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COBYX passed their third anniversary on July 1. The folks at Morningstar said they release a fund's star rating on the third trading day of the following month. Given the appearance of low volatility (just looking at the NAV price chart) and high performance, five stars seemed likely. David Hobbs, C&B's president, wrote today to confirm that.
I was not looking for a concentrated fund per se; I just track lots of interesting small funds. Several Observer readers wrote and asked me to look into this one in particular. I did, it was striking, and so we ran the profile.
Yep, that certainly is a striking feature of the fund. The fee is structurally high in the sense that it's driven by a 1.5% management fee; that is, the managers' cut of the action. In a hedge fund it would be 2% of assets plus 20% of net profits above a certain threshold (the "2 and 20 world"). In Wintergreen (WGRNX), it's 1.5%. Mr. Winter's argument is that you're getting a "2 and 20" type fund without paying the 20. I suspect that the managers would make a similar argument (I'll check my interview notes, but I don't think I remembered to ask for an explanation of the management fee).
That's not a defense of the fees, just a bit of context for them.
While I don't see a compelling case for this particular fund, I also really appreciate David's, and MFO contributors', efforts to keep the board current about new, small, unique, and/or under-the-radar mutual funds. Thanks.
Comments
I was not looking for a concentrated fund per se; I just track lots of interesting small funds. Several Observer readers wrote and asked me to look into this one in particular. I did, it was striking, and so we ran the profile.
Does that help?
David
That's not a defense of the fees, just a bit of context for them.
David