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.
Support MFO
Donate through PayPal
REcommendations for International SmallCap Fund (Value or Blend) at Fidelity
Gisox still falls under the small category, I think- at least compared to the typical large cap international fund. Maybe the most compelling option I've seen in the space for what it's worth,
Maybe true, but the stalwarts funds definitely have a quality bent and also may be somewhat value related for companies that have fallen out of favor, fwiw.
Presuming that you have to use Fido funds, why not FISMX? 5* at M*. It's separated a bit from its index on M*, and the manager has been there 2 yr during part of the overperformance. I'm trapped in Fido for my 403B , so I don't ignore their 5* funds. Over years, small cap usually outperforms, and I'm assuming you want international exposure.
Since Aug 2015, FISMX could have been substituted by a fixed portfolio of ETFs (~20% DFE, 19% SCHC, 17% PGF, 10% WPS, 6% FM, 6% DFJ, 5% BRF, and several smaller positions) that had a ~1% higher cumulative return at a comparable volatility. See goo.gl/2Z3V5Q
Very easy -- there are lots of ways to come up with a "better" (less volatile, less risky, lower fees -- name your wish) plan when you know in advance what you want the answer to be. I did computational modelling professionally for years and I can assure you that taking a set of choices, locking them up in a safe for a year and then looking at the results is entirely different from combing through data from a year ago and choosing a data set that would have done SO MUCH better with "your" "alternative/better" choices from a year ago. It's easy to "predict" the present from the past, another story to predict the future from the present (or the past, for that matter).
markot06, for the life of me, I can't imagine who would choose 7 ETF's to replace one mutual fund's performance. And aren't those choices made in the rear view mirror. How would you know ahead of time to pick that percentage mix of ETF's. Are you joking with us?
@Mulder420 asked for thoughts on FISMX, so I provided an alternative. No shenanigans, pure math. If you do not care about strict replication accuracy, use fewer ETFs. Sure, FISMX performance may divert from that of the ETF portfolio over time. Nevertheless, thanks to the fund inertia, you can track it reasonably well with a 1-month delay (a different fit mode) and still get better risk-adjusted results (e.g. by about 1.3% since Aug 2015). In addition, ETFs will give you an immediate visibility into exposures, as opposed to the "black box" nature of the mutual fund (re: the delayed semi-annual holdings disclosures subject to all sorts of manipulation). This is very useful when constructing the overall investment portfolio.
If you were going to make a choice between the two, which would you choose and why?
I was impressed with the information in Dennis' write-up of ICMIX this month but Dr. Snowball called QUSIX one of the 3, and only 3, great small cap international funds. I'm a little surprised Intrepid has only been able to raise $17MM in assets with a good record over more than 2 years. It almost seems like the risk of liquidation for ICMIX could be pretty high if it doesn't garner a good amount more interest in the next 12 months. They're eating almost half of expenses under the expense waiver and that most likely means "future" shareholders will eventually bear those costs if the expense ratio eventually falls below the waiver.
I also like FISMX a lot, Global Stalwarts and GP International Opportunities and I own several of these funds but I'm looking to add some "value" to the mix with new money.
FISMX has done well, but just be aware that they have had a lot of manager changes. Since the fund's inception in 2002 there have been 9 different fund managers. Sam Chamovitz, the current manager, has been managing the fund since 2014. He does have a $1M+ invested in the fund which is good.
Thanks for the suggestions!! I know FISMX has been a revolving door and I stopped adding to it years ago partly because of that and partly because I found other funds I liked more, but I've always kept what I had and been pretty happy with the longer term performance.
In the Foreign SCV/MCV space, investors may want to check out BISMX ($100K min. at Fidelity, other brokerages), SBSIX ($100 minimum at Scottrade) and FNDC.
I'm a little surprised Intrepid has only been able to raise $17MM in assets with a good record over more than 2 years. It almost seems like the risk of liquidation for ICMIX could be pretty high if it doesn't garner a good amount more interest in the next 12 months. They're eating almost half of expenses under the expense waiver and that most likely means "future" shareholders will eventually bear those costs if the expense ratio eventually falls below the waiver.
Thank you for your preceding comments. Let me add a few points.
Intrepid seeks to put the shareholder’s interests first and generate great risk-adjusted returns. They have six different mutual fund strategies launched since 2005 and have been patient with each of these strategies, recognizing that it takes time for the asset base to grow and for the funds to start showing up on screens.
They give every fund they launch a multiyear timeframe to prove itself, which should at least reflect a full market cycle, and specifically have little expectation that any new fund will grow materially until it secures a three-year track record and receives a Morningstar rating.
ICMIX is on track with their initial assumptions for asset growth, does not foresee eliminating its expense ratio caps, and hopes to reduce the expense ratios as the fund grows.
As Franklin said in his 3Q 16 commentary, “Thank you for letting us build”, i.e., the building process takes time, and that being patient and building the portfolio right pays off for everyone.
I appreciate your interest in this month's article.
I am not sure there is a compelling reason to own smallcap value or smallcap growth per se. Why not look at the entire Intl smallcap space? QUSIX has been a good option for actively-managed funds. I would compare it to DLS even though DLS is a lot more dividend oriented. Expenses are a big deal. You will pay 73 bps more for active management that won a bit over five years, broke even over three, and lagged by 600 bps over last 12 months. Will management be able to match the 5-year comparison going forward? SCZ is a blend of value and growth. It has similar numbers with expenses of only 40 bps. Also note that QUSIX has about 20% in EM small caps, so the potential volatility is higher. Maybe the bigger question is whether you need an international small cap at all. Will this really bump your returns or just increase the potential risk?
Fidelity will likely let you transfer in shares (e.g. from Vanguard) to a taxable account even if you don't have $1M. But you should check to be sure, and also make sure that they'll let you buy more once you transfer the shares in.
@BobC, thank you for your thoughts. I tend to agree with you about growth vs. value even though it seems like academia suggests value does better in the long-term, but I have other foreign small cap holdings like GPIOX that give me the growth side of things. Part of the reason for my question is that I'd actually like to balance out the growth and value a bit more and I have a good deal more growth than value at this point.
I'm pretty sure there are endless arguments for why I should or shouldn't have foreign small cap in my portfolio and I tend to think the reality is that not many people truly "need" most of this stuff. But I want it and I want it because I think most of the developed world has a demographic problem that will hurt bigger businesses more than smaller businesses. And I want to be selective across the board so I'm not a fan of broad passive approaches to foreign markets now because I'm not a big believer in those economies, broadly speaking. I'm willing to pay people I believe in to be selective and hopefully do better than average. I realize that goes against the prevailing wisdom in some regards but I'd rather follow what I believe in along with the associated risks than do something I don't believe in or even to just avoid it altogether.
@openice, thanks for your insights. The article in the monthly commentary and your comments provide perspectives that aren't common anywhere I've found other than here on MFO. They are very helpful and much appreciated.
Late last spring or early summer there was a spirited debate about funds that hold a lot of cash. At the time I think it was related to the liquidation of Eric Cinnamond's fund. I like this fund a lot- the way everything is approached, the way Franklin thinks and communicates, the shareholder friendliness. I also recognize that I and anyone else who likes the fund has to be prepared for the possibility of times when it may hold very large amounts of cash. If you can accept that and believe they'll come out ahead over the market cycle then it's great. If you have a hard time with that then it'll be even worse when you have real money invested.
Comments
That said, if you like the thinking behind QUSIX, you might be more interested in their global strategy PGVFX: http://www.mutualfundobserver.com/2014/12/polaris-global-value-pgvfx-december-2014/
WAIOX has been a successful fund for a long time, defying its very high expenses.
I was impressed with the information in Dennis' write-up of ICMIX this month but Dr. Snowball called QUSIX one of the 3, and only 3, great small cap international funds. I'm a little surprised Intrepid has only been able to raise $17MM in assets with a good record over more than 2 years. It almost seems like the risk of liquidation for ICMIX could be pretty high if it doesn't garner a good amount more interest in the next 12 months. They're eating almost half of expenses under the expense waiver and that most likely means "future" shareholders will eventually bear those costs if the expense ratio eventually falls below the waiver.
I also like FISMX a lot, Global Stalwarts and GP International Opportunities and I own several of these funds but I'm looking to add some "value" to the mix with new money.
Thanks.
Kevin
Intrepid seeks to put the shareholder’s interests first and generate great risk-adjusted returns. They have six different mutual fund strategies launched since 2005 and have been patient with each of these strategies, recognizing that it takes time for the asset base to grow and for the funds to start showing up on screens.
They give every fund they launch a multiyear timeframe to prove itself, which should at least reflect a full market cycle, and specifically have little expectation that any new fund will grow materially until it secures a three-year track record and receives a Morningstar rating.
ICMIX is on track with their initial assumptions for asset growth, does not foresee eliminating its expense ratio caps, and hopes to reduce the expense ratios as the fund grows.
As Franklin said in his 3Q 16 commentary, “Thank you for letting us build”, i.e., the building process takes time, and that being patient and building the portfolio right pays off for everyone.
I appreciate your interest in this month's article.
Best.
I have roughly equal amounts in QUSIX and GPROX.
Fidelity will likely let you transfer in shares (e.g. from Vanguard) to a taxable account even if you don't have $1M. But you should check to be sure, and also make sure that they'll let you buy more once you transfer the shares in.
I'm pretty sure there are endless arguments for why I should or shouldn't have foreign small cap in my portfolio and I tend to think the reality is that not many people truly "need" most of this stuff. But I want it and I want it because I think most of the developed world has a demographic problem that will hurt bigger businesses more than smaller businesses. And I want to be selective across the board so I'm not a fan of broad passive approaches to foreign markets now because I'm not a big believer in those economies, broadly speaking. I'm willing to pay people I believe in to be selective and hopefully do better than average. I realize that goes against the prevailing wisdom in some regards but I'd rather follow what I believe in along with the associated risks than do something I don't believe in or even to just avoid it altogether.
Late last spring or early summer there was a spirited debate about funds that hold a lot of cash. At the time I think it was related to the liquidation of Eric Cinnamond's fund. I like this fund a lot- the way everything is approached, the way Franklin thinks and communicates, the shareholder friendliness. I also recognize that I and anyone else who likes the fund has to be prepared for the possibility of times when it may hold very large amounts of cash. If you can accept that and believe they'll come out ahead over the market cycle then it's great. If you have a hard time with that then it'll be even worse when you have real money invested.
Thanks again for your thoughts!