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@Shostakovich: I like to have you believe that I have my people working at M* but that would be a lie. Actually, I got the information by luck. I Googled Osterweis Strategic Investment Fund structural and tactical issues, scrolled down and there it was. Regards, Ted
I don't get the M* commentary. Nothing has changed with this fund's structure, style, process, or philosophy since it started. I have spent a lot more time than M* talking to the entire management team at Osterweis over the past 12 years. Interesting the commentary was written only about two weeks after the same analyst praised the fund and its management for its "excellent risk-adjusted" performance and as a "shelter in the current storm", and "outshining its benchmark", "relative resilience". He goes on to compliment the managers who "are better at assessing credit risk than the rating agencies", and then said the fund's volatility "has been on par with the Barclays Agg". Given that nothing changed at the fund during those two weeks, the new commentary is hard to swallow. When I first read it a few weeks ago, I tried to get a response from M*. Of course they did not respond to my inquiry about the 180-degree about face. This for me is more evidence that the written analysis of funds is often worth a lot less than digging through the numbers and fund documents themselves.
If I read it correctly, Strategic Income offered "unlikely shelter in the current storm." The analyst has been negative on Strategic Investment's downside for at least a couple years.
Fortunately OSTFX had the smarts to dump Valeant, unlike Sequoia and some others (Vanguard was also very late to dump, BTW). Perhaps the most important thing to keep in mind is that Osterweis started as a firm that managed money for ultra-high net worth families. Capital preservation was and is a high priority. The funds came along as an offshoot of the private money management, sort of a "what can you do for out grandkids" response. As a result, OSTFX has never been flashy, never been a style-box fund (it is most definitely not a midcap blend fund, another M* mistake), and strives to provide good returns over the long haul. Everyone of us has owned at least one fund that stumbles once in a while. Prior to last year's crappy number, you have a 10-year average return of that is very close to the S&P 500 with less risk. We are willing to give the team a little slack here. There has been very little turnover on the team, with Berler and Kovriga there since 2006. Are there concerns? Yes, there are always concerns with actively-managed funds.
If OSTIX is compared to the Non-Traditional Bond category (which is where we believe it should be), it is a bracket buster. Are there concerns? Yes, but the YTD number is not because the team decided to take dumb pills. Like OSTFX, we are giving them some slack, but nothing suggests there is any flaw. Which reminds me again that I seldom read M* analyst commentary for a good reason.
Comments
Regards,
Ted
http://analysisreport.morningstar.com/fund/research/c-report?t=XNAS:OSTVX®ion=usa&culture=en-US&productcode=MLE&cur=
How did you get access to that ?
Regards,
Ted
David
Also, a bit disappointing that they've had the turnover on the equity team.
http://www.benzinga.com/analyst-ratings/analyst-color/16/02/6508179/valeant-gets-closer-to-lefts-50-target-after-new-account?curator=thereformedbroker&utm_source=thereformedbroker
Combine that with the HY bond exposure in the fixed income sleeve, and a presence in MLPs, and you pretty much have your under-performance explained.
If OSTIX is compared to the Non-Traditional Bond category (which is where we believe it should be), it is a bracket buster. Are there concerns? Yes, but the YTD number is not because the team decided to take dumb pills. Like OSTFX, we are giving them some slack, but nothing suggests there is any flaw. Which reminds me again that I seldom read M* analyst commentary for a good reason.