ARIVX: anyone still own it

DavidMMP

I hold a larger position in this fund and established it almost at its inception. I understand the reason holding large cash position, and also understand that we should consider this fund as a conservative allocation fund with cash as the other alternative asset. But with 75% in cash, this fund still lost .53% today in a slightly down market. Did I miss anything here with this fund, or should I move on to other real SCV funds?

rjb112

DavidMMP said:

But with 75% in cash, this fund still lost .53% today in a slightly down market. Did I miss anything here with this fund, or should I move on to other real SCV funds?

Here's why the fund lost .53% today even though it is 75% in cash.
BTW, I'm not familiar with this fund. Just took a look after you posted the question:

All of the fund's top 10 holdings were down today as can be expected in a down market, but several of them were down a LOT for a one day decline.



The Gold mining stocks had a horrific day, and that has affected your fund a lot. Take a look at the top 10 holdings of your fund.



Your opinions?

rjb112

DavidMMP said:

But with 75% in cash, this fund still lost .53% today in a slightly down market. Did I miss anything here with this fund, or should I move on to other real SCV funds?

With the unique holdings in the top 10, I wouldn't assess it on the basis of how much it lost today versus how much the market lost. Because this definitely is not a "market" kind of fund, it has NO characteristics that are index-like.

Take a look at the sector weightings. This fund goes its own way and does not look at what others are doing.



I would study the manager. I Googled him, and there is plenty to read about him, including several interviews, to understand his current and past thinking and investment strategy.

You could read his fund reports. There is a semi-annual report that came out in July of this year. And whatever shareholder communications he has.

Below are the calendar year returns. His first full year of operations, he was at the top of the heap. The next two years, the bottom......

Where he will be over the next few years is totally unpredictable

rjb112

DavidMMP said:

....... should I move on to other real SCV funds?

Not sure what you mean by "real" in "real SCV funds"?

This fund is not going to perform like the category of SCV funds, as I don't think it has much in common with them. This fund is definitely a 'one man show'....the manager has definite opinions which are the reason for the current allocation.

So if you are looking for "small cap value" as an asset class, you are not really getting it here. Here you are getting a specific opinion about the markets and how to sidestep risk.

If you want the small cap value asset class, one way you can get that with a small cap value index fund. With this fund you get the manager and his specific opinions, not an asset class.

Sven

Three years is a bit short. Like to see a longer track record, at least through a down year like 2008 and its drawdown.

DavidMMP

Thanks For both, my original thesis of buying this fund was that it would be a steady small cap fund based on manager's prior fund track record, which I owned briefly (less than three years).

MikeM

Sven, the fund wasn't around in 2008, but the fund manager was and he handled his ICMBX fund superbly. So, there is a track record.

I bought into ARIVX and Cinnamond when it first came out because of his conservative style and the good press it got from David here at MFO. I dumped it when I saw his affinity to precious metal miner stocks. He has been caught in a value trap for years now and won't adjust. Ala Hussman? Maybe that's to harsh.

DavidMMP

Agree with you that he has been caught in a value trap and not flexible enough to adapt to the market environment. Investing is more art than science, he seems very rigid which can be conceived as good for some folks but not for me.

AndyJ

MikeM said:

I bought into ARIVX and Cinnamond when it first came out because of his conservative style .... I dumped it when I saw his affinity to precious metal miner stocks. He has been caught in a value trap for years now and won't adjust.

That was my ARIVX experience exactly, Mike; sold the last of it in January '13.

Charles

So, through June since inception 3.5 years ago, the fund has returned 7.6% annually...way better than US aggregate bonds.

I see it as a unique conservative allocation fund.

It is better than its M* 1 star quantitative rating for investors more concerned with risk.

Experienced, true value manager. Watches downside. Great communication.

My biggest issue with the fund is same issue I have with most funds.

It charges too much.

Part of the reason is organizational overhead. But 1.41% on several hundred million AUM is indefensible.

ASTON continues to impose 12b-1 fees.

ASTON continues to impose high minimums ($1M) for institutional shares.

BrianW

I own it and will continue to hold it. It isn't always easy to watch other funds out perform in the short term. If you'd like to review a longer timeframe, bring up a chart of ICMAX. This is a fund that Eric Cinnamond was primarily responsible for before moving to the current fund. Compare the performance of this fund (ICMAX) to any other SCV you can think of. At this point in my life, I remember the .com bubble and 2007-2008. I would rather look stupid and keep my money than join the crowd and lose it.

BrianW

And, in my opinion dumping this fund at this time would be the worst thing you can do. The valuations of the market, if you have a trusted Manager such as Steven Rommick, Don Yacktman or the FMI guys, are extremely high. To me, this means the next meaningful move could be downward. Would you really want to sell this type of fund which may protect to the downside for an index fund which will not offer any protection?

Ted

BrianW: With all due respect, I promised my cat, Pink, I would feed this turkey to him on Thanksgiving Day. Its never to late to sell a fund.
Regards,
Ted

Total PercentileRanking (09/08/2014)

1-Day 98%

1-Week 99%

1-Month 99%

3-Month 15%

YTD 72%

1-Year 99%

3-Year 99%

BrianW

And I suppose that's what makes a market.

DavidMMP

I do see the points Charles and others made, it appears that the return seems ok for a conservative allocation fund, will hold it for another year to decide. Thanks all.

VintageFreak

I own ARIVX
I own ICMAX
I own FPIVX

All high cash stakes.

I want to own future outperformers, not current outperformers. This is not about "conservative allocation fund". Buy the manager, not the fund. Will I time the market? Or will I let my manager time the market? Does Warren Buffet time the market? I consider these fully allocated positions. If I didn't I would buy index funds. Buying active management and then questioning that active management is ludicrous. If you want to be fully invested by index fund.

PS FPA Crescent has high cash stake too. M* is all messed up saying it has 46% bonds when a lot of that is short term treasuries.

rjb112

VintageFreak said:

FPA Crescent has high cash stake too. M* is all messed up saying it has 46% bonds when a lot of that is short term treasuries.

VintageFreak, for FPACX, below is how M* lists those Treasury holdings. You don't want them to list that as cash, do you? I can't fault them for listing the actual holdings. However, I would like it a lot if they were to go into more detail about those holdings. For example, would be nice if they detailed the bond holdings, so we knew the maturities and duration of those Treasuries. Have you checked the fund website to see if it is detailed there?

rjb112

Ted said:

BrianW:
Total PercentileRanking (09/08/2014)

1-Day 98%

1-Week 99%

1-Month 99%

3-Month 15%

YTD 72%

1-Year 99%

3-Year 99%

@Ted, what website did you go to for this? I checked Morningstar, and they are not listing Percentile Ranking for the time frames you listed.

thanks

VintageFreak

@rjb. It is not about what I want or not want. Lot of funds have "cash" position in treasuries. And M* needs to be consistent. When it comes to FPIVX, also it owns treasuries. e.g.

SHORT-TERM INVESTMENTS — 37.6% (Cost $39,856,033)
State Street Bank Repurchase Agreement — 0.01% 07/01/13
(Dated 6/28/13, repurchase price of $39,856,033, collateralized by
$46,935,000 principal amount U.S. Treasury Bond —
2.75% 2042, fair value $40,657,444) . . . . . . . . . . . . . . . . . . .

But M* does not say "Bond" for FPIVX, it says Cash. FPACX owns several different treasury bonds with lower yields, i.e. more conservative, and M* says Bond.

rjb112

VintageFreak said:

Lot of funds have "cash" position in treasuries. And M* needs to be consistent.
But M* does not say "Bond" for FPIVX, it says Cash. FPACX owns several different treasury bonds with lower yields, i.e. more conservative, and M* says Bond.

@VintageFreak: I just went to the FPA website, and now we have the necessary clarification.

Take a look at the asset allocation on the website

http://www.fpafunds.com/crescent

The FPA funds say on their website that FPACX has 6.3% cash, as of 6/30/2014
They give a different mix than M* is showing, but very little cash.

I'm not very enamored with the colors and circle chart they put together......perhaps a table clearly stating the asset classes with percentages would have done a better job, but here it is:

AndyJ

As several have said here over time, beware M* on their bond/cash/hybrid breakdowns within bond and allocation funds. Their analytical tools for bonds are very, very shoddy and inconsistent compared to the tools for stocks.

[Deleted User]

The user and all related content has been deleted.

rjb112

Maurice said:

As someone who use to frequently put together various charts for presentations, I would never have used the same color in 4 out of 8 categories. Perhaps the person at FPA is color blind.

Looking at their circle chart and trying to figure out what asset classes had what percentages, I was beginning to feel that I was color blind.......

VintageFreak

AMG has completed River Road Acquisition. I voted against it, but of course that was never going to make any difference since these things are formalities. Guessing fund will now become Aston / AMG River Road Independent Value. Or is it AMG Aston / River Road Indepedent Value?

Anyways, I hope nothing changes for ARIVX. I have been okay holding it for the long term with certain expectations. If Cinnamond leaves after acquisition I'm going to be really pissed.

VintageFreak

DavidMMP said:

I hold a larger position in this fund and established it almost at its inception. I understand the reason holding large cash position, and also understand that we should consider this fund as a conservative allocation fund with cash as the other alternative asset. But with 75% in cash, this fund still lost .53% today in a slightly down market. Did I miss anything here with this fund, or should I move on to other real SCV funds?

Look at ARTVX year to date to get some perspective. It is good ARIVX is in 75% cash. If you are fundamentally still okay with Cinnamond still invests, and still looking to switch, one option is his old charge ICMAX. PVFIX also cut off the same cloth. Also compare with BRSVX. Going into ARIVX we need to accept how the manager is investing. He is doing what he said he would do all along.

NumbersGal

I'm still hanging on to ARIVX --- who am I to second guess Cinnamond (or his proteges at ICMAX - both about 75% cash)? At least not yet.
Regarding PVFIX (Pinnacle Value) I think that part of its performance has been helped by being so micro-cap oriented. The geometric av. market cap for Pinnacle is only $250m. (ARTVX is $1174 and ARIVX is $1181).
For reference, the micro cap ETF IWC has a market cap of $403 and , one of my favorites, WEMMX (Teton Westwood Mighty Mites AAA) is $483.

fundalarm

with respect to "cash" or "cash equivalents" or "short-term instruments" definition... it usually includes physical cash or treasury bills (treasury securities with maturities under 12 months). all 1+ year treasuries are called treasury notes and belong to the "bond" class, not cash.

MikeM

...who am I to second guess Cinnamond...

Hi NumbersGal. Well since you asked, you are the person paying above average fees for some really bad sector-picking choices by this manager. I think you have a right to second guess this guy. I also think Cinnamond has shown himself to be the quintessential value trapped manager. He went heavy into basic materials/mining stocks years too early. Either his poor judgment or his ego wouldn't allow him to adjust. That's why the bleak record.

Ted

@MikeM: I'm in total agreement with you, I have always said its never too late to sell a losing fund.
Regards,
Ted

Charles

Believe it or not, ARIVX remains a top quintile performer, life time.

Basically, it had a strong first year in 2011. But it's spent time in the barrel ever since.

The hefty 1.47%, which goes to pay RiverRoad, Aston, and now AMG among others, while holding nearly 80% in zero interest cash remains a drag.

The on-going bull market is casting a lot of defensive money manager in tough light. Mr. Cinnamond is in good company, if that helps any.

Numbers through November...

00BY

I have been in it since day one and will stick with it. It is hard to see it under perform, but it will tend to do so in a bull market.

Gets 32 percent of the upside and 29 percent of the downside. It is conservative.