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This fund is very young (inception: 2/15/2012), and has a whopping 81% exposure to Asia, which is way too high for a diversified EM balanced fund. So far, the larger, more established, and lower cost MACSX has outperformed SFGIX during all periods since its inception.
I am in no rush to buy this fund. When SFGIX develops a longer track record which equals or preferably beats MACSX, and increases its exposure to non-Asia EM, then I will consider buying this fund over MACSX. I see no benefit to being an early buyer of this fund, as it only has $2.8M in AUM per M* and will likely not close to new investors any time soon. Although there is a lot of excitement about this fund here and over on M*, right here, right now, I have placed this fund on my watch list, but I am not a buyer.
MAPIX has been a great fund, and it has not lost any luster since Foster departed. We have used it as a 'chicken' way to invest in China and other Asia EMs. But posters are correct that it is not a true EM fund. There really is no low-risk way to play emerging markets. Lazard We track about 40 EM stock funds, and the best still lost more than 40% in 2008, while the index was down almost 50%. By 2011, some funds seemed better at handling volatility, since many more did better than the index. But I think you go with strong long-term management here, so it's hard to overlook Oppenheimer, Aberdeen, Invesco, and Virtus (run by Vontobel). And Wasatch WAEMX has been rather surprisingly strong during selloffs in its short history. I really am impressed with that fund's managers.
Reply to @BobC: The Virtus fund is going to get complaints (load fund, etc), but I think it's actually an interesting, unique take on EM that has done pretty well. It's worth consideration. I have not been pleased with Pimco's new EM stock and balanced offerings.
Take a look at DEM, Wisdom Tree Emerging Market Equity (ETF). DEM holds 300 high dividend emerging markets stocks. It was down -10.3% in 2011 against -21% for the index.
Yes Scott as you pointed out - Andrew Foster knew that the heavy Asia exposure would come up and he addressed that question. So in current form it has a similar exposure to MACSX with a bit of exposure outside of Asia for the time being. And as Andrew mentioned they have their research hat on in evaluating numerous regions outside of Asia and it's just a matter of time and the right price to jump into more non-Asian stocks.
I wouldn't worry about such extremely short performance time periods. We have to dig deeper to look at what's happending. In Q1 this year we saw pretty good returns especially in EM and so with the Seafarer fund launching in the middle of Q1 with probably a substantial cash position --- it didn't have quite the same momentum behind their back as other established funds.
There's some following and real interest with the Seafarer fund and how Andrew's handling the EM allocation of the fund from some diehard Matthews Asia fans but I wouldn't say there's a huge fanfare or huge following. In fact, there was a much bigger fanfare and following of Eric Cinnamond when he started ARIVX including investors rushing to get in before the fund closed (...which by the way ARIVX is underperforming its peers YTD).
The small size currently of Seafarer means that investors aren't rushing in --- I wouldn't base an investment on follow-the-leader tactic such as getting into ARIVX just because so many others were doing it too. I would do your own analysis as to whether Andrew Foster and team is investing in the way that appeals to you and something you're looking for in your portfolio irrespective of whether there's just a few million in assets or one billion. Listen to the content of what's he saying, how he's investing, what region he likes, what region he's researching and eyeing, why he likes certain preferred/convertible securities, etc.
Another one I like is Aberdeen's FEO - Emerging Market's Opportunity fund which looks at both EM stocks & bonds and I've looked at their stock and bond holdings in their reports. I'm invested in FEO too.
Reply to @Kenster1_GlobalValue: "Yes Scott as you pointed out - Andrew Foster knew that the heavy Asia exposure would come up and he addressed that question. So in current form it has a similar exposure to MACSX with a bit of exposure outside of Asia for the time being"
I don't own the fund or am I planning on getting it, and was merely responding to another poster's concern about the fund's Asia exposure.
"I wouldn't worry about such extremely short performance time periods."
I'm not - I've been bullish on EM for a number of years now, even a few years ago when people on fundalarm said things like, "How could you trust those governments!?!?!"
I am not going to go back to being nearly 100% EM as I was in 2009, but I have increased my EM exposure in the last couple of months. I also think Europe becomes interesting as everyone flees from it. In terms of EM, I think I'm seeing a number of names that are impressive in terms of being nimble - look at Naspers, which was mentioned in a thread yesterday. You have a printing business started in 1915 that successfully transformed itself into a very modern media conglomerate with E-commerce businesses across emerging markets. I continue to think the EM consumer will - despite some bumps along the way - will grow in impact over time.
I'm not sure who's comparing this fund to ARVIX (I don't believe anyone did in this thread and I sure didn't?) - Cinnamond was kind enough to respond quite quickly to concerns when David contacted him a couple of months ago and those getting into that fund should do so with the understanding that the manager is protective of principal/conservative. He will not always time that right, but at least he provided a detailed discussion of his reasoning.
Reply to @scott: Hey Scott - no I didn't mean to imply that you were worried about the short-term performance. I just meant to refer to the part about the high asia exposure as you pointed out the link to where Andrew addressed that topic.
The rest of my post was just talking in general and to everyone and not really addressing it to you.
Nobody is comparing the fund to ARVIX - the point is that if we are going to look at such EXTREMELY short-term performance of the Seafarer fund (hey why is it behind other EM funds), that would be like evaluating the short-term YTD performance of the fairly new fund, ARVIX.
You just gave an explanation behind ARIVX. Exactly my point! That's why I gave an explanation behind why the Seafarer fund might be a bit behind other EM funds over the short period since its debut. I'm NOT knocking ARIVX! What I'm implying is that if an investor likes ARVIX and can understand the reasons for why over very short-periods for why it won't keep up with other peer funds --- then the Seafarer fund can also be in the same boat, especially even more so considering that it debuted in the middle of Q1 and missing some of the upswing momentum that other funds were able to ride.
To reiterate my point --- I'm not piting ARVIX versus Seafarer but using it as an example. If ARVIX is such a highly recommended risk-averse fund whereby a manager moved from an existing fund company and started a new fund at another fund shop and those investors can understand Eric's investing style and understand that at there will be times where his fund won't keep up with peers over the Short-term (e.g. YTD), then that very same idea can be applied to Andrew's Seafarer fund that just got off the ground less than 3 months ago.
I had read the linked explanation prior to writing my post. And I honestly cringed when I read this statement, " I have emphasized Asia in the initial portfolio because I know it best." That may be true, but it is not what I want to hear from the manager of a diversified EM balanced fund that I am considering adding to my portfolio. I would like my manager and his/her team to "know" the global emerging and frontier markets.
Again, my default in this space is MACSX until SFGIX becomes more globally diversified and proves itself performance-wise. I have yet to be presented with compelling reasons to be an early buyer of this fund.
I totally agree that each investor should do their own due diligence prior to purchasing SFGIX. I was merely expressing my opinion that I have yet to be convinced that I should add SFGIX to my portfolio.
As for comparing SFGIX to ARIVX, this is definitely an apples to oranges comparison. Eric Cinnamond managed ICMAX from 10/3/2005-9/2/2010, and he absolutely crushed VBR during this time period. Since inception, his new fund, ARIVX has outperformed VBR. Note that both ICMAX and ARIVX have the exact same investment strategy and space --domestic SCV. Mr. Cinnamond merely took his defined expertise to a new money manager, and has proven to be a skilled investor in the domestic SCV space. IMO, he deserves whatever popularity/fanfare he has received.
On the other hand, Andrew Foster has done an outstanding job managing the Asian funds -- MACSX, MAPIX, and MINDX -- but has, in fact, never managed a diversified EM balanced fund. This is a new space for him, unlike Mr. Cinnamond, who continues to operate in the domestic SCV space. Will Mr. Foster's expertise in Asia translate into expertise in the broad EM space, with regards to equities, preferred stocks, convertible bonds, and fixed income securities ? I don't know, and it is really hard to predict. That is why SFGIX is on my watch list and not in my portfolio.
Reply to @kevindow: Yeah, I certainly agree with what you're saying. I do have confidence in Foster, but hopefully he will display successful movement towards a broader EM portfolio over the next year. I will say that opening an EM fund and not having a broader group of EM holdings because he "knows Asia best" is a little off-putting, but still, I think the fund has long-term potential.
Reply to @scott: I guess the thing I wonder about the initial portfolio is why the fairly long startup process for the fund (after he'd gotten Seafarer Capital organized) wasn't enough time for him to do at least some DD to come up with a somewhat more geographically diverse portfolio.
So I don't own it now, but would love to see Sfgix move toward becoming a solid, broad-based, core EM fund - and I'd likely be a buyer if/when that comes about.
Well, I know this thread was originally on low risk EM funds, but the comparison and comments about ARIVX bug me a little.
The comment "...including investors rushing to get in before the fund closed (...which by the way ARIVX is underperforming its peers YTD)".
I switched my small cap holdings to ARIVX back in spring-summer of 2011, so I guess I was one of those that went rushing in. I contend that investors that went rushing in before the fund closed were smart investors. There aren't many managers in the small cap category with the record of Eric Cinnamond. This is a 'preserve capital first' fund that is easy to hold onto in bad times and good. The fact that ARIVX didn't jump out of the gate YTD doesn't mean anything over the the long term. But if short term numbers are important, it has actually been pretty impressive in the last few months as the stock market has cooled. Heck, it's even on the positive side for the week (+.74%) when most all equity funds are down - especially it's small cap benchmark. ARIVX is beating it's benchmark in any time range you look at, except the YTD #. One week, 1 month, 3 month, 1 year. If you look at Cinnamond's previous fund, ICMAX, that funds record beats the index for the 3 and 5 year periods handily. I'm more then happy I made the switch.
So, that's my 2cents on "...those rushing in..." to ARIVX. Not sure why, but I felt compelled to stand up for this terrific fund manager.
Comments
I am in no rush to buy this fund. When SFGIX develops a longer track record which equals or preferably beats MACSX, and increases its exposure to non-Asia EM, then I will consider buying this fund over MACSX. I see no benefit to being an early buyer of this fund, as it only has $2.8M in AUM per M* and will likely not close to new investors any time soon. Although there is a lot of excitement about this fund here and over on M*, right here, right now, I have placed this fund on my watch list, but I am not a buyer.
Kevin
It was down -10.3% in 2011 against -21% for the index.
I wouldn't worry about such extremely short performance time periods. We have to dig deeper to look at what's happending. In Q1 this year we saw pretty good returns especially in EM and so with the Seafarer fund launching in the middle of Q1 with probably a substantial cash position --- it didn't have quite the same momentum behind their back as other established funds.
There's some following and real interest with the Seafarer fund and how Andrew's handling the EM allocation of the fund from some diehard Matthews Asia fans but I wouldn't say there's a huge fanfare or huge following. In fact, there was a much bigger fanfare and following of Eric Cinnamond when he started ARIVX including investors rushing to get in before the fund closed (...which by the way ARIVX is underperforming its peers YTD).
The small size currently of Seafarer means that investors aren't rushing in --- I wouldn't base an investment on follow-the-leader tactic such as getting into ARIVX just because so many others were doing it too. I would do your own analysis as to whether Andrew Foster and team is investing in the way that appeals to you and something you're looking for in your portfolio irrespective of whether there's just a few million in assets or one billion. Listen to the content of what's he saying, how he's investing, what region he likes, what region he's researching and eyeing, why he likes certain preferred/convertible securities, etc.
Another one I like is Aberdeen's FEO - Emerging Market's Opportunity fund which looks at both EM stocks & bonds and I've looked at their stock and bond holdings in their reports. I'm invested in FEO too.
I don't own the fund or am I planning on getting it, and was merely responding to another poster's concern about the fund's Asia exposure.
"I wouldn't worry about such extremely short performance time periods."
I'm not - I've been bullish on EM for a number of years now, even a few years ago when people on fundalarm said things like, "How could you trust those governments!?!?!"
I am not going to go back to being nearly 100% EM as I was in 2009, but I have increased my EM exposure in the last couple of months. I also think Europe becomes interesting as everyone flees from it. In terms of EM, I think I'm seeing a number of names that are impressive in terms of being nimble - look at Naspers, which was mentioned in a thread yesterday. You have a printing business started in 1915 that successfully transformed itself into a very modern media conglomerate with E-commerce businesses across emerging markets. I continue to think the EM consumer will - despite some bumps along the way - will grow in impact over time.
I'm not sure who's comparing this fund to ARVIX (I don't believe anyone did in this thread and I sure didn't?) - Cinnamond was kind enough to respond quite quickly to concerns when David contacted him a couple of months ago and those getting into that fund should do so with the understanding that the manager is protective of principal/conservative. He will not always time that right, but at least he provided a detailed discussion of his reasoning.
The rest of my post was just talking in general and to everyone and not really addressing it to you.
Nobody is comparing the fund to ARVIX - the point is that if we are going to look at such EXTREMELY short-term performance of the Seafarer fund (hey why is it behind other EM funds), that would be like evaluating the short-term YTD performance of the fairly new fund, ARVIX.
You just gave an explanation behind ARIVX. Exactly my point! That's why I gave an explanation behind why the Seafarer fund might be a bit behind other EM funds over the short period since its debut. I'm NOT knocking ARIVX! What I'm implying is that if an investor likes ARVIX and can understand the reasons for why over very short-periods for why it won't keep up with other peer funds --- then the Seafarer fund can also be in the same boat, especially even more so considering that it debuted in the middle of Q1 and missing some of the upswing momentum that other funds were able to ride.
To reiterate my point --- I'm not piting ARVIX versus Seafarer but using it as an example. If ARVIX is such a highly recommended risk-averse fund whereby a manager moved from an existing fund company and started a new fund at another fund shop and those investors can understand Eric's investing style and understand that at there will be times where his fund won't keep up with peers over the Short-term (e.g. YTD), then that very same idea can be applied to Andrew's Seafarer fund that just got off the ground less than 3 months ago.
Hi Scott,
I had read the linked explanation prior to writing my post. And I honestly cringed when I read this statement, " I have emphasized Asia in the initial portfolio because I know it best." That may be true, but it is not what I want to hear from the manager of a diversified EM balanced fund that I am considering adding to my portfolio. I would like my manager and his/her team to "know" the global emerging and frontier markets.
Again, my default in this space is MACSX until SFGIX becomes more globally diversified and proves itself performance-wise. I have yet to be presented with compelling reasons to be an early buyer of this fund.
Kevin
Hi Kenster:
I totally agree that each investor should do their own due diligence prior to purchasing SFGIX. I was merely expressing my opinion that I have yet to be convinced that I should add SFGIX to my portfolio.
As for comparing SFGIX to ARIVX, this is definitely an apples to oranges comparison. Eric Cinnamond managed ICMAX from 10/3/2005-9/2/2010, and he absolutely crushed VBR during this time period. Since inception, his new fund, ARIVX has outperformed VBR. Note that both ICMAX and ARIVX have the exact same investment strategy and space --domestic SCV. Mr. Cinnamond merely took his defined expertise to a new money manager, and has proven to be a skilled investor in the domestic SCV space. IMO, he deserves whatever popularity/fanfare he has received.
On the other hand, Andrew Foster has done an outstanding job managing the Asian funds -- MACSX, MAPIX, and MINDX -- but has, in fact, never managed a diversified EM balanced fund. This is a new space for him, unlike Mr. Cinnamond, who continues to operate in the domestic SCV space. Will Mr. Foster's expertise in Asia translate into expertise in the broad EM space, with regards to equities, preferred stocks, convertible bonds, and fixed income securities ? I don't know, and it is really hard to predict. That is why SFGIX is on my watch list and not in my portfolio.
Take care.
Kevin
So I don't own it now, but would love to see Sfgix move toward becoming a solid, broad-based, core EM fund - and I'd likely be a buyer if/when that comes about.
The comment "...including investors rushing to get in before the fund closed (...which by the way ARIVX is underperforming its peers YTD)".
I switched my small cap holdings to ARIVX back in spring-summer of 2011, so I guess I was one of those that went rushing in. I contend that investors that went rushing in before the fund closed were smart investors. There aren't many managers in the small cap category with the record of Eric Cinnamond. This is a 'preserve capital first' fund that is easy to hold onto in bad times and good. The fact that ARIVX didn't jump out of the gate YTD doesn't mean anything over the the long term. But if short term numbers are important, it has actually been pretty impressive in the last few months as the stock market has cooled. Heck, it's even on the positive side for the week (+.74%) when most all equity funds are down - especially it's small cap benchmark. ARIVX is beating it's benchmark in any time range you look at, except the YTD #. One week, 1 month, 3 month, 1 year. If you look at Cinnamond's previous fund, ICMAX, that funds record beats the index for the 3 and 5 year periods handily. I'm more then happy I made the switch.
So, that's my 2cents on "...those rushing in..." to ARIVX. Not sure why, but I felt compelled to stand up for this terrific fund manager.