I am looking at a few Mid Cap Value funds because I believe we are due for a style rotation to Value and Mid Cap soon. I am interested in the following Nuance Mid Cap Value NMAVX, Artisan Mid Cap Value ARTQX , JP Morgan Mid Cap Value JAMCX, Janus Henderson Mid Cap Value JNVSX. I do like the look of the Nuance Fund, but it has a turnover of over 100% And how can you be a value investor with a high turnover such as that. Any one that has any feedback will be much appreciated. Thank you in advance.
Comments
If they're turning it over at 124% I'ld have to have faith that their stock-picking is so freaking smart that they'll beat the index more often than not. I would study their strategy thoroughly.
So far, they do look pretty smart. M* call them a blend. So they may be sneaking some growth stocks in there.
I like your memorial at DC. Was there when I was in the 6th grade. Saw that Washington memorial, the reflecting pool, White House, the Smithsonian, etc. God, it was great! I thought this country was the best ever!
So, Linc, why do you think things are going to change now? Just asking.....
Value in these funds for a reason, no? Problems, yes, and we're talking mid not large, right? Think Japan 2.0. We're in a slow motion train wreck. It's going to take months to see it. Little is not good right now.....much less value. Again, what will change to drive this? A vaccine? Doubt it.....
It's about bills and money. I'm a huge mid cap fan. Value needs growth (GDP) and inflation to rise in value. Is that present?
I own large value. Just bought it and have lost money: AMFFX. Why would mid do better now? Again, not picking on you....just saying......
Interest rates and inflation will tell you when. Right now, they're going nowhere, so unless you have a long timeframe, I would look elsewhere.
God bless
the Pudd
The ARTQX management team outperformed the mid-cap value category for a number of years based on total return/risk-adjusted return. However, poor stock selection and the retirement of one of the senior managers seems to have taken a toll. ARTQX has lagged its category every calendar year from 2014 - 2019 (except 2016).
TRMCX is a good fund. Although there is some key-person risk, T. Rowe Price is well-resourced and generally handles manager transitions well. Purchase of this fund may be restricted to customers who trade directly with T. Rowe Price.
If you're not opposed to indexing, VMVAX may also be worthy of consideration.
Did you mean Janus (JNMCX) or Jensen (JNVSX), or both?
Toward the end of their fund management tenure with JNMCX, the Perkins seemed to have lost their mojo. In the past few (about 5) years the change in management has brought some improvement. Still, nothing to get excited about. FWIW the cheaper Janus D shares recently reopened.
@Observant1 identified another fund recently reopened, TRMCX. That's a better fund. TRP has one of the best records in handling changes in management, transitioning slowly and not surprising investors.
I agree with the others about NMVAX's high turnover rate. The prospectus even declares: "The Fund’s annual portfolio turnover rate will generally be 100% or greater." So the high turnover last year isn't an exception. While M* says that the fund's portfolio has been blend for the past three years, it still classifies the fund as value. OTOH, Lipper classifies it as midcap core (blend). The high turnover might suggest that the fund will follow market trends, drifting more quickly to value if there is rotation. Or the fund might simply be a value poseur.
Another factor you might want to consider if you're thinking about market rotation is the possibility that foreign equities could start outperforming domestic ones. Small and midcap funds tend not to invest as much abroad. Exceptions include TRMCX (15%, of which 1/5 is EM), and NMVAX (20% but no EM). FLPSX (41%, but only about 1/15 EM) is in a class by itself here, holding more foreign stocks than some global funds including Fidelity's own Worldwide FWWFX (37%, 1/8 EM) (mentioned for reference purposes only).
Hard to suggest other value funds without knowing what's available to Abe. Some 401's have a limited menu.
I look at FLPSX and wonder how it's going to perform after Tillinghast leaves. I see they have a team in place. So maybe they all get a sleeve. But that's one gigantic mid-cap with more holdings than some indexes.
Tillinghast had one of the shortest hiatuses on record (4 months).
https://www.reuters.com/article/us-fidelity-tillinghast/star-fidelity-manager-tillinghast-to-take-leave-idUSTRE76C6C520110713
Prospectus, September 29, 2011:
"Effective September 6, 2011 the following have been named interim portfolio managers of the fund while the fund's portfolio manager, Joel Tillinghast is on a leave of absence from the firm. Mr. Tillinghast is expected to return in the first quarter of 2012."
Same prospectus, As Revised January 9, 2012
No mention of leave of absence, just this sentence: "Joel Tillinghast is lead portfolio manager of the fund, which he has managed since December 1989." That was followed by a list of co-managers who had managed the fund "since September 2011."
For several years, FLPSX was a small cap fund, e.g. from 1997: "Exceptional stock selection has been a hallmark of Fidelity Low-Priced Stock, the biggest fund not only among this select threesome [FLPSX, Royce Low Priced, and Robertson Stephens Global Low Priced] but also among all funds that buy small stocks."
https://www.nytimes.com/1997/11/30/business/mutual-funds-is-there-a-pound-of-wisdom-in-a-pennywise-strategy.html
It did have an auspicious start, albeit as a low-load (3%) fund. (See 1994 prospectus). "The fund, which celebrates its first birthday this week [Dec 23, 1990], was down 3.1 percent at the end of November. That compared to an 8.9 percent drop for the 77 small-company stock funds tracked by Morningstar Inc."
https://www.sun-sentinel.com/news/fl-xpm-1990-12-23-9003040100-story.html
The 1997 NYTimes article cited above adds that "several weeks ago it raised the price it is willing to pay to $35 for a share from $25. When the fund began in 1989, its price limit was $15 a share."
With a few exceptions, iirc, owning the occasional low-priced LC stock --- e.g., I believe I recall its owning B, Barnes Group, and Nav, Navistar, and then later Vz and T when the criterion moved above $25. (Not positive; those were just stocks I followed / owned individually at the same time as FLPSX.)
I suppose the first two might not have qualified at LC, but no one thought of them as SC.
Tillinghast's abiding interest in overseas companies has been a drag for some time now.
FLPSX performed well PRIOR to 2005 but after that, for the last 15 years, it has been an index hugger.
That aside, the annual differences in performance between FLPSX and NAESX over the past 10 years, per M* are:
2010: -7.02% (FLPSX underperformed)
2011: 2.75%
2012: 0.45%
2013: -3.30%
2014: 0.29%
2015: 3.22%
2016: -9.39%
2017: 4.57%
2018: -1.32%
2019: -1.55%
2020 YTD: -2.61%
Portfolio Visualizer shows correlation dipping after 2014. Click on the Rolling Correlation tab for the graph showing this divergence.
https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=FLPSX,NAESX,IJH&startDate=01/01/2005&timePeriod=2&tradingDays=60&months=36
FWIW, M* classified FLPSX as midcap blend 2010-2013, and midcap value 2014 to the present.
M*
http://portfolios.morningstar.com/fund/summary?t=OMFL
ETF.com
https://www.etf.com/OMFL
PortfolioVisualizer
https://tinyurl.com/omfl-at-pv
https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&ticker=OMFL
FWIW, M* classifies the fund as large cap blend, and Lipper calls it multi-cap core. The turnover over the fiscal year ending June 2019 was 138%; the 83% that M* reports is for the two months July 2019-August 2019, according to the prospectus.
http://hosted.rightprospectus.com/Invesco/Fund.aspx?cu=46138J619&dt=P&ss=etf
It appears that the fund has four fixed portfolios, representing recovery, expansion, slowdown, and contraction phases in the economic cycle. So if the country remains in one phase of a cycle for a year, one should expect very little turnover (primarily reflecting changes in the Russell 1000). OTOH, if there's even one change of phase, there should be a significant turnover, as one portfolio is substituted for another. That would explain the high turnover rate.
In terms of design, I'd prefer to see a smooth transition between phases. Aside from this, it is an interesting approach. The questions are how well matched the factor weightings are to the economic phases (i.e. whether stocks with those particular weightings will tend to do better in each of the phases), and how well the index identifies the current cycle phase we're in. Typically NBER takes several months to determine, retrospectively, that we have entered (or exited) a recession. This index must make similar determinations in real time.
https://www.nber.org/cycles/recessions_faq.html
"The current economic cycle/market condition category, which determines which factor configuration is applied, is derived from a rules-based methodology that relies on certain leading economic indicators and information regarding global risk appetite. The applicable category is provided to the Index Provider by Invesco Indexing in the form of a data signal (the “Signal”)." (prospectus)