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Since this fund hedges its currency exposure, it might be that the dollar has not exactly behaved as expected given that the virus is a serious threat to the U.S. I would check the return of the dollar versus the Euro for clues.
The $USD spiked up from 03/09 and then down and settled around where it was. Not able to discern completely the co-relation, but I suspect "value" and "international" theme did them in, like I have ranted about earlier.
This goes with "the market can remain irrational longer than you can stay solvent" theme. First heard about it in the context of SFGIX and that theme simply hasn't worked out.
"Large" and "Growth" has worked better both domestically and internationally, and even right now.
Yep. After a lifetime of this foolishness I've come to believe that a "value stock" is nothing more than a stock that was decent at one time, but no more. I guess that makes Boeing and GE now "value stocks". Boeing may turn out to be an exception, since it's just one of the two biggies, and the government wants to save it's sorry ass for it's defense value. GE, not so much.
How many times I convinced myself I did the right thing buying FMI funds instead of other funds - because they will hold up better.
Yet one more reason to not fall in love with manager. I have done a good job at this for the most part, but I needed this crisis to weed me completely off such sentiments. Need to watch one's holdings carefully in such times. I will do that now.
I know little to nothing about this fund but looking at the holdings Equity/Other as @LewisBraham noted you will see a significant dollar amount of currency hedges primarily the large allocation ($1.9B) to the British Pound. I wonder if they got caught leaning the wrong way on one or all of these. I won't even attempt to analyze this as it's totally out of my ballpark and I have no clue what game they are even playing.
Edit to add: I guess I should have noted that the holdings were dated as of December 31, 2019 so my comments are more useless than normal. Who knows what they may be holding now.
No, it isn't a currency problem I realize now because FMI recently launched an unhedged version of this fund-- FMIFX --and it's getting clobbered, too: https://morningstar.com/funds/xnas/fmifx/performance Perhaps it's exposure to oil companies like Schlumberger. One would really need to break down the portfolio to understand.
I also would have guessed currency (but Lewis beat me to the punch).
I ran FMIJX, TBGVX (mostly hedged), VEU (unhedged reference), and HEFA (hedged EAFE) through Portfolio Visualizer. While the hedged funds have somewhat better correlation between themselves than with VEU, the differences seem marginal at best.
You guys are too fast for me and I also did the comparison as well on currency hedging. Tweedy Brown Global Value also have an unhedged clone fund, TBCUX and it is slightly worse than the hedged fund, TBGVX.
I've been surprised by the performance of FMIJX this year. The fund's 31.98% YTD loss is greater that 96% of its peers in the Foreign Large Blend category. The FMI team is conscious of valuations and wary of excessive debt. Their funds usually hold up well during market downturns.
Could FMIJX mishap be because of unforeseen redemption by hit-n-run investors. Not to say this is not a problem for other funds as well. Just wondering if managers got caught with their pants down because they didn't have any cash on hand to meet redemptions. Forcing to sell can be damaging to your own portfolio since you have to sell at Market and can't put Limit orders.
Thanks, @Lewis, for posting that. I'm no long a shareholder, so I don't get it directly. They make a compelling case for investing in the fund now. It does not appear from their narrative that they were forced into selling positions; in fact they did a fair amount of buying in the quarter. They have significant positions in travel and retail that declined a lot.
The shareholder letter immediately preceding this latest one touted FMI's outperformance in down markets. Oops. All three of their funds dropped more than their benchmarks in this latest rout. They admit that they lag in up markets. That may not bode well for the future performance of this fund; its trailing three- and five-year returns are already subpar.
I worry too. Sometimes things stop working and we get emotionally attached to funds. I've been reasonably good taking tax losses though so don't have too much in all of their 3 funds which i own.
Several comments 1) FMIJX ranks in M* in its category for YTD and 1-3 years at 92-94 which is at the bottom 6-8%. In the last 5 years it ranked in the top 10% in 3 years but at the bottom 2 years. That should tell you its inconsistency. Up to 2016 it was a much better performer. 2) From their 3/31/2020 outlook "At this early stage, COVID-19 has hurt value investors much more than their growth counterparts. Many sectors and industries in the value camp, such as financials, energy, industrials, travel and hospitality, have been the hardest hit by the virus. Intensifying the market pressure, Saudi Arabia’s unexpected move to open the spigots has crushed the price of oil. Nearly all energy-related companies, including businesses that only have moderate energy exposure, have seen their stocks decline precipitously. Year-to-date, value has underperformed growth by 10.69%, as the MSCI EAFE Value Index has declined 8.20%," 3) You can switch to CWVGX with better performance + risk. See PV(link) 4) I have been avoiding international for years now. The SP500 gets about 40% of its earnings from abroad and QQQ about 50%.
@FD1000 The problem with this sort of comparison is the past is gone, and there is little evidence for long-term performance persistence of top performing funds in the future: https://advisorperspectives.com/articles/2020/01/23/december-2019-spiva-persistence-scorecard There is evidence for short-term performance persistence, however. The fund that is hot this year may well be hot the next, but the fund that is hot over the past five years most likely won't be over the next five. That's why other criteria besides peformance should also be used, fees being one, valuation of the portfolio, style consistency, manager tenure and risk control. By the time three or five-years of outperformance have occurred the investments the manager made that have proven successful may be tapped out and he/she is due for some underperformance. The question is then is the manager someone investors can tolerate sitting through the underperformance periods after the strong ones. Evidently for some MFO-ers, this is not the case with FMIJX, despite the explanation management provided for the underperformance. This is a fundamental problem with active management. Even if the strategy makes sense and the management knows how to execute it many investors buy and sell at the wrong times, leading to a poor overall investor experience. There are a number of MFO-ers I think therefore who would be better off indexing as they can't take these bouts of underperformance. This is not meant to be a criticism. It is a reality of investing.
Then again, FMIJX marketed itself as a defensive fund that is good at losing less during downturns. In this regard, it has failed at a fundamental objective during this period, although it hasn't in past ones. Therefore, a review is in order and a consideration of management's explanation of the suprising downside in this case. The question becomes, do investors believe management's rationale or not?
Let's look at a story of 2 International funds. If we look at total return, the growth of $10,000 invested on 1/1/2011, we have these results:
Both funds A and B start with a $10,000 investment on 1/1/2011.
on 12/31/2011, fund A had $8609 / fund B had $9823 on 12/31/2012, fund A had $10124 / fund B had $11608 on 12/31/2013, fund A had $12391 / fund B had $14969 on 12/31/2014, fund A had $11489 / fund B had $15138 on 12/31/2015, fund A had $11459 / fund B had $15625 on 12/31/2016, fund A had $11018 / fund B had $17188 on 12/31/2017, fund A had $13360 / fund B had $19843 on 12/31/2018, fund A had $11876 / fund B had $17966 on 12/31/2019, fund A had $15456 / fund B had $21034
At the end of 9 years of return history, fund B has returned 36% more than fund A.
on 4/1/2020, fund A had $12663 / fund B had $15693
Even after a misstep in the 1st qtr of 2020 (which every manager goes though) Fund B has still returned ~20% more than fund A for long term investors.
Also: Fund A's managers have been on board for 3 years, fund B management since inception. Fund A's volatility as measured by STD is 13.5, fund A has been less volatile at 11.3. Fund A has an expense ration of 1.15%, you'll pay less for fund B, 0.9%.
If you are a long term investor, which fund would you have been happier investing if on 1/1/2011? If you are a long term investor, why would you throw out fund B and replace it with find A? Is there a crystal ball that tells you fund A is immune to manager missteps?
@LewisBraham What you said is mostly correct BUT index works best for US LC. I have done very nicely by having a list of great risk/reward funds and selecting the one with the best momentum. Basically, I call them my NBA team. I want my team to go to the playoff every year. Even a superstar (like PIMIX) will be out if I can find a better performer (in my case IOFIX). This guarantees my funds to be a top performer. I also care a lot about volatility. In 2000-2009 I mostly held 3 funds SGENX,FAIRX,OAKBX. After 2010 and preparing for retirement I held PRWCX and PIMIX and then IOFIX.
=============== @MikeM long term FMIJX looks better but I only care what happened in the last 1-3 years. See my answer above. I also look at my fund managers as my contractors, I employ the ones that give me the best work for the money. If they don't perform, I just switch them.
I employ the ones that give me the best work for the money. If they don't perform, I just switch the
@FD1000, then you are not an investor, you're a trader of the hottest fund of the month club. Most here are investors. So, speaking for myself as an investor, I would not take your short term rear view mirror advice on this one.
I employ the ones that give me the best work for the money. If they don't perform, I just switch the
@FD1000, then you are not an investor, you're a trader of the hottest fund of the month club. Most here are investors. So, speaking for myself as an investor, I would not take your short term rear view mirror advice on this one.
You should never take advice from anybody but do your own due diligence. That's what I do. But, I have held funds for months up to several years. As I said, I look for best risk/reward funds first then select the best one. I have held PIMIX(Multi) and PHMIX for years. It's not just the best performer. There are all kind of investors, I don't put anybody in a box. I can say that if you are not a buy and hold forever (Bogle style) then you are not an investor. The key is to find what works best for you to meet your goals. How many investors do you know who sold over 99% before the crash this year?
I can tell you from experience that a good fund can do well in the next 1-2 years.
"...I can say that if you are not a buy and hold forever (Bogle style) then you are not an investor...."
Easy to win arguments/debates when you pull definitions outa the clear blue sky, to suit your purposes and defend your viewpoint. I've been mostly lurking through several of these discussions/debates involving FD1000 and I just can't understand why , on a board like this one, there must be winners and losers. I come here to learn. Reading many of the interchanges between others here and FD1000, it's clear that he/she has an unreasonable need to win all the time. Reminds me of conversations with my nephew. Reminds me of the Orange Abortion in the White House. ....... When I was a younger man and doing comunity organizing, our leader reminded us very early about a Cardinal Rule: if you control the terminology and definitions and can get the ones on the other side of the issue to start believing and using your definitions and terminology, then you've all but WON the issue. ******************************************** I'm not interested in embroidery nor competition in here. You've got info worth sharing? Share it, by all means.
"...I can say that if you are not a buy and hold forever (Bogle style) then you are not an investor...."
I come here to learn. Reading many of the interchanges between others here and FD1000, it's clear that he/she has an unreasonable need to win all the time. Reminds me of conversations with my nephew. Reminds me of the Orange Abortion in the White House. ....... When I was a younger man and doing comunity organizing, our leader reminded us very early about a Cardinal Rule: if you control the terminology and definitions and can get the ones on the other side of the issue to start believing and using your definitions and terminology, then you've all but WON the issue. ******************************************** I'm not interested in embroidery nor competition in here. You've got info worth sharing? Share it, by all means.
My main point is that you can't make your assumption on others. If an investor meets their goals then it's that simple. I know a guy that sold his company for millions of dollars years ago and wants low volatility and invested over 90% in Munis and it worked great for him over 20 years. Another one retired with a pension + his SS covers his expenses and all his money is in stocks. Another guy uses only CEFs and trade them with good results. They all met their needs, there is no right or wrong answer, the problem is trying to put someone in a box that you don't like.
Over the years I shared my thoughts and actually helped hundreds who contacted me privately. I never tell them to use my style, never, I helped them using their style. This is what many can't grasp. Example: An older relative retired around 2001-2 and told me he saw several financial advisors and thinks that 1% is too high and he really doesn't trust them while markets got volatile and he wants a stable LT simple portfolio and all his money is at Vanguard. Based on his portfolio, he needed about 3-3.5% yearly withdrawal. I told him he can be in just 35-40% stocks and the rest bonds and to invest in just 2 funds VWIAX+VSCGX. Every 2-3 years this guy calls me and thank me how I saved him so much money and how it works. I knew VWIAX would be better but I wanted to diversify a bit more. Below are the results(link)
@FD1000 "My main point is that you can't make your assumption on others..." I bet you'd love the chance to proofread that and express it so that it makes sense? This is your chance. ..... As for the rest of what you posted above: You want credit, you want adulation, you want to get stroked. OK, consider it done. Next?
Okay, back on topic. Is "value" going to be dead for a while? It seems to me "Large Growth" might continue its extended run even after we recover from the current crisis. We need to stop falling in love with funds. Consider switching FMIJX with an international growth fund?
Comments
Isn't that a rather common theme these days in almost all areas of the markets?
cf: IOFIX
This goes with "the market can remain irrational longer than you can stay solvent" theme. First heard about it in the context of SFGIX and that theme simply hasn't worked out.
"Large" and "Growth" has worked better both domestically and internationally, and even right now.
Yet one more reason to not fall in love with manager. I have done a good job at this for the most part, but I needed this crisis to weed me completely off such sentiments. Need to watch one's holdings carefully in such times. I will do that now.
Derf
USD/GBP
Edit to add: I guess I should have noted that the holdings were dated as of December 31, 2019 so my comments are more useless than normal. Who knows what they may be holding now.
Perhaps it's exposure to oil companies like Schlumberger. One would really need to break down the portfolio to understand.
I ran FMIJX, TBGVX (mostly hedged), VEU (unhedged reference), and HEFA (hedged EAFE) through Portfolio Visualizer. While the hedged funds have somewhat better correlation between themselves than with VEU, the differences seem marginal at best.
https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=FMIJX,TBGVX,VEU,HEFA&timePeriod=2&tradingDays=60&months=60
1) FMIJX ranks in M* in its category for YTD and 1-3 years at 92-94 which is at the bottom 6-8%. In the last 5 years it ranked in the top 10% in 3 years but at the bottom 2 years. That should tell you its inconsistency. Up to 2016 it was a much better performer.
2) From their 3/31/2020 outlook "At this early stage, COVID-19 has hurt value investors much more than their growth counterparts. Many sectors and industries in the value camp, such as financials, energy, industrials, travel and hospitality, have been the hardest hit by the virus. Intensifying the market pressure, Saudi Arabia’s unexpected move to open the spigots has crushed the price of oil. Nearly all energy-related companies, including businesses that only have moderate energy exposure, have seen their stocks decline precipitously. Year-to-date, value has underperformed growth by 10.69%, as the MSCI EAFE Value Index has declined 8.20%,"
3) You can switch to CWVGX with better performance + risk. See PV(link)
4) I have been avoiding international for years now. The SP500 gets about 40% of its earnings from abroad and QQQ about 50%.
Then again, FMIJX marketed itself as a defensive fund that is good at losing less during downturns. In this regard, it has failed at a fundamental objective during this period, although it hasn't in past ones. Therefore, a review is in order and a consideration of management's explanation of the suprising downside in this case. The question becomes, do investors believe management's rationale or not?
Both funds A and B start with a $10,000 investment on 1/1/2011.
on 12/31/2011, fund A had $8609 / fund B had $9823
on 12/31/2012, fund A had $10124 / fund B had $11608
on 12/31/2013, fund A had $12391 / fund B had $14969
on 12/31/2014, fund A had $11489 / fund B had $15138
on 12/31/2015, fund A had $11459 / fund B had $15625
on 12/31/2016, fund A had $11018 / fund B had $17188
on 12/31/2017, fund A had $13360 / fund B had $19843
on 12/31/2018, fund A had $11876 / fund B had $17966
on 12/31/2019, fund A had $15456 / fund B had $21034
At the end of 9 years of return history, fund B has returned 36% more than fund A.
on 4/1/2020, fund A had $12663 / fund B had $15693
Even after a misstep in the 1st qtr of 2020 (which every manager goes though) Fund B has still returned ~20% more than fund A for long term investors.
Also:
Fund A's managers have been on board for 3 years, fund B management since inception. Fund A's volatility as measured by STD is 13.5, fund A has been less volatile at 11.3.
Fund A has an expense ration of 1.15%, you'll pay less for fund B, 0.9%.
If you are a long term investor, which fund would you have been happier investing if on 1/1/2011? If you are a long term investor, why would you throw out fund B and replace it with find A? Is there a crystal ball that tells you fund A is immune to manager missteps?
of course:
Fund A = CWVGX
Fund B = FMIJX
What you said is mostly correct BUT index works best for US LC. I have done very nicely by having a list of great risk/reward funds and selecting the one with the best momentum. Basically, I call them my NBA team. I want my team to go to the playoff every year. Even a superstar (like PIMIX) will be out if I can find a better performer (in my case IOFIX). This guarantees my funds to be a top performer. I also care a lot about volatility.
In 2000-2009 I mostly held 3 funds SGENX,FAIRX,OAKBX. After 2010 and preparing for retirement I held PRWCX and PIMIX and then IOFIX.
===============
@MikeM
long term FMIJX looks better but I only care what happened in the last 1-3 years. See my answer above.
I also look at my fund managers as my contractors, I employ the ones that give me the best work for the money. If they don't perform, I just switch them.
But, I have held funds for months up to several years. As I said, I look for best risk/reward funds first then select the best one. I have held PIMIX(Multi) and PHMIX for years. It's not just the best performer.
There are all kind of investors, I don't put anybody in a box. I can say that if you are not a buy and hold forever (Bogle style) then you are not an investor. The key is to find what works best for you to meet your goals.
How many investors do you know who sold over 99% before the crash this year?
I can tell you from experience that a good fund can do well in the next 1-2 years.
Easy to win arguments/debates when you pull definitions outa the clear blue sky, to suit your purposes and defend your viewpoint. I've been mostly lurking through several of these discussions/debates involving FD1000 and I just can't understand why , on a board like this one, there must be winners and losers. I come here to learn. Reading many of the interchanges between others here and FD1000, it's clear that he/she has an unreasonable need to win all the time. Reminds me of conversations with my nephew. Reminds me of the Orange Abortion in the White House.
....... When I was a younger man and doing comunity organizing, our leader reminded us very early about a Cardinal Rule: if you control the terminology and definitions and can get the ones on the other side of the issue to start believing and using your definitions and terminology, then you've all but WON the issue.
********************************************
I'm not interested in embroidery nor competition in here. You've got info worth sharing? Share it, by all means.
Over the years I shared my thoughts and actually helped hundreds who contacted me privately. I never tell them to use my style, never, I helped them using their style. This is what many can't grasp.
Example: An older relative retired around 2001-2 and told me he saw several financial advisors and thinks that 1% is too high and he really doesn't trust them while markets got volatile and he wants a stable LT simple portfolio and all his money is at Vanguard. Based on his portfolio, he needed about 3-3.5% yearly withdrawal. I told him he can be in just 35-40% stocks and the rest bonds and to invest in just 2 funds VWIAX+VSCGX. Every 2-3 years this guy calls me and thank me how I saved him so much money and how it works.
I knew VWIAX would be better but I wanted to diversify a bit more. Below are the results(link)