So many mutual fund ideas have past through this web-site and it's predecessor FundAlarm since I started visiting 11+ years ago. Some ended up being stinkers, but others have ended up being staples in my portfolio. With that, I was wondering what fund ideas were found here by others here at MFO/FundAlarm that were either bad buys or those that were great. These come quickly to mind for me:
The 3 best for me have been: (in no particular order):
PRWCX, SFGIX, and PONDX (DSENX is quickly finding it's way up the list, just haven't owned it as long).
3 stinkers I wish I didn't gamble on:
USAGX, ARIVX, WASYX
Comments
Do you mean PRWCX (TRowe's great fund) versus PWRCX? The latter is a high-priced fund of funds and looks like a stinker to me...but the former, I own and agree is a great one.
Good thread @MikeM
Worst: Found plenty on my own and switched to index funds instead.
Worst: IVFIX
Worst: ARTWX
DisHonorable mention: RWGFX (still own it though, been eyeing swapping it back for an index or DSENX)
Worst: AOD
Regards,
Ted
Oops @rforno beat me to this observation. I think we can safely assume Mike meant PRWCX Capital Appreciation. Own and agree it's a great fund from a fine family. Probably "overbought" at this time - if the term may be applied to a fund.
EXTAX was just (this month) liquidated. From the prospectus supplement: (I'm confident Shadow posted this at the time; now it was just easier to fetch the filing directly.)
Good thread.
Hmmm ... worst (and definitely my bad):
Whitebox Funds ... WBMIX
Burns me to this day that they closed-up shop after what ... three years.
Cowards!
c
All the other ones I read about before FA (GLRBX etc.) but it was nice to have confirmed.
Worst- rsivx. purchased just before it flailed and it ended up being tax harvested. repurchased recently.
Worst is EXTAX
I wonder if they could have handled it differently. Could they have changed the E.R. to 0.1% when the cash exceeded 66%? Just thinking out loud.
I had never seen his blog before but it seems light while still relevant so fans of his might be interested if they didn't know about it...
ericcinnamond.com/
Disappointments: SEEDX, RWGFX, FOBAX, RSIVX
Investors often are late to the party with funds, getting if after the big gains. Once the fund gains large numbers of assets, it may be unable to continue using its unique strategy. Certainly MFLDX is a good example of this. Spectacular numbers from inception 2008 through much of 2013 (assets ballooned from $35 million to almost $16 billion), then running of the tracks and crashing, not recovering even as assets dropped to $370 million. Here there was no management change. In hindsight, the small fund's purchase by a large fund company was likely a big mistake.
I would urge caution about labeling relatively new funds "Best". "Best" can mean different things to different investors. While I personally own SIGIX because of its manager's track record, the fund is barely 5 years old. I own it because I believe it is a good compliment to a higher-volatility index like SCHE. It may not have the best long-term total return numbers, but I am ok with that.
The real problem is who buys a 1* fund? Everyone wants to by 5* funds. I think the *s influence people in a way simply "top performing fund" wouldn't. I can guarantee most of the people looking at M* and at fund companies touting the star rating received from M*, take this to mean more than just a performance based rating when it is really just that.
Finally it is hard to know when someone was lucky or just good or both or neither. MFLDX started in 2008. Perfect timing for a L/S fund. I'm glad I sold because it stopped being NTF at Scottrade.
That was useful to me and, arguably, profitable to you because I stewed a lot about what contributed to the mistake. Part of the lack of a mutual fund record, as opposed to an SMA record and part was that the two managers executing the fund strategies were only assistants on the SMA strategy. Both of those conclusions helped me tighten the criteria for funds I've written about. That played out in the case of Auer Growth (AUERX), where the senior Mr. Auer managed his retirement account to something like a 10:1 advantage over the broad market over some ridiculously long time; the junior Mr. Auer talked him into launching the strategy as a fund. I was, I hope, clearly skeptical about it. A one-star fund with bottom 2% performance followed.
The only queasy interval was Nakoma Absolute Return, which was managed by one of the guys at the U of Wisconsin's famous securities analysis program. These guys cranked out a string of first-tier managers and ran a very successful long-short hedge fund which they eventually offered to the public as a mutual fund. I 'fesseup to the problem with the fund a long time ago (07/11) in a discussion started by Vintage Freak: I've become more cautious about hedge fund conversions as a result; my experience is that those often end up as being okay funds but mostly shadows of their former selves. Why? Rekenthaler made a good argument this month: hedge fund conversions are cherry-picked and we don't know anything about the rest of the crop. A hedge fund manager might have 10 funds, nine of which smell like the beach at low tide and one of which has had (maybe, "has lucked into") eye-popping results. The existence of the nine dogs doesn't have to be disclosed so we falsely assume that the one winner is representative of the managers' skills. While that's not always the case - that is, some hedge fund conversions produce reputable mutual funds - it's something that we need to approach with skepticism.
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I'm mostly able to sleep at night when I consider the other funds we're written about. Mostly. Some have been spectacular successes, which is nice, but I draw more comfort from the fact that most of the managers (including Mr. Cinnamond) have invested heavily in their funds and have done precisely what they said they were going to do. That is, they were disciplined and true to that discipline. Mr. Barbee (AVALX) told you he was going to stay fully invested, at all times, in the tiniest and cheapest stocks in existence. It's been clear from Day One that that's a rocket-and-crash discipline. The fund made a mint during the 2000-02 bear, dipped by 65% in the 2007-09 one, and is beating the competition by over 300 bps since. Its cumulative (i.e. compounded) advantage since launch is huge. That said, I'd never invest in it since I much prefer not to have my long-term returns punctuated by apocalypse. But I'm perfectly comfortable with what we wrote about it.
For what that's worth,
David
I also owned Utopia Funds. I do recall receiving communication from them. It said something like Dodd Frank + state regulations in the state of Michigan made it quite impossible for them to operate as a low cost shop and remain viable as a business. They cited hardships in general for smaller financial firms in general. There may have been more specifics I don't recall.