Category Archives: Mutual Fund Commentary

The Most Consistent Winners, 2013-2024

By David Snowball

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 →

Briefly Noted

By TheShadow

Updates

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 →

June 1, 2024

By David Snowball

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.

Continue reading →

To Augustana’s class of 2024: money is not your master

By David Snowball

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 →

Asset Allocation & International Equities, Part I: What is the right percentage allocation?

By Devesh Shah

Introduction: “Can you improve the returns of this endowment portfolio?”

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 →

FPA Queens Road Small Cap Value (QRSVX)

By David Snowball

Objective and strategy

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 →

Fund Family Performance for Equity ETFs

By Charles Lynn Bolin

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 →

Briefly Noted

By TheShadow

Updates

Morningstar expresses concerns with Akre Focus (AKREX).

On March 31, 2024, this portfolio had double-digit stakes in four different stocks … Such hefty positions aren’t the only concerns here, though. The transition from firm founder Chuck Akre to younger managers and analysts has been rocky, featuring several unexpected departures. The investment team currently consists only of manager John Neff and two research analysts.

There has been a serious problem with outflows from the fund, in almost a quarter since Mr. Akre formally separated himself from day-to-day management at the end of December, 2020. Firm assets Continue reading →

May 1, 2024

By David Snowball

Dear friends,

Welcome to the May issue of Mutual Fund Observer. We’re glad you’re here.

May marks the end of my 40th year of teaching at Augustana College. (And no, they’re not free of me yet. I’m back again in the fall!) It’s an amazing place that has grown a lot over the course of my career. We were founded in 1860 by educated immigrant parents who were anxious to preserve the traditions of their (Scandinavian) homelands while Continue reading →

The Quality Anomaly

By David Snowball

There’s so much we can’t explain:

What’s the universe made of? (Hint: it doesn’t actually seem to be “matter and energy”)

What lives in the ocean’s “twilight zone”? (“It’s remote. It’s deep. It’s dark. It’s elusive. It’s temperamental,” according to Woods Hole … perhaps the most mysterious and vital space on the planet)

What killed Venus? (The planet, not the goddess. Best guess is that it Continue reading →

Briefly Noted

By TheShadow

Fidelity Investments is planning to charge a $100 servicing fee when placing buy orders on exchange-traded funds issued by nine firms. The new servicing charge, which may be imposed on ETFs issued by Simplify Asset Management, AXS Investments, Day Hagan, Sterling Capital, Cambiar, Regents Park, Rayliant, Adaptive, and Running Oak, is set to take effect on June 3. The new fee will apply to ETFs that do not participate in a maintenance arrangement with Fidelity.  Fidelity may update its “Surcharge-Eligible ETF” list again.    

Poster Rforno noted that Calamos Investments LLC announced the launch of 12 structured protection exchange-traded funds which seek to provide 100% protection and equity upside to a predetermined cap over one-year outcome periods (before fees and expenses). The ETFs are Continue reading →

April 1, 2024

By David Snowball

Dear friends,

It’s April. I spent much of the Easter weekend wearing a t-shirt out to work in the gardens. It was glorious. Today, the forecast is for hail. Tomorrow? Snow.

Next week? Oh, I don’t know … dragon fire?

And still, it behooves us to be grateful for what we have. The world’s most corrosive force is not greed. It’s envy, which is driven by the sense that what we have just isn’t enough, and bitterness that others have more. That’s a theme that Charlie Munger reflected on repeatedly: “I have conquered envy in my own life. I don’t Continue reading →

Funds For Long-Term Tax-Efficient Investment (VTCLX, DGRW)

By Charles Lynn Bolin

It’s a good practice to take a thorough review annually of investment performance including fees and taxes. A dual-income household may accumulate a half dozen or more accounts because of tax characteristics, ownership, and goals. A good way to start is to list the accounts in order of planned withdrawals. The next step is to make sure that each account has the appropriate amount of risk and that the assets within are tax-efficient for the type of account. I am in the process of converting Traditional IRAs to Roth IRAs and the conversion is taxed as ordinary income. Municipal Bonds are included in Modified Adjusted Gross Income and may impact Continue reading →

Options Based Funds – a deeper dive

By Devesh Shah

Introduction:

In the March 2024 MFO, I introduced the two main developments in Options in recent years.

Zero-Day Options and Options-Based Funds. We learnt about the history of options, the market players involved and benefitting from Options, and started getting deeper into the Funds.

In April MFO, through the 2nd and 3rd articles in the series, I hope to Continue reading →

The Options Conundrum: Fund Comparisons, Performance, and Risk

By Devesh Shah

Having looked at the qualitative rationale for why options-based funds are offered by fund managers and sought by some investors, it behooves us to quantitatively analyze options funds’ performance. There is no ONE BENCHMARK that can be used to compare ALL the options funds. That may be a good thing. It’s made me think of what a good way to create a customized benchmark for each fund might look like. The benefit of keeping things focused on the small picture is we can look at one fund at a time, in detail, without drawing too Continue reading →

Mystery Solved: Fidelity Actively Managed ETFs (FMIL >= FFLC)

By Charles Lynn Bolin

I wrote Outperforming Actively Managed ETFs last month in the Mutual Fund Observer Newsletter and described Fidelity New Millenium Fund (FMIL) in my “Short List of Great Owl Funds”, but before the newsletter was published, FMIL just up and disappeared! Several members brought it up in the Discussion Board – FMIL Confusion. Fortunately, Charles Boccadoro has solved the mystery by finding “Q&A: Fidelity to Introduce Fundamental Active ETF Suite”.

Fidelity New Millennium ETF (FMIL) has gotten Continue reading →

March 1, 2024

By David Snowball

Dear friends,

In like a lion, out like a lamb? The Total Stock Market Index has risen 12% in the past three months, as has the S&P 500. Nvidia stock is up 76% in the same period while semiconductor stocks inched up … 48%.

The thermometer in Davenport today topped 76 degrees, just a bit warm for a late winter day. We heard that participants in the March 1st Polar Plunges at locations across the upper Midwest had to be Continue reading →