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The managers of the two new Grandeur Peak Funds (GPGOX, GPIOX) have certainly been busy buying stocks. I am a little surprised by the sheer number of holdings in the two modestly-sized funds:
The number of holdings in GPGOX is in the 150 ballpark range I believe. I'm not surprised at all because that's what they've stated since inception in terms of approximate number of holdings being targeted by the funds.
Furthermore, when they were managing the Wasatch Global Opp fund - they had 300 stock holdings. And consider that they are investing in micro-cap and small-cap stocks and so they probably don't want to get too concentrated.
Reply to @Kenster1_GlobalValue: "And consider that they are investing in micro-cap and small-cap stocks and so they probably don't want to get too concentrated."
For small-and micro-cap stocks, they are thinly traded and often not sufficient liquidity to establish large positions without trading up the stock price. Also it is also a matter of risk management.
YTD the fund has done quite well compared to its global fund peers.
Reply to @Sven: The fund has done well, but has it done better than WAGOX and/or will it do better than WAGOX in the future? I think this is a tough call. GPGOX's performance is still quite similar to WAGOX, although I note that GPGOX had a bigger run up in Feb 2012 and a corresponding bigger fall in May 2012. Maybe this is a meaningful difference in strategy, or maybe it is just an isolated incident. Their YTD performance is almost the same. GPGOX has slightly lower expenses but this has not seemed to make a noticeable difference yet.
Reply to @claimui: YTD performance is too short to draw meaningful conclusion. Over longer term, i.e. 5 years or longer, these two funds will track each other closely unless the strategy deviates.
Nevertheless, this fund should do well by pairing up with a larger cap global fund.
Reply to @Sven: My question is really more whether folks expect GPGOX to be a distinct and compelling alternative to WAGOX, or if these two funds will be more or less interchangeable. I'm thinking in comparison to MACSX vs. SFGIX, where the two funds have performed similarly thus far but where SFGIX is clearly pursuing a distinct strategy and I would expect it deviate from MACSX in the future.
Reply to @claimui: I totally agree that performance of SFGIX is likely to deviate from MACSX with the investment universe now that it spans beyond Asia. It can also swing both directions depending on whether Mr. Foster has all resource to cover all regions, and the strategy still work in South America, for example.
With smaller asset base to start, GPROX may out-perform in the short term comparing to WAGOX. Otherwise I expect them to be interchangeable.
Reply to @Sven: Now, the spin-off funds are limited in research resources vs the more established former funds. The question is how much the research that the fund manager received while working for the bigger more established firm mattered in returns. I think it will take a while before we will know.
If you go to Grandeur Peak's website they do a fairly good job of describing how they built the shop and hired "truly global" analysts, vice focusing on sector or country specific. I owned WAGOX a while because the expense ratio was 2.25% at the time. I will pay up for performance but that was pretty nuts considering Wasatch has shown a propensity to recently let their funds get a little bigger than they have historically…..i.e. WAEMX and WAAEX. I will stick with GPGOX unless they don't close before ti gets to big. I think that the managers stated that they would close it before it reached $500 million in assets.
Reply to @Investor: Clearly building a team of analyst to cover the global stocks, especially within the micro- and small-cap universes, is a huge task. This side we (investors) do often see easily. Only time will tell how this process evolves as it reflects through the market cycles.
Personally I think SFGIX would be more challenged with added coverage on stocks, convertibles, and bonds, globally rather than Asia-centric focus. I hope there is sufficient analyst support for Mr. Foster to be successful.
Reply to @Heathbob: Wasatch funds tend to close their funds to new investors at low asset level. Sometime they are "hard closing" and existing shareholders cannot invest additional $$. Although WAEMX is closed only to new shareholders, and the billion $ asset came after the closing.
With respect to GPROX, the goal of closing at $500 million is a reflection that is the asset level the management team feel they can comfortably manage. For a global allocation fund, this is a very low asset level.
After a bit more due diligence, I decided to take a chance on GPIOX and GPGOX. Since I have to shoot out a fund from my portfolio, I've sold out my small but relatively long time investment in OAKEX and bought GPIOX since both cover International small caps.
I'm also planning to make minimum foothold investment in GPGOX against fund closure possibility which is expected to happen around $400M assets according to this.
Howdy Investor, I am sure you have also been monitoring "our inhouse", at Fido; FEDDX fund, too. Currently, about 60% sm cap and 40% mid cap in developing markets, and is really spread around globally. Performance for this new fund is impressive when matched against similar entries. Take care, Catch
Reply to @Investor: I have been thinking the same thing, but this will be funded from Pimco Total Return.
Lately I have been adding to existing foreign equities through Vanguard FTSE Index, VEU and Wisdom Tree Emerging Markets High Yielding Equity Fund, DEM. Both funds have not done well thus far with fear of European crisis and slow down in emerging market. At the same time, this represents entry point opportunities when the price become attractive, and higher return is likely in the longer term. I tend to hold positions 5 years or longer.
I do occasionally look at FEDDX but I already have WAEMX which has similar investments and performance. For someone looking for an alternative to WAEMX (which is closed now) FEDDX may be a pretty good alternative.
Comments
The number of holdings in GPGOX is in the 150 ballpark range I believe. I'm not surprised at all because that's what they've stated since inception in terms of approximate number of holdings being targeted by the funds.
Furthermore, when they were managing the Wasatch Global Opp fund - they had 300 stock holdings. And consider that they are investing in micro-cap and small-cap stocks and so they probably don't want to get too concentrated.
For small-and micro-cap stocks, they are thinly traded and often not sufficient liquidity to establish large positions without trading up the stock price. Also it is also a matter of risk management.
YTD the fund has done quite well compared to its global fund peers.
Nevertheless, this fund should do well by pairing up with a larger cap global fund.
With smaller asset base to start, GPROX may out-perform in the short term comparing to WAGOX. Otherwise I expect them to be interchangeable.
Personally I think SFGIX would be more challenged with added coverage on stocks, convertibles, and bonds, globally rather than Asia-centric focus. I hope there is sufficient analyst support for Mr. Foster to be successful.
With respect to GPROX, the goal of closing at $500 million is a reflection that is the asset level the management team feel they can comfortably manage. For a global allocation fund, this is a very low asset level.
After a bit more due diligence, I decided to take a chance on GPIOX and GPGOX. Since I have to shoot out a fund from my portfolio, I've sold out my small but relatively long time investment in OAKEX and bought GPIOX since both cover International small caps.
I'm also planning to make minimum foothold investment in GPGOX against fund closure possibility which is expected to happen around $400M assets according to this.
I am sure you have also been monitoring "our inhouse", at Fido; FEDDX fund, too. Currently, about 60% sm cap and 40% mid cap in developing markets, and is really spread around globally. Performance for this new fund is impressive when matched against similar entries.
Take care,
Catch
Lately I have been adding to existing foreign equities through Vanguard FTSE Index, VEU and Wisdom Tree Emerging Markets High Yielding Equity Fund, DEM. Both funds have not done well thus far with fear of European crisis and slow down in emerging market. At the same time, this represents entry point opportunities when the price become attractive, and higher return is likely in the longer term. I tend to hold positions 5 years or longer.
I do occasionally look at FEDDX but I already have WAEMX which has similar investments and performance. For someone looking for an alternative to WAEMX (which is closed now) FEDDX may be a pretty good alternative.