SFGIX Underperformance

BenWP

http://updates.seafarerfunds.com/t/ViewEmail/r/ABC6E0301B01329A2540EF23F30FEDED/A8EFEBE0ED2CC0EB4D402EFBD42943A3
Shareholders of SFGIX, myself included, probably received an email with Andrew Foster's latest video. I did not watch the whole thing but I did listen carefully as Foster struggled to explain why the fund has failed to keep pace with its bogey for four quarters running. Not buying Chinese internet stocks did not sit well with me as good reasoning. I know many on the board own the fund and I, for one, believed we'd be rewarded in a year when EM stocks have been on a tear. Do others share my disappointment?

Ted

@BenWP: No question SFGIX has had a difficult time of it YTD and 1-Year, putting it in the 85 and 93 percentile. However, its 3 & 5 year performance is excellent with a 5th and 7th percentile ranking. I guess its a question of what have you done for me lately. I recommend if thing don't improve significantly by the end of 2017, I'd dump Foester
Regards,
Ted
M*: SFGIX Performance:
http://performance.morningstar.com/fund/performance-return.action?t=SFGIX&region=usa&culture=en-US

Crash

Ya, I've been getting impatient, too. Longer term, the fund looks great. And I remember the lesson of the tortoise and the hare. But when the pack is almost ALL ahead of you, a point will be reached when "making your move" will simply be too late. SFGIX has done very well just over the past 2 DAYS...

willmatt72

With all due respect, I don't put much weight behind the fact that the fund has struggled for a year. Given Foster's history, I would give him the benefit of the doubt for now. As Ted said, the fund's 3 and 5-year performance is very good. I would give Foster the benefit of the doubt that he will turn it around. In addition, I don't believe SFGIX is considered a total EM fund, so it may lag other EM funds that are more comprehensive.

JoJo26

If you're going to get your panties in a bundle over one year of performance, you shouldn't be investing with active managers. Just go passive and call it a day.

MikeM2

WM76 and JoJo are right on the money. Just today there is an article on M* by Christine Benz mentioning that HY bonds and EM equities are two areas that benefit from active managers.

LewisBraham

Attacking the fund in this environment is a failure to understand Foster's strategy. He is a defensive risk-averse emerging markets investor. When the average emerging fund is up 21.5% in 6 1/2 months like in 2017, this fund will probably lag. Anyone complaining about its 16.5% return instead of 21.5% is suffering from a bit of irrational exuberance. Foster ran Matthews Asian Growth & Income for six years with the same defensive strategy. It too would lag in go-go markets and shine in more stable or bearish ones.

rforno

I don't give a hoot about meeting any particular performance benchmark but my own.

If a fund I hold gains 16% and everyone else gains 25% in a given year, I am not worried; it's still a very solid rate of return imho. Conversely, if a given fund loses significantly less than everyone else, I will chalk that up as a 'win' for the year, as it shows some concern over downside risks and/or good allocations.

And besides, one year does not matter if you're a long-term fund investor. Unless you're in a bubble, not everything moves equally and in the same direction at all times.

districtwanderer

Recent SFGIX performance is exactly what I expect; in fact, it's the very reason I own it as my primary EM exposure. @rforno hit the nail on the head: don't compare yourself (or a particular fund) to others, as long as it is accomplishing your objectives--and yours alone! If you feel impatient with one year EM performance, you probably shouldn't have an EM allocation. You're likely to make changes at the wrong time and lose out in the long run.

BenWP

One can never be sure of how to take comments made in this or other fora. If I attacked Foster's fund, it would be a surprise to me. I owned his Matthews fund for several years and followed him to Seafarer. I've had a sizeable EM allocation since before the Asian meltdown in the 90's. To paraphrase the guy in the Farmer's ad: "[I] know a thing or two, because [I]'ve seen a thing or two."

LewisBraham

@Benwp If it came across as I was suggesting you specifically were attacking the fund, I apologize. I was referring to the general disappointment of the top three posts and the suggestion of dumping the fund by year-end. That kind of short-term underperformance in a raging bull for emerging markets in 2017 is not enough in my view to throw in the towel if you believe in this manager's defensive process. The fund is functioning as designed. A better sell sign to me would be if it started lagging during a downturn in emerging markets. I guess what I'm saying to everyone, not specifically you, is don't expect a golden glove winning short stop to hit home runs. This is not the right environment for this fund to outperform.

JoJo26

LewisBraham said:

@Benwp If it came across as I was suggesting you specifically were attacking the fund, I apologize. I was referring to the general disappointment of the top three posts and the suggestion of dumping the fund by year-end. That kind of short-term underperformance in a raging bull for emerging markets in 2017 is not enough in my view to throw in the towel if you believe in this manager's defensive process. The fund is functioning as designed. A better sell sign to me would be if it started lagging during a downturn in emerging markets. I guess what I'm saying to everyone, not specifically you, is don't expect a golden glove winning short stop to hit home runs. This is not the right environment for this fund to outperform.

A Rod won a couple golden gloves AND hit home runs

[Deleted User]

The user and all related content has been deleted.

hank

The original post did not suggest selling the fund - only "disappointment" on hearing Foster's explanation. And the query appears directed mainly towards other investors in the fund. It's their b***s that's in the fire. I commend Lewis for his fair and judicious handling of the issue in his last post.

Listened to the first 5 minutes of the linked interview and thought Andrew Foster sounded kind of stressed out trying to explain his fund's recent performance. Yikes - if this is the life of a fund manager, who would want the job? Every day at 6 PM your fund's gain/loss is splashed all over the internet for the world to see. Who wants to be graded nearly every single day of their life? A few clicks at M* brings up your weekly, monthly and yearly performance. Tough seat to be in. Like it or not, that's how many (dare I say most?) investors today evaluate their fund managers. The fund flows speak for themselves.

" He’s a man way out their in the blue riding on a smile and a shoeshine.
And when they start not smiling back—that’s an earthquake."

(Arthur Miller)

BobC

I have no reason to believe Foster has suddenly taken dumb pills. He has ably managed dollars for my clients and me for about 10 years, first at MAPIX and with SIGIX since he started that fund. I frankly do not care if the fund under-performs during an EM bull market. It is up about 12% year to-date. I'll gladly take that. The way bigger test for me is when EM is struggling, as they did in 2013, 2014, 2015, and even 2016 to some extent. In those years, SIGIX came through as I expected it would. If you bought SIGIX for outsized gains during EM bull markets, you bought the wrong fund. That is not how the fund is run. While I am sure Andy would like to be at the top this year, and that he is frustrated to be near the bottom, that does not bother me one bit.

Sven

I discovered Mr. Foster from Matthews Asia Growth & Income fund and followed him through the Seafarer Oversea Growth & Income fund. He is one of rare manager who I like to invest with many years to come as I did with Micheal Price (before he sold his company to Franklin and retired). It is when the EM index lost over 60% in 2007 while MAPIX lost half of that and recovered much quicker. Having long term investment horizon is key to keep everything in the proper perspective.