our September issue has posted

David_Snowball

Dear friends,

You might peak over to that side. I picked up on Shadow's post about the ARIVX and had a chance to speak with Eric Cinnamond about it. I spent some time following up on Shadow and BobC's discussions about the Artio spiral downward. Took more than a moment to rant about the idea of hiring Gary Black to run things. I did substantially updated profiles of Northern Global Tactical Asset Allocation, which is now NTF at Scottrade, and Aston/River Road Independent Value. Highlighted a new Wasatch fund in registration.

For what it's worth,

David

mnzdedwards

Thank you David for your great service and dedication. I always eagerly look forward to reading your monthly commentary over a cup of coffee. Keep up the great work - you are much appreciated!

Mike_E

David_Snowball

Reply to @mnzdedwards: Thanks, Mike. I appreciate the kind words. David

MikeM

Thanks David for another great commentary. I especially liked your timely feedback from Eric Cinnamond.

I didn't add a comment on Shadow's post about ARIVX re-opening because it was confusing to me. What was the reason for opening a fund with so much cash on hand? Some were bashing a fund that fits to a tee what I want in an equity investment, capital preservation at the forefront and a proven smart manager. A fund with a goal of out performing the market over a full economic cycle. Not a fund that tries to shoot the lights out in good times but pays the piper in bad.

ARIVX has become one of my favorites, along with YAFFX and MACSX, because they all seem to have the investment goals my risk tolerance relates too.

AndyJ

Reply to @MikeM: I wonder (?) if the timing was dictated at least partly by the contract with the umbrella group; i.e., was there a provision that said the fund would shift the capacity to non-institutional investors if the projected institutional AUM didn't materialize by Sept 1, 2012? If that's the case, the contract date just happened to fall at a time when he's still holding a lot of cash.

VintageFreak

Northern Global Tactical Allocation - Why would one invest in this fund when managers have no commitment to their own "tactical" abilities. It's one thing for a manager to be excused for not investing in "XYZ Aggressive Growth" assuming one accepts his/her ability but respects his age (say 60+) to excuse why there's no investment in an aggressive fund. However, for such a fund, for manager to not have any investment is simply insulting investors and I cannot believe we let ourselves be treated this way.

I'm also worried about Wasatch. I own WAIGX and WAEMX and is my small cap/foreign exposure - I own no other fund with such exposure. Sounds like they are suffering from a case of Janusitis in the 2000s. WTF ?!?!?! Stop opening new funds and concentrate on managing your existing charges. You are not the top dog anymore or the only game in town for small cap investing. Besides you are increasingly venturing more and more into international/emerging territory. I hope you don't have a grand plan of buying / selling stocks in your funds to each other of your funds in a ponzi scheme of sorts like Janus did with their various growth funds. We know how it ended when there's no one left to sell too.

Wasatch - WHASSUP ?!?!?!?!?! What's next? Wasatch Agrarian India Fund? Wasatch Rural Africa Fund.

Finally, Calamos. Why is it that even after I take time and carefully evaluate a fund to construct my portfolio, I get shell shacked?. Hiring Gary Black tells me Calamos is looking for a way out. Selling out to ABN Amro or someone? I own CVLOX. Some luck.

Charles

Nice issue David.

I am using the re-opening of ARIVX as the opportunity to have the good Mr. Cinnamond be one of my fund managers, even though (and perhaps even so) the fund is having a bit of an off year so far.

Good to see Northern Global Tactical Allocation BBALX becoming more proactive (aggressive?) in it allocation process. Approach seems a bit like AQR Risk Parity AQRIX, but without the shorting. And yeah, like VintageFreak and you point out, somewhat discouraging that there is no ownership of fund by management.

Glad too that you will review Whitebox next month.

Thanks, as always.

Investor

The text in some of the table cells for ARIVX profile ( http://www.mutualfundobserver.com/2011/04/astonriver-road-independent-value-arivx/ ) is not flowing right when it hits right edge of the cell and lost from view. I had to make the text smaller than normal to be able to read. Please correct wrapping behavior.

Investor

David, I did not see any FundReveal take on the funds. I am curious how the previous FundReveal evaluations have panned out.

Also, the September issue is missing an important reminder that needs repeating (I know you might feel like it is getting old but it is necessary for running a free website without ads and charging for content). I'll include it here for you:

And speaking of fall, it’s back-to-school shopping time! If you’re planning to do some or all of your b-t-s shopping online, please remember to Use the Observer’s link to Amazon.com. It’s quick, painless and generates the revenue (equal to about 6% of the value of your purchases) that helps keep the Observer going. Once you click on the link, you may want to bookmark it so that your future Amazon purchases are automatically and invisibly credited to the Observer. Heck, you can even share the link with your brother-in-law. Once you click on the link, you may want to bookmark it so that your future Amazon purchases are automatically and invisibly credited to the Observer. Heck, you can even share the link with your brother-in-law.

chip

Reply to @Investor:

I'm sorry about that. It seemed to be browser-based and related to the size of the graph, but I think it's fixed now. Would you mind checking in your browser?

David_Snowball

Reply to @Investor: Hi, big guy!

FundReveal is currently refining its business model and website. They're interested in continuing their collaboration with us, but need a bit of time to get other stuff straightened up first. I'm just waiting quietly.

Chip edited September to include a version of the Amazon note and we're editing the "welcome to the Observer" email that new folks receive when they sign up for the monthly "hey, we've updated" email. We gain about 50-80 people a month. The edits will highlight the Amazon (and other) options. I don't include it every month based on advice from Roy to avoid the "eternal pledge drive" appearance. I've never tested whether monthly or bi-monthly reminders work better.

For what it's worth,

David

David_Snowball

Reply to @VintageFreak: Hey, VF!

I mostly think of insider ownership of a mutual fund in pragmatic rather than moral terms. While it's always a nice symbolic gesture to have the manager and trustees in the trenches with you, the place where the rubber hits the road is performance. In general, higher levels of manager and trustee ownership correlate with a better risk-return profile.

Having said that, I'm not entirely dismayed by the Northern managers. As far as I can tell, the fund derives its performance from the asset allocation judgment of Northern's investment policy committee. That judgment is executed by buying or selling index funds. It's not clear to me how much room the managers have to add or detract value, and so I'm only modestly annoyed with them. Investing, in this case, would be a nice gesture but might not be a performance driver.

Agrarian India? Oooooooooooo! I'm setting aside cash now!

And I suspect that this is Calamos' attempt to succession planning. Whether the future includes remaining an independent fund (or a "series" of something like AMG), I have no clue.

David

Investor

Reply to @chip: Looks good now. Thanks.