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The First Foundation Total Return fund (FBBAX) does fit the moniker of a go-anywhere fund. It invests in an eclectic mix of international equities (49%), domestic equities (26%) and fixed income (13%). Cash is currently around 10%. The equities represent the full range of market caps and styles. The fund has had some top quintile years and some bottom ones as well. My personal take is that “go-anywhere” sounds sexy, but it does not translate into an investment strategy that one would recommend to a good friend or a family member. I don’t mind trying out a niche fund for a while with money I don’t need for something important, which is what I did with FBBAX.
I wonder how the anverage retail investor today would react if his “go-anywhere” fund lost 15% in a year when the Dow, NASDAQ and S&P all gained? Obviously the manager had decided to go somewhere non-mainstream. May have been wrong. May have been a year or two early. Might have built a large position in something while price was depressed.
Real hedge funds operate a lot differently than retail funds. They attract wealthy clients who can ride out multi-year losses. They impose limits on how much, if any, they can withdraw for the first several years. And often the operator receives a predetermined % of the gains - adding incentives to take risk. SEC restrictions may be lesser or non-existent. More risk taking. Much different animal.
@hank, @catch22 and other MI residents might be amused to know that FBBAX has approximately 1% of its AUM in KEWL, the Keewenau Land Association. This former forestry products company has considerable subsurface mineral rights. The Upper Peninsula of MI is the ultimate fly-over region (speaking from the point of view of a non-native), but one could imagine a revival if profitable mining returned to the UP. To complement that unusual holding, the fund has Phillip Morris. Go-anywhere does not appear to imply ESG.
@hank, @catch22 and other MI residents might be amused to know that FBBAX has approximately 1% of its AUM in KEWL, the Keewenau Land Association. This former forestry products company has considerable subsurface mineral rights. The Upper Peninsula of MI is the ultimate fly-over region (speaking from the point of view of a non-native), but one could imagine a revival if profitable mining returned to the UP. To complement that unusual holding, the fund has Phillip Morris. Go-anywhere does not appear to imply ESG.
I used to tour the UP by road several times a summer. Some beautiful locals on the big water. Other than quick one-day trips to the island for bicycling, I haven’t been back in several years, Given my “druthers” I’d drive 4-5 hours east from the Sault into Canada. But I digress. Yes - the UP once boasted a thriving mining industry.
To FBBAX - ISTM Phillip Morris is a favorite of funds that emphasize a stable income stream and / or low volatility. Hasn’t been a bad hold in recent years. (I get the ESG point. Nice job connecting the dots Ben.) Whenever possible, I like to “hold to the fire” any fund I look at by checking how it performed in 2008 - the worst year for equities in my lifetime. FBBAX lost30.66% in 2008 (according to Yahoo) which was actually a bit better than its category (and probably better than the S&P). This knowedge, however, does not compel me to want to send $$.
Does size matter? In theory a smaller fund can be more nimble and obviously doesn’t suffer from the dreaded asset bloat. OTOH,,, too little assets can’t support a savvy group of analysts and could be forced into unplanned redemptions in a sell off. Not to mention a too small fund might be failing to gain traction for a reason. FBBAX is awfully small.
Just to be clear, FBBAX owns Philip Morris International (PM). That was spun off in 2008 from MO (formerly Philip Morris, rebranded as Altria in 2003). MO retained its Philip Morris USA subsidiary.
Also, Morningstar/Sustainalytics rates PM just as high (or as low) as Tesla on its ESG risk assessment scale. Not that Tesla is all that great, scoring poorly in some ESG areas like labor management and governance (according to both M* and MSCI). While tobacco companies (such as PM and MO) are generally eschewed by funds marketed as ESG, other companies like Tesla are owned in significant quantities by many ESG funds.
Comments
I wonder how the anverage retail investor today would react if his “go-anywhere” fund lost 15% in a year when the Dow, NASDAQ and S&P all gained? Obviously the manager had decided to go somewhere non-mainstream. May have been wrong. May have been a year or two early. Might have built a large position in something while price was depressed.
Real hedge funds operate a lot differently than retail funds. They attract wealthy clients who can ride out multi-year losses. They impose limits on how much, if any, they can withdraw for the first several years. And often the operator receives a predetermined % of the gains - adding incentives to take risk. SEC restrictions may be lesser or non-existent. More risk taking. Much different animal.
To FBBAX - ISTM Phillip Morris is a favorite of funds that emphasize a stable income stream and / or low volatility. Hasn’t been a bad hold in recent years. (I get the ESG point. Nice job connecting the dots Ben.) Whenever possible, I like to “hold to the fire” any fund I look at by checking how it performed in 2008 - the worst year for equities in my lifetime. FBBAX lost 30.66% in 2008 (according to Yahoo) which was actually a bit better than its category (and probably better than the S&P). This knowedge, however, does not compel me to want to send $$.
Just to be clear, FBBAX owns Philip Morris International (PM). That was spun off in 2008 from MO (formerly Philip Morris, rebranded as Altria in 2003). MO retained its Philip Morris USA subsidiary.
Rebranding 2003
Spin-off 2008
Also, Morningstar/Sustainalytics rates PM just as high (or as low) as Tesla on its ESG risk assessment scale. Not that Tesla is all that great, scoring poorly in some ESG areas like labor management and governance (according to both M* and MSCI). While tobacco companies (such as PM and MO) are generally eschewed by funds marketed as ESG, other companies like Tesla are owned in significant quantities by many ESG funds.
https://www.investmentnews.com/esg/news/is-tobacco-esg-friendlier-than-tesla-funds-investors-dont-think-so-239436
MSCI ESG ratings tool - enter TSLA, click on 3rd question (how well is it managing ESG)