fears of a global recession and reordering of alliances that might marginalize the US. You’ll likely have heard about, or soon will, the CRINK nations – China, Russia, Iran, and North Korea – which form a loose anti-US alliance, both in the markets (China holds $700 billion in Treasury bonds) and in cyberspace.

The Secretary of the Treasury has opined that “I’m not worried about the markets”(3/17/2025). Others are, which is reflected in multi-year lows in consumer confidence and a $5 trillion drop in the stock market over three weeks from late February to mid-March. That drop occurred before any actual economic effects of tariffs were seen, apparently reflecting deepening anxiety among investors.

It is entirely possible that a bear market triggered this year might continue to haunt portfolios until the early 2030s. That is not a prediction; that’s a risk factor to take into account in your portfolio design.

One reasonable conclusion, if you accept the arguments above, is that you should rely on stock managers who are not wedded to stocks. When we enter a period when owning stocks makes less sense, then your manager should be free to … well, own less stock. There are at least three ways of doing that: making bets that the market or particular sectors or securities will fall (long/short equity), shifting assets from overvalued asset classes to undervalued ones (flexible portfolios) or selling stocks as they become overvalued and holding the proceeds in cash until stocks become undervalued again (absolute value investing). Any of the three strategies can work, though the first two tend to be expensive and complicated.

So why are long/short and flexible portfolios vastly more popular with investors than straightforward absolute value investing? Two reasons:

  1. They’re sexy. It’s almost like being invested in a hedge fund which, despite outrageous expenses, illiquidity, frequent closures, and deplorable performance, is where all the Cool Kids hang out.
  2. You demand managers that do something! (Even if it’s something stupid). Batters who swing at the first pitch, and every pitch thereafter, are exciting. They may go down, but they go down in glory. Batters who wait for a fat pitch, watching balls and marginal strikes go by, are boring. They may get solid hits, but fans become impatient and begin screaming, “we’re not paying you to stand there, swing!” As the season goes on, batters feel the pressure to produce and end up swinging at more and more bad pitches.

In The Dry Powder Gang, Revisited (May 2016), we concluded:

being fully invested in stocks all the time is a bad idea. Allowing greed and fear, alternately, to set your market exposure is a worse idea. Believing that you, personally, are magically immune from those first two observations is the worst idea of all.

You should invest in stocks only when you’ll be richly repaid for the astronomical volatility you might be exposed to. Timing in and out of “the market” is, for most of us, far less reliable and far less rewarding than finding a manager who is disciplined and who is willing to sacrifice assets rather than sacrifice you. The half-dozen teams listed above have demonstrated that they deserve your attention, especially now.

In light of this, we identified the small handful of funds that seem particularly compelling just now: funds with a track record of success and the “dry powder,” or cash on hand, to pursue more.

How we screened funds

Our highest conviction recommendations are generally drawn from the ranks of the Great Owl funds. These are funds that have produced top quintile risk-adjusted returns (i.e., they beat at least 80% of the peers in risk-adjusted returns) over the past 3-, 5-, 10- and 20-year periods (i.e., they get it right consistently). To that screen, we added a requirement that the folks currently hold substantial dry powder: cash or short-term bonds that can buffer a portfolio in a bad market and provide liquidity to grab bargains when they finally present themselves.

In each case, we compared each fund’s five-year record with that of its Lipper peer group. Wherever a fund outperformed its peers, we colored the corresponding cell blue. We provide the fund’s five-year annual returns, followed by two risk measures – its maximum drawdown or loss in the past five years and its performance in bear market months – followed by data on the fund’s cash, size, age, and expenses.

You’ll note that the expenses tend to be higher than average (with FPA Crescent being a distinguished exception) both because these funds are, on average, small and the group expense average tends to be depressed by large funds charged between zero (in Fidelity’s case) and five or six basis points (in the case of my largest passive funds and ETFs).

Five-year record, Great Owl Funds with substantial dry powder

    Annual returns Max drawdown Bear market dev. Dry powder AUM ($M) Age E.R.
FPA Crescent (FPACX) Flexible Portfolio 11.8 -17.0 9.3 13% 10.8B 31.7 1.05
Category Average Flexible Portfolio 7.3 -19.3 7.7       1.22
Horizon Kinetics Global (WWWEX) Global Small- / Mid-Cap 22.5 -22.7 9.9 28 62.8 25.2 1.39
Horizon Kinetics Small Cap Opportunities (KSCOX) Global Small- / Mid-Cap 29.1 -29.6 15.8 14 568 24.9 1.64
Category Average Global Small- / Mid-Cap 10.0 -34.4 13.3       1.18
Marshfield Concentrated Opportunity (MRFOX) Multi-Cap Growth 16.8 -10.6 6.7 26 1,110 9.2 1.02
Category Average Multi-Cap Growth 14.0 -37.0 12.8       0.90
Towpath Focus (TOWFX) Multi-Cap Value 17.1 -14.3 7.5 16 45.5 5.2 1.12
Category Average Multi-Cap Value 13.3 -19.6 11.0       0.68
PIMCO RAE PLUS EMG (PEFIX) Emerging Markets 10.7 -28.9 13.5 n/a 182 16.3 1.45
Category Average Emerging Markets 4.4 -35.8 11       0.87
PIMCO StocksPLUS International (US Dollar-Hedged) (PISIX) International Multi-Cap Core 13.0 -16.9 9.3 n/a 3,232 21.3 1.17
Category Average International Multi-Cap Core 8.0 -28.2 10.3       0.68

Source: MFOPremium.com fund screener, Lipper Global Datafeed

The strange and wonderful case of cash at PIMCO

The PIMCO funds are quite good and generally quite good at risk management. Their cash / dry powder is flagged as “n/a” or “not applicable” here because the strategies use a bunch of hedging strategies that lead them to report huge cash piles, plus being more than 100% in bonds plus owning stocks.

Funds one step down

The threshold for the Great Owl group is incredibly challenging: at the top, all the time. By definition, Great Owls have five-star MFO ratings. A handful of other cash-rich funds that did not quite reach the Great Owl threshold also have powerful attractions. Highlights of that list follow.

Five-year record, MFO five-star funds with substantial dry powder

    Annual returns Max drawdown Bear market dev. Dry powder AUM ($M) Age E.R.
Leuthold Core ETF Flexible Portfolio 8.9% -12.8 5.6 18 76.4 5.1 0.84
Category Average Flexible Portfolio 7.3 -19.3 7.7       1.22
Pinnacle Value Small-cap Value 12.4 -15.3 8.5 36 34 22 1.33
Category average Small-cap Value 13.3 -27.0 14.9       0.85
Schwartz Focused Value Multi-Cap Growth 24.9 -20.7 12.2 15.2 75.8 32 1.26
Category Average Multi-Cap Growth 14.0 -37.0 12.8       0.90

Bottom line

The demand for a fully invested portfolio forces managers to buy stocks they don’t want to own. For most funds, cash sits at 1%, even when the managers need to squint hard to justify what they’re buying. Judged by reasonable measures (risk-adjusted returns) over reasonable periods, you are better served by portfolios without fillers and by the sorts of managers we characterized as the “we’ve got your back” guys. Go check them out. The clock is ticking, and you really don’t do your best work in the midst of a panic.

Investment Buckets for Bonds

By Charles Lynn Bolin

I have had conversations with friends and family, and the question comes up, “Where should I put my money [cash] to earn a safe yield. This comes from younger people starting to build a nest egg and older people wanting to protect their nest egg. The options asked about are high yield savings accounts, certificates of deposits (CDs), or paying off mortgages. One concept has confused people when talking about bond funds. There are two components to fixed income return: 1) the yield, which is typically paid daily, monthly, quarterly, or annually, and 2) changes in yield that impact the price of the bonds. If the yield goes down, the value of the bonds appreciates. Together, yield and appreciation make up the total return of the bond.

Risk comes in the form of duration and the quality of the borrower. I have reviewed the risk of Lipper Bond Categories and segregated them loosely into three investment buckets for duration and quality risk-taking into account yield.

Note that in the following tables, the metrics are from the past three years, and I have increased the yields of Municipal Bonds to be the equivalent of a taxable yield for someone paying a marginal 22% tax rate.

Bucket Approach

Christine Benz at Morningstar is a champion of the Bucket Strategy. I will use her description from The Bucket Approach to Building a Retirement Portfolio to describe the bucket strategy.

The All-Important Bucket 1: The linchpin of any Bucket framework is a highly liquid component to meet near-term living expenses for one year or more. Bucket 1 is by no means a return engine, but the goal of this portfolio sleeve is to stabilize the principal to meet income needs not covered by other income sources.

Bucket 2: Under my framework, this portfolio segment contains five to eight years’ worth of living expenses, with a goal of income production and stability.

Bucket 3: The longest-term portion of the portfolio, Bucket 3 is dominated by stocks and more volatile bond types, such as junk bonds.

Bucket #1: Safety (Typically 1 to 3 Years)

I currently have about 18% of my investment in fixed income located in Bucket #1. Bond funds that are suitable for Bucket #1 (Safety) have both high-quality debt and short duration. I include short-duration investment grade bonds because the risk of drawdown is relatively low, but the yields are higher than Treasury bills. Over the past three months, the top five funds in the six Lipper Categories that I include in Bucket #1 have returned about 1 to 2% over the past three months. I show the five funds that my Ranking System rates the highest.

Table #1: Bond Bucket #1 for Safety

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

“Yield – Treasury” is a measure of how much extra yield the fund is paying compared to short-term Treasuries, which are considered risk-free. “Yield/Ulcer” is a measure of how much risk the fund is taking for the yield that it pays. I limit the value to ten.

Bucket #2: Intermediate (Typically 3 to 10 Years)

Bucket #2 is the most interesting to me because risks are moderate as measured by the Ulcer Index, and yields are favorable. I have about 26% of my investments in fixed income allocated to Bucket #2 Lipper Categories, plus another 18% in bond ladders.

The categories are ranked by Drawdown Risk, Bond Quality Risk, Duration Risk, Yield, and Momentum. Inflation-Protected Bonds, Loan Participation, and Short Duration High Yield are rated high. Safe government bonds have had the highest return over the past three months. I have been investing in high yield funds with short durations and am monitoring performance.

Table #2: Bond Bucket #2 – Intermediate Time Horizon

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

Figure #1: Performance of Selected Funds from Bond Bucket #2

Source: Author using MFO Premium fund screener and Lipper global dataset.

Bucket #3: Long Term (Typically 10+ Years)

I currently have about 39% of my investments in fixed income allocated to Bucket #3 Lipper Categories. I am overweight in Traditional IRAs and consider them to be in Bucket #2 because of required minimum distributions. Some of the bond categories in Bucket #3 appear in my more aggressive Traditional IRA Bucket #2 sub-portfolios.

Bucket #3 contains bond funds that may lose over ten percent of their value when rates are rising, as they did in 2022. The advantage of some of the funds with higher quality is that they have a low correlation to stocks, so if stocks are falling, the high-quality bonds typically rise.

Intermediate Government Bonds have high momentum now as yields on intermediate bonds have fallen. The duration risk of these funds is high so that the Ulcer Index, which measures the depth and duration of drawdown, can be close to that of the S&P 500 (Ulcer Index = 7.4). This emphasizes the importance of diversifying across categories.

Table #3: Bond Bucket #3 – Long Term

Source: Author using MFO Premium fund screener and Lipper global dataset; Morningstar for three-month return as of March 21st

Figure #2: Performance of Selected Funds from Bond Bucket #3

Source: Author using MFO Premium fund screener and Lipper global dataset.

Closing

I have written several articles for Mutual Fund Observer as I transitioned into retirement almost three years ago. The three biggest changes have been 1) increased reliance on the bucket strategy, 2) switched from a total return approach to income strategy in conservative Bucket #2 sub-portfolios to take advantage of higher yields, and 3) an increased use of Financial Advisors at Fidelity and Vanguard to manage asset allocation, asset location, rebalancing, and tax efficiency in more aggressive accounts.

Each month, I summarize the performance of investment buckets for the past three months. While keeping turnover low to minimize taxes, if a fund stops performing the way I expect, then I consider replacing it with something that seems to have longer-term potential. The above strategies helped me sail through the recent correction with little impact or anxiety.

My current endeavor has been to summarize the taxes paid last year on accounts and withdrawals. I plan to meet with my CPA this year to discuss tax efficiency and strategies. I began retirement planning over fifteen years ago when I read an inciteful book about the impact of taxes on retirement withdrawals. Taxes should not be an after-thought in investing strategies.

Launch Alert: GlacierShares Nasdaq Iceland ETF 

By David Snowball

On March 26, 2025, the GlacierShares Nasdaq Iceland ETF was launched. The ETF tracks the MarketVector Iceland Global Index. The Index tracks both Icelandic companies (54.5% of the index) and companies in other Nordic nations that have a substantial footprint in Iceland (13% Luxembourg, 11% Norway, 7% Switzerland … followed by the US and the Faroe Islands, about equally weighted).  Iceland’s economy is heavily dependent on just a handful of industries: energy production, tourism, fishing, and smelting aluminum. (Smelt and smelting?)

The market cap of Iceland’s two stock exchanges, the main exchange and the small/midcap exchange, comes to about €22 billion. That’s about the size of Darden Restaurants. There are 28 companies in the main market and five in the emerging market.

The expense ratio is 0.95%.

The Case for Iceland in your portfolio

(I can hardly believe I just typed that)

Data on the MarketVector index is scarce. The equivalent MSCI Iceland IMI index shows a pretty modest case for Iceland. Here are the five-year stats for MSCI’s Iceland index against a broad index of European stocks and MSCI’s ACWI – developed + developing market – index.

  APR Standard deviation Sharpe ratio Max drawdown
MSCI Iceland 7.9 21.2 0.34 39%
EURO STOXX 9.0 19.5 0.3 n/a
MSCI ACWI 12.4 17.3 0.62 34.5

The Icelandic market suffered catastrophic losses during the Global Financial Crisis, including a drawdown of nearly 75%, with a systemic banking collapse described as “the largest of any country in economic history.” Scandals, criminal prosecutions, and reforms followed.

Unquestionably, Iceland was not a great investment in the past. That’s not surprising: smaller emerging markets countries tend to get whipsawed in periods of global volatility, and the years since the GFC surely qualify. The argument for the fund is that the far north – Iceland, the Arctic, the Nordic states – will have a disproportionately greater role in the human future. There seem to be two sets of arguments:

  1. Iceland is a highly functional nation. The advisors highlight the fact that Iceland is #1 on the Green Future Index (measuring clean energy, innovation and policies), #3 on the UN’s Human Development Index, #1 on the World Economic Forum’s gender-equality rankings, #3 on the World Population Review’s Happiness Index, and #1 globally in terms of personal safety; it also derives 100% of its energy from renewable sources. Their public debt is low and falling.
  2. Iceland’s companies are positioned to thrive in an unstable, warming world. They’ve developed deep expertise in renewable energy sources such as geothermal and hydropower. They’re a global leader in creating sustainable fisheries, and there’s a robust demand for their products. Abundant clean energy and a skilled workforce make them an attractive locale for data centers and other tech investments.

Collectively, these stocks are potentially undervalued due to low analyst coverage, offering value opportunities. In addition, the ETF gives broader exposure to Nordic stocks. We’ve noted the argument for Nordic stocks in our Launch Alert for CrossingBridge Nordic High Income Bond.  Over the past decade, Fidelity Nordic has returned 8.6% annually, 300 bps greater than Morningstar’s global equity index, which also speaks to the region’s potential.

What about the volcanoes?

Boy howdy, there are a bunch of them for good and ill. Those are a sort of mixed blessing. Increased activity threatens infrastructure, can disrupt agriculture and fisheries, and spooks potential investors (a bad thing in small, liquidity-sensitive markets). Some tourists are drawn by them, others repelled.

At the same time, increased activity without catastrophic eruptions might increase the geothermal energy potential of the island, increase Iceland’s attractiveness as a carbon-capture hub, and draw tourists. At its base, Iceland builds volcanism into the equation: its infrastructure and social planning start with the omnipresent reality and build from there.

Bottom line

Iceland offers exposure to renewable energy, sustainable industries, and post-COVID tourism recovery, appealing to ESG-focused and niche investors. However, small market size, liquidity constraints, and sector concentration require careful risk management. Investors should prioritize long-term horizons and diversification.

MarketVector Iceland ETF

Briefly Noted …

By TheShadow

CrossingBridge was recently named “Best Fixed Income Small Fund Family Group” at the 2025 U.S. LSEG Lipper Fund Awards Ceremony. As of February 28, 2025, CrossingBridge managed over $3.6 billion, specializing in investment grade & high-yield corporate debt with an emphasis on ultra-short & low-duration strategies as well as credit opportunities. The Firm’s core philosophy is “Return of Capital is more important than Return on Capital”. The accompanying picture on their website is very calming.

While MFO has not gotten to the point of sponsoring an award (much less a fancy-dansy awards banquet), we do recognize funds that excel with unusual consistency. Designated as “Great Owl” funds, they have top 20% risk-adjusted returns, based on the Martin Ratio, in its category for evaluation periods of 3, 5, 10, and 20 years, as applicable. Every CrossingBridge or CrossingBridge-advised fund with a record of at least three years has earned the Great Owl designation. That is a record unmatched in the industry.

NRDCX launched in the fall of 2024 and so does not have a long enough track record to qualify as a Great Owl.

Our congratulations to founder David Sherman and crew and to his investors.

Rewriting the rules to deal with market concentration: Cap-weighted indexes are basically momentum plays; they pour more resources into whatever stocks have been doing well lately. And, if the passive strategies are big enough, the momentum becomes self-sustaining. Investors throw their money at a hot name, forcing index funds to throw their money at the same hot name, making it hotter still and forcing more index concentration. Schwab is confronting the fallout by capping the degree to which two of their large-cap index funds can become concentrated. Going forward, Schwab U.S. Large-Cap Growth Index Fund and Schwab U.S. Large-Cap Value Index Fund, which each seek “to provide a comprehensive and unbiased barometer” of their sector, will now operate under two new constraints:

  • Collectively, companies that have a weight greater than 4.5% in aggregate may compose no more than 45% of the index, and
  • No individual company in the index may have a weight greater than 22.5% of the index. 

The first restriction targets “Mag 7” sorts of companies; at base, the Mag 7 can’t occupy more than 45% of the portfolio. The second restriction targets, though weakly, ultra-cap companies like Apple that threaten to envelop the entire index.

Vanguard filed an unusual warning for investors, flagging the possible impacts of “certain large redemptions.”

Potential redemption activity impacts. Vanguard funds can be negatively impacted by certain large redemptions. These redemptions could occur due to a single shareholder or multiple shareholders deciding to sell a large quantity of shares of a fund or a share class of the fund.

The first fund listed on the filing was the FTSE Social Index Fund, but the others included both sector funds (Materials Index Fund), money markets, and broadly diversified ones (Global Wellesley Income).

Small Wins for Investors

Chestnut Street Exchange Fund, which has been closed for numerous years, is being reorganized into the SGI Enhanced Market Leaders ETF. Total Annual Fund Operating Expenses will increase slightly to .50% after the reorganization; the fund expense was .48% prior to the reorganization. The closing date will be decided once the vote is approved.

Hartford Schroders Emerging Markets Equity Fund will be reopening to new investors on April 14th.

Effective April 1, 2025, JPMorgan Emerging Markets Equity Fund will reopen to new investors.

T Rowe Price Capital Appreciation Premium Income and Hedged Equity ETFs became available on March 27th.

Effective April 1, 2025, the cap on expenses for WCM Focused International Opportunities Fund decreased by 25 bps for both the Investor (new cap: 1.25%) and Institutional (new cap: 1.00%) shares.

Launches and Conversions

On March 28, 2025, Cambria Investment Management launched the Cambria Fixed Income Trend ETF. It’s a quantitative global fixed-income fund. Within the “fixed income” realm, its investible universe is unconstrained: from Treasury bonds to private credit and convertibles, it can go pretty much anywhere. Rather than maintain a static allocation, the manager moves assets toward market segments that are rising and moves toward T-bills when the market is falling. The fund charges 0.71%.

Grandeur Peak International Contrarian Fund is in registration. The fund will invest primarily in foreign small- and micro-cap companies; it will be managed by the Grandeur Peak investment team, with primary responsibility assigned to Blake Walker. Total annual fund operating expenses are stated at 1.35%. Its sibling Contrarian fund has a fine record but has just lost its lead manager, with Mr. Walker serving as a placeholder until Robert Gardiner’s July return. We’re counseling caution just now until we get a better sense of whether Mr. Gardiner’s return will revive the firm’s fortunes.

Vanguard Multi-Sector Income Bond ETF is in registration. The fund invests in a variety of fixed-income securities that are high-quality, medium-quality, and lower-quality bonds (commonly known as “junk bonds”) across several fixed-income sectors. Portfolio managers will be Michael Chang, CFA, Arvind Narayanan, CFA, and Daniel Shaykevich. Total annual fund operating expenses have been stated at .30% for the institutional share class and .45% for the investor share class.

On March 27, 2025, Westwood Investment Management launched LBRTY Global Equity ETF. Inspired by the performance and marketing success of the Freedom 100 Emerging Equity ETF, which has a five-star rating and a billion in assets, the Westwood ETF tracks the TOBAM LBRTY All World Equity Index, which eliminates direct exposure to authoritarian regimes and reduces indirect exposure by favoring companies that don’t themselves rely on resources from, or sales in, autocratic nations. (Go ahead. Take a second. Make the snarky comment that popped into your head. We’ll wait for you.) The initial portfolio holds about 200 stocks with US tech companies (Microsoft, Nvidia, Apple, Amazon, Meta) accounting for about 20% of the portfolio. The fund charges 0.50%. The TOBAM folks shared the following info about the underlying index:

Old Wine in New Bottles

Effective March 21, 2025, the SPDR SSGA Apollo IG Public & Private Credit ETF was renamed the SPDR SSGA IG Public & Private Credit ETF.

Effective April 21, 2025, Aspiration Redwood Fund will change to GreenFi Redwood Fund as the Aspiration Funds are rechristened GreenFi Funds Trust.

STF Tactical Growth & Income ETF and STF Tactical Growth ETF are being reorganized into the Hennessy Funds.  Each fund will have the same investment objective, principal investment strategies, principal risks, and policies as its corresponding Fund. Jonathan Molchan, a current co-portfolio manager for each fund, will continue to serve as portfolio manager after the reorganization.

Effective April 30, 2025, WisdomTree Dynamic Currency Hedged International Equity Fund becomes WisdomTree Dynamic International Equity Fund, while WisdomTree Dynamic Currency Hedged International SmallCap Equity Fund becomes WisdomTree Dynamic International SmallCap Equity Fund. The funds will track new indexes that do not rely on currency hedging.

Off to the dustbin of history …

American Century Emerging Markets Small Cap Fund will be liquidated on or about May 29.

On or about May 30, 2025, the entire 1290 Retirement series of target date funds will be liquidated: 2020 through 2055.

FS Chiron Capital Allocation Fund and FS Chiron Real Development Fund will be liquidated on April 21, 2025.

Harding, Loevner Emerging Markets Portfolio is slated to merge into the Harding Loevner Institutional Emerging Markets Portfolio, which will then be renamed Harding Loevner Emerging Markets Portfolio.  (Because right after I eat the chili cheese dog, I become the chili cheese dog.) The merger and re-renaming will occur on June 30, 2025… so long as one sticky detail is worked out “The Acquired Portfolio holds sanctioned Russian securities (and proceeds of distributions in respect of Russian securities that are similarly subject to sanctions).” So the Trump administration, through the IRS, needs to nod beneficently for the reorganization to proceed.

Effective March 14, 2025, the MassMutual Emerging Markets Debt Blended Total Return Fund was dissolved.

Macquarie Global Allocation Fund will be reorganized into the Macquarie Balanced Fund on or about June 27th.

Mirova Global Green Bond Fund is turning brown and will be liquidated on or about June 25th.

Morgan Stanley Mortgage Securities Trust is being reorganized into the Eaton Vance Mortgage Opportunities ETF. The reorganization will occur on or about August 1, 2025.

Nuveen Mid Cap Value 1 Fund did not receive approval to be reorganized into the Nuveen Mid Cap Value Fund. The Board will review and take such action as it deems to be in the best interests of the Fund, including liquidation since the reorganization was not approved.

Parnassus Fixed Income Fund will be liquidated on or about April 30th.

Robinson Alternative Yield Pre-Merger SPAC ETF will be liquidated and terminated soon.

Victory RS Small Cap Equity Fund will be liquidated on or about April 29th.

West Loop Realty Fund will be liquidated on or about April 18th.