Category Archives: Mutual Fund Commentary

February 1, 2026

By David Snowball

Welcome to the February issue of Mutual Fund Observer.

We’re glad you’re here.

I’ve always been fascinated by the interplay of climate and culture, the way that our physical world seeps deep into our cultural bones. After years of The News from Lake Wobegon, Minnesota, gained an almost mythical spot in my vision of people in winter. For those of you who haven’t visited, the temps in Minneapolis hit -21 degrees Fahrenheit in January, and the force of the wind deducted another 30 degrees from that total. That’s low enough that Continue reading →

The One Uncorrelated Portfolio to Rule Them All by Slaying Inflation and Market Corrections

By Charles Lynn Bolin

Perhaps you may be amused by the similarities of this article, where I search through hundreds of alternative funds to slay the dragons of inflation and market corrections and the delusions of Don Quixote de la Mancha, who set out on misadventures for chivalry. I am not ready to denounce alternatives as foolish fiction, as Don Quixote denounced chivalry before dying.

Don Quixote and Sancho Panza going to the wedding Gamaches (1850) by Honore Daumier Source: Artchive

For this article, I created the Grins and Giggles Portfolio with the objective to minimize the correlation between the funds for the past six years. I follow this up with the Last Laugh Portfolio Continue reading →

Quality Worked in 2025. And Failed Spectacularly

By David Snowball

Quality investing delivered one of its worst years on record in 2025. Except when it didn’t. Some quality funds posted top-quintile returns while many languished at the bottom, a divergence so dramatic it demands explanation. The story isn’t that quality failed; it’s that the market split quality investors into winners and losers based on a single tactical choice.

“Quality” funds in 2025

87 funds and ETFs have “quality” as part of their name; 60 of those 87 funds trailed their peers in 2025. Most funds that pursue “quality” Continue reading →

Perpetual Motion Income Machine

By Charles Lynn Bolin

I skimmed through a couple of books for this article about income, searching for ideas. They tend to be very general, tell the reader how to get rich, or focus on risky investments like stocks and real estate investment trusts (REITs). Exchange-traded funds that invest in REITs averaged drawdowns of 38% during the past six years, while the S&P 500 had a drawdown of 24%. Ouch! I have a different perspective on income. Funds should have a high reward for the risk taken. The book that I related to the most was Income Factory – How You Can Live Off Your Dividends in the Future: Grow Your Income with Dividend Growth and Income Strategies (2025) by Sebastian Johnen, because Continue reading →

A Letter to Layla

By David Snowball

Hi, Layla.

Chip and I are grateful for the help you’ve given us in learning to be a bit more physically fit, and we were delighted to hear that you were interested in learning a bit about … umm, financial fitness. I know it seems confusing and infinitely complex.

It isn’t. Really, you just need to have a bit of faith, a bit of discipline, and Continue reading →

The Indolent Portfolio, 2025

By David Snowball

A tradition dating back to the days of FundAlarm was to annually share our portfolios, and reflections on them, with you. My portfolio, indolent in design and execution, makes for fearfully dull reading. That is its primary charm.

This is not a “here’s what you should own” exercise, much less an “envy me!” one. Instead, it’s a “here’s how I think. Perhaps it will help you do likewise?” exercise. Continue reading →

Briefly Noted

By TheShadow

Updates

The Last Titan departs: Fidelity’s last great star manager, Will Danoff, is preparing to leave the stage after nearly four decades at the firm and 35 years at the helm of Fidelity Contrafund, with his retirement slated for the end of 2026.

We have long argued that Fidelity in the 21st century had a great many good managers but only two transcendent ones: Joel Tillinghast at Low-Priced Stock and Will Danoff at Contrafund. They both had the ability to Continue reading →

January 1, 2026

By David Snowball

Welcome to the New Year’s issue of the Mutual Fund Observer. We’re glad you’re here.

Heraclitus, the famously elusive Greek philosopher, reminded his students that you cannot step into the same river twice. Both we and the river will have changed. According to legend, one of those students – snarky little barstid – replied: “I don’t think you can step into the same river once.” Even as we step, the river flows and changes.

As do we. Continue reading →

A Closer Look at Income Strategy

By Charles Lynn Bolin

For most accounts, my primary investing objective is risk-adjusted return with dividends reinvested. I have set up automated withdrawals to transfer money from a conservative Traditional IRA (Core TIRA) in the Intermediate Investment Bucket to the Short-Term Investment Bucket. Having a steady income just took on a higher priority.

In this article, I look at how historical distributions fluctuate according to either the interest rate cycle or the stock market cycle, along with Continue reading →

New Year’s Resolution #1: Don’t underwrite lobotomies

By David Snowball

Ninety years ago, emergent science and a self-assured entrepreneur came together to offer a quick and cheap solution to an intractable problem.

The press loved it. The public became enamored, and demanded more and more of it. The Nobel committee awarded a Prize for it.

It seemed like a good idea at the time.

It always does. Continue reading →

What Five AIs Told Me About 2026’s Best Investment

By David Snowball

And what their answers tell you.

In mid-December 2025, I asked five AI systems – ChatGPT, Claude, DeepSeek, Grok, Perplexity – the same deliberately unfair question: “given current market condition and historic patterns, what is likely to be the highest returning asset class available to US investors in 2026?” The question is unfair because nobody can know that until 2027, and because it ignores all of the important stuff, information about the investor’s horizon, needs, and temperament, which is vastly more important than raw returns information.

Every system rushed to answer rather than Continue reading →

AI and MFO

By David Snowball

Since our January 2026 issue has two distinct, cautionary essays on the incursion of artificial intelligence chatbots into our lives, schools, and portfolios, it’s important for you to understand the role of AI at MFO.

Every single article is conceived and written by one of three human beings: Snowball, Lynn Bolin, or The Shadow. All of them are reviewed, cleaned, edited (and occasionally snickered at) by one of two human beings: Raychelle and Chip. Whether the argument or the writing is sublime or execrable, it’s human. Continue reading →

My 2026 Investment Plan

By Charles Lynn Bolin

I recently automated withdrawals from one conservative Traditional IRA (Core TIRA) into my short-term investment bucket for basic spending needs and emergencies. Previously, I automated withdrawals from a more aggressive Traditional IRA for longer-term discretionary spending needs. This exercise increased my focus on income. I just added Janus Henderson AAA CLO ETF (JAAA) to my Core TIRA sub-portfolio as a lower-risk income fund rather than to pursue higher returns.

The Core TIRA is conservate Traditional IRA, within the Intermediate Investment Bucket, that is intended to have long-term returns of Continue reading →

Briefly Noted…

By TheShadow

Updates

Star manager Tiffany Hsiao returned to Matthews Asia in mid-November after a stint managing a private fund for Artisan Partners. In mid-December, she was joined by two members of her team from Artisan. It does not appear that she’ll be responsible for individual funds just now but will, instead, work with Mark Headley and the existing Matthews managers “to generate new perspectives and insights across portfolios.” This is unalloyedly good news for Matthews investors, and Continue reading →

December 1, 2025

By David Snowball

Dear friends,

Welcome to the December Mutual Fund Observer, and to the holiday season.

The Christmas of the early American republic would be barely recognizable to us. In many colonies, it was a workday, ignored or mistrusted; only some immigrant communities treated it as a true festival. You’ll remember the Christmas of Continue reading →

As The World Turns…

By Charles Lynn Bolin

Setting aside uncertainty this year over tariffs, affordability, a slowing economy, high stock market valuations, and government shutdowns, this article is focused on the long-term risk of the next financial crisis. I am not worried about a gloom and doom scenario.  I do want to have a portion of my overall portfolio prepared for another financial crisis or currency devaluation, whether it is associated with the next bear market or one after that.

This Time Is Different – Eight Centuries of Financial Folly (2009) by Carmen M. Reinhart and Kenneth S. Rogoff covers debt cycles and financial crises: Continue reading →

The Kids are Alright

By David Snowball

MFO’s founding mission is to “write for the benefit of intellectually curious, serious investors— managers, advisers, and individuals—who need to go beyond marketing fluff, beyond computer-generated recommendations and beyond Morningstar’s coverage universe.” But one of our core precepts is “80% of all existing funds could disappear today with no loss to anyone, except possibly the managers who have to explain it to their spouses.” The goodriddance group includes two overlapping sorts of idiocy: (1) many are launched Continue reading →

Launch Alert: GMO Domestic Resilience ETF

By David Snowball

On October 1, 2025, GMO launched the GMO Domestic Resilience ETF (DRES), bringing the firm’s time-tested quality-focused investment discipline to a distinctly contemporary challenge: identifying companies positioned to benefit as manufacturing, defense production, and critical supply chains return to U.S. soil. DRES represents GMO’s bet that reshoring and nearshoring—the movement of production capacity back onshore or to nearby allies—constitutes more than political theater or a temporary supply-chain correction. The fund targets sectors at the heart of this shift: Continue reading →