It’s no secret that the consuming passion of fixed income investors is “the search for yield.” The Financial Times offered a nice snapshot of the problem; here is the income available (the yield) from the super-safe benchmark 10-year Treasury bonds Continue reading →
In a peculiarly peculiar move, Praxis Small Cap (MMSCX) is becoming Praxis Small Cap Index Fund. Praxis might, charitably, be described as “bad” (its five-year record trails its peers by 600 basis points annually) and “expensive” (1.68% with a 5.25% sales load). In an attempt to be less “bad,” they’re giving up active management but remaining expensive (1.13% with a 5.25% sales load). Here’s advice to prospective providers of index funds: if you can’t make it cheap, you’re going to lose. Praxis is attempting to dodge that ugly truth by being not-quite-an-index funds: its benchmark is the S&P SmallCap 600 but “the Fund seeks to avoid companies that are deemed inconsistent with the stewardship investing core values. In addition, the Adviser uses optimization techniques to Continue reading →
Dear friends,
I walked along today, kicking leaves, marveling at the maples, crunching through my last Golden Russet apple and wondering at the tension between local delight and global despair. Things are good in my life. My classes are full and my students are … hmmm, fascinating in a “bright but so very different from what I recall” way. My son just earned his driver’s license and I bought him a respectable used car. I harvested my first-ever potato crop and the last of my carrots and onions, so roasted root veggies are on the menu this week. I’m happy.
The world beyond mine is less happy. Weather forecasters report that Continue reading →
Technically, 10,315,656 miles high.
The IMF reported in October that global debt, government, corporate and individual, is now $152 trillion. (That’s $152 followed by 000,000,000,000.) That’s historically high, both in absolute terms and relative to global GDP. And it’s not limited to slow-growing developed economies; increasingly emerging markets are issuing debt at a record pace.
Folks at the Endowment for Human Development, who have either spiffy calculators or too much free time, calculate that Continue reading →
Halloween is the time of year to start thinking about the impact of capital gains distributions from your mutual funds and ETFs. At CapGainsValet.com, we’ve spent the last month updating our site and building our Free and Pro databases. We’ve already made two passes through over 250 fund firm websites looking for 2016 distribution estimates.
As I think about how this year compares to previous years, I have a house full of high schoolers dressed up for a Halloween party. Some of their costumes match my Continue reading →
There’s a good chance that the next five years will be far more challenging for investors than the past five. It’s rare that a market delivers returns (12% annual returns) greater than its volatility (11% standard deviation). We’ve had five years of extraordinary monetary policy; if the next five years look more ordinary (say, 10 year rates back to their normal 3-4% range), there’s likely to be a “repricing” of assets, possibly dramatic, surely erratic. GMO’s asset class projections, which simply assume a return to normal levels of profits and earnings, say that almost all asset classes are set for negative real returns.
For folks looking for managers well-equipped to handle hostile markets, we used Continue reading →
In October, we offered a Launch Alert for RiverNorth’s latest fund, RMPLX. It’s a closed-end interval fund which offers institutional investors access to the quickly evolving marketplace lending sphere. The fund has a million dollar minimum initial investment and, structurally, has some similarities to a hedge fund.
In mid-November, RiverNorth will host a webcast helping investors understand the potential risks, returns and distinctive characteristics of this slice of the market. They’ve done good work with their webcasts before, so folks with the interest and wherewithal might Continue reading →
In a February 2012 Wall Street Journal piece, I nominated MASNX as one of the three most-promising new funds released in 2011. In normal times, investors might be looking at a moderate stock/bond hybrid for the core of their portfolio. In extraordinary times, there was a strong argument for looking here as they consider the central building blocks for their strategy. Our profile of the fund that year argued
these really do represent the “A” team in the “alternatives without idiocy” space. That is, these folks pursue sensible, comprehensible strategies that have worked over time. Many of their competitors in the “multi-alternative” category pursue bizarre and opaque strategies (“hedge fund index replicant” strategies using derivatives) where the managers mostly say “trust us” and “pay us.” On whole, this collection is far more reassuring.
Herewith are notes about the month’s announced changes in the fund industry: closings, openings, name changes, liquidations and more.
Thanks, as ever, to the anonymous and indefatigable Shadow for his yeoman’s work in keeping me, and the members of MFO’s discussion board, current on a swarm of comings and goings.
On October 3, 2016, Henderson Group PLC merged with Janus Capital Group, nominally “a merger of equals.” The Henderson funds will be reorganized into Continue reading →
Dear friends,
Welcome to autumn. It’s a season of such russet-gold glory that even Albert Camus (remember him from The Stranger and The Plague?) was forced to surrender: “Autumn is a second spring when every leaf is a flower.” It’s the time of apples and cinnamon, of drives through the Wisconsin countryside, and of gardens turning slowly to their rest.
Open the windows, unpack the flannel, raise high the cup of cider. Summon the children, light the bonfires, deploy the marshmallows! Continue reading →
“I’m not saying it’s lollipops and marshmallows in emerging markets but …”
Andrew Foster, 9/5/2016
Twelve months ago, the headlines were apocalyptic:
“Investors pull $1 trillion from emerging markets in a year” (CNN, 8/24/2105)
“Emerging Market rout gathers speed” (Which Investment Trust, 8/25/2015)
“Investors Race to Escape Risk in Once-Booming Emerging-Market Bonds” (New York Times , 8/22/2015)
“The Bubble of Emerging Markets Pops” (History News Network, 8/27/2015) Continue reading →
RiverNorth Capital Management launched RiverNorth Marketplace Lending Corporation (RMPLX), a closed-end interval fund dedicated to marketplace lending (a/k/a “online lending”) asset class. They’re in pursuit of high current income.
“Marketplace lending” are all of those companies that allow small borrowers to get quick access to loans for unconventional (that is, non-bank) lenders. Lending Club would be a familiar example for most of us. The volume of lending has increased 700% in four years to about $17 billion a year. Continue reading →
On Monday, October 3, RiverPark Funds launched RiverPark Commercial Real Estate Fund (RCRIX). Like several of RiverPark’s funds, RCRIX began life as a hedge fund. Unlike any of its predecessors, though, it is being structured as an interval fund.
What does that mean? Morty Schaja explains the investment case:
The Fund’s objective is to seek current income and capital appreciation consistent with the preservation of capital by investing predominantly in the approximately $600 billion commercial mortgage backed securities (“CMBS”) market that is secured by income-producing commercial real estate assets predominantly in the United States.
Herewith are notes about the month’s announced changes in the fund industry: closings, openings, name changes, liquidations and more.
Thanks, as ever, to the anonymous and indefatigable Shadow for his yeoman’s work in keeping me, and the members of MFO’s discussion board, current on a swarm of comings and goings.
Effective mid-January, 2017, the AB Wealth Appreciation Strategy (AWAAX) and AB Balanced Wealth Strategy (ABWAX) will no longer invest in other AllianceBernstein funds. Instead, they’ll invest directly in equities. Color me “confused.” The funds currently seem to hold shares of just one AB fund (Multi-manager Alternative Strategies) along with a ton of individual equities. Continue reading →
Dear friends,
It’s fall. We made it!
The leaves are still green and there are still tomatoes to be canned (yes, I do) but I saw one of my students pull on a sweater today. The Steelers announce their final roster this weekend. The sidewalks are littered with acorns. It’s 6:00 p.m. and the sun outside my window is noticeably low in the sky. I hear the distant song of ripening apples. Continue reading →
The latest vogue in higher education, an industry rife with voguishness, is stackable certificates. Stackable certificates are academic credentials certifying your ability to complete some specific task. Some of the certifications (Craft Brewing) seem modestly more concrete than others (Dream Tending). Since they’re relatively easy to obtain in relatively short periods, students can accumulate a bunch of them while still earning a conventional degree. That’s the “stackable” part.
In order to shore up the Observer’s finances, we’ve decided to capitalize on the trend and launch our new Certificate in E.T.F. Punditry program. Continue reading →
“Moon in a barrel: you never know just when the bottom will fall out.”
Mabutsu (19th Century Japanese haiku poet)
So, August as usual is the period of the “dog days” of summer, usually a great opportunity to catch up on reading. A site I commend to you for all things investment is Hurricane Capital, recommended to me by my friend Michael Mauboussin, of Credit Suisse. Among other things Michael pointed out that the writer of this blog (from Sweden) had posted all of Michael’s strategy and thought pieces going back for years. A recent one, which I would suggest is worth a read is Continue reading →
“… over the long term the benefits offered by diversifying a portfolio of less correlated asset classes can be significant … investing in a diversified portfolio across equity and fixed income is the best option for most individuals,” wrote Jeremy Simpson in 2015, then director of Morningstar Investment Management in the article The Benefits of Diversification.
In Mebane Faber’s classic The Ivy Portfolio, he cites multiple sources on the benefits of diversification Continue reading →
Over the past eight years the US mutual fund industry has witnessed a massive shift from active to passive management. In the Trapezoid universe, 35% of equity funds are now passively managed compared with 28% a year ago. This figure is AUM weighted, includes exchange-traded and closed-end funds, captures flows through July. The fixed income universe gets less attention but we observe 12% of AUM are now passively managed. Continue reading →
On August 31, 2016, Seafarer announced the imminent closure of its flagship Seafarer Overseas Growth & Income fund. The closure is set to become effective on September 30, 2016.
Highlights of the announcement:
