Category Archives: Mutual Fund Commentary

July 1, 2020

By David Snowball

Dear friends,

Welcome to the summer of our discontent.

I admit to being a bit distracted this month. My son, Will, was exposed last week to an individual who subsequently tested posted for the coronavirus. Neither she nor he was… uh, optimally cautious during their interaction and she’s subsequently fallen ill. We promptly sought a test from the State of Iowa’s preferred provider, only to learn that they couldn’t see him for four days and weren’t sure how quickly they’d have results. We turned, instead, to our local hospital which administered the test immediately, promising the results “in two to three days.” Four days later, we’ve been told that actually means Continue reading →

Behind the Curtains – Building A Ranking System

By Charles Lynn Bolin

It has taken me nearly two decades to unlearn what I thought I had learned during my first two decades of investing. I started studying business cycles about 15 years ago which helps me determine how aggressive or defensive I want to be based on risks and trends in the economy and investment environment. This month, I describe how to create a Ranking System that requires about one or two hours per month to update and evaluate funds. The May results and composition of the Model Portfolios can be found in Continue reading →

Launch Alert: Driehaus Small/Mid Cap Growth Fund

By David Snowball

On May 1, 2020, Driehaus Capital Management launched Driehaus Small/Mid Cap Growth Fund (DSMDX).

The Fund is managed by Jeff James and Michael Buck, along with assistant portfolio manager Prakash Vijayan. The fund uses the same strategy used since 2012 for Driehaus Small/Mid Cap Growth separately managed account clients. Messrs. James, Buck, and Vijayan also Continue reading →

Briefly Noted . . .

By David Snowball

Effective on October 1, 2020, all of the Alpha Architect funds will transition from index funds to actively-managed ones, though the change will likely be undetectable to investors since “the adviser’s methodology will be substantially unchanged from the current approach it uses.” The funds in question are

  • Alpha Architect U.S. Quantitative Value ETF (QVAL)
  • Alpha Architect International Quantitative Value ETF (IVAL)
  • Alpha Architect U.S. Quantitative Momentum ETF (QMOM)
  • Alpha Architect International Quantitative Momentum ETF (IMOM)
  • Alpha Architect Value Momentum Trend ETF (VMOT).

On June 30, Trillium Asset Management was Continue reading →

June 1, 2020

By David Snowball

Dear friends,

Welcome to summer.

All of us hope that it’s not going to be a long, hot one.

Some months it’s easy to write a welcome note, some months not. This is one of those latter times. Over the night just passed there were ongoing instances of “civil unrest” (the police chief’s term) with a caravan of 100 cars proceeding from one shopping plaza to the next. Four people – including a police officer simply driving his car – were shot; two, not including the officer, died. Many of the caravanning cars bore Minnesota plates. That followed a Continue reading →

Rules Based Investing – Rule #6 Develop a Simple Investment Process Based on Rules and Guidelines

By Charles Lynn Bolin

Wow! What a year it has been so far! Coronavirus is at the top of the list. For me personally, there was a diagnosis, uncertainty, denial, surgery, and then recovery. After recovery, I took an assignment involving significant travel with less time to spend researching and investing for a couple of months followed by lots of free time. These two life events did not impact how I invest as much as the last rule, to “Develop a Simple Investment Process Based on Rules and Guidelines”. First, I wanted portfolios that were stable enough that I would be comfortable holding them unattended for months at a time during a bear market. For this reason, I created three relatively simple model portfolios that I follow with Continue reading →

The Mice that Roared: How Two Small Funds Threaten to Disrupt Two Large Industries

By David Snowball

On May 15, 2020, an unassuming filing with revolutionary potential appeared in the Securities and Exchange Commission’s EDGAR database. It was an N-1A, initial prospectus, filing for two ETFs: SmartETFs Dividend Builder ETF and SmartETFs Asia Pacific Dividend Builder ETF. Both unremarkably offered “to provide investors with dividend income and long-term capital growth.”

The real news appeared on Continue reading →

Launch Alert: ClearBridge Focus Value ETF (CFCV)

By David Snowball

On May 27, 2020, ClearBridge Investments launched ClearBridge Focus Value ETF (CFCV), one of the first active, non-transparent ETFs launched under the so-called Precidian protocol.

Precidian Investments, like ClearBridge, is an affiliate of Legg Mason. Legg paid $25 million in January 2020 to acquire the majority ownership of Precidian. It had been a minority owner since 2016. Precidian received approval from the SEC for a process that allows fund managers to evade the traditional ETF rule requiring constant, real-time portfolio transparency. Precidian now licenses its “technologies” to other advisers, allowing them to offer active funds with limited portfolio visibility.

ClearBridge Investments, a 50-year-old firm, manages $120 billion in assets. It merged in 2013 with Legg Mason Capital Management. Each of Legg’s nine affiliates managers – including Royce and Brandywine – maintains its investment autonomy while Legg handles marketing and distribution.

Sometime in the third quarter of 2020, Franklin Resources will complete Continue reading →

Launch Alert: Jensen Global Quality Growth

By David Snowball

On April 15, 2020, Jensen Investment Management launched the Jensen Global Quality Growth Fund (JGQSX).  This new fund is a global version of Jensen Quality Growth: the same discipline, same managers. Jensen Quality Growth Fund (JENSX) is, at least from the perspective of those who look at long-term accomplishments, one of the best domestic large-cap core funds in existence.

What do they do? Continue reading →

Briefly Noted

By David Snowball

Updates

Index Funds S&P 500 Equal Weight NoLoad Fund (INDEX, cool ticker) passed its fifth anniversary on April 30, 2020. It’s no secret that traditional US stock indexes are becoming more and more concentrated in just a few mega-cap names. Ten percent of the S&P 500 is invested in just two stocks (Microsoft and Apple) and 20% of the entire index is held in five stocks (adding Amazon, Facebook, and Alphabet). That’s great if you want concentrated exposure, in particular to mega-cap tech.

There’s an alternative: place an equal amount in each of the S&P 500 stocks. In INDEX, for example, Apple is 0.21% of the portfolio rather than 5.09%. The resulting portfolio is Continue reading →

May 3, 2020

By David Snowball

It’s May.

Welcome to the Mutual Fund Observer’s ninth anniversary edition. When we first launched in 2011, Chip cautiously observed that the average independent website had a six-week lifespan and a median visitor of … one.

We appear to have beaten the averages by 462 weeks and 1,812,027 readers.

Our decade of readership looks remarkably like the rhythm Continue reading →

The Young Investor’s Baptism by Fire: 2020 and the market beyond

By David Snowball

“As for me, I baptize you with water for repentance, but He who is coming after me is mightier than I, and I am not fit to remove His sandals; He will baptize you with the Holy Spirit and fire.” Matthew 3:11

“Making far more than a single statement, Cantigny was the doughboys’ baptism by fire, and for those who survived, it became the crucible by which they would measure all subsequent experience, in large-scale fighting at Soissons and the grand Meuse-Argonne offensive … May 28, 1918, was the US military’s coming-of-age—the day it crossed a historical no-man’s-land that separated contemporary fighting methods from the muskets and cannon of the nineteenth century. Continue reading →

Rules Based Investing – Rule #5 Understand the Impact of Taxes on Investments

By Charles Lynn Bolin

Matthew Kenigsberg, Vice President of Investment & Tax Solutions at Fidelity Investments, summarizes the benefits of managing the impact of taxes on investments well in “Are you invested in the right kind of accounts?”

“You can’t control market returns, and you can’t control tax law, but you can control how you use accounts that offer tax advantages—and good decisions about their use can add significantly to your bottom line…” Continue reading →

What I’m thinking

By Chip

I’m so grateful to have stable employment in a position that allowed me to – quickly and fairly painlessly – pivot to a work from home model. I have not yet encountered a task that couldn’t be completed remotely. As a matter of fact, I think I’m being more productive than ever, as we puzzle through various scenarios for offering community college classes over the summer and into the fall semester.

I find my emotions Continue reading →