On May 17, 2024, Otter Creek Advisors launched the Otter Creek Focus Strategy ETF (OCFS). In doing so, they are providing an existing separately managed account strategy which launched on May 29, 2020, as an ETF. Otter Creek was founded in 1991 to manage a long/short hedge fund and, in 2013, launched a long/short mutual fund. That four-star fund Continue reading →
I celebrated my 69th birthday last month and will just be reaching my prime next year. I volunteer at Habitat For Humanity two days per week building homes for those that might not otherwise be able to afford them. I have been greatly influenced by the wisdom of the now elders in finance. My friend Dave Hogle and I used to take a three-hour drive to the nearest Costco and discuss Continue reading →
I love a good mystery. WPG Partners Select Hedged is one. It is live, tracked by Morningstar, and available through Schwab, but appears on neither the Boston Partners nor WPG websites. Here’s what to know.
On May 31, 2024, Boston Partners launched WPG Partners Select Hedged, a long/short small-cap fund from its WPG Partners subsidiary. Boston Partners manages Continue reading →
“Bits and Pieces” is a collection of things that I have learned over the past few months. David Snowball suggested that I write articles about transitioning into retirement. This “Bits and Pieces” article contains a few Continue reading →
“Rest is not idleness, and to lie sometimes on the grass under trees on a summer’s day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.” John Lubbock, The Use Of Life (1896)
I’ve let my brain disconnect from the urgent events of the day (month, season, year …) a bit, and gave it rein to go where Continue reading →
As of July 19, 2024, the Amplify High Income ETF went from passively tracking an index of the top 45 US closed-end funds to tracking the top 60.
The US Securities and Exchange Commission reserves the right to study any proposed fund offering for 70 days before the adviser is permitted to offer the fund for sale to the public. During that time, (a) the SEC might require substantive or editorial changes to the fund’s prospectus and (b) the adviser is permitted to Continue reading →
On July 10, 2024 – T. Rowe Price launched T. Rowe Price Intermediate Municipal Income ETF (TAXE), an actively managed ETF. Price has 16 other ETFs, including semi-transparent and transparent equity and income funds but this is the first that does not directly mirror an existing fund.
The fund is co-managed by James Lynch and Charlie Hill, who collectively have 53 years of investment experience, and have served Continue reading →
Dear friends,
Welcome to Really, Really Summer … and to the July issue of Mutual Fund Observer.
Summertime is an especially blessed and cursed interval for those of us who teach. On the one hand, we’re mostly freed from the day-to-day obligation to be in the classroom. Some of us write, some travel, and some undertake “such other duties as may from time to time be assigned” by our colleges. On the other hand, we hear the clock ticking. All year long, as we try to face down a stack of 32 variably literate essays at 11 p.m. Sunday night, we think “If I can just make it to summer, I’ll Continue reading →
Morningstar held its annual investment conference [Morningstar Investment Conference US (MICUS) 2024] last week in Chicago, on 26 and 27 June. It employed a new venue and conference schedule: The Navy Pier and a chock-full, two-day agenda. The 292-foot-wide Pier, which opened originally in 1916, and was “built by the city for the people, is the largest in the world, projecting east 3,040 feet into Lake Michigan. It remains the longest public pier in the world today.”
The occasion also Continue reading →
Briefly brilliant performance isn’t all the tough. It requires rather more luck the skill and it can be wildly profitable for the adviser, though deadly for the investors. ARK Innovation ETF is, of course, the current poster child for boom-then-bust. The fund posted triple-digit returns in 2020, saw its assets explode then promptly (and predictably) crashed. Anyone who bought five years ago and has devoutly held on has lost 1% annually and has trailed 99.9% of all similar investors. Those who bought at the peak three years ago have clocked annual Continue reading →
No liquidations, no mergers, and 100% of funds posted above-average returns. Of the 68 firms with a 100% 10-year success rate, 41 also have a perfect five-year record.
| Firm Success Ratio 10-Year | Firm Success Ratio 5-Year | # of funds | |
| Appleseed | 100 | 100 | 1 |
| Auer | 100 | 100 | 1 |
| Bretton Fund | 100 | 100 | 1 |
| Caldwell & Orkin | 100 | 100 | 1 |
| Cantor Fitzgerald | 100 | 100 | 2 |
| Changing Parameters | 100 | 100 | 1 |
| Channel Investment Partners | 100 | 100 | 1 |
| Clark Fork | 100 | 100 | 1 |
| Cook & Bynum Capital | 100 | 100 | 1 |
| Disciplined Growth Investors (DGI) | 100 | 100 | 1 |
| Dodge & Cox | 100 | 100 | 6 |
| Equity Investment | 100 | 100 | 1 |
| First Foundation | 100 | 100 | 2 |
| Freedom | 100 | 100 | 1 |
| Hamlin Capital Management | 100 | 100 | 1 |
| Hillman | 100 | 100 | 1 |
| Hood River Capital Management | 100 | 100 | 1 |
| Investment House | 100 | 100 | 1 |
| Ironclad Funds | 100 | 100 | 1 |
| Kopernik | 100 | 100 | 2 |
| Lyrical Partners | 100 | 100 | 1 |
| MainGate Funds | 100 | 100 | 1 |
| Matisse Funds | 100 | 100 | 1 |
| Meehan Focus | 100 | 100 | 1 |
| Moncapfund | 100 | 100 | 1 |
| Needham | 100 | 100 | 3 |
| New Alternatives | 100 | 100 | 1 |
| OCM | 100 | 100 | 1 |
| Otter Creek | 100 | 100 | 1 |
| Payson | 100 | 100 | 1 |
| Performance Trust Asset Management | 100 | 100 | 3 |
| Port Street Investments | 100 | 100 | 1 |
| Private Capital Management | 100 | 100 | 1 |
| Seafarer | 100 | 100 | 1 |
| Smead | 100 | 100 | 2 |
| Sound Shore | 100 | 100 | 1 |
| Sparrow | 100 | 100 | 1 |
| Stringer Asset Management | 100 | 100 | 1 |
| Teberg | 100 | 100 | 1 |
| Terra Firma Asset Management | 100 | 100 | 1 |
| Vericimetry | 100 | 100 | 1 |
Inevitably some of the 10-year winners have tailed off more recently. It’s reassuring that only 17 of 68 funds (25%) have tailed off badly, with fewer than half of their 10-year funds still thriving.
| Firm Success Ratio 10-Year | Firm Success Ratio 5-Year | |
| Fuller & Thaler | 100 | 83 |
| WCM Investment Management | 100 | 75 |
| Bridge Builder | 100 | 75 |
| Grandeur Peak | 100 | 71 |
| Trillium | 100 | 50 |
| Prospector | 100 | 50 |
| Medalist Partner | 100 | 50 |
| Jensen | 100 | 50 |
| Campbell & Company | 100 | 33 |
| Oakhurst | 100 | 25 |
| Swan Wealth Advisors | 100 | 20 |
| YCG FUNDS | 100 | 0 |
| Reaves | 100 | 0 |
| Polen Capital | 100 | 0 |
| Polaris Capital Management | 100 | 0 |
| MP 63 | 100 | 0 |
| MAI | 100 | 0 |
| Long Short | 100 | 0 |
| Lisanti Capital Growth | 100 | 0 |
| JAG Capital Management | 100 | 0 |
| EIP Funds | 100 | 0 |
| Edgewood | 100 | 0 |
| Copley | 100 | 0 |
| Conestoga | 100 | 0 |
| Clifford Capital | 100 | 0 |
| BBW Capital | 100 | 0 |
| Akre | 100 | 0 |
My largest holding by far is an actively managed, total stock market fund of funds with a tilt toward large-cap growth stocks. According to multpl.com, the Price-to-earnings ratio of the S&P 500 is 28.5 which is 50% higher than the average of 19.8 since 1970 and higher than 80% of the years since 1970. Table #1 shows the price-to-earnings ratio of Vanguard sectors and style exchange-traded funds. While most sectors are Continue reading →
Sometimes I wish I lived in Theory. In Theory, investing is such a reasonable, predictable activity. Theoretical Investors know that they’re buying pieces of a company’s future earnings stream. And, being rational, they know that they’re better off buying $1 worth of future earnings for $0.60 rather than for $0.90. In Theory, investors will logically and smoothly migrate from high-cost providers to low-cost providers of an earnings stream.
In Theory, if investors Continue reading →
Our colleague Devesh Shah has been in search of a reason to have any direct international exposure. That is, for an answer to the question, “Why should I invest one cent in an international equity fund?” He notes that the default for many endowment portfolios is 18% international, but that – over the course of the 21st century so far – the actual efficient frontier portfolio held only 5% international equity.
International stocks are 40% of the total global capitalization. They are Continue reading →
Effective June 3, 2024, David Baron and Michael Baron became Co-Presidents of Baron WealthBuilder Funds and of Baron Asset Management. Ron Baron remains Chairman, CEO, and Portfolio Manager.
On or about August 28, 2024, IQ Winslow Large Cap Growth ETF and IQ Winslow Focused Large Cap Growth ETF will change from semi-transparent active ETFs to fully transparent active ETFs which will publicly disclose all of its actual portfolio holdings on a daily basis. Continue reading →
Dear friends,
It’s been a whirlwind month for us. In just about 30 days, I got married (waves to Chip!), finished my 68th trip around the big ball o’ fire in the sky, bade farewell to my 40th group of seniors (just a heads up, world. They’re coming for you!), visited with the managers from FPA (really, if you put Mr. Scruggs in a cardigan he’d totally rock the Mr. Rogers’ look), watched the Dow hit 40,000 and visited my brothers and sisters in Pittsburgh for the first time in two years.
Hi, guys.
You made it. You survived Covid and being kicked off campus midway through spring of your freshman year. You survived a year of Zoom. You survived that weird casserole the dining commons kept serving. You survived me. And, at the end of it, you were standing together, laughing and glowing. We’re incredibly proud of you and hopeful for the good you can do in the world.
I’ve never aspired to deliver a “last lecture” for graduates, but you might consider Continue reading →
In late 2022, I became a trustee of a private school endowment and was asked to join the investment committee. The committee consisted of a dedicated group of trustees with prudent investment sense. Although there were no permanent employees to manage the investment, a number of decisions had made the job manageable. The endowment worked with a sharp financial fiduciary who advised and then carried out the committee’s decisions.
Broadly speaking, the endowment had followed David Swensen’s Yale public model. Market timing and stock picking were completely avoided. Asset Allocation, Continue reading →
The fund seeks capital appreciation by investing in the stocks or preferred shares of U.S. small-cap companies. The manager pursues a sort of “quality value” strategy: he seeks high-quality firms (strong balance sheets and strong management teams) whose stocks are undervalued (based, initially, on price/earnings and price-to-cash flow metrics). Because it is willing to hold companies as their market cap rises, the portfolio has about 9% invested in mid-cap stocks that it bought when they were small caps.
In general the portfolio holds Continue reading →
I went on a Bucket List Adventure to Yellowstone National Park last month and stayed at the historic Old Faithful Inn built in 1904. We saw the geysers, the Grand Canyon of Yellowstone with its beautiful falls, majestic bison with their calves, powerful grizzly bears with their cubs, and a coyote crossing through a congested intersection without concern for the traffic.
The other adventure that I went on last month was to take a deeper dive into “Fund Family” performance for exchange-traded funds that invest in domestic equities, global and international equities, and emerging market equities. The concept is Continue reading →
