Category Archives: Mutual Fund Commentary

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 →

What I’m Thinking

By Charles Lynn Bolin

I put some thought into the following paragraph.  It is not gloom and doom, nor does it paint a rosy picture. 

New cases of COVID-19 in the U.S. have stabilized at 25 thousand cases and 2,000 deaths on a daily basis which, if not improved soon, are terrifying numbers. 

Worldwide, 81% of the closed cases are due Continue reading →

Elevator Talk: Eric Cinnamond and Jayme Wiggins, Palm Valley Capital Fund (PVCMX)

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200-word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more.

Continue reading →

Launch Alert: Grandeur Peak US Stalwarts Institutional (GUSYX)

By David Snowball

On March 19, 2020, Grandeur Peak launched the U.S. Stalwarts (GUSYX) fund, the third of their “alumni funds.” U.S. Stalwarts will invest primarily in U.S. companies with market caps at the time of purchase of $1.5 billion or more. The fund’s first portfolio disclosure reflects those emphases: 84% US and 75% mid- to large-cap stocks.

Grandeur Peak, founded in 2011 by emigres from Wasatch Advisers which is located four miles down Continue reading →

Launch Alert: Matthews Asia Emerging Markets Equity (MEGMX/MIEFX)

By David Snowball

On April 30, Matthews Asia launched its Emerging Markets Equity Fund. In parsing the name, please note that “Asia” modifies “Matthews,” rather than “Emerging Markets.” That is, this will be the first global equity fund in the Matthews lineup. While this is not the first time that Matthews has considered a fund with global reach (Mr. Matthews and Andrew Foster discussed it a decade ago), this is the first time that the Matthews strategy map encompasses the whole Continue reading →

Funds in Registration

By David Snowball

The Securities and Exchange Commission, by law, gets between 60 and 75 days to review proposed new funds before they can be offered for sale to the public. Each month, Funds in Registration gives you a peek into the new product pipeline. Most funds currently in registration are in a scramble to launch by June 30th with the hope that having a “standard reporting period” to share with investors sooner. Continue reading →

Briefly Noted

By David Snowball

Updates

Chicago Equity Partners Balanced (MBEAX) no more. MBEAX has been a splendid performer that mixed high-quality, larger US stocks (93% mid- to mega-cap) with investment-grade bonds (99.5% BBB or above, at last reading). Effective April 17, 202, it became the AMG GW&K Global Allocation Fund (MBEAX) with a new name, new team, and new discipline. The portfolio shifts from domestic to global in both its equity and bond sleeves.

Investors should treat this as Continue reading →

April 1, 2020

By David Snowball

Dear friends,

When I say, “I hope you’re well,” it’s far more than an opening formality.

Did you blink?

If so, you missed it. The Great Bull Market of 2020. In perhaps the shortest-lived bull market in history, the DJIA rebounded by over 21.4% in three days after The (First) Bear Market of 2020. The latter growled from 19 February – 23 March, while the latter charged from 23 – 26 March after which we had a sharp down, a sharp up, a wimpy down and Continue reading →