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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
  • How to Sell ‘Carbon Neutral’ Fossil Fuel That Doesn’t Exist
    Here is a Summary of a recently released Global Commons Survey. The Survey measures the level of responder awareness regarding changes deemed crucial by members of the scientific community to limit climate change. And it looks at barriers to taking rapid action regarding those changes (pages 15 - 16 of the Survey are one place to look). It appears there is only limited agreement it is necessary to take substantial and widespread rapid action involving the recommended changes. One comment from the Summary:
    ...although 59 percent of people surveyed said they believed in the need for a rapid transition away from fossil fuels, just eight percent acknowledged the need for large-scale economic shifts this decade.
  • Artisan Partners launches post-venture China fund for Tiffany Hsiao
    I'm interested in this strategy, does anyone have any inside info on timing of potential mutual fund. The strategy currently appears only on institutional (separate managed account) side of Artisan.
    The strategy is targeting 15% in private investments, so it's a poor fit for a mutual fund.
  • One-third of Investors Trade While Drunk
    IMHO the headline is clickbait.
    The column that is the source of these findings includes the paragraph:
    And not just impulsive, but sometimes inebriated: 32% of investors admit they’ve traded stocks while drunk. ... younger investors admit to falling into this trap much more frequently than older traders, with 59% of Gen Zers admitting to drinking and trading, versus just 9% of baby boomers.
    I lean more toward teetotaling myself, but I thought there was a distinction between taking a sip of an apéritif to whet one's appetite for a share of BRK.B and getting sloshed before sinking one's life savings into bitcoin. Drinking and getting drunk are not the same.
    I find the results (what little is presented) suspect. Generally, a question along the lines of "have you ever ..." should have more positive responses from older people than younger ones, because the older one is the more opportunity one has had to do whatever. Even trading with an app (which goes all the way back to Schwab's Equalizer on DOS). Even trading over a nice chardonnay. Yet on every question, the percentage of respondents who have ever done x declines with age.
    The MagnifyMoney column reads like a commercial for its financial adviser referral program. It's got this big bar chart showing how people who invest with advisors are less likely to feel regret, make emotional investments, lose sleep over the market. And it concludes: "Sometimes the smartest move to take control of your finances is to let an experienced professional guide you."
  • T. Rowe Price Is Splitting in Two. What That Means for Investors.
    I read about this when it was announced. Morningstar did an article about this a while back and after reading that, it made sense to me.
    https://www.morningstar.com/articles/1026626/what-t-rowe-prices-split-means-for-fund-investors
    I have about 25% of my investments with TRP PRWCX, RPMGX and TRSGX .
    The change makes sense to me. I don't see any downside. There could be some portfolio improvements. The analysts will change which could make some differences, but the managers will stay the same.
    Thank you! Didn't see that article
  • Hong Kong’s Hang Seng index closes more than 4% down as China tech and education shares plunge
    Strongly considering throwing a few dollars into Fido's 5 star China Fund - FHKCX.
    Don't really want to buy education stocks (TAL, EDU, etc), but at current prices.....tempting. The Chinese gubmint is even more devious than our gubmint - they turned 800 lb gorilla BABA into a 400 lb. gorilla.
    And at least it will never be boring.
    That's for sure. Maybe you'll have to go over there to do your own due diligence...
  • When do 10 and 50 not average to 30? When computing fund P/E ratios
    I'ves seen an increase in the use of harmonic average, because it supposedly eliminates outliers, is that correct?
    Since no data points are excluded in calculating a harmonic average, outliers are not being eliminated. The formula doesn't even identify which points, if any, are outliers.
    Arguably one could claim that taking the harmonic average of a data set has a natural tendency to underweight extreme points. But even that is a myth.
    Consider the data set {9, 10, 11, 20}. 20 is supposedly an "obvious" outlier. Without it, the average is 10. With it, the average is 12.5. The harmonic average is 11.36, which seems somehow "better".
    Now consider the data set {1, 9, 10, 11}. Here 1 is the "obvious" outlier. Without it, the average is 10. With it, the average is 7.75. The harmonic average is 3.07. That seems somehow "worse".
    The difference between these two examples is that inverting numbers gives proportionately less weight to larger numbers (desirable when 20 is the outlier) but more weight to smaller numbers (undesirable when 1 is the outlier).
    I did cringe when I read in the Bogleheads wiki page I cited that " Using a harmonic average presents the advantage of reducing [not eliminating] the effect of outliers". I gave the page anyway because I felt the rest was useful as a terse summary.
  • How to Sell ‘Carbon Neutral’ Fossil Fuel That Doesn’t Exist
    That chart and the comment provide a useful big picture explanation for at least part of what has changed in the UK in recent decades. They also speak more generally to the potential staying power of the global climate change challenge.
    Here is another current example of how disruption is now impacting the US:
    EXPLAINER: Western states face first federal water cuts
  • When do 10 and 50 not average to 30? When computing fund P/E ratios
    That is also correct. In some respects, S&P funds aren’t automated index funds in that the stocks in them are selected by members of the S&P index committee and one of the criteria for the committee’s inclusion of a stock in the S&P 500 historically has been profitability. I believe that is true for the S&P 600 for small stocks as well.
    Companies must have positive earnings over the most recent quarter as well as over the most recent four quarters (in aggregate) to be considered for inclusion. Consequently, the S&P 600 has a bit of a quality tilt versus the Russell 2000.
  • How to Sell ‘Carbon Neutral’ Fossil Fuel That Doesn’t Exist
    Any country that shifts from being an industrial nation that produces physical things to a more service oriented one will most likely see a drop off in carbon emissions. I would expect the U.K.'s decrease in emissions might in some ways mirror the increase in emissions from developing nations like China and India which manufacture many of the things the U.K. and other nations consume. This is worth looking at: image
  • How to Sell ‘Carbon Neutral’ Fossil Fuel That Doesn’t Exist
    The population increased in the 1980's. My hunch is the 1980's drop was at least somewhat related to the continuing decline in coal consumption and the related 84/85 coal strike and its aftermath (Iron Lady time).
  • Hong Kong’s Hang Seng index closes more than 4% down as China tech and education shares plunge
    Strongly considering throwing a few dollars into Fido's 5 star China Fund - FHKCX.
    Don't really want to buy education stocks (TAL, EDU, etc), but at current prices.....tempting. The Chinese gubmint is even more devious than our gubmint - they turned 800 lb gorilla BABA into a 400 lb. gorilla.
    And at least it will never be boring.
  • T. Rowe Price Is Splitting in Two. What That Means for Investors.
    I read about this when it was announced. Morningstar did an article about this a while back and after reading that, it made sense to me.
    https://www.morningstar.com/articles/1026626/what-t-rowe-prices-split-means-for-fund-investors
    I have about 25% of my investments with TRP PRWCX, RPMGX and TRSGX .
    The change makes sense to me. I don't see any downside. There could be some portfolio improvements. The analysts will change which could make some differences, but the managers will stay the same.
  • Hong Kong’s Hang Seng index closes more than 4% down as China tech and education shares plunge
    More from Andy Rothman in today's WSJ. Unsprisingly, Andy's pro-China stance is evident once again!
    https://www.wsj.com/articles/u-s-economy-likely-to-outgrow-chinas-due-to-contrast-in-pandemic-responses-11629036000
    Andy Rothman, a China specialist at Matthews Asia, views the growth reversal as a blip along a road leading to China eventually becoming the world’s largest economy. The recent U.S. results are “like getting so excited about the Washington Nationals winning five in a row but they’re still five games below .500,” he said.
  • Baillie Gifford manager to retire
    @msf
    You're a wealth of knowledge, as usual. Thanks so much for that link. $110bn managed by two portfolio managers. I assume the overlap on the various vehicles is pretty high. If so, that's a lot to manage without running into capacity constraints, no? If I recall correctly, Anderson typically has 35-40 stock portfolios? Has BG ever closed their "Foreign Large Growth" strategy to new flows across vehicles?
    Im impressed with BG's recent turbo-charged growth and have read about their long history of private investing. But again, given their concentrated approach, i don't get how they don't have to close their growth strategies.
  • Baillie Gifford manager to retire
    I can't say how much BG is getting per dollar under management. But I can address the capacity question.
    As of August 31, 2020, the two BG fund managers at the time (Anderson and Coutts) were managing a bit less than $110B, including four mutual funds, around a half dozen pooled investments, and nearly two score other accounts. Of that, over half, $57B, came from the Vanguard fund. And the Vanguard fund accounted for nearly all the money that carried performance-based fees.
    Data is from SAI, p. B-70 (pdf p. 80)
    https://personal.vanguard.com/pub/Pdf/sai023.pdf?2210175721
    Vanguard is not adding to the management burden, it is the management burden for this strategy.
    I suppose BG could subadvise for a different family instead and charge more. With Vanguard they can be reasonably confident that the fund will not push more money at them than they feel they can handle. Vanguard would either add another investment management firm or close the fund, immediately. (None of this "we're closing the fund in two months" at Vanguard.)
    As an example of what could happen with other families is what happened at IVINX two decades ago. The fund wanted to reopen. The subadvisor and original manager, Hakan Castegren, felt capacity limited. The fund reopened over his objections and he walked away. Sometimes, money isn't everything. Shocking. :-)
    https://www.morningstar.com/articles/7158/ivy-international-replaces-castegren-with-former-scudder-kemper-manager
  • T. Rowe Price Is Splitting in Two. What That Means for Investors.
    I remember hearing about the "splitting" of T. Rowe Price Associates and T. Rowe Price Investment Managemnt last year, but didn't really know what to think of it. Over the weekend, I ran upon this barrons article which highlighed the rationale in more detail than I anticipated. So long story short, it seems T. Rowe got so big, that it needs two entities to manage investment capacity? While I think I understand this...when i start talking it out, it doesn't make much sense to me. So This helps them so at an entity level, they aren't invested too much in a single company? Or does this help them with reporting, meaning, they don't have to report owning >X% of a company? Or is this from a trading perspective, having separate entities will make it easier to trade without moving markets? When i take a step back, I don't fully understand how its that different from just having one entity?
    And of course, the most important question: I don't fully understand if this is a good or bad thing for investors?
    And I assume Blackrock and every other big manager >$1tn AUM has done this?
    https://www.barrons.com/articles/t-rowe-price-is-splitting-in-two-what-that-means-for-investors-51606333566
  • Hong Kong’s Hang Seng index closes more than 4% down as China tech and education shares plunge
    I taken that you don't invest with Matthews Asia funds or have high opinon of their outlook? Though I agree that Matthews Asia funds have not excel with the exiting of several experienced managers.
    I used to, but not anymore. I was pretty enthusiastic about them 10 years ago after I met with one of the founders. I found their approach to investing and vibrant team pretty compelling and unique. However, performance started becoming mediocre around 2015 and their fees are high, then portfolio managers started leaving, and not to retire, but to other competitor firms. I can't list all the names, but i recall at least 10 relatively young portfolio managers leaving the firm in the past two years, which is meaningful given the size of Matthews. Something seems off with the team and overall company. Not something we haven't seen happen at other boutiques. Its tough to stay hungry and not slip into complacency and mediocrity. The recent departures, who again are all relatively young, tell me people are jumping ship and there are bigger issues at play than just poor performance.
    Its been interesting to see where Matthews PMs have left to. I've been trying to find a way to get into Tiffany Hsio's China private/public fund at Artisan (I loved her China Small fund at Matthews). Others left for Genesis (UK) and Rondure in SLC IIRC.
  • Baillie Gifford manager to retire
    @msf Thank you so much for all the information on BG and their relationship with Vanguard. So I understand that BG is one of the actual advisors of VWILX and VWIGX. However, what I don't understand is - how is this relationship worth it for BG, who are fully in the active-management camp? Meaning, the advisory fee on VWILX and VWIGX is ~18 bps and the total TER is 33bps and 44 bps, respectively. BG's other Foreign Growth equity funds' management fees average around 40 bps and TERs around 50+ bps. This subadvisory relationship with Vanguard is sizeable (~$70bn between VWILX and VWIGX) but must be at incredibly low fee rates, guessing 50% of 18 bps? Given BG's already capacity constrained across a number of their strategies (high overlap?), I don't understand how this arrangement makes sense for them.
  • When do 10 and 50 not average to 30? When computing fund P/E ratios
    That is also correct. In some respects, S&P funds aren’t automated index funds in that the stocks in them are selected by members of the S&P index committee and one of the criteria for the committee’s inclusion of a stock in the S&P 500 historically has been profitability. I believe that is true for the S&P 600 for small stocks as well.