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I like actively managed, very focused ("best ideas") funds. However I am having trouble understanding how this fund makes sense. - Almost 1/3 of the fund is cash. - The rest of the fund is in only 8 stocks. - The managers barely trade (25% turnover). - The expense ratio is very high (1.88%).
I am not saying the strategy is bad or that it does not work, but it seems like investors are paying the managers a very high fee to do very little. Unless you are exceptionally lazy or investing very little, I don't think it would be that hard or expensive to buy and hold 8 stocks on your own through a discount brokerage, and rebalance and/or buy on the dips periodically.
Well, I have to disagree with that. There is nothing particularly complicated about buying 8 stocks with 60% of your money and holding the rest in cash, but that doesn't make it easy to do well. The right 8 stocks will do fantastically and the wrong 8 can ruin you.
There are several things that are very impressive about the fund. The mutual fund has been open since 2009, a period of time that encompasses a gigantic bull market, and it has kept up. If you look at the portfolio, all the companies are large consumer defensives and Berkshire Hathaway. If the market were to drop 50% tomorrow, this fund wouldn't follow t and these guys would probably buy. That's uterly fantastic and I seriously doubt that you or I could do replicate this.
Btw, this isn't a "best ideas" fund, it is a different way to invest.
The managers are young, seem to love what they are doing. These are all very strong positives, and this fund will probably do very well. On thee other hand, 1.88% is a lot if your name isn't Seth Klatamn. I don't know if I will invest but this Fund is deffinately worth a look.
Comments
- Almost 1/3 of the fund is cash.
- The rest of the fund is in only 8 stocks.
- The managers barely trade (25% turnover).
- The expense ratio is very high (1.88%).
I am not saying the strategy is bad or that it does not work, but it seems like investors are paying the managers a very high fee to do very little. Unless you are exceptionally lazy or investing very little, I don't think it would be that hard or expensive to buy and hold 8 stocks on your own through a discount brokerage, and rebalance and/or buy on the dips periodically.
There are several things that are very impressive about the fund. The mutual fund has been open since 2009, a period of time that encompasses a gigantic bull market, and it has kept up. If you look at the portfolio, all the companies are large consumer defensives and Berkshire Hathaway. If the market were to drop 50% tomorrow, this fund wouldn't follow t and these guys would probably buy. That's uterly fantastic and I seriously doubt that you or I could do replicate this.
Btw, this isn't a "best ideas" fund, it is a different way to invest.
The managers are young, seem to love what they are doing. These are all very strong positives, and this fund will probably do very well. On thee other hand, 1.88% is a lot if your name isn't Seth Klatamn. I don't know if I will invest but this Fund is deffinately worth a look.