Author Archives: Editor

February, 2010

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

FundAlarm – Highlights & Commentary – (Updated 1st of Each Month)

David Snowball’s
New-Fund Page for February, 2010
 

Dear friends,

You can’t imagine the sinking feeling I had at the beginning of January, when I read the headline “Stocks have best first week since 1987.” Great, start with parallels to a year that had one of the market’s greatest-ever traumas. I was somehow less disturbed to read three headlines in quick succession at the end of that same month: “January barometer forecasts a down 2010” and “Three crummy weeks for stocks” on the same day as “Growth hits 6-year high” and “Energy prices dip in January.” There’s such a sense of disconnect between Wall Street’s daily gyrations (and clueless excesses) and the real-world that there’s not much to do, other than settle back and work toward a sensible long-term plan.

Portfolio Peeking Season

As is our tradition, Roy and I take a few minutes each February to share our portfolios and the thinking that shapes them. Our hope is that our discussions might give you the courage to go look at the bigger picture of your own investments and might, too, give you some guidance on how to make sense out of what you see.

My portfolio lives in two chunks: retirement (which used to be 15 years away but now, who knows?) and not. My retirement portfolio is overseen by three entities: TIAA-CREF, T. Rowe Price, and Fidelity. Within each retirement portfolio, I have three allocation targets:

  • 80% equity / 20% income (which includes real estate)
  • 50% domestic / 50% international in the equity sleeve
  • 75% developed / 25% developing in the international sleeve

Inevitably things vary a bit from those weightings (TIAA-CREF is closer to 75% domestic / 25% international, for example), but I get pretty close. Over the past decade, that allocation and good managers have allowed me to pretty consistently outperform the Vanguard Total Stock Market (VTSMX) by 1 to 2% per year. In 2008, I lost about 36% — a percent better than Vanguard’s Total Stock Market but a percent worse than my benchmark composite. In 2009, I gained about 37% — eight percent better than Vanguard’s Total Stock Market, almost five percent better than either Vanguard’s Total World Stock Market ETF (VT) or my benchmark.

The same factors that drove the portfolio down in 2008 (a lot of international exposure and a lot of emerging markets exposure) drove it back up in 2009. Early in 2009 I rebalanced my account, which meant adding equity exposure and, in particular, emerging market equity exposure. None of my funds earned less than 20% and four of them – T. Rowe Price International Discovery (PRIDX), T. Rowe Price Emerging Market Stock (PRMSX), Fidelity Emerging Middle East and Africa (FEMEX) and Wasatch Microcap Value (WAMVX, in a Roth IRA) – returned more than 50%.

My non-retirement portfolio is considerably more conservative: it’s supposed to be about 25% US stocks, 25% foreign stocks, 25% bonds and 25% cash. It lost about 20% in 2008 and made about 30% in 2009.

Right now that’s accomplished with six funds:

  • TIAA-CREF Money Market, which generates income of $2.66 for every $1000 in my account. Sigh.
  • T. Rowe Price Spectrum Income (RPSIX): a fund of Price’s income-oriented funds. Technically a multi-sector bond fund, its relative performance is often controlled by what happens with the one stock fund that’s included in its portfolio. In general, it serves as a low-volatility way for me to keep ahead of inflation without losing much sleep. It’s pretty consistently churned out 5-6% returns and has lost money only during the 2008 meltdown. I could imagine being talked into a swap for Hussman Strategy Total Return (HSTRX), which didn’t lose money in 2008 and which also offers a low-volatility way to keep ahead of inflation. It has pretty consistently outperformed Price by 2-3% annually, but HSTRX’s fate lies in the performance of one guy – John Hussman, PhD – while Price is spread across eight or nine managers.
  • Artisan International Value (ARTKX): a very solid fund run by two Oakmark alumni. Made 33% in 2009, while lagging the vast majority of its peers. I’m fine with that, since leading in a frothy market is often a sign of an undisciplined portfolio. My only question is whether I’d be better in Artisan Global Value (ARTGX), which is smaller, more flexible and run by the same team.
  • Leuthold Global (GLBLX) is one manifestation of my uncertainty about the global economy and markets. It’s a go-anywhere (really: think “pallets of palladium in a London warehouse”) fund driven by a strict quantitative discipline. I bought it because of my admiration for the long-term success of Leuthold Core (LCORX), of which this is the “global” version. It made about 32% in 2009, well beyond its peers. I’d be substantially happier if it didn’t cost 1.82% but I’m willing to give Leuthold the chance to prove that they can add enough value to overcome the higher cost.
  • Finally, my portfolio by enlivened by the appearance of two new players: FPA Crescent (FPACX) and Matthews Asian Growth & Income (MACSX). I started 2009 with a pile of cash generated by my sale of Utopia Core (which was closed and liquidated, at a painful loss) and Baron Partners (which talked big about having the ability to take short positions – which I hoped would provide a hedge in turbulent markets – but then never got around to actually doing it). After much debate, I split the money between FPA and Matthews. FPA Crescent is a no-load fund from a mostly “loaded” family. Its manager, Steven Romick, has the flexibility to invest either in a company’s stock or its bonds, to short either, or to hold cash. This has long been a fixture of Roy’s portfolio and I finally succumbed to his peer pressure (or good common sense). The Matthews fund is about the coolest Asian fund I know of: strong absolute returns and the lowest risk of any fund in the region. Once it reopened to new investors, I began piling up my pennies. In 2009, it did what it always does in soaring markets: it made a lot of money in absolute terms (about 40%) but trailed almost all of its peers (97% of them). Which is just fine by me.

A more rational person might be drawn to MACSX’s sibling fund, Matthews Asia Dividend (MAPIX). Over its first three years, it has actually outperformed MACSX (by almost 2:1) with no greater risk. “Bob C.,” on the FundAlarm discussion board, mentioned that he’d been moving some of his clients’ assets into the fund. In retrospect, that looks like a great move but I’m reluctant to sell a fund that’s doing what I bought it to do, so I’ll probably watch and learn a bit longer.

What does the next year bring? Not much. Most of my investment success has been driven by two simple impulses: don’t take silly risks (which is different from “don’t take risks”) and save like mad. I continue to gravitate toward conservative managers who have a fair amount of portfolio flexibility and a great record for managing downside risks. And I continue saving as much as I can: about 13.5% of my annual income goes to retirement, my employer – Augustana College – contributes the equivalent of 10%, and about 10% of my take-home pay goes into the funds I’ve just mentioned. While college professors don’t make a huge amount of money, the fact that all of my investments are set on auto-pilot helps me keep with the program. Although I’ve profiled several incredibly intriguing funds over the past year, I’ll probably not add any new funds right now – I don’t have any really obvious holes and I’m not great at keeping control of large numbers of funds.

Roy writes:

Alas, I am quite a bit less systematic than David in designing my portfolio, not that there is anything wrong with David’s approach (in fact, it is quite good). Basically, I try to keep my portfolio roughly divided into broad capitalization “thirds” — one-third each large cap, mid-cap and small-cap funds — and within each third roughly divided into value, blend, and growth orientation. In other words, I try to fill each square of the venerable, nine-square Morningstar style box with a roughly equal percentage of my portfolio, with a further goal to have about 15% of my portfolio in foreign stocks, and an overweight in the health care, technology and fiancial services sectors (I’ll get back to you in about 10 years on that last one). To get an overview of my portfolio for this purpose, I use the Morningstar portfolio X-ray tool (which, by the way, is available free on the T. Rowe Price WSeb site).

Roy’s Mutual Fund Portfolio (as of December 31, 2009, in alphabetical order within each percentage category)

More than 15% by dollar value

  • Buffalo Small Cap (BUFSX)
  • iShares Russell 3000 Index ETF (IWV)

Less than 15% by dollar value

  • Allianz RCM Global Technology D (DGTNX)
  • Bridgeway Ultra-Small Company Market (BRSIX)
  • Cohen & Steers Realty Shares (CSRSX)
  • Fidelity Select Brokerage & Investment (FSLBX)
  • FPA Crescent (FPACX)
  • Vanguard 500 Index (VFINX)
  • Vanguard European Stock Index (VEURX)
  • Vanguard Health Care (VGHCX)
  • Vanguard Total Stock Market ETF (VTI)
  • Wasatch Global Technology (WAGTX)
  • Weitz Partners Value (WPVLX)

In early 2010, shortly after the snapshot above, I sold Bridgeway Ultra-Small Company Market, due to poor performance, and invested the proceeds in Wasatch Mid Cap Value (WAMVX). I also have arranged to invest this year’s retirement plan contributions in WAMVX.

To simplify things a bit, I probably should sell my shares of Vanguard 500 Index (VFINX) and invest the proceeds in iShares Russell 3000 Index ETF. But I hold the VFINX in a taxable acccount, and my desire not to pay capital gains tax outweighs my need to tidy up. Likewise, to reduce the number of my holdings, I should sell my shares of Vanguard Total Stock Market ETF (VTI) and invest the proceeds in iShares Russell 3000 Index ETF (IWV), which plays a very similar role in my portfolio (the shares of VTI are held in a retirement account so, in this case, such a sale would have no tax consequences). Here, I just don’t want to pay the transaction fees which, while minor, ultimately strike me as unnecessary.

[Back to David] Forward Long/Short Credit Analysis: a clarification and correction

In January, I profiled

Forward Long/Short Credit Analysis (FLSRX), a unique fund which takes long and short positions in the bond market. The fund’s appeal is due to (a) its prospects for extracting value in an area that most other mutual funds miss and (b) its pedigree as a hedge fund. Forward’s president was particularly proud of this latter point, and took some pains to dismiss the efforts of competitors who could come up with nothing more than hedge fund wannabes:

Unlike the “hedge fund light” mutual funds, this one is designed just like a hedge fund, but with daily pricing, daily liquidity, and mutual fund-like transparency.

Forward’s commitment to the fund’s hedge roots was so strong that it was initially available only to qualified investors: folks with a net worth over $1.5 million or at least $750,000 invested in the fund.

Since Forward says that FSLRX models a Cedar Ridge hedge fund, but doesn’t specify which hedge fund they mean, I guessed that it was Cedar Ridge Master Fund and highlighted Cedar Ridge’s performance as an illustration of FSRLX’s potential.

I was wrong on two counts. First, I had the wrong hedge fund. “Evan,” one of our readers, wrote to inform me that the correct fund was Cedar Ridge Investors Fund I, LP. Second, the Investors’ fund record raises serious questions about FSLRX. The Cedar Ridge Master Fund lost 6% in 2008, a respectable performance. Cedar Ridge Investors, however, lost 31% — which is far less reassuring. Worse, there was a cosmic gap between the 2009 performance of Cedar Ridge Investors (up 98%) and its doppelganger, FSLRX (up 47%). When I asked about the gap in performance, the folks at Forward passed along this explanation:

The Forward Long/Short Credit Analysis Fund is based on the Cedar Ridge Investors I. The performance difference in 2009 between the two is easily explained. Compared to the Cedar Ridge fund, FLSRX fund is more diversified and uses less leverage to be able to provide daily liquidity and operate as a fund for retail investors.

Somehow that 2:1 return difference is making the Forward fund look pretty durned “hedge fund light” about now. (Many thanks to Evan for pointing me, finally, in the right direction.)

Akre Focus: Maybe it is worth all the fuss and bother

In the January issue, I took exception to the uncritical celebration by financial journalists of the new Akre Focus (AKREX) fund. Manager Chuck Akre intends to manage AKREX using the same strategy he employed with the successful FBR Focus (FBRVX) fund, and Akre is the only only manager FBRVX has ever known. AKREX – for all intents and purposes – is FBRVX: same manager, same expenses, same investment requirement, same strategy. I was, however, still suspicious: FBRVX has a very streaky record, Mr. Akre’s entire analyst team resigned in order to stay with the FBR Fund and, in doing so, they were reported as making comments that suggested that Mr. Akre might have been something less than the be-all and end-all of the fund. I e-mailed Akre Capital Management in December, asking for a chance to talk but never heard back.

Victoria Odinotska, president of a public relations firm that represents Akre Focus, read the story and wrote to offer a chance to chat with Mr. Akre about his fund and his decision to start Akre Focus. I accepted her offer and gave our Discussion Board members a chance to suggest questions for Mr. Akre. I got a bunch, and spent an hour in January chatting with him.

Our conversation centered on three questions.

Question One: Why did you leave? Answer: Because, according to Mr. Akre, FBR decided to squeeze, if not kill, the goose that laid its golden eggs. As Mr. Akre, explained, FBR is deeply dependent on the revenue that he generated for them. He described his fund as contributing “80% of FBR’s assets and 100% of net income.” While I cannot confirm his exact numbers, there’s strong evidence that Focus is, indeed, the lynchpin of FBR’s economic model. At year’s end, FBR funds held $1.2 billion in assets. A somewhat shrunken Focus fund accounted for $750 million, which works out to about 63% of assets. By Mr. Akre’s calculation, he managed $1 billion for FBR, which represents about 80%. More importantly, most of FBR’s funds are run at a substantial loss, based on official expense ratios:


Expense ratio before waivers

Expense ratio after waivers

Loss on the fund
FBR Pegasus Small Cap Growth

3.9%

1.5%

2.4%
FBR Pegasus Mid-Cap

3.0%

1.4%

1.6%
FBR Pegasus Small Cap

2.8%

1.5%

1.3%
FBR Technology

3.0%

1.9%

1.1%
FBR Pegasus

2.2%

1.3%

0.9%
FBR Focus

1.4%

1.4%

–
FBR Large Cap Financial

1.8%

1.8%

–
FBR Small Cap Financial

1.5%

1.5%

–
FBR Gas Utilities Index

0.8%

0.8%

–

Source: FBR Annual Report, “Financial Highlights, Year Ending 10/31/09”

Based on these numbers, virtually all of FBR’s net income was generated by two guys (Mr. Akre, whose Focus fund generated $10.8 million, and David Ellison whose two Financial funds chipped in another $3.5 million), as well as one modestly over-priced index fund (which grossed $1.5 million)

FBR underwent a “change of control” in early 2009 and, as Mr. Akre describes it, they decided they needed to squeeze the goose that was laying their golden eggs. After a series of meetings, FBR announced their new terms to Akre, which he says consisted of the following:

  • He needed to take a 20% cut in compensation (from about 55 basis points on his fund to 45 basis points), a potential cash savings to management that he did not believe would be passed on to fund shareholders.
  • He would need to take on additional marketing responsibilities, presumably to plump the goose.
  • And he had eight days to make up his mind.

Mr. Akre said “no” and, after consulting with his team of three analysts who agreed to join him, decided to launch Akre Focus. The fund was approved by the SEC in short order and, while his analysts worked on research back at the home office, Mr. Akre took a road trip. Something like three days into that trip, he got a call. It was his senior analyst who announced that all three analysts had resigned from his new fund. The next day, FBR announced the hiring of the three analysts to run FBR Focus.

FBR has been taking a reasonably assertive tack in introducing their new portfolio managers. They don’t quite claim that they’ve been running the fund all this time, but they come pretty close. FBR Focus’s Annual Report, January 2010, says this: “Finally, we are pleased to be writing this letter to you in our expanded role as the Fund’s co-Portfolio Managers. We assumed this position on August 22, 2009, after working a cumulative 23 years as the analysts responsible for day to day research and management of the Fund’s investments (emphasis added).” Mr. Akre takes exception to these claims. He says that his analysts were just that — analysts — and not shadow managers, or co-managers, or anything similar. Mr. Akre notes, “My analysts haven’t run the fund. They have no day-to-day investment management experience. They were assigned to research companies and write very focused reports on them. As a professional development opportunity, they did have a chance to offer a recommendation on individual names. But the decision was always mine.”

Mr. Akre’s recollection is certainly consistent with the text of FBR’s annual and semi-annual reports, which make no mention of a role for the analysts, and don’t even hint at any sort of team or collegial decision-making.

Question Two: How serious is the loss of your entire staff ? Answer: not very. After a national search, he hired two analysts who he feels are more experienced than the folks they replaced:

  • Tom Saberhagen: Since 2002, a Senior Analyst with the Aegis Value Fund (AVALX), which I’ve profiled as a “star in the shadows”.
  • John Neff, who has been in the financial services industry for 15 years. He was a sell-side equity analyst for William Blair & Company and previously was in the First Scholar program at what was then First Chicago Corporation (now JP Morgan).

Question Three: What can investors expect from the new fund? Mr. Akre has some issues with how the size of FBR Focus was managed at the corporate level. It’s reasonable to assume that he will devote significant attention to properly managing the size of his own fund.

In general, Mr. Akre is very concerned about the state of the market and determined to invest cautiously, “gingerly” in his terms. He plans to invest using precisely the discipline that he’s always followed, and seems exceptionally motivated to make a success of the fund bearing his name. In recognition of that, I’ve profiled Akre Focus this month as a “star in the shadows.”

Thanks again to Mr. Akre for taking the time to talk with me, and for giving us some rare behind-the-scenes views of fund management. Of course, if there are credible viewpoints that differ from Mr. Akre’s, we’d like to hear them, and we’ll carefully consider printing them as well.

Noted briefly:

RiverNorth Core Opportunity(RNCOX), was recognized by Morningstar as the top-performing moderate allocation/hybrid fund over the past three years. My profile of RNCOX was also the subject of vigorous discussion on the FundAlarm Discussion Board, where some folks were concerned that the closed-end market was not currently ripe for investment. (Source: Marketwire.com, 1/12/10)

Manning & Napier, Matthews Asia and Van Eck were recognized by Strategic Insight (a research firm) as the fastest-growing active fund managers in 2009. I know little about Van Eck, but have profiled several funds from the other two firms and they do deserve a lot more attention than they’ve received. (Source: MutualFundWire.com, 1/14/10)

T. Rowe Pricewas the only pure no-load manager to make Lipper/Barron’s list of “best fund families, 2009.” The top three families overall were Putnam (#1 – who would have guessed?), Price and Aberdeen Asset Management. Top in U.S. equity was Morgan Stanley, Price topped the world equity category, and Franklin Templeton led in mixed stock/bond funds. Fidelity ranked 26/61 while Vanguard finished 40th. (Source: “The New Champs,” Barron’s, 2/01/10).

Raising the prospect that Forward Long/Short Credit Analysis (FSLRX, discussed above and profiled last month) might be onto something, Michael Singer, head of alternative investments for Third Avenue Management, claims that the best opportunities in 2010 will come distressed debt (a specialty for the new Third Avenue Focused Credit (TFCVX) fund), long-short credit (à la Forward) and emerging markets. Regarding long-short credit, he says, “Last year, making money in long-short credit was like shooting fish in a barrel. This year talented traders can make money on both the long and short side, but you better be in the right credits.” (Source: “Tricky Sailing for Hedge Funds,” Barron’s, 2/01/10).

In closing . . .

I’ve written often about the lively and informative debates that occur on FundAlarm’s discussion board. For folks wondering whether supporting FundAlarm is worth their time, you might consider some of the gems scattered up and down the Board as I write:

  • “MJG” linked to the latest revision of well-regarded Callan Periodic Table of Investment Returns, which provides – in a single, quilt-like visual – 20 years’ worth of investment returns for eight different asset classes. “Bob C” had reservations about the chart’s utility since it excludes many au currant asset classes, such as commodities. After just a bit of search, Ron (a distinct from rono) tracked down a link to the Modern Markets Scorecard which provides a decades’ worth of data on classes as standard as the S&P500 and as edgy as managed futures. You can find the Scorecard here: Link to Scorecard (once you get to this page, on the Rydex Web site, click on the appropriate PDF link).
  • After a January 28 market drop, “Fundmentals” offered up a nice piece of reporting and interpretation on the performance of variously “hedged” mutual funds.

Posted by Fundmentals
on January 28, 2010 at 20:02:18:

The long/short category in M* includes many different strategies which may not be correlated with each other but days like this expose the different strategies and how they behave.

I have divided the funds into several behavioral categories

Long huggers: These are the category equivalent of closet indexers in active long-only funds. Their short/hedging positions don’t prevent them from being close to the market movements (say upto -1% on a day like this). These should be avoided if they do this consistently. Examples include:

Astor Long/Short ETF I ASTIX -0.71% (try shorting for a change bud)
Old Mutual Analytic Z ANDEX -1.01% (need more analytics it seems)
Schwab Hedged Equity Select SWHEX -0.85% (hedged? try again)
Sound Mind Investing Managed Volatility SMIVX -0.90% (no one with sound mind will think this is managing volatility)
The Collar COLLX -0.67% (cute name but is the manager a dog?)
Threadneedle Global Extended Alpha R4 REYRX -0.94% (What alpha? Missing the needle)
Virtus AlphaSector Allocation I VAAIX -0.71% (Pick whether you want to be an alpha fund or a sector fund)
Wasatch-1st Source Long/Short FMLSX -0.95% (Perhaps time to try the 2nd Source for ideas?)
Wegener Adaptive Growth WAGFX -1.12% (Sorry bud, you ain’t adapting nor growing)

Long-biased: These hedge/short sufficiently to reduce downside but still manage to lose with some correlation to the market (say around -0.5% on a day like this. Examples include

AQR Managed Strategy Futures N AQMNX -0.51% (future ain’t looking bright with this)
Beta Hedged Strategies BETAX -0.41% (need more cowbells.. er.. hedging)
Glenmede Long/Short GTAPX -0.37% (a bit more short perhaps?)
Highland Long/Short Equity Z HEOZX -0.56% (High on long?)
ICON Long/Short Z IOLZX -0.58% (Not too long if you please?)
Janus Long/Short T JLSTX -0.51% (More like long T-shirt, try a short size)
Nakoma Absolute Return NARFX -0.55% (absolute loss?)

Market neutral: These funds are hedged/short sufficiently to provide a return largely unrelated to the market movement (say between -0.3% to 0.3% on a day like this). Most of them fall here and are what you need in this category

Alpha Hedged Strategies ALPHX -0.30%
Alternative Strategies I AASFX -0.16%
American Century Lg-Shrt Mkt Netrl Inv ALHIX +0.20
Arbitrage R ARBFX -0.08%
DWS Disciplined Market Neutral S DDMSX +0.22
First American Tactical Market Oppt Y FGTYX -0.1%
GMO Alpha Only III GGHEX 0.00%
Goldman Sachs Absolute Return Tracker IR GSRTX -0.11%
ING Alternative Beta W IABWX -0.18%
Merger MERFX +0.06%
MFS Diversified Target Return I DVRIX -0.22%
Robeco Long/Short Eq Inv BPLEX +0.12%
TFS Market Neutral TFSMX -0.33%
Turner Spectrum Inv TSPCX +0.18%
Vantagepoint Diversifying Strategies VPDAX -0.20%

Short biased: These are hedged/short sufficiently that they are mostly inverse correlated with the market but do have some upside in up markets (say around +0.5% on a day like this)

None I can find

Short huggers: This is the opposite of the long huggers who are so hedged/short that they are more correlated with inverse funds than being short biased and are likely to do poorly in up markets. Avoid if they do this consistently. Examples

Hussman Strategic Growth HSGFX +0.95% (The strategy is to grow only when everyone is shrinking?)
In addition to well-earned words of thanks, many of the 20 replies offered up other hedged and risk-diversifying funds worthy of consideration and suggestions for ways to interpret the inconsistent ability of managers to live up to the “market neutral” moniker.

Of the 20 funds with “absolute” in their names, precisely half have managed to break even so far in 2010. Only two “absolute return” funds actually managed to achieve their goal by staying above zero in both 2008 and 2009 — Eaton Vance Global Macro Absolute Return (EAGMX) and RiverSource Absolute Return Currency & Income (RARAX). Both also made money in January.

  • In common with many nervous investors, “Gandalf” was curious about how much investable cash other folks were holding in the face of the market’s (so far) minor correction. You might be interested to read why several respondents were at 75% cash – and what they intended to do next.

The joys of the board are varied, but fleeting – after a week to 10 days, each post passes into The Great Internet Beyond so that we can make room for the next generation. As we pass the 280,000 post mark, the members of the discussion community have offered up a lot of good sense and sharp observations. Roy and I invite you to join in the discussion, and to help provide the support that makes it all possible.

Please do let us know, via the board or e-mail, what you like, what makes you crazy and how we can make it better. We love reading this stuff!

With respect,

David

FundAlarm © 2010

American Century One Choice funds: Income (ARTOX), 2025 (ARWIX), 2035 (ARYIX), and 2045 (AROIX) (formerly American Century LIVESTRONG funds), June 2006

By Editor 

At the time of publication, this fund was named American Century LIVESTRONG funds.

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

June 1, 2006

FundAlarm Annex – Fund Report

Objective

These are “funds of funds” which grow increasingly conservative as the
retirement target date approaches.

Adviser

American Century Investment Management.  American Century is located in Kansas City and manages about $80 billion through 70 funds.  That slightly overstates the case since 10 of their offerings – the LIVESTRONG and One Choice groups – are “funds of funds.”

Manager

Richard Weiss, Vidya Rajappa, Radu Gabudean, Scott Wilson and Brian Garbe.

Mr. Weiss is the chief investment officer for multi-asset strategies and oversees the team that manages all of the firm’s multi-asset strategies, including the OneChoice, Strategic Allocation and college savings portfolios. Ms. Rajappa, formerly director of quantitative research at AllianceBernstein, is head of portfolio management. Mr. Gabudean is a portfolio manager who previously was the vice president for quantitative strategies at Barclays Capital. Mr. Wilson has been an American Century portfolio manager since 2011; prior to that he was an equity analyst for 20 years. Mr. Garbe is a senior portfolio manager. Prior to joining American Century in 2010, he was a portfolio manager for the investment wings at several banks and hedge funds.

Opening date

August 31, 2004.  Formerly called the “My Retirement” funds (another marketing gem), they were rebranded as LIVESTRONG funds on May 15, 2006. 

Minimum investment

$2500 for both regular and tax-sheltered accounts, and $2000 for a Coverdell Education Savings Account.  The IRA minimum is $500 if you establish a monthly automatic investing plan.

Expense ratio

0.75% for Investor class shares, as of June 2023. In general, Morningstar classifies this fund, and the other funds in the One Choice series, as having high expense ratios. The One Choice series of funds collectively hold $1.8 billion, as of June 2023.

Comments

The LIVESTRONG funds, like the MY RETIREMENT ones before them, invest in 14 other American Century funds.  The funds had very modest performance in their first year or so of operation and drew little interest from retail investors.  In rebranding the funds as  LIVESTRONG, American Century did four things:

  • It acquired Lance Armstrong as a spokesmodel.
  • It agreed to contribute at least $1 million of corporate – not investor – money to the Lance Armstrong Foundation in each of the next several years.
  • It eliminated tobacco companies from the investment mix.
  • And it latched on to a sort of goofy marketing slogan (“Get your Lance face on!”), accompanied by a very odd website.

All of which is unobjectionable, despite some snickering from the pundit gallery (“Tour de Funds”).  The Armstrong Foundation is
generally well-respected and highly-rated by the charity watchdog groups.  There’s a logical tie for the American Century funds, whose founder and founder’s wife are both cancer survivors.  The founder already supports a cancer research center. Fidelity has already led the way on celebrity spokesmodels (Sir Paul McCartney) and a number of other fund companies (Ariel and Bridgeway among them)  have charitable missions.

But none of that offers a reason to invest in the funds.  They seem a tiny bit more costly and noticeably less aggressive than the offerings from the Big Three.  Here, for example, is a comparison of American Century’s target-date 2025 fund to those of the Big Three:

 

American Cent.

Fidelity

Price

Vanguard*

 US stocks

50

58

60

71

Int’l stocks

15

15

19

11

Bonds

30

20

15

18

Cash

5

7

5

0

Expenses

.88

.75

.82

.20

*The Vanguard portfolio reflects changes that will occur early in June, 2006. We reported on those earlier.

The LIVESTRONG funds are distinguished by their annual asset mix adjustment, while the others wait for five years.  The LIVESTRONG funds also hold a few international bonds (something like a half percent for 2025), a little real estate (2%), some emerging markets equity exposure (3%), and the manager is meditating upon commodities.

Bottom line

It’s not clear that there’s any particular reason to choose these funds over their competitors. Retirement investors seeking a more-aggressive portfolio might consider T. Rowe Price and then make their own contribution (and receive their own tax deduction) to a worthy charity such as the Armstrong Foundation.  (While you’re at it, send a little to FundAlarm as well.)

Company website

https://www.americancentury.com/invest/funds/one-choice-in-retirement-portfolio/artox/

One Choice portfolio strategy outline:

https://www.americancentury.com/invest/accounts/one-choice-portfolios/

Al Frank Fund (VALUX), April 2008

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

April 1, 2008

FundAlarm Annex – Fund Report

Objective

The objective of the Al Frank Fund is long-term capital appreciation. The manager selects equity securities that he believes are out of favor and undervalued, then purchases and holds them until it believes that the securities have reached a fair value. That tends to take a while, so portfolio turnover is quite low and the portfolio is quite diverse: just under 300 holdings, across all valuations and size ranges. Currently the portfolio is comprised mostly of U.S. names.

Adviser

Al Frank Asset Management. The adviser, named for its late founder, manages two mutual funds (Al Frank and Al Frank Dividend Value) and about 800 separate accounts. Altogether, it manages about $750 million in assets.

Managers

John Buckingham and Jessica Chiaverini. Mr. Buckingham is the Chief Investment Officer for Al Frank, which he joined in 1987. He’s responsible for the fund’s day-to-day management. He’s also the Director of Research and editor of both The Prudent Speculator and the TechValue Report newsletters. Ms. Chiaverini works mostly with the firm’s separate accounts and the analysts.

Management’s Stake in the Fund

Mr. Buckingham has between $100,000 and $500,000 in each of the funds and owns about 20% of the adviser. Ms. Chiaverini has a marginal investment in the fund, but does buy many of the individual stocks recommended by The Prudent Speculator and held in the fund. Because Al Frank is part of the Advisers Series Trust, which provides the fund’s administrative and legal services, their board is actually a group designated to oversee all of the Advisers Series funds. As a result, they generally have no investment in either of the Al Frank funds.

Opening date

January 2, 1998.

Minimum investment

$1,000 for regular and IRA/UGMA accounts.

Expense ratio

1.24% after a waiver on assets of $67 million, as of August 2023. There’s a 2.0% redemption fee on shares held fewer than sixty days.

Comments

Since I’m working on next week’s quizzes for my Advertising and Social Influence class at Augustana, I thought I’d toss in a short quiz for you folks, too. Here’s the set-up to the question:

Fund-tracker Morningstar provides an analysis in visual form of each mutual fund’s “ownership zone.” They define the “ownership zone” this way:

Ownership zones are the shaded areas of the style box intended to be a visual measure of a fund’s style scope–that is, the primary area of a fund’s ownership within the style box. Some key points to remember about the ownership zone are that it encompasses 75% of the stock holdings in the fund’s portfolio, and that it is centered around a centroid that is determined using an asset-weighted calculation.

Please match each fund with its corresponding ownership zone:

a. Al Frank Fund b. Fidelity Low-Priced Stock c. Vanguard Total Stock Market

 

1. 2. 3.

 

If you thought Fidelity’s Low-Priced is represented by image #1, you get a point. If you thought Vanguard’s Total Stock Market index is represented by index #3, you’re wrong. Terribly wrong. Image #3 represents a picture of the Al Frank Fund’s holdings.

For a fund whose ticker is VALUX, you might imagine . . . well, you know, “value” stocks in the portfolio. And while Mr. Buckingham thinks of himself as a value investor, he is wary of letting his portfolio get anchored merely to traditional value sectors like financials and utilities (the latter of which, by the way, he does not own). He argues that non-traditional realms, like tech, can offer good – and occasionally spectacular – values which are missed when you stick strictly to traditional valuation metrics. He argues that tech firms (the subject of his TechValue Report) might have no earnings but nonetheless represent legitimate “value” investments if the business shows evidence of substantial growth potential and the available valuations are at the low end of their historic ranges. He write:

In short, we seek bargains wherever they reside. If Blue-Chips seem cheap, we buy them. If technology stocks appear undervalued, we snap them up. We believe that limiting our investment universe by market-cap or value-versus-growth distinctions likely will serve only to limit our potential returns.

As new money comes (slowly, he grumps) into the fund, Mr. Buckingham rebalances the portfolio by investing in the new names with the most compelling valuations rather than adding to his existing positions. He argues that having a sprawling portfolio offers the best prospect for long-term success, in part because much of a portfolio’s gain is driven by a relative handful of wildly successful investments. Since it’s hard to predict which invest will be spectacular as opposed to merely “good” and since something like a third of any good investor’s choices “simply don’t work out,” he holds “200 or more stocks in our Funds, to improve our chances of owning those rare few stocks that everyone wishes they’d noticed earlier. This disciplined approach makes it possible for us to put patience – perhaps the most elusive of investment qualities – to work.” Skeptics might recall that Joel Tillinghast, on the short list of the best investment managers ever to work for Fidelity, consistently holds 700 or more stocks in his Fidelity Low-Priced Stock (FLPSX) portfolio. That’s complemented by the fact that Mr. Buckingham’s newsletter, “The Prudent Speculator has evolved to become the #1 newsletter as ranked by The Hulbert Financial Digest in its fifteen-, twenty- and twenty-five-year categories for total return performance through May 31, 2007.”

Over the decade of Al Frank fund’s existence, it’s landed in the top 2% of its peer group clocking in with annual returns of 12.7%, which tops the S&P500 and its mid-cap blend peer group by about 5% a year. Its absolute returns over the past five years – 19% annually – are stronger while its relative returns and about the same as for the longer period. The headache for investors comes in the pattern of year-to-year performance that leads to those strong, long-term numbers.

 


Year

Peer Group Ranking

2001

Top 10%

2002

Bottom 10%

2003

Top 10%

2004

Bottom 10%

2005

Top 10%

2006

Bottom 10%

2007

Just below average

 

On whole, that pattern doesn’t bother him. Citing Warren Buffett’s famous dictum, “At Berkshire, we would rather earn a lumpy 15% over time than a smooth 12%,” Mr. Buckingham takes lumpiness as an inevitable consequence of independent thinking.

Bottom Line

Al Frank definitely offers lumpy returns. The manager neither aspires to nor achieves smoothly mediocre results. He tends to make a lot of money for his investors, but punctuates periods of stout returns with periods where a good glass of stout might be called for. For folks willing to take the bad with the good, they’ve got access to a strong track record and devoutly original thinking.

Fund website

http://www.alfrankfunds.com/

FundAlarm © 2008

Akre Focus (AKREX), February 2010

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

February 1, 2010

FundAlarm Annex – Fund Report

Objective

The fund seeks long-term capital appreciation by investing, mostly, in US stocks of various sizes, though it is likely to hold small and mid-cap stocks more frequently than large cap ones. The fund may also invest in “other equity-like instruments.”  The manager looks for companies with good management teams (those with “a history of treating public shareholders like partners”), little reliance on debt markets and above-average returns on equity.  Once they find such companies, they wait until the stock sells at a discount to “a conservative estimate of the company’s intrinsic value.”  The Fund is non-diversified, with both a compact portfolio (25 or so names) and a willingness to put a lot of money (often three or four times more than a “neutral weighting” would suggest) in a few sectors.

Adviser

Akre Capital Management, LLC, an independent Registered Investment Advisor located in Middleburg, VA. Mr. Akre, the founder of the firm, has been managing portfolios since 1986, and has worked in the industry for over 40 years. At 12/30/09, the firm had over $500 million in assets under management split between Akre Capital Management, which handles the firm’s separately managed accounts ($1 million minimum), a couple hedge funds, and Akre Focus Fund.  Mr. Akre founded ACM in 1989, while his business partners went on to form FBR.  As a business development move, it operated it as part of Friedman, Billings, Ramsey & Co. from 1993 – 1999 then, in 2000, ACM again became independent.

Manager

Charles Akre, who is also CEO of Akre Capital Management. Mr. Akre has been in the securities business since 1968 and was the sole manager of FBR Focus (FBRVX) from its inception in 1996 to mid-2009.  He holds a BA in English Literature from American University, which I mention as part of my ongoing plug for a liberal arts education.

Managements Stake in the Fund

Mr. Akre and his family have “a seven figure investment in Akre Focus, larger than my investment in the FBR fund had been.”

Opening date

August 31, 2009 though the FBR Focus fund, which Mr. Akre managed in the same style, launched on December 31, 1996.

Minimum investment

$2,000 for regular accounts, $1000 for IRAs and accounts set up with automatic investing plans.

Expense ratio

1.46% on assets of about $150 million.  There’s also a 1.00% redemption fee on shares held less than 30 days.

Comments

In 1997, Mr. Akre became of founding manager of FBR Small Cap Growth – Value fund, which became FBR Small Cap Value, the FBR Small Cap, and finally FBR Focus (FBRVX). Across the years and despite many names, he applied the same investment strategy that now drives Akre Focus.

Here’s his description of the process:

The process we employ for evaluating and identifying potential investments (compounding machines) consists of three key steps:

  1. We look for companies with a history of above average return on owner’s capital and, in our assessment, the ability to continue delivering above average returns going forward. Investors who want returns that are better than average need to invest in businesses that are better than average. This is the pond we seek to fish in.
  2. We insist on investing only with firms whose management has demonstrated an acute focus on acting in the best interest of all shareholders. Managers must demonstrate expertise in managing the business through various economic conditions, and we evaluate what they do, say and write for demonstrations of integrity and acting in the interest of shareholders.
  3. We strive to find businesses that, through the nature of the business or skill of the manager, present clear opportunities for reinvestment in the business that will deliver above average returns on those investments.

Whether looking at competitors, suppliers, industry specialists or management, we assess the future prospects for business growth and seek out firms that have clear paths to continued success.

Mr. Akre’s discipline leads to four distinguishing characteristics of his fund’s portfolio:

  1. It tends to be concentrated in (though not technically limited to) small- to mid-cap stocks.  His explanation of that bias is straightforward: “that’s where the growth is.”
  2. It tends to make concentrated bets.  He’s had as much as a third of the portfolio in just two industries (gaming and entertainment) and his sector weightings are dramatically different from those of his peers or the S&P500.
  3. It tends to stick with its investments.  Having chosen carefully, Mr. Akre tends to wait patiently for an investment to pay off.  In the past ten years, FBRVX never had a turnover ratio above 26% and often enough it was in the single digits.
  4. It tends to have huge cash reserves when the market is making Mr. Akre queasy.  From 2001 – 04, FBRVX’s portfolio averaged 33.5% cash – and crushed the competition. It was in the top 2% of its peer group in three of those four years and well above average in the fourth year.

Those same patterns seem to be playing out in Akre Focus.  At year’s end, he was 65% in cash.  Prompted by a reader’s question, I asked whether he had a goal for deploying the cash; that is, did he plan to be “fully invested” at some point?  His answer was,no.  He declared himself to be “very cautious about the market” because of the precarious state of the American consumer (overextended, uncertain, underemployed).  He allowed that he’d been moving “gingerly” into the market and had been making purchases weekly.  He’s trying to find investments that exploit sustained economic weakness.  While he has not released his complete year-end portfolio, three of his top ten holdings at year-end were added during the fourth quarter:

  • WMS Industries, a slot machine manufacturer. He’s been traditionally impressed by the economics of the gaming industry but with the number of casino visits and spending per visit both down dramatically, his attention has switched from domestic casino operators to game equipment manufacturers who serve a worldwide clientele.  By contrast, long-time FBRVX holding Penn National Gaming – which operates racetracks and casinos – is a “dramatically smaller” slice of AKREX’s portfolio.
  • optionsXpress, an online broker that allows retail investors to leverage or hedge their market exposure.
  • White River Capital, which securitizes and services retail car loans and which benefits from growth in the low-end, used car market

Potential investors need to be aware of two issues.

First, despite Morningstar’s “below average” to “low” risk grades, the fund is not likely to be mild-mannered. FBRVX has trailed its peer group – often substantially – in four of the past ten years.  If benchmarked against Vanguard’s Midcap Index fund (VIMSX), the same thing would be true of Mr. Akre’s private account composite.  Over longer periods, though, his returns have been very solid. Over the past decade returns for FBRVX (11% annually, as of 12/31/09)  more than doubled its average peer’s return while his separate accounts (8%) earned about a third more than VIMSX (6%) and trounced the S&P500 (-1.0%).

Second, Mr. Akre, at age 67, is probably . . . uhhh, in the second half of his investing career.  Marty Whitman, Third Avenue Value’s peerless 83-year-old star manager, spits in my general direction for mentioning it.  Ralph Wanger, who managed Acorn (ACRNX) to age 70 and won Morningstar’s first “fund manager lifetime achievement award” in the year of his retirement from the fund, might do the same – but less vehemently.  Mr. Akre was certainly full of piss and vinegar during our chat and the new challenge of building AKREX as an independent fund is sure to be invigorating.

Bottom Line:

Partnership is important to Mr. Akre.  He looks for it in his business relationships, in his personal life, and in his investments.  Folks who accept the challenge of being Mr. Akre’s partner – that is, investors who are going to stay with him – are apt to find themselves well-rewarded.

Fund website

Akre Focus Fund

FundAlarm © 2010

Driehaus International Small Cap Growth (DRIOX), November 2007

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

November 1, 2007

FundAlarm Annex – Fund Report

Objective

The Driehaus International Small Cap Growth Fund seeks to maximize capital appreciation.  The Fund invests primarily in equity securities of smaller capitalization non-U.S. companies exhibiting strong growth characteristics. The fund invests at least 80% of its net assets in the equity securities of non-U.S. small capitalization companies, currently that is companies whose market capitalization is less than $2.5 billion at the time of investment.

Adviser

Driehaus Capital Management LLC, which was organized in 1982 to provide investment advice to high net worth individuals and institutions. As of July 31, 2007, it managed approximately $4.4 billion in assets. Driehaus runs three other mutual funds: Emerging Markets Growth (closed to new investors), International Discovery, and International Yield Opportunities (new in 2007).

Managers

Howard Schwab and David Mouser. Schwab is the lead manager here and was the lead manager for the Driehaus International Opportunities Fund, L.P., the predecessor limited partnership from its inception in August, 2002 until it transformed into this mutual fund. Schwab is also a co-manager of the Driehaus Emerging Markets Growth Fund and, for several months, helped manage the Driehaus International Equity Yield Fund. Mr. Mouser has “certain responsibilities” for investment decision-making on fund, “subject to Mr. Schwab’s approval,” just as he did with the limited partnership.

Management’s Stake in the Fund

Technically none, since the fund began operation after the date of the last SAI.

Opening date

September 17, 2007. If you don’t like that date, you could choose July 1, 2001 (the date on which Schwab began managing separate accounts using this strategy) or August 1, 2002 (the date that they launched the International Opportunities Fund, L.P., whose assets and strategies the mutual fund inherits). Technically you might also choose February 26, 2007, the date that the fund was “established as a series of Driehaus Mutual Funds” but apparently had no assets or investors. It’s a little confusing, but it does offer a certain richness of data.

Minimum investment

$10,000 for regular accounts, $2,000 for IRAs. The minimum subsequent investment for regular accounts is high, at $2,000, but it’s only $100 with an automatic investment plan. In any case, it’s a lot more affordable for most of us than the $20 million minimum required for a separate account that uses this same strategy.

Expense ratio

1.16% on assets of $205.8 million, as of July 2023. 

Comments

DRIOX represents an interesting case for investors. It’s a new fund but it’s directly derived from two predecessor entities. There are separately managed accounts with combined assets of $210 million and there was a Limited Partnership with assets of $100 million, both managed by the same guys with the same strategies. But they were also managed under very different legal structures (for example, the L.P.s don’t have to pay out distributions the way that funds are required to do) for very different sorts of clients (that is, folks with $20 million or more to invest). In addition, Driehaus runs two other mutual funds with different management teams but with the same investment discipline.

In general, all Driehaus managers are growth guys who look for companies which have:

  • Dominant products or market niches
  • Improved sales outlook or opportunities
  • Demonstrated sales and earnings growth
  • Cost restructuring programs which are expected to positively affect company earnings
  • Increased order backlogs, new product introductions, or industry developments which are expected to positively affect company earnings

They also consider macroeconomic and technical information in evaluating stocks and countries for investment.

What might we learn from all of that data? Driehaus makes gobs of money for its investors.

  • The International Small Cap Growth separate accounts have returned 36.9% annually since inception. Their benchmark has returned 13.5% over the same period.
  • The International Opportunities LP returned 36.75% annually since inception. Its benchmark returned 27.3% over the same period.
  • Emerging Markets Growth fund (DREGX) has returned 22.3% annually since inception. Its benchmark returned 13.6%. Over the past five years it has returned 44.2% annually, while its Morningstar peer group returned 36.7%.
  • International Discovery fund (DRIDX) has returned 22.2% annually since inception. Its benchmark returned 7.2%. Over the past five years it has returned 34.4% annually, while its Morningstar peer group returned 24.0%.

While I’m generally not impressed by big numbers, those are really big performance advantages, delivered through a variety of investment vehicles over a considerable set of time frames.

There are two risks which are especially relevant here. The first is that Driehaus is a very aggressive investor. Morningstar classifies Emerging Markets Growth and International Discovery as having Above Average risk. Both of the funds have turnover rates around 200%. That aggressiveness is reflected in considerable swings in performance. International Discovery, for example, has the following peer ranks:

Year Morningstar Peer Rank, Percentile
2003

22
2004

97
2005

1
2006

90
2007

1

Emerging Markets shows the same saw-tooth pattern, though in a tighter range:

Year Morningstar Peer Rank, Percentile
2002

66
2003

14
2004

48
2005

14
2006

4
2007

31

The performance data for the International Small Growth separate accounts makes the strategy’s strengths and limits pretty clear. They calculate “capture ratios,” which are essentially volatility estimates which measure performance in rising and falling markets separately. A score of 100 means you rise (or fall) in synch with the market. A score of 110 up and 130 down means that you rise 10% more than the market when it’s going up and fall 30% more when it’s going down. Here are the most recent capture ratios, as of 9/30/07:

 

3 Years

5 Years

Upside

179.28

179.66

Downside

139.51

110.01

Which is to say, it rises 80% more in good times and drops 40% more in bad than does the market. You don’t want to be here when the rain is falling.

The second risk is Driehaus’s penchant for closing and/or liquidating funds. Driehaus had a bunch of other funds that they seem to have liquidated: Driehaus International Growth (DRIGX), Driehaus European Opportunity (DREOX) and Driehaus Asia Pacific Growth (DRAGX), all of which died in 2003. The very successful Emerging Markets Growth fund just closed to new investors.

Bottom Line

For investors with $10,000 to spare and a high tolerance for risk, this might be as good as bet for sheer, pulse-pounding, gut-wrenching, adrenaline-pumping performance as you’re going to find.

Fund website

http://www.driehaus.com/DRIOX.php

 

Guinness Atkinson Alternative Energy (GAAEX), September 2007

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

September 1, 2007

FundAlarm Annex – Fund Report

Objective

The fund seeks long-term capital appreciation by investing in US and overseas of companies involved in the alternative energy or energy technology sectors, which includes companies that increase energy efficiency but excludes nuclear.

Adviser

Guinness Atkinson Asset Management, headquartered in Woodland Hills CA but also has offices in London. The company was founded by a number of then and former managers for Investec, a multinational investment firm. The firm manages mutual funds whose net assets are about $340 million.

Manager

Tim Guinness, Ed Guinness and Matthew Page. Tim Guinness is the lead manager, the firm’s Chief Investment Officer and manager of the Global Energy and Global Innovators funds. Immediately prior to founding GA, he was joint chairman of Investec. Ed Guinness, Tim’s son, has engineering and management degrees from Cambridge. Before joining Guinness Atkinson, he worked on tech investing at HSBC and risk arbitrage for Tiedemann Investment Group in New York. Matthew Page has a Master’s degree in Physics from Oxford and worked briefly at Goldman Sachs before joining GA.

Opening date

March 31, 2006.

Minimum investment

$5000 for regular accounts, $2500 for regular accounts for individuals who own shares in other GA funds, $1000 for IRAs and $100 for accounts opened with an automatic investing plan.

Expense ratio

1.1% after waivers on $33.7 million in assets as of July 2023. 

Comments

More than is usually the case, I feel like I’m on a precipice over a gaping dark chasm of ignorance. There are two questions – is there a strong case now for alternative energy investing? and if so, is there a strong case for making that investment through an open-end mutual fund? Those are good questions for which good answers would take pages. Multiple, many, numerous pages. Little of which I’m competent to write. As a result, I’ll try to offer the second-grader’s version of the story and will ask the indulgence of folks who have profound professional knowledge of the subject.

Is there a case now for alternative energy investing? Well, there’s certainly a case for alternative energy so there’s likely a parallel case for investing in the field. What’s the case?

  • The world is running out of affordable oil and gas –

While there’s no question of imminent physical exhaustion, a number of economists project the future price of oil based on the notion of “peak oil.” At base, the peak oil theory says that once half of the oil in a particular reservoir is withdrawn, the price for removing the other half escalates sharply. There’s no single, definitive estimate for when a peak has been passed, since every oil field has its own life cycle. In general, though, experts seem to agree that the US peaked in the early 1970s and the North Sea peaked in the early 2000s. The most pessimistic estimates claim that global production is has already passed its peak (this is a subject, by the way, that causes Saudi oil ministers to sputter mightily), with 54 of the world’s 65 major producing nations in decline. A more cautious study commissioned by the US Department of Energy (Hirsch, et al, Peaking Of World Oil Production: Impacts, Mitigation, & Risk Management, 2005) predicted the peak would be “soon,” by which they meant within 20 years. Natural gas is not substantially better off.

That study made two other important claims: (1) “As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented.” And (2) “Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.”

A point rarely recognized is that much of the oil that remains is not light sweet crude; it’s generally a heavy, sour oil that’s hard to refine and a relatively poor source of higher distillates such as gasoline.

  • Fossil fuel consumption is irreparably affecting the global climate

You don’t actually need to believe this argument, you mostly need to agree that it is moving into the area of “commonly accepted wisdom,” since that’s what motivates governments and other organizations to act.

I’ll note, in passing, that I’m not a climatologist and so I’m not competent to judge the technical merit of what appears to be an enormous and growing body of peer-reviewed research which substantiates this claim. I am, as it turns out, trained to assess arguments. From that perspective, I’m note that those arguing against the theory of human-induced climate change generally support their case through deceptive and misleading arguments – they mischaracterize their sources, suppress inconvenient conclusions found in the research they cite, over-claim their own qualifications, and shift argument grounds midway through. The vast majority of the skeptics’ discourse appears in blogs rather than in peer-reviewed journals and little of it is research per se but rather they focus on often-narrow methodological critiques (one recent controversial was over a quarter-degree difference in a calculation). With the possibility that the future of human civilization hangs in the balance, we deserve much more honest debate.

  • In anticipation of the two preceding arguments, governments are going to push hard for alternatives to fossil fuels

Whether through taxation, carbon emission caps, subsidies or legal protections (e.g., relaxed siting requirements), governments around the world are moving to support the production of alternative energy.

The tricky question is the “now” part – is it currently prudent to invest in this field? The Guinness Atkinson folks are refreshingly blunt, both in print and on the phone, about the undeniable risks in the field:

. . . a large percentage of alternative energy companies are thinly traded small cap stocks . . . many of these companies are loss making or just beginning to produce profits [and] many alternative energy stocks have appreciated significantly recently as a result of increased energy prices (Guinness Atkinson, The Alternative Energy Revolution, March 2006).

In a phone conversation, Jim Atkinson (GA’s president) stressed that these were voluntary caveats that GA included because they wanted well-informed investors who were willing to hold on through inevitable, short-term dislocations. The company does, indeed, support the goal of informed investors. Their monthly Alternative Energy Briefs provides a richness of information that I’ve rarely seen from a fund company.

Three factors specific to Guinness Atkinson cut against these concerns: (1) the elder Mr. Guinness has a lot of experience in the field of energy investing. The Alternative Energy fund is the offspring of a successful, offshore global energy fund of his. Both of the younger fund managers have graduate training in technical fields (engineering and physics) which bears on their ability to read and assess information about firms and their technologies. And (2) they’re reasonable conservative in their choice of companies. By Mr. Guinness’ calculation, about 82% of the portfolio companies have “positive earnings forecasts for 2007.” That number climbs to 90% by 2008. Finally (3) they build risk management into portfolio construction. They expect to have 30 or so stocks in the portfolio and, in a perfect world, they’d assign 1/30th of their assets to each stock. Lacking perfect confidence in all of their companies, they assign a full share only to companies in which they have the greatest confidence, a half share to those in which they have fair confidence and a “research share” – that is, a very small amount – to those whose prospects are most speculative but which they’d like to track. The managers note that their poorest performers are generally held in the “research” pool, which both vindicates their stock assessment and limits the damage.

Is there a strong case for making that investment through an open-end mutual fund? I’m rather more confident that the answer here is, yes. The alternative channel for alternative energy investing is one of about three exchange traded funds:

  • PowerShares WilderHill Clean Energy

(PBW) which invests in clean energy and conservation technologies. Its top holding is Echelon Corporation which provides “control networking technology for automation systems.” Echelon’s website highlights their work in improving McDonald’s kitchens. Net assets are $1.1 billion with expenses of 0.70%.

  • Market Vectors Global Alternatives

(GEX) which tracks the Ardour Global Index (Extra Liquid) of companies “engaged in the business of alternative energy.” Net assets are $61 million, expense ratio is not available.

  • First Trust NASDAQ Clean Edge US Liquid

(QCLN) tracks the NASDAQ Clean Edge U.S. Index of “clean energy” companies, which includes lots of semiconductor makers. The fund has $23 million in assets.

There are several “clean technology” ETFs, which invest in pollution control, networking, and efficiency-supporting companies. There are, in addition, a number of specialized “green” mutual funds (Spectra Green) and ETFs (Claymore/LGA Green) which don’t particularly focus on the energy sector. They like, for example, Starbuck’s because of its commitment to recycling and environmental causes.

So why not an ETF? At base, the only argument for them is low-cost: their expense ratios are about 0.7% and Guinness’ is about 1.7%. That cost advantage is overstated by three factors: (1) Guinness e.r. is declining, their’s isn’t. (2) Brokerage fees aren’t included – each purchase of an ETF goes through a broker for whose services you pay. And (3) ETFs don’t trade at their net asset value. When ETFs trade at a premium, you actually pay for less than you get. Premiums on the alternative energy ETFs have run lately from 33 to 260 basis points. By way of translation, a fund with a 70 basis point expense ratio and a 260 basis point premium to NAV is costing an investor 3.3% to buy.

The arguments against the ETFs are (1) that they’re limited to liquid investments. That’s why you’ll notice the “liquid” in the names of several. That generally excludes them from investing in private placements or very small companies. (2) You have to have a lot of confidence in the quality of the underlying index. A number of commentators don’t. Of PowerShares WilderHill Clean Energy, which has more assets than all of the other investment options combined, Morningstar recently opined:

. . . this fund lacks a well-reasoned strategy as well as a sensible, diversified benchmark. Instead, its index holds lots of companies with unproven business models and speculative stock prices. For example, the index’s average return on equity is actually negative, despite its rich average price/earnings multiple of 25 (Analyst Report, 3/5/07).

They concluded that investors “would be better off with an active manager,” though that was not a particular endorsement of Guinness Atkinson. In addition, (3) ETFs can be sold short and otherwise made part of the arbitrage games of hedge fund managers. Which isn’t a recipe for stable returns.

Perhaps as a result, Guinness Atkinson has consistently outperformed the ETFs. It benchmarks its performance against the WilderHill Clean Energy index. Here are the performance comparisons, as of 7/30/07:

  Guinness WilderHill
YTD 30.60% 25.01%
Trailing twelve months 34.35 22.39
Since fund inception 14.53 0.64

 

Bottom Line

If I were to invest in alternative energy, I think there’s a strong case to be made for investing with an active manager who has broad discretion and considerable experience. The ETF’s cost advantages are simply not sufficient to overcome their design limitations. Even if Guinness did not have a corner on the market for no-load alternative energy funds, their excellent work in a range of other funds, thoughtful portfolio construction and broad expertise makes them a strong candidate for the role.

(By way of full disclosure, my wife – who has degrees in environmental planning and law – reviewed a bunch of the literature I’ve been working through and chose to invest several thousand dollars of her retirement account in the Guinness Atkinson fund.)

Fund website

Alternative Energy Fund

Northern Active M International Equity (formerly Active M International Equity), (NMIEX), November 2006, July 2010

By Editor 

At the time of publication, this fund was named Northern Multi-Manager International Equity (NIEWX) Fund.
This fund was formerly named Active M International Equity.

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

November 1, 2006
Update (posted July 1, 2010)

FundAlarm Annex – Fund Report

Objective

The fund seeks long-term capital appreciation through a diversified portfolio of non-U.S. securities. Income is “incidental.” It’s willing to invest in companies of any size, though primarily in the developed markets. The portfolio is allocated among four independent, outside managers.

Adviser

Northern Trust. The parent company was founded in 1889 and has about $650 billion in assets under management. Northern Trust Global Advisors (NGTA) has been managing money for institutional investors for about a quarter century.

Manager

Andrew Smith, Senior Vice President and Chief Investment Officer for NTGA since 2000. Before that, he managed about a billion dollars in asset allocation funds for Spectrum Investments. Smith’s task here is primarily to select and monitor the fund’s sub-advisers. The four current sub-advisers are:

  • Altrinsic Global Advisors – A Connecticut-based firm with about $3 billion under management. They focus on large, high quality companies. Northern describes them as having a “relative value style: expected to protect capital in negative markets.”
  • Nicholas-Applegate Capital Management – A California-based adviser with about $15 billion under management. These folks provide an aggressive-growth element to the portfolio.
  • Oechsle International Advisors – A Boston firm which oversees about $18 billion. This is a fairly GARP-y, conservative growth group. Oechsle was subject to a disciplinary action by the SEC in 1998 for failing to adequately supervise one of its private portfolio managers, who has since left the firm. Oechsle subsequently reimbursed its clients for the monetary losses they suffered.
  • Tradewinds NWQ Global Investors – This is a wholly-owned subsidiary of Nuveen Investments with about $23 billion under management. These folks pursue an “absolute value” style which is “distinguished by deep specialization, fundamental analysis and transparency.” In theory they’ll provide the best down-side protection for the portfolio.

Inception

June 22, 2006.

Minimum investment

$2,500 for regular accounts, $500 for IRAs and $250 with an automatic investment plan.

Expense ratio

0.84%, after waivers from a 0.90% gross expense ratio, on assets of $475.1 million, as of July 2023. There’s also a 30-day, 2% redemption fee to discourage active traders.

Comments

The argument for Northern’s various multi-manager funds is pretty straightforward. Northern has been selecting investment managers for really rich people for 125 years. They’ve done it well enough that Northern has been entrusted with assets that are starting to creep up on the trillion dollar mark. They sorted through a set of 500 managers before selecting these four.

And, in general, they seem to be getting it right. Collectively Morningstar awards four-stars to Northern’s international fund line-up and praises their “very low” expense ratios. Nicholas-Applegate runs a bunch of pretty solid international funds, but their investment minimums are typically around a quarter million dollars. Tradewinds has only a few funds, but they’re solid, disciplined performers. Altrinsic and Oechsle’s public records are mostly with funds for sale to Canadian investors. In the US, they seem to serve mostly high net-worth individuals.

Northern positions this as a fairly aggressive choice. On their risk-reward spectrum, it occupies the fourth spot from the top behind the emerging markets, international real estate and international growth funds and next to their international index fund.

Bottom line

This fund is a calculated risk, in some ways more than most. You’re basically betting on Northern’s ability to assemble a group of superior investors whose services are not generally available. Mr. Smith has been doing this for better than 20 years and seems to be rising steadily within his profession. And Northern has been doing it, to the apparent satisfaction of “a well-heeled client” for better than a century. This seems to create a fair presumption in their favor, especially at a time when compelling choices in international funds are few.

Company link

http://www.northernfunds.com

November 1, 2006

Update (posted July 1, 2010)

Assets: $2.7 billion Expenses: 1.4%
YTD return (through 6/17/10): (4.0%)  

Our original thesis

This fund is a calculated risk, in some ways more than most. You’re basically betting on Northern’s ability to assemble a group of superior investors whose services are not generally available.

Our revised thesis

So far, so good.

Since inception, NMIEX has performed modestly better than its peers or its index. The fund is down about 6% since inception, its international core peer group is down about 7% and its primary benchmark is down about 9%. It has earned those modestly above-average returns with modestly below-average volatility. It substantially outperformed its peers and benchmark during the 2007-09 crash, slightly outperformed them in the May 2010 mini-crash and substantially trailed (47% for NMIEX versus 61% for its benchmark index) through during the 12 month surge following the market low. Both the better performance in the down market and the poorer performance, especially in the early phases of the rebound, are attributable to the same factor: the fund had only about half of the exposure to European financial stocks as did its peers.

In general, the seven Northern Multi-Manager funds have been entirely respectable performers over the short life spans. Like Price funds, they generally seem to do a bit better than the peers over time and rarely end a year in the basement. Northern has been pretty vigilant about monitoring the performance of its sub-advisors and has not been reluctant to replace teams that are drifting (mostly notably in the underperforming Small Cap NMMSX fund, where they’ve made three switches in about 12 months).

It’s regrettable that the fund’s expense ratio has remained virtually unchanged, despite the tripling of assets under management from 2007 through 2010. The 1.4% fee here compares to 1.1% for the average international fund, and rather less than that for the average large cap, developed market international fund.

This is a solid choice whose low minimum investment (down to $250 for folks setting up an automatic investment plan) and broad diversification might recommend it to a wide audience.

FundAlarm © 2006, 2010

Aegis Value (AVALX) – May 2009

By Editor

. . . from the archives at FundAlarm

These profiles have not been updated. The information is only accurate as of the original date of publication.

May 1, 2009

FundAlarm Annex – Fund Report

Fund name:

Aegis Value (AVALX)

Objective

The fund seeks long-term capital appreciation by investing (mostly) in domestic companies whose market caps are ridiculously small. On whole, these are stocks smaller than those held in either of Bridgeway’s two “ultra-small” portfolios.

Adviser:

Aegis Financial Corporation of Arlington, VA. AFC, which has operated as a registered investment advisor since 1994, manages private account portfolios, and has served as the Fund’s investment advisor since the fund’s inception. They also advise Aegis High Yield.

Manager

Scott L. Barbee, CFA, is portfolio manager of the fund and a Managing Director of AFC. He was a founding director and officer of the fund and has been its manager since inception. He’s also a portfolio manager for approximately 110 equity account portfolios of other AFC clients managed in an investment strategy similar to the Fund with a total value of approximately $80 million. Mr. Barbee received an MBA degree from the Wharton School at the University of Pennsylvania.

Management’s Stake in the Fund:

As of August 31, 2008, Mr. Barbee owned more than $1 million of fund shares. He will also be the sole owner of the adviser upon retirement of the firm’s co-founder this year.

Opening date

May 15, 1998

Minimum investment

$10,000 for regular accounts and $5,000 for retirement accounts, though at this point they might be willing to negotiate.

Expense ratio

1.43% on assets of $66 million

Comments:

Let’s get the ugly facts of the matter out of the way first. Aegis Value is consistently a one- to two-star small value fund in Morningstar’s rating system. It has low returns and high risk. The fund’s assets are one-tenth of what they were five years ago.

‘Nuff said, right?

Maybe. Maybe not. I’ll make four arguments for why Aegis deserves a second, third, or perhaps fourth look.

First, if we’d been having this discussion one year ago (end of April 2008 rather than end of April 2009), the picture would have been dramatically different. For the decade from its founding through last May, Aegis turned a $10,000 initial investment into $36,000. Its supposed “small value” peer group would have lagged almost $10,000 behind, while the S&P500 would have been barely visible in the dust. Over that period, Aegis would have pretty much matched the performance of Bridgeway’s fine ultra-small index fund (BRSIX) with rather less volatility.

Second, ultra-small companies are different: benchmarking them against either small- or micro-cap companies leads to spurious conclusions. By way of simple example, Aegis completely ignored the bear market for value stocks in the late 1990s and the bear market for everybody else at the beginning of this century. While it’s reasonable to have a benchmark against which to measure a fund’s performance, a small cap index might not be much more useful than a total market index for this particular fund.

Third, ultra-small companies are explosive: Between March 9 and April 29, 2009, AVALX returned 66.57%. That sort of return is entirely predictable for tiny, deep-value companies following a recession. After merely “normal” recessions, Morningstar found that small caps posted three-year returns that nearly doubled the market’s return. But the case for tiny stocks after deep declines is startling. Mr. Barbee explained in his January 22 shareholder letter:

. . . in the 5 years following 1931, the Fama/French Small Value Benchmark returned a cumulative 538 percent without a down year, or over 44 percent per year. Even including the damaging “double-dip” recession of 1937, the benchmark returned over 21 percent annually for the 7 years through 1938. After market declines in 1973 and 1974, over the next 7 years (1975 through 1981), the Fama/French Small Value Benchmark returned a cumulative 653 percent without a down year, or greater than 33 percent per year.

Fourth, the case for investing in ultra-small companies is especially attractive right now. They are deeply discounted. Despite the huge run-up after March 9, “the companies held by the … Fund now trade at a weighted average price-to-book of 29.4%, among the very lowest in the Fund’s nearly 11-year history.” The universe of stocks which the manager finds most attractive – tiny companies selling for less than their book value – has soared to 683 firms or about five times the number available two years ago. After the huge losses of 2008 and early 2009, the fund now packs a tax-loss carryforward which will make any future gains essentially tax-free.

Bottom Line

Mr. Barbee, his family and his employees continue to buy shares of Aegis Value. He’s remained committed to “buying deeply-discounted small-cap value stocks,” many of which have substantial cash hoards. Investors wondering “how will I ever make up for last year’s losses?” might find the answer in following his lead.

Fund website

Aegis Value fund

FundAlarm © 2009

January 2012 Funds in Registration

By Editor

Driehaus International Credit Opportunities Fund

Driehaus International Credit Opportunities Fund seeks to provide positive returns under a variety of market conditions.   It will hold long and short positions in a variety of developed and developing market fixed-income instruments.  It may use derivatives to hedge its exposure.  The fund will be non-diversified in terms of both the number of securities held and the number of nations or regions represented in the portfolio.  Its annual portfolio turnover is estimated to be 100 – 300%.  The fund will be managed by Adam Weiner who has managed emerging markets fixed income and currency strategies for Oppenheimer and Frontpoint Partners/Morgan Stanley.  In 2011, he joined Driehaus as a portfolio manager for international credit-oriented strategies.  He is not a member of the team which runs Driehaus’s other two “nontraditional bond” funds. $10,000 minimum initial investment.  Expenses not yet set.

Artisan Small Cap (ARTSX), December 2011

By Editor

Objective

The fund pursues “maximum long-term capital growth” by investing a broadly diversified portfolio of small cap growth stocks.  For their purposes, “small cap” means “under $2.5 billion in market cap at the time of purchase.”   As of 9/30/11, they held 70 stocks.  They cap individual positions at 3% of assets, though some might appreciate past that point.  They have small stakes in both developed (2.5%) and emerging (2.3%) markets.   The managers look for companies with at least two of the following franchise characteristics:

Low cost production capability,

Possession of a proprietary asset,

Dominant market share, or a

Defensible brand name.

If the stock is reasonably priced and they have reason to believe that the firm’s prospects are brightening, it becomes a candidate for acquisition.

Adviser

Artisan Partners of Milwaukee, Wisconsin.   Artisan has five autonomous investment teams that oversee twelve distinct U.S., non-U.S. and global investment strategies. Artisan has been around since 1995.  As of 9/31/2011 Artisan Partners had approximately $51 billion in assets under management.  That’s up from $10 billion in 2000. They advise the 12 Artisan funds, but only 6% of their assets come from retail investors.

Manager

The fund is managed by the same team that manages primarily-midcap Artisan Mid Cap (ARTMX) and primarily-large cap Artisan Growth Opportunities (ARTRX) funds.  The marquee name would be Andy Stephens, founding manager of ARTMX and, earlier, co-manager of Strong Asset Allocation.  Craig Cepukenas has been an analyst with the fund since 1995 and a co-manager since 2004.  The other team members (Mr. Stephens plus Jim Hamel, Matt Kamm, Jason White) joined in the last two years.   Their work is supported by seven analysts.

Management’s Stake in the Fund

Each of the managers invests heavily in each of the three funds.  Mr. Hamel has over a million in each fund and Mr. Stephens has over $2.5 million spread between the three, while the other managers (generally younger) have combined investments well over $100,000.

Opening date

March 28, 1995.

Minimum investment

$1000 for regular accounts, reduced to $50 for accounts with automatic investing plans.  Artisan is one of the few firms who trust their investors enough to keep their investment minimums low and to waive them for folks willing to commit to the discipline of regular monthly or quarterly investments.

Expense ratio

1.2%, on assets of $1.8 Billion (as of June 2023).

Comments

ARTSX was Artisan’s first fund, launched as a vehicle for Carlene Murphy Ziegler to showcase her talents.  Ziegler had been a star at Strong, and her new fund returned 35% in its first year, about 50% better than its peers.   In under a year, the fund had gathered $300 million in assets.  It closed to new investors in February of 1996, a decision for which it was rightly lauded.

And then, something happened.  The fund, mild-mannered by growth fund standards, lagged its peers during the “hot” years of the late 1990s, rallied briefly at the turn of the century, then settled back into a long decade of mediocre returns.  Artisan tried to reignite the fund by bringing in Ziegler’s former co-manager, Marina Carlson, but nothing seemed to work.  Even in its worst years the fund was never awful, but it was also never really good again.  Ziegler retired from managing the fund in 2008 and Carlson in 2009.

Then, in 2009, Artisan found the fix.  They gave management responsibility to their five-manager Growth Team.  Artisan’s fund management is structured around a series of team.  Each team has a distinctive style (US Value, International Value, Growth, Global Equity, and Emerging Markets) and each has a distinctive, consistent investment discipline.  As each team proves its ability to provide strong, consistent, risk-conscious performance in one arena, Artisan allows them to extend their process to another.  The U.S. Value team, for example, started with Small Cap Value (ARTVX), which was wildly successful and closed to new investors.  They began managing Mid Cap Value (ARTQX) in 2001, posted a series of exceedingly strong years, and decided to add the predominantly large cap Artisan Value (ARTLX) fund in 2006.  The Growth Team started with Mid Cap (1997), added Growth Opportunities (2008) and then Small Cap (2009).

The practice of keeping teams together for the long term, allowing them to perfect and then gradually extend their investment disciplines, has produced consistently strong results for Artisan’s investors.  With the exception of their Emerging Markets fund (which is not available to retail investors), over the last three years every Artisan fund has earned four or five stars from Morningstar and every one is ranked above average in Lipper’s ratings.  Regardless of the time period you check, no Artisan fund (excepting, again, Emerging Markets) has a Morningstar rating below three stars.

The managers’ discipline is clear and sensible.  One part of the discipline involves security selection: they try to find companies with a defensible economic moat and buy them while the price is low and the prospect for rising profits looms.  Philosophically, they are driven to hunt for accelerating profit cycles. Their edge comes, in part, from their ability to identify firms which are in the early stages of an accelerating profit cycle. Their intention is to get in early so they can benefit from a long period of rising profits. The other part is capital allocation: rather than pour money into a new holding, they begin with small positions in firms whose profits are just beginning to accelerate, increase that toward their 3% asset cap as the firm achieves sustained, substantial profits, and then begins selling down the position when the stock becomes overvalued or the firm’s profitability slips.

Since taking charge of Small Cap, the fund has performed exceptionally well.  $10,000 invested when Mr. Stephens & co. arrived would have grown to $13,800 (as of 11/29/11) while their average peer would have returned $12,700.  The fund posted weak relative and strong absolute returns during the “junk rally” in 2010, making 20.5% for its investors.  In 2011, the fund finished the first 11 months in the top 2% of its peer group with a return of 5.2% (compared to a loss of nearly 8% for its average peer).

Bottom Line

Artisan has an entirely admirable culture.  Their investment teams tend to stick together for long periods, with occasional promotions from the analyst ranks to recognize excellence.  They are uniformly risk conscious, deeply invested in their funds and singularly willing to close funds before asset bloat impairs performance.  As of December 2011, half of Artisan’s retail funds (five of 10) are closed to new investors.

The Growth Team follows that same pattern, and has posted strong records in their other charges and in their two-plus years here.  Investors looking for a rational small cap growth fund – one which is competitive in rising markets and exceptionally strong in rocky ones would be well-advised to look at the reborn Artisan Small Cap fund.

Fund website

Artisan Small Cap fund

 

© Mutual Fund Observer, 2011.  All rights reserved.  The information here reflects publicly available information current at the time of publication.  For reprint/e-rights contact [email protected].

December 2011 Funds in Registration

By Editor

Aviva Investors Emerging Markets Local Currency Bond Fund

Aviva Investors Emerging Markets Local Currency Bond Fund popped up in the SEC database this month.  Oddly enough, the fund already exists but is not available for sale to either individual or institutional investors.  The coolest aspect of the offering is its heritage; it’s based on a SiCav, “a sub-fund of a socioto anonyme formed under the laws of the Grand Duchy of Luxembourg.”  The least cool aspect is that the fund in question consistently trails its index.  When available, it will be team managed, will charge1.15% and will be available for a $5000 minimum.

FAM Small Cap Fund

FAM Small Cap Fund will attempt to “maximize long-term return on capital” by investing in a non-diversified portfolio of quite small companies.  They’re targeting stocks valued at between $50 million and $1 billion.  The managers will determine each firm’s “true business worth” as the basis for their investments.   The managers are Thomas Putnam, Chairman of the adviser, and Marc Roberts, a research analyst for them.   Mr. Putnam’s two other FAM funds, Value and Equity-Income, have been solidly unspectacular for years. The minimum initial purchase is  $5000 for a regular  account and $2000 for an IRA.   Expenses of 1.5%. The proposed launch date is February 12, 2012.

Forward Managed Futures Strategy Fund

Forward Managed Futures Strategy Fund will pursue long term total return.  The Fund will generally invest in the futures contracts included in the Credit Suisse Multi-Asset Futures Strategy Index.  The primary asset classes included in the CSMF Index are commodities, currencies, equity indexes and fixed income. The CSMF Index will take long positions in futures contracts with strong positive positioning relative to its 250-day moving average price and short positions in futures contracts with strong negative positioning relative to the 250-day moving average price.   Their goal is positive returns regardless of market conditions, with a target volatility level of approximately 15% per year.  This strategy is employed by a variety of managed futures funds; they work really well when markets show sustained movements in either direction but suffer in volatile, directionless ones. The Fund will be team managed.  The team leader is Nathan Rowader, Forward’s Director of Investments.  The other team members include Forward’s president and CIO, Jim O’Donnell, Paul Herber and David Ruff. Expenses not yet set.  Investment minimum is $4000, reduced to $2000 for Coverdells and accounts with e-delivery options, $500 for accounts with an automatic investment plan.

Hussman Strategic Dividend Value Fund

Hussman Strategic Dividend Value Fund seeks total return through a combination of dividend income and capital appreciation, with added emphasis on protection of capital during unfavorable market conditions.  It pursues this objective by investing primarily in dividend-paying common stocks.  The Fund has the ability to vary its exposure to market fluctuations based on factors its investment manager believes are indicative of prevailing market return and risk characteristics.  John Hussman, founder and manager of nearly $9 billion in the three other Hussman funds, will run the show.  In general, the Hussman funds have been more distinguished for their strong risk management than for exceptional long-term returns.  Expenses of 1.27% after a substantial “fee deferral.” The minimum initial investment is $1,000, except the minimum is $500 for IRA/UTMA accounts.  Oddly, Morningstar already lists the fund on its site, though it’s not scheduled to open until February 12, 2012.

Satuit Capital U.S. Small Cap Fund

Satuit Capital U.S. Small Cap Fund will seek long-term growth by investing in a diversified portfolio of U.S. small cap stocks. Small cap translates to “comparable to the Russell 2000.”  They’ll start with quantitative screens to construct a Focus List, and then qualitative ones to sort through the Focused stocks.  The management team is the same folks who run Satuit Capital U.S. Emerging Companies (SATMX).  It includes Robert Sullivan, Satuit’s chairman, president and Chief Investment Officer.  Here’s the good news: SATMX (formerly Satuit Microcap) is a really strong fund, with returns in the top 1% of its peer group over the past decade.  The bad news: Satuit offered a small cap fund once before, became discouraged and shut it down rather quickly.  Expenses will be 1.5%. The minimum initial investment is quite low, at $1000.

Satuit Capital U.S. SMID Cap Fund

Satuit Capital U.S. SMID Cap Fund seeks to provide investors with long-term capital appreciation by investing in a diversified portfolio of U.S. small- to mid-cap stocks.  SMID is operationalized as “comparable to the Russell 2500” index.  The managers will use the same combination of quantitative and qualitative screens here as they do in their small cap fund. The management team is the same folks who run Satuit Capital U.S. Emerging Companies (SATMX).  It includes Robert Sullivan, Satuit’s chairman, president and Chief Investment Officer.   Expenses will be 1.5%. The minimum initial investment is quite low, at $1000.

Wasatch Frontier Emerging Small Countries Fund

Wasatch Frontier Emerging Small Countries Fund will pursue long-term capital appreciation by investing in a non-diversified portfolio of stocks represented in “frontier market or small emerging market country.”  The firms in question need either to be domiciled in those markets, or to generate more than 50% of revenues or earnings in them.  Wasatch warns that these include  “the least developed markets even by emerging markets standards.”  Nominally it’s an all-cap fund, practically it’s a small cap one.  The fund will be managed by Laura Geritz who helps manage the Wasatch Emerging Markets Small Cap and International Opportunity funds.  She has an interesting history, having come up through the ranks from “bilingual customer service representative” to “analyst” to “manager.”  Expense ratio not yet announced, but it’ll be high.  The minimum initial investment is $2000 except for college savings accounts and funds with an automatic investing plan, in which case the minimum is reduced to $1000.  The proposed launch date is late January, 2012.

November 2011 Funds in Registration

By Editor

Ariel Global Equity Fund

Ariel Global Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 stocks, foreign, domestic and emerging. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

Ariel International Equity Fund

Ariel International Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 developed market stocks outside the US. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

ASTON/Silvercrest Small Cap Fund

ASTON/Silvercrest Small Cap Fund The manager is Roger Vogel, Managing Director of Silvercrest and lead portfolio manager for Silvercrest’s small cap value investment strategy. Prior to Silvercrest, he co-managed both small-cap and large-cap portfolios for Credit Suisse. His private account composite has returned 6.4% since inception in 2003, while the Russell 2000 Value returned 4%. For better or worse, most of his advantage comes in a dramatic outperformance in 2008. Expense ratio of 1.41%, minimum initial investment of $2500, reduced to $500 for IRAs.

Forward Endurance Fund

Forward Endurance Fund seeks long-term growth by investing, long and short, in a global stock portfolio. Their focus will be “to identify trends that may have large and disruptive impacts on global business markets.” David Readerman and Jim O’Donnell will manage the fund. They recently took over Forward Small Cap as well. Expenses not yet set, $4000 minimum initial investment, reduced to $2000 if you sign up for eDelivery, $500 for accounts with automatic investing plans.

Forward Floating NAV Short Duration Fund

Forward Floating NAV Short Duration Fund seeks maximum current income consistent with the preservation of principal and liquidity. Their investment strategy is generic (investment grade, US and non-US, government and corporate debt), but they’re benchmarked against the three-month T-bill and the prospectus goes to pains to say that they’re not a money market. That, of course, says that they’re trying to market themselves as “better than a money market.” David L. Ruff and Paul Broughton will manage the fund. Both have extensive experience, though not in fund management. Expenses not yet set, $4000 minimum initial investment, reduced to $2000 if you sign up for eDelivery, $500 for accounts with automatic investing plans.

FPA International Value Fund (FPIVX)

FPA International Value Fund (FPIVX) seeks above average capital appreciation while attempting to minimize the risk of capital loss. FPA looks in all their funds for well-managed, financially strong, high quality businesses whose stock sells at a significant discount. The managers, Eric Bokota and Pierre Py, are both former Harris Associate (i.e., Oakmark) analysts. Initial expense ratio of 1.98% (they don’t believe in fee waivers), but at least the minimum initial investment ($1500) is low.

Gerstein Fisher Multi-Factor International Growth Equity Fund

Gerstein Fisher Multi-Factor International Growth Equity Fund will seek long-term capital appreciation. They’ll focus on “smaller growth companies that may also display characteristics typically associated with value-oriented investments.” Gregg S. Fisher, the firm’s chief investment officer, will manage the fund. Expenses of 1.37%, $5,000 minimum initial investment.

Granite Value Fund

Granite Value Fund will seek long-term growth by investing globally in about 40 mid- to large-cap stocks. Scott B. Schermerhorn will manage the fund. Expense ratio of 1.35%, $10,000 minimum initial investment, reduced to $5000 for tax-advantaged accounts.

IASG Managed Futures Strategy Fund (“N” shares)

IASG Managed Futures Strategy Fund (“N” shares) will seek positive long-term absolute returns. The plan is to invest 75% in fixed income and 25% in a combination of “commodity pools” and ETFs. This has “bad idea” written all over it. The strategy is obscure and depends, largely, on investing in a bunch of actively managed “pooled investment vehicles,” each of which has a manager pursued his own commodity strategy, often derivative based or in ETFs that have price momentum. The fund will be managed by Perry Lynn and JonPaul Jonkheer of IASG Capital Management. $2500 investment minimum, expense ratio not yet set.

Kottke Commodity Strategies Fund (“N” shares)

Kottke Commodity Strategies Fund (“N” shares) will seek positive absolute returns. The plan is to invest 75% in cash and 25% in exchange-traded commodity futures and options. The cash – currently offering negative real returns – is collateral for the commodity positions. The fund will be managed by a team led by Michael Crouch (“head trader”). $2500 investment minimum, expense ratio not yet set.

Miller Tabak Merger Arbitrage and Event Driven Fund

Miller Tabak Merger Arbitrage and Event Driven Fund will pursue capital appreciation by investing the stocks of companies that are undergoing, or may undergo, “transformational corporate events” such as “announced merger transactions, announced or have possible spin-offs, split-offs or sales of divisions; businesses that are exploring “strategic alternatives” such as stock buybacks, or sales of the entire companies; companies that may announce or have completed attractive acquisitions; and other special situations.” Michael Broudo will manage the fund, and also manages Miller Tabak’s merger arbitrage and event-driven equity group. Miller Tabak is a heavy weight institutional firm that executes trades for hedge funds and institutions, and this has the feel of a “friends and family” fund for those unable to afford MT’s private accounts. $1000 investment minimum, but an expense ratio (after waivers!) of 2.75%.

Scharf Fund

Scharf Fund will seek long-term capital appreciation. The fund will mostly invest in stocks (daringly, the manager targets stocks which “have significantly more appreciation potential than downside risk over the long term”), might invest up to 50% in international stocks and might invest up to 30% in bonds. Brian A. Krawez, former “Head of Research at Belden and Associates<” will manage the fund. $10,000 investment minimum, reduced to $5000 for tax-advantaged accounts and those with automatic-investing plans, expense ratio of 1.25%.

Sierra Strategic Income Fund

Sierra Strategic Income Fund wants “to provide total return (with income contributing a significant part) and to limit volatility and downside risk.” It will be a fund of income funds, including funds or ETFs which invest in foreign, emerging or domestic bonds, issued by governments or corporations, and REITs. They look with asset classes with price momentum, try to find high-alpha managers in those classes and have a fairly severe stop-loss discipline. The fund will be managed by a team from Wright Fund Management, which has been using this strategy in separate accounts since the late 1980s. Expenses not yet set, $10,000 minimum initial investment.

TFS Hedged Futures Fund

TFS Hedged Futures Fund will pursue long-term capital appreciation. It will be a global long/short equity fund. It will be managed by a six-person team. Expenses, after waivers, of 2.30%, $5000 minimum investment.

Vanguard Emerging Markets Government Bond Index Fund

Vanguard Emerging Markets Government Bond Index Fund will track the performance of the Barclays Capital Emerging Markets Sovereign Index (USD) that measures the investment return of U.S. dollar-denominated bonds issued by governments of emerging market countries. They anticipate a weighted average maturity of 10-15 years. Greg Davis and Yan Pu will manage the fund. Expense ratio of 0.50%, minimum initial investment is $3000.

Vanguard Target Retirement 2060 Fund

Vanguard Target Retirement 2060 Fund will seek to provide capital appreciation and current income consistent with its current asset allocation. It invests in just three underlying funds, Vanguard Total Stock Market Index (63%), Vanguard Total International Stock Index (27%) and Vanguard Total Bond Market II Index (10%). As with all such funds, it was slowly become more conservative as 2060 approaches. (Given that I’m not going to be here to confirm it, I’ll take Vanguard’s word on the matter.) The investment minimum is a remarkably low $1000, expense ratio is equally remarkable, at 0.18%.

Vanguard Total International Bond Index Fund

Vanguard Total International Bond Index Fund will track the Barclays Capital Global Aggregate ex-USD Float-Adjusted Index (Hedged) that measures the investment return of investment-grade bonds issued outside of the US. They anticipate a weighted average maturity of 5-10 years. Greg Davis and Yan Pu will manage the fund. Expense ratio of 0.40%, minimum initial investment is $3000.

William Blair Small-Mid Cap Value Fund

William Blair Small-Mid Cap Value Fund will seek long-term capital appreciation, which they’ll pursue by investing in domestic small- and mid-cap stocks. The management team are the same folks who run Blair Small Cap Value and Mid Cap Value, neither of which is bad. Expenses not yet set, $5000 minimum initial investment, reduced to $3000 for IRAs.

Manager changes, Archive

By Editor

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Fund Out with the old In with the new Date
Absolute Opportunities (AOFOX) No one’s out Pine Cobble Capital joins five other institutional firms sub-advising the fund. 07/11
Alger Health Sciences (AHSAX) David Farhadi Dan Chung and Maria Liotta. Chung, Alger’s CIO/CEO, has helped run the fund since 2005 05/11
Allianz RCM Disciplined International Equity (RAIGX). Ara Jelalian Steven Berexa 08/11
Allianz RCM Global Commodity Equity (ARMAX), formerly Allianz RCM Global Resources No one, but . . . Alec Patterson joined the management team and now co-manages with Paul Strand 09/11
Alpine Cyclical Advantage Property Fund (EUEYX) No one’s out . . . David Kruth, who has experience as a Goldman Sachs global real estate manager, joins as an “associate manager” 04/11
Alpine Dynamic Dividend (ADVDX) Andrew Kohl The rest of the portfolio team (Jill Evans, Kevin Shacknofsky, Joshua Duitz) is joined byBrian Hennessey. 04/11
Altegris Managed Futures Strategy (MFTAX) Rodney Square Management Altegris Advisors is hunting for a new manager. In the interim, they’ll run the fund themselves. 07/11
American Century International Bond (BEGBX) No one, but . . . Simon Chester joined the management team 08/11
Aston/Barings International (ABIIX) Nathan Griffiths Former co-manager David Bertocchi becomes the lead manager. 04/11
Aston/Fortis Real Estate (AARIX) Fortis Investment Management Harrison Street Securities, which will occasion a renaming to Aston/Harrison 07/11
BlackRock International Bond Portfolio (BIIAX) Andrew Gordon, who’s been with the fund since 1997 Scott Thiel joins Yoni Saposh 08/11
BlackRock Science & Technology Opportunities (BGSAX) No one, but . . . Paul Ma joined the management team of Thomas Callan, Jean Rosenbaum, and Erin Xie. 09/11
BlackRock World Income Fund (MDWIX) Andrew Gordon, who’s been with the fund since 2006 Scott Thiel joins Yoni Saposh 08/11
Buffalo China (BUFCX) No one, but . . . Shelly Ma joins as a co-manager on the steadily-improving BUFCX. In the past five years it has trailed 98% of its peers, then 96%, 91%, 69% and – over the first three quarters of 2011, a breakthrough – 49%. 09/11
Buffalo High Yield (BUFHX) Kent Gasaway The rest of the management team remains in place 09/11
Buffalo International (BUFIX) No one, but . . . Shelly Ma joins as a co-manager, whose new fund is merely “consistently mediocre” rather than “eye-watering” (see Buffalo China) 09/11
Buffalo Large Cap (BUFEX) Grant Sarris, in part of a larger management realignment The rest of the management team remains in place 09/11
Calvert Bond (CSIBX) Gregory Habeeb Matt Duch 09/11
Calvert Income (CFICX) Gregory Habeeb Michael Abramo 09/11
Calvert Large Cap Growth (CLCIX) John Montgomery, president of Bridgeway A team from Atlanta Capital Management will run the fund until its merger into Calvert Equity (CSIEX), which they also run. 05/11
Calvert Social Index (CSXAX) Kevin Yousif Eric Lessnau and David Jones 05/11
Columbia Dividend Income (LBSAX) No one goes but . . . David King and Michael Barclay join Richard Dahlberg and Scott Davis 04/11
Columbia Emerging Markets Opportunity (IDEAX) Vanessa Donegan Irina Miklavchich and existing manager Rafael Polatinsky. 05/11
Columbia Global Equity (IGLGX) Andrew Holliman Esther Perkins joins current co-manager Stephen Thornber 06/11
Columbia Global Extended Alpha (RTAAX) Andrew Holliman Stephen Thornber and Jeremy Podger. 06/11
Columbia Mortgage and Asset Backed (NMTGX) Lee Reddin Michael Zazzarino, who has been co-manager of the fund since 2007, will be lead manager. 09/11
Davidson Multi-Cap Equity Fund William B. Whitlow is retiring The lead manager, Brian Clancy, remains but gains a 7th co-manager, Paul Condrat 08/11
Dreyfus Global Sustainability (DGYAX) Five new co-managers from Mellon Capital were added in mid-April. 04/11
DWS Climate Change (WRMAX) Nicolas Huber Andrew Pidden comes in, and the fund becomes DWS Clean Tech 08/11
DWS Emerging Markets Equity (SEKAX) Thomas Gerhardt who joined this modestly regrettable $300 million fund got canned. Good question. In a particularly cruel shot, DWS announced that “until May 9, 2011,” co-manager Rainer Vermehren is in charge. Vermehren joined the same day as Gerhardt and appears slated to be employed seven weeks longer. 04/11
DWS Gold & Precious Metals (SGDAX) Pierre Martin The rest of the management team remains in place 09/11
DWS International (SUIAX) Nikolaus Poehlmann, Andreas Wendelken, and Mark Schumann – another undistinguished team that was hired just after the Emerging Markets team. Jason Inzer and Thomas Voecking who, according to company documents, will sort of collate the recommendations of thousands of analysts 04/11
DWS Strategic Value (KDHAX) Volker Dosch, Oliver Pfeil, and Thomas Schuessler – who were undistinguished in the execution of their post. Jason Inzer and Thomas Voecking (see DWS International) 04/11
Eagle Growth & Income Fund (HRCVX) for reasons unclear (it’s been a great fund), Thornburg Investment Management has been terminated and an in-house team (Edmund Cowart, David Blount and John Pandtle) replaces them. They manage a billion in “other accounts” but no funds. 04/11
Federated Balanced Allocation (BAFAX) John Leibee Founding managers Hans Utsch and Lawrence Auriana, who have been here since 1986, lead a five-person management team. 07/11
Federated Capital Appreciation (FEDEX) Carol Miller James Grefenstatte joins Dean Kartsonas 05/11
Federated Capital Income (CAPAX). No one, but . . . Christopher Smith joined the management team 08/11
Federated Kaufmann (KAUAX) John Leibee Hans und Franz live on! Which is to say the founding managers, Hans Utsch and Lawrence Auriana, who have been here since 1986, continue to lead a five-person management team. 07/11
Federated Kaufmann Large Cap (KLCAX) John Leibee Founding managers Hans Utsch and Lawrence Auriana, who have been here since 1986, lead a five-person management team. 07/11
Fidelity Advisor Equity Income (FEIAX) Stephen Petersen James Morrow and Adam Kramer 04/11
Fidelity China Region (FHKCX) Joseph Tse, who has a great 2010 and good 2011 Bobby Bao, who manages some of Fidelity’s Canadian funds (AsiaStar) and portions of their Pyramis portfolios 08/11
Fidelity Commodity Strategy (FFCSX) Jeffrey Adams, who works for Fido’s quant Geode arm Bobe Simon, Lou Bottari, Patrick Waddell, Maximilian Kaufman, and Eric Matteson. 05/11
Fidelity Income Replacement and Jonathan Shelno Andrew Dierdorf and new manager Christopher Sharpe 07/11
Fidelity International Value (FIVLX) George Stairs, who I decried as a mediocre Putnam manager when Fidelity hired him Alexander Zavratsky 09/11
Fidelity Japan (FJPNX) Robert Rowland Rei Shigekawa. This change was profiled with some concern by Chuck Jaffe of CBS/Marketwatch. 04/11
Fidelity Magellan (FMAGX) Harry Lange, the third Fidelity superstar to flame-out here Jeffrey Feingold becomes the fourth Fidelity superstar to fling himself on Lynch’s Legacy 09/11
Fidelity NASDAQ Composite Index (FNCMX) Jeffrey Adams, another Geode guy Bobe Simon, Lou Bottari, Patrick Waddell, Maximilian Kaufman, and Eric Matteson. 05/11
First Eagle Gold (SGGDX) No one Chris Kwan joined Abhay Deshpande and Rachel Benepe. 06/11
First Investors Blue Chip (FIBCX) Matthew Wright Edwin Miska and Sean Reidy 05/11
Forward Emerging Markets (FEMMX) Nidhi Mahurkar Peter Jarvis. A solid fund, team run, that’s ground through 23 managers. 05/11
Forward Funds’ Forward Growth (FFGRX) Peter J. Niedland The rest of the management team remains in place 09/11
Forward Growth Fund Peter J. Niedland is “hereby deleted” Mr. Niedland was a recent addition to the portfolio team, the rest of which remains. 08/11
GAMCO Westwood Mighty Mites (WEIMX) No one. Elizabeth Lilly joins the existing team of Mario Gabelli, Laura Linehan, Walter Walsh 07/11
Generation Wave Growth (GWGFX) Jeffrey Middleswart Gerry Sullivan, who also manages the quant Industry Leaders fund (ILFIX). GS is the 10thmanager in 10 years, with the changes here paralleling changes in Vice Fund 07/11
ING Equity Dividend (IEDAX) Christopher Corapi joined the management team 05/11
ING Global Bond (INGBX). No one, but . . . Robert Robis joins Michael Mata and Christine Hurtsellers. 08/11
ING Global Equity Dividend (IAGEX) Moudy El Khodr Bruno Springael will join Nicholas Simar, and Herman Klein. 05/11
ING Global Opportunities (IAFAX) Tjeert Keijzer and Tycho van Wijk Huub van der Riet and Alex van der Laan join Dirk-Jan Verzuu on this sad sack little fund. 05/11
ING Global Resources (IGRAX) No one, but . . . John Bailey became the third c0-manager 08/11
ING International Small Cap Multi-Manager (NTKLX) Qi Zeng Patrick McCafferty, who is part of the Acadian Management sleeve of the portfolio 04/11
ING International Value (NIVAX) Glenn Carlson, Brent Woods, Jim Brown, Amelia Morris, Brent Fredberg, Jeffrey Germain, and Paul Hechmer Marin Jansen, David Rabinowitz, and Joseph Vultaggio. 05/11
ING Janus Contrarian (IJCAX) Janus Capital Management ING Investment Management, though the fund will merge into ING Growth and Income in 2012. 07/11
Invesco Global (ATKAX) Heather Peirce Dana Love, her former co-manager 04/11
Invesco Global Equity (GTNDX) Michael Fraikin Ralph Coutant and Andrew Waisburd join Uwe Draeger, Karl-Georg Bayer and Jens Langewand 05/11
Invesco Global Growth (AGGAX) “Senior” portfolio manager Barrett Sides retires Sides’ three co-managers will carry on without him. It’s a mediocre, but not bad, fund. 06/11
Invesco International Growth (AIIEX) “Senior” portfolio manager Barrett Sides is retiring but won’t be missed enough to be replaced. It’s a very solid fund with a well-established team. This is the 8th Invesco fund to see a manager change since May 2011. 06/11
Invesco Leisure (ILSAX) Jonathan Mueller Ido Cohen and existing manager Juan Hartsfield. 05/11
Invesco Select Real Estate Income (ASRAX) James Trowbridge Joe Rodriguez, Jr., Mark Blackburn, Paul Curbo, and Darin Turner. 05/11
Invesco Small Companies (ATIAX) Ted Chisholm Robert Mikalachki, Virginia Au and Jason Whiting 04/11
Invesco Structured Core (SCAUX) Anthony Shufflebotham Daniel Tsai and Andrew Waisburd get added to the existing team 05/11
Janus Contrarian (JACNX) David Decker who has run the fund since ’96. Very independent portfolio, very high volatility. Dan Kozlowski. DK left Janus to run a hedge fund. Apparently part of the deal to secure his return was having Janus become a partner in his hedge fund. 05/11
Janus Fund (JANSX) Daniel Riff leaves to become sole manager of Janus Long/Short Burt Wilson, who has been with Janus for six years, joins Jonathan Coleman who has co-managed the fund since 2007 05/11
Janus Global Bond (JGBAX) No one but. . . Chris Diaz was added as a third manager 05/11
Janus Global Technology (JAGTX) Barney Wilson Brad Slingerland, who ran the fund with Wilson in 2006-08. He’ll Tweet for you as bradsling. 05/11
Janus Long-Short (JALSX) David Decker whose record is low correlation, high risk, modest returns Daniel Riff, who has been comanaging the fund, will become the sole manager 05/11
John Hancock Greater China Opportunities (JCOAX) No one is going but Kai Kong Chay joined the management team of Terrance Pak Hing Chum, and Ronald Chan. 05/11
JPMorgan Asia Equity (JAEAX Andrew Swan Joshua Tay, Pauline Ng, and new manager Patrick Chiu. 05/11
JPMorgan Asia Equity (JAEAX) No one, but . . . Patrick Chiu joined the management team 08/11
JPMorgan Multi-Sector Income (JSIAX) Jon Jonsson The rest of the portfolio team (Robert Michele and Iain Stealey) are joined by Nicholas Gartside and Matthew Pallai. 04/11
Legg Mason Capital Management All Cap Fund (SPAAX) David Nelson Jay Leopold and Bill Miller remain at this overpriced underperformer. 04/11
Loomis Sayles Global Equity and Income (LGMAX) Mark Baribeau Daniel Fuss, David Rolley, and Warren Koontz 05/11
Loomis Sayles Small Cap Value (LSCRX) Daniel Thelen Joseph Gatz 05/11
Lord Abbott allocation funds, generally A committee The Chairman. Robert Gerber is now the solo manager, in place of a management committee which he formerly chaired. 08/11
MainStay International Equity (MSEAX) Rupal Bhansali Edward Ramos 06/11
Managers AMG FQ Tax-Managed U.S. Equity (MFQAX) Andrew Berkin David Chrisman 06/11
Managers AMG FQ U.S. Equity (FQUAX) Andrew Berkin David Chrisman 06/11
Managers Cadence Capital Appreciation No one, but . . . Robert Ginsberg, formerly of Invesco and Putnam, joined the management team 08/11
Managers Cadence Emerging Companies No one, but . . . Robert Ginsberg joined the management team 08/11
Managers Cadence Focused Growth No one, but . . . Robert Ginsberg joined the management team 08/11
Managers Cadence Mid-Cap No one, but . . . Robert Ginsberg joined the management team 08/11
Marshall Mid-Cap Value (MRVIX) No one goes but . . . Gregory Dirkse and Brian Janowski join Matthew Fahey in running the fund. 04/11
Marsico 21st Century (MXXIX) Cory Gilchrist, who was very optimistic about an economic turnaround Brandon Geisler, who isn’t. 09/11
Marsico Global (MGLBX), Cory Gilchrist James Gendelman and Tom Marsico 09/11
MassMutual Select Diversified International (MMZAX) AllianceBernstein Gerd Woort-Menker, Jeroen Huysinga, and Georgina Perceval Maxwell of JP Morgan 06/11
MassMutual Select Overseas (MOSAX) AllianceBernstein Gerd Woort-Menker, Jeroen Huysinga, and Georgina Perceval Maxwell of JP Morgan will join teams from Harris Associates and MFS. 06/11
MFS International Growth (MGRAX) No one In January 2012, Kevin Dwan joins David Antonelli. No explanation for the unusually long lead time. 07/11
Morgan Stanley Global Strategist (SRTAX) No one Cyril Moullé-Berteaux joins Mark Bavoso 07/11
Morgan Stanley Institutional Balanced (MPBAX) No one Cyril Moullé-Berteaux joins Mark Bavoso 07/11
Nationwide International Value (NWVAX) AllianceBernstein UBS Global Asset Management 06/11
Nuveen Strategy Balanced Allocation (FSGNX), No one, but . . . James Colon joins existing manager David Cline 06/11
Nuveen Strategy Conservative Allocation (FSFIX) No one, but . . . James Colon joins existing manager David Cline 06/11
Nuveen Strategy Growth Allocation (FAGSX) No one, but . . . James Colon joins existing manager David Cline 06/11
Oakmark International Small Cap (OAKEX) No one’s leaving Michael Manelli, an international equities analyst, joined David Herro who has managed the fund since inception. Herro manages three funds and serves as CIO, so this might simply be stress relief. 05/11
Old Mutual TS&W Mid-Cap Value (OTMAX) John Pickler Brett Hawkins 06/11
Oppenheimer Main Street Small & Mid Cap (OPMSX) Benjamin Ram Raymond Anello joins Matthew Ziehl and Raman Vardharaj 05/11
Penn Series Small Cap Value James B. Otness is being phased out by 12/31/11 The rest of the team is going to work just a bit harder. 08/11
PIMCO Emerging Markets Bond (PAEMX) No one, but . . . Ramin Toloui will be joined by Michael Gomez 09/11
PIMCO Global Advantage Strategy (PGSAX) No one, but . . . Andrew Balls was added as co-manager 09/11
Principal SmallCap Blend (PLLAX), Thomas Morabito Brian Pattinson will also join the management team 08/11
Principal SmallCap Growth (PMAAX). Thomas Morabito Brian Pattinson will also join the management team 08/11
Principal SmallCap Value (PSUAX), Thomas Morabito Phil Nordhus and Brian Pattinson 08/11
Quant Small Cap (QBNAX) Matt Williams Robert von Pentz and Rhys Williams 04/11
Rochdale Fixed Income Opportunities (RIMOX) Stefan Pinter, Theodore Stohner, and Maxim Matveev of GML Capital have been added to the teams managing the fund. The other teams are from Seix Investment Advisers and Federated. 06/11
RS Small Cap Growth (RSEGX) Allison Thacker, one of four co-managers Three co-managers remain. Ms. Thacker is leaving to manage Rice University’s $4 billon endowment. 09/11
RS Technology (RSIFX) Allison Thacker Three comanagers remain. Ms. Thacker is leaving to manage Rice University’s $4 billon endowment. 08/11
Russell Emerging Markets (REMAX) T. Rowe Price Delaware Management Company and Victoria 1522 Investments join five other institutional teams already on the fund 05/11
Russell Tax-Managed US Large Cap (RTLAX) Turner Investment Partners (to whom this happens a lot) Sustainable Growth Advisers, which joins four other institutional teams on the fund 05/11
Russell US Quantitative Equity (REQAX) No one . . . Russell decided that four sub-advisers weren’t enough, so they added PanAgora Asset Management 05/11
Russell US Small & Mid Cap (REBSX) Robert Kuharic Jon Eggins 05/11
Schwab Core Equity (SWANX) Vivienne Hsu The rest of the management team remains in place 09/11
Schwab Dividend Equity (SWDSX) Vivienne Hsu The rest of the management team remains in place 09/11
Schwab Premier Equity (SWPSX) Vivienne Hsu, who also chips in on several other “active equity” funds No one yet named, presumably her co-managers will become lead managers 08/11
Sentinel Mid Cap Value (SYVIX) Steinberg Asset Management Effective 08/11, Crow Point Partners – run by some former Evergreen managers – takes over 06/11
Sentinel Mid Cap Value (SYVIX) Steinberg Asset Management Peter DeCaprio and Timothy O’Brien of Crow Point Partners 08/11
SSgA Emerging Markets (SEMSX) Brad Aham, but just until Christmas Co-manager Chris Laine will manage the fund during Brad’s leave of absence. 09/11
T. Rowe Price Africa & Middle East (TRAMX) Joseph Rohm, who left suddenly for South Africa Chris Alderson. 07/11
T. Rowe Price Retirement funds Ned Notzon, long-time lead of Price’s allocation funds, steps down as “co-chairman” of these funds ahead of his year-end retirement. Jerome Clark became the “sole chairman” of the fund on 8/1/11 07/11
TIAA-CREF Bond (TIBDX). Elizabeth Black and Steven Sterman John Cerra remains and is joined by Steven Raab and Joseph Higgins 08/11
TIAA-CREF Enhanced International Equity Index (TFIIX). Ping Wang goes Current co-managers Steve Rossiello and Pablo Mitchell will soldier on without him. 06/11
TIAA-CREF Enhanced Large-Cap Growth Index (TLIIX) Ruxiang Qian Comanager Kevin Zhang goes solo. 06/11
Vice Fund (VICEX) Jeffrey Middleswart Gerry Sullivan, who also manages the quant Industry Leaders fund (ILFIX). GS becomes the fund’s 7th manager in nine years. 07/11
Virtus Multi-Sector Fixed Income (NAMFX) Goodwin Capital Advisers The other subadvisor, Newfleet Asset Management, will take sole control. 06/11
Wasatch Global Opportunities (WAGOX) Robert Gardiner and Blake Walker. Gardiner also runs three small cap funds for Wasatch but his official bio lists this as “his true passion.” Oops. JB Taylor, who manages Wasatch Core Growth, joins Roger Edgely 05/11
Wasatch International Opportunities (WAIOX) Blake Walker Laura Geritz, who runs Wasatch Emerging Markets Small Cap, joins Roger Edgeley 05/11
Wells Fargo Advantage C&B Mid Cap Value (CBMAX) Kermit Eck will leave on Dec. 31, 2011 The rest of the management team remains in place 09/11
Wells Fargo Advantage Intrinsic Small Cap Value (WFSMX) Jeffrey Peck is gone… And apparently didn’t need to be replaced. Given the fund’s long-term weakness, the absence of a new manager suggests either that Wells Fargo is resigned or that they think Mr. Peck was the problem. Owie. 06/11
Wells Fargo Advantage Small Cap Growth (MNSCX) Jerome Philpott and Stuart Roberts Joseph Eberhardy, Thomas Ognar, and Bruce Olson 04/11
Wells Fargo Advantage Small Cap Value (SSMVX) No one, but . . . Erik Astheimer and Michael Schneider were added as co-managers. 09/11
Wells Fargo Advantage Strategic Large Cap Growth (ESGAX) Shannon Reid, David Chow, and Jay Zelko Tom Ognar. I’ve always been fascinated with Ognar’s name. Sounds like a Norse hero. Managed Strong Growth for years, but should have managed one of the old PrinCor funds. You can see him stalking into the feasting hall now and announcing, “I am Ognar of Princor.” 08/11
Winslow Green Growth (WGGFX) Jack Robinson Karina Funk, Elizabeth Levy, and David Powell 09/11

Manager changes, October 2011

By Editor

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Fund Out with the old In with the new Dt
BlackRock Total Return (MAHQX) No one, but . . . Bob Miller joins the fund’s three existing managers. 10/11
Davis Opportunity(RPEAX) No one, but . . . F. Jack Liebau is now listed as manager. 10/11
DWS Latin America Equity (SLANX) Florian Tanzer leaves as co-manager. Robert Kalin joins existing manager, Rainer Vermehren. 10/11
Fairholme (FAIRX) Charlie Fernandez, Bruce’s cousin-in-law Bruce Berkowitz. 10/11
Fairholme Allocation (FAAFX) Charlie Fernandez, Bruce’s neighbor Bruce Berkowitz. 10/11
Fairholme Focused Income (FOCIX) Charlie Fernandez, Bruce’s president Bruce Berkowitz. 10/11
Fidelity Equity-Income (FEQIX) Stephen Petersen: 18 years, $8 billion and it was still a closeted index A three-manager team of James Morrow, Adam Kramer, and Ramona Persaud, with Morrow as lead 10/11
Fidelity Equity-Income II (FEQTX) Stephen Petersen: $4 billion and 2.5 years, same outcome Scott Offen 10/11
Fidelity International Small Cap (FISMX) Noriko Takahashi Nicholas Price, manager of Fido Japan Smaller Companies, will handle the fund’s investments in Japan. 10/11
Goldman Sachs Capital Growth (GSCGX), Concentrated Growth, Flexible Cap Growth and Strategic Growth Fund David Shell is retiring at the end of the year, after managing $21 billion poorly Current portfolio managers from the GSAM growth team. 10/11
Goldman Sachs Capital Growth (GSCGX) Kumar Venkateswaran Current portfolio managers from the GSAM growth team. 10/11
Invesco Global Equity (GTNDX) Ralph Coutant Michael Abata joins the existing management team. 10/11
Invesco Structured Core(SCAUX) Ralph Coutant Michael Abata joins the existing management team. 10/11
Mainstay Global High Income (MGHAX) Howard Booth leaves as co-manager. New co-manager Jakob Bak joins the fund’s three remaining managers. 10/11
MassMutual Premiere Diversified Bond (MDVAX) Jill Fields left as co-manager. Sean Feeley, a member of subadvisor Babson Capital’s high-yield team, was named as a new co-manager. 10/11
Old Mutual Barrow Hanley Value(OAFOX) No one, but . . . Current manager, James Barrow, is joined by co-managers Robert Chambers, Timothy Culler, Mark Giambrone, and J. Ray Nixon Jr. 10/11
Old Mutual Large Cap Growth (OLGBX) Bradley Fretz leaves as co-manager. The rest of the management team remains in place 10/11
Steward Select Bond (SEAKX) Howard Potter leaves as co-manager. Edward Jaroski will join as co-manager with Claude Cody 10/11
T. Rowe Price Africa & Middle East (TRAMX) Chris Alderson, who was temporarily managing after the abrupt departure of Joseph Rohm, mid-2011. Oliver Bell, formerly of Pictet Asset Management 10/11

Forward Endurance Fund

By Editor

Forward Endurance Fund seeks long-term growth by investing, long and short, in a global stock portfolio. Their focus will be “to identify trends that may have large and disruptive impacts on global business markets.” David Readerman and Jim O’Donnell will manage the fund. They recently took over Forward Small Cap as well. Expenses not yet set, $4000 minimum initial investment, reduced to $2000 if you sign up for eDelivery, $500 for accounts with automatic investing plans.

ASTON/Silvercrest Small Cap Fund

By Editor

ASTON/Silvercrest Small Cap Fund The manager is Roger Vogel, Managing Director of Silvercrest and lead portfolio manager for Silvercrest’s small cap value investment strategy. Prior to Silvercrest, he co-managed both small-cap and large-cap portfolios for Credit Suisse. His private account composite has returned 6.4% since inception in 2003, while the Russell 2000 Value returned 4%. For better or worse, most of his advantage comes in a dramatic outperformance in 2008. Expense ratio of 1.41%, minimum initial investment of $2500, reduced to $500 for IRAs.

Ariel International Equity Fund

By Editor

Ariel International Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 developed market stocks outside the US. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

Ariel Global Equity Fund

By Editor

Ariel Global Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 stocks, foreign, domestic and emerging. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

IASG Managed Futures Strategy Fund (“N” shares)

By Editor

IASG Managed Futures Strategy Fund (“N” shares) will seek positive long-term absolute returns. The plan is to invest 75% in fixed income and 25% in a combination of “commodity pools” and ETFs. This has “bad idea” written all over it. The strategy is obscure and depends, largely, on investing in a bunch of actively managed “pooled investment vehicles,” each of which has a manager pursued his own commodity strategy, often derivative based or in ETFs that have price momentum. The fund will be managed by Perry Lynn and JonPaul Jonkheer of IASG Capital Management. $2500 investment minimum, expense ratio not yet set.

Granite Value Fund

By Editor

Granite Value Fund will seek long-term growth by investing globally in about 40 mid- to large-cap stocks. Scott B. Schermerhorn will manage the fund. Expense ratio of 1.35%, $10,000 minimum initial investment, reduced to $5000 for tax-advantaged accounts.