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Eric Cinnamond and the Aston/River Road Independent Value Fund (ARIVX) was my top performer in 2011, and top 1% in category..thus earning a break and a continued place in my portfolio.
At 65% cash however, and 98 and 99% percentile performance in the years since then...honestly, I'm not sure that the 2011 performance alone is enough to stay in contention.
Is a 7% ongoing annual return reasonable for an actively managed equity fund?
A seemingly reasonable question, but as always, fire the manager based on the broadest and highest and longest overview you can muster, not just his or her longterm performance but your needs and wishes. We pay these guys to make these decisions. I clearly remember 15 or so years ago some important money manager giving an interview in which she said 'I simply cannot charge my clients [did not say 1% but it was clear] to put them into Romick holding so much cash.' Now, I myself am not an FPACX acolyte here like some, but have been in it since and may do so again (how's that for taking my own advice?). Yet Romick's record especially given a fair amount of constant cash speaks for itself loud and clear. Older, I now own ARLSX and sense Cinnamond may be aces. But ask yourself if you like so many here are trading waaay too quickly.
At least 7% is positive; some of my M* driven stocks remain negative 6 years later.
I stopped my AIP with ARIVX, leaving the money, but wishing the ER were lower. I have some more in my TDA IRA, where my allotment is finally in the green. I check in infrequently, but I expect to shift funds from RPHYX TO ARIVX, among others, when the market drops and let Mr. Cinnamond decide when it has dropped enough to justify investing. I assume this will occur within 2 years, which might qualify me as one of the too frequent traders (but which suggests to me that PRESSmUP might as well wait - can't imagine what one could confidently transfer funds to now, although RSIVX might work, if it didn't cost too much to leave when you want the money for equities - TDA has a fee for 6 months). I presume I will resume the AIP also, depending whether the 2 weddings next year have been paid for. Active management probably is justified in small caps and Cinnamond has now reverted to or below the mean, so I hope he's ready to outperform.
Still have my AIP going in FPACX - can't chase hot funds with AIPs, and Romick is still positive, even if he lags the indexes. Will see how I feel about this in 2015.
My main concern with ARIVX and why I sold out of it wasn't that it goes to cash. Heck, I have other managers like Romick, Berkowitz and Yacktman that do the same. But stock picking has been the downfall for this fund over the last couple years. Cinnamond has been heavy into basic materials, miners for example, and not in sectors that have done pretty well like health care and financials. Some times deep value can become a value trap, at least in the short term. This is what bugged me about the fund. That is why I gave up on ARIVX, not the cash percentage.
I switched to a global small cap, GPGOX, and I'm very happy I made the change.
What made me sell ARIVX in April was reading his management reports. He seemed to be making a macro call -- that the economic recovery was a debt-fueled mirage -- that struck me as very wrong. Had he just said he could not find inexpensive stocks I probably would have stuck with him. I have happily stuck with managers (Bridgeway, Fairholme) through multiyear periods of underperformance if I agree with their strategy. I did not agree with his. I was up 17% or so on ARIVX (I'd bought it the day it opened) and I put half the proceeds in RPHYX as a cash substitute, half in HUSIX. I've been happy with that move but I may sell HUSIX if the market keeps going up.
Unless Cinnamond admits at some point that he has seriously messed up, you may wait a long time for him to invest his cash. Even the Q3 2011 dip, which sent small value stocks down 20%, was not enough to get him to bring his cash level below 50%.
Comments
At 65% cash however, and 98 and 99% percentile performance in the years since then...honestly, I'm not sure that the 2011 performance alone is enough to stay in contention.
Is a 7% ongoing annual return reasonable for an actively managed equity fund?
I stopped my AIP with ARIVX, leaving the money, but wishing the ER were lower. I have some more in my TDA IRA, where my allotment is finally in the green. I check in infrequently, but I expect to shift funds from RPHYX TO ARIVX, among others, when the market drops and let Mr. Cinnamond decide when it has dropped enough to justify investing. I assume this will occur within 2 years, which might qualify me as one of the too frequent traders (but which suggests to me that PRESSmUP might as well wait - can't imagine what one could confidently transfer funds to now, although RSIVX might work, if it didn't cost too much to leave when you want the money for equities - TDA has a fee for 6 months). I presume I will resume the AIP also, depending whether the 2 weddings next year have been paid for. Active management probably is justified in small caps and Cinnamond has now reverted to or below the mean, so I hope he's ready to outperform.
Still have my AIP going in FPACX - can't chase hot funds with AIPs, and Romick is still positive, even if he lags the indexes. Will see how I feel about this in 2015.
I switched to a global small cap, GPGOX, and I'm very happy I made the change.
Unless Cinnamond admits at some point that he has seriously messed up, you may wait a long time for him to invest his cash. Even the Q3 2011 dip, which sent small value stocks down 20%, was not enough to get him to bring his cash level below 50%.
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/comment/22055#Comment_22055
Kevin