Updates
Stay of execution: the Mirae Asset Asia Fund (MALAX) and Emerging Markets Fund (MALGX) were both scheduled for liquidation. “[A]fter further consideration,” the Board changed its mind. Both are very solid little funds, with an emphasis on the “little.” They have $25 million in assets between them after almost seven years of operation. At the same time, both are four-star funds with the same manager and both are distinguished by capturing a bit less of the downside and a bit more of the upside than their peers. The question remains whether, given the current infatuation with passive funds, that will ever be enough for the funds to reach economic viability.
Briefly Noted . . .
SMALL WINS FOR INVESTORS
The Board of Directors has approved re-opening the Boston Partners Long/Short Research Fund (BPRRX) to all investors, effective as of March 1, 2017. That said, they may re-close the fund is assets grow by more than 5%. They’re currently at $6.5 billion. In rough terms, that’s $300 million in inflows. It’s a really good long/short fund though, to be clear, it is not their closed flagship fund, Boston Partners Long/Short Equity (BPLEX).
The Board of Directors of Leuthold Funds has reduced the investment advisory fee (i.e., Leuthold’s cut) for Leuthold Global (GLBLX) from 1.10% to 0.90%.
CLOSINGS (and related inconveniences)
None that we noticed. Rather to the contrary, closed funds are starting to re-open. Given that valuations aren’t getting any more attractive, the reopenings (Oakmark International, Oakmark Global, Artisan Mid Cap Value) mostly seem to signal asset outflows and rising financial distress on the advisors’ part.
OLD WINE, NEW BOTTLES
On April 15, the American Century Disciplined Growth Plus Fund (ACDJX) will be renamed AC Alternatives Disciplined Long Short Fund (and will, well, begin shorting stocks). The manager will use the same quantitative model that he currently employs; he’ll just have the opportunity to short the least-attractive stocks that the system outputs as well as investing in the most-attractive ones.
Aspiriant Risk-Managed Global Equity Fund’s name has changed to Aspiriant Risk-Managed Equity Allocation Fund (RMEAX). They’re also dropping the requirement of investing globally. They’ve drawn a lot of assets ($750 million) for a fund with a pretty modest performance record; the argument, of course, is that they’re capturing more upside than downside which necessarily means trailing the market but being a lot less risky. That’s a hard sell and, to their credit, these folks are doing it.
Effective February 15, 2017, BlackRock Small Cap Growth Equity Portfolio became BlackRock Advantage Small Cap Growth Fund (CSQEX). Morningstar hasn’t quite caught up with the change.
Deutsche Global Equity Fund (DBISX) will be rechristened as with Deutsche Global Macro Fund on May 8, 2017. In the prospectus it gets a new name, objective, strategy and subadvisor. At base, it jettisons the whole “equity” focus in favor of multi-asset minuet. Given that they have no assets and a record that trails 97% of their peers over the past decade, the desire for change is understandable if late.
On May 1, 2017, The Dreyfus Third Century Fund (DTCAX) which has always been an ESG sort of fund, will be renamed The Dreyfus Sustainable U.S. Equity Fund, with some refinements to the ESG mandate.
In what might be the prelude to a merger, on April 10, the HSBC Emerging Markets Local Debt Fund (HBMAX) becomes the HSBC Emerging Markets Fixed Income Fund. The key difference is that now it invests in local currency debt; after the change it will invest in both local currency and dollar-denominated debt. At the same time, HSBC Emerging Markets Debt Fund (HCGAX) will change its mandate so that it, too, invests in both local currency and dollar-denominated debt. Both funds will then adopt the same benchmark: J.P. Morgan Emerging Markets Bond Index Global (50%) and the J.P. Morgan Government Bond Index – Emerging Markets Global Diversified (50%), though neither fund has enough assets to be financially viable.
OFF TO THE DUSTBIN OF HISTORY
There’s a sudden wave of share class liquidations, which we thought we’d mention separately. These are instances where funds sort of give up on the retail market and try to tie their fate to their ability to attract “sophisticated” institutional investors. The “sophisticated” is in quotation marks out of respect to the ridicule that advisors occasionally heap upon the heads of these guys.
Bogle Investment Management Small Cap Growth Fund (BOGLX/BOGIX) has closed its Investment class and converted the existing shareholders to the lower-cost institutional class.
Convergence Core Plus Fund (MARVX) is doing likewise.
Meritage Value Equity Fund (MPVEX) has discontinued the sale of its Investor Shares and it appears they’ll liquidate the Investor share class. They will continue to offer Institutional Shares. It’s not clear that the current Investors get to stay on-board.
Al Frank Dividend Value Fund (VALDX) is going to be merged into Al Frank Fund (VALUX). Nominally the shareholders vote on the move on April 20; given that the proposed liquidation would occur by the next day, I’m thinking this one is already in the books.
Breithorn Long/Short Fund (BRHAX) shorted out February 28, 2017.
Eaton Vance Hexavest Emerging Markets Equity Fund (EHEAX) will liquidate on March 31, 2017. If you’d invested on the fund’s opening day five years ago, you’d still be underwater today.
Gratry International Growth Fund (GGIGX) will be liquidated on or about March 30, 2017
Newfound Total Return Fund (NFBAX) heads to the lost-and-found on March 7, 2017.
Nuveen Gresham Long/Short Commodity Strategy Fund (NGSAX) will be liquidated after the close of business on April 24, 2017.
PIMCO RAE Worldwide Fundamental Advantage PLUS Fund (PWWAX) will liquidate on April 28, 2017. Morningstar categorizes it as a market-neutral fund, though it’s not quite that. Regardless, this chart of its performance against its market-neutral peers may explain its current fate.
It will be preceded in death by two actively-managed ETFs, PIMCO Diversified Income Active ETF (DI) and PIMCO Global Advantage Inflation-Linked Bond Active ETF (ILB), both of which disappear on April 7, 2017.
Princeton Futures Strategy Fund (PFFAX) becomes the Princeton Past Strategy Fund on March 27, 2017.
Putnam is merging away a bunch of funds. The $5 billion Putnam Fund for Growth and Income (PGRWX), rated Bronze by Morningstar, will merge into the $6 billion Equity Income Fund (PEYAX) on or about May 15, 2017. The $1.2 billion Putnam High Yield Trust (PHIGX) will be absorbed by the $600 million High Yield Advantage (PHYIX) on May 8, 2017. The 3- and 5-year correlations between the funds’ performance is a perfect 1.0. The $22 million Putnam Global Dividend (PGDEX) will merge into the $8 million Global Sector (PPGAX) while Putnam Global Energy (PGEAX) will merge into Global Natural Resources (EBERX), but those mergers will be no earlier than mid-May and might well be later.
SCS Tactical Allocation Fund (SCSGX), which has lost a daunting 10% annually over the past three years while its peers have been climbing, will disappear on March 31, 2017.
TCW Small Cap Growth Fund (TGSNX) and the TCW Growth Equities Fund (TGDNX) will be liquidated on or about March 15, 2017.
Toews Hedged Core Frontier Fund (THEMX) has closed and will face The Final Frontier on March 15, 2017.
The closed-end Virtus Total Return Fund (DCA) will, pending shareholder approval, merge into The Zweig Fund (ZF) sometime toward the end of March, 2017.
