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Considering this fund for a small part of my IRA, This fund has done very well in a down market this year, but am concerned about how it would perform in an up market. I believe it had a fairly significant drop last year in a short time period. I don’t need spectacular returns, just some growth. Doesn’t shorting make this fund more risky than many long funds?. Any thoughts?
BIVIX has done quite well for the 4 year period starting 201801 -- APR of 20.1 and MaxDD of 14.4. I picked 4 years because BIVIX is less than 5 years old.
Screening for funds with a 4 year performance period starting 201801, APR of at least 20 and a MaxDD of 15 did not yield any funds in the Alt category. The closest I saw was SAPEX which has an APR of 17.7, MaxDD=14.6
Some select life of fund stats vs. SP500 APR 19.7 vs. 18.3 (impressive!) MaxDD 14.4 vs. 19.6 (again very impressive) Ulcer Index of 5.3 vs. 4.5
I'll note here that several smart and wise folks on this forum have stated -- some funds work great until they don't. RLSFX is a good example that has stumbled badly out of the gates in 2022. I invested in BLNDX despite my "rule" (ha) of not investing in funds less than 3 years old. Not a disaster yet but I'm watching it.
I wouldn't say shorting in this case makes the fund more risky than long funds, but it reduces some risks while increasing others. The thing to understand is that this fund buys value stocks on the long side and often bets against higher priced growth stocks on the short. When value is in favor, it should do well while when growth is in favor RLSFX makes more sense as it does the opposite--favors growth stocks over value. BIVIX, I would say, reduces market based risks while increasing individual stock selection risk. The most important thing to do with these kinds of funds I think is read up about them and understand their strategies and what the manager is doing and why as well as possible: https://invenomic.com/ This fund has a fact sheet, commentaries, annual reports, strategy descriptions. I would ignore the performance numbers as those are in the past and read the documents on its web site instead. If you think value beats growth going forward, it will probably work.
M* indicates that BIVIX has a net ER of 2.84% and an adjusted ER of 2.24%. I personally wouldn't purchase a fund with an ER > ~1.25%. Many alt funds are too expensive...
If you have specific questions about Invenomic, do let me know. Ali & co. have been pretty responsive in the past, going so far as meeting me for coffee and an interview in lovely Moline, Illinois. I'd happily raise your questions or ask the folks there to scan this thread (which they've been known to do).
I share, by the way, the concern over the fund's e.r. Part of the expense can be excused as "the inevitable cost of shorting securities," but the management fee is 1.74%. When I look at other five-star long-short equity funds, the equivalent numbers range from 1.20% (Alger) and 1.25% (Virtus KAR) to 1.50% (RiverPark) and 1.99% (Longboard). Again, that's management fee, not total e.r. but management fee is the thing most easily controlled by the advisor.
David: Thanks for the information. I use the fund with VELIX in the alternative long-short category. There R is .62 but only for 15 months, VELIX being relatively new.
Mgr has the hot hand for sure. Would have got in with a small position to hold a seat had I known about the close but I'm also wary of these funds which work till they stop working.
Spoke with Ali Motamed, one of the two PMs on the fund. Their strategy has three different products, and as an all-cap fund, it will hard close at 1.3-1.5 AUM, allowing it to invest in smaller companies when they see opportunities there. This was also mentioned in their December commentary and will be repeated in their January commentary when it's published.
Davep:BIVIX Risk varies between 4 and 5 at MFOP. Max DD -14.1% 202003, Recovery months +3. MFO Great Owl (GO). Capture Ratio Overall vs. S&P is Up 72%, Down 4% = Overall U/D of 17.7% 500. Beaten S&P 500 in all periods since inception in all up-and-down periods.
The fund website indicates about 150 companies each on the short and long side. That is 300 companies. They use technology to screen companies to hold in the portfolio. Is it fair to call this a long-short quant fund?
If you readily have the links, could you please direct me to info that confirms the fund strategy is long value companies and short growth companies? M* does show the fund in the value box for all years since inception.
The fund's performance since inception is good, though the fund's negative performance since June 8, 2022 gives me a pause if in a malaise whether cash is not a better option. If we are already getting closer to the bottom of the current bear market, is this the right fund to be in to spring up. I think this is a good fund but I will have to think if now is a good time to get into it, giving up cash.
With current money market fund yields in the 3-4% range, the fund should be able to cover its ER from the cash it holds (net long seems to vary 20-30%).
@Lewis -- I would argue that ARKK also engages in a form of value investing if you broaden the definition of value as paying for something today that you expect to sell for higher tomorrow. ARKK is obviously using growth and discount rate assumptions different than what "classic" value investors do but it's all value investing the way I see it
@Balu, @Dennis -- I bought at Schwab through a grandfathered eligibility situation which might not be available to everybody. I've been watching this fund since February when I just missed buying into it before it publicly closed. Strategy is quant + fundamental as described at https://www.invenomic.com/_files/ugd/8592d8_c3a2c82a2bdd4701b77dcfdf2100a230.pdf Currently net 25% long positioning which I'm good with. Invenomic provides monthly commentary which is not common. Standpoint's Eric Crittenden provides monthly commentary too
Per portfolio visualizer inception to date performance is over 22% vs. SPY which is over 9%. 3Y performance numbers starting 10/01/2019 are 34% and 8% respectively. Any performance numbers below 3 years I don't pay much attention too but BIVIX has been on fire in 2022 YTD 30% vs. -23% for SPY
Comments
Screening for funds with a 4 year performance period starting 201801, APR of at least 20 and a MaxDD of 15 did not yield any funds in the Alt category. The closest I saw was SAPEX which has an APR of 17.7, MaxDD=14.6
Some select life of fund stats vs. SP500
APR 19.7 vs. 18.3 (impressive!)
MaxDD 14.4 vs. 19.6 (again very impressive)
Ulcer Index of 5.3 vs. 4.5
It started faltering after I bought (ha)
This fund has a fact sheet, commentaries, annual reports, strategy descriptions. I would ignore the performance numbers as those are in the past and read the documents on its web site instead. If you think value beats growth going forward, it will probably work.
http://www.strategicinvestorradio.com/e/longshort-strategy-investing-invenomic-capital-management-wali-motamed-cfa/
Otherwise looks good to me.
I personally wouldn't purchase a fund with an ER > ~1.25%.
Many alt funds are too expensive...
I share, by the way, the concern over the fund's e.r. Part of the expense can be excused as "the inevitable cost of shorting securities," but the management fee is 1.74%. When I look at other five-star long-short equity funds, the equivalent numbers range from 1.20% (Alger) and 1.25% (Virtus KAR) to 1.50% (RiverPark) and 1.99% (Longboard). Again, that's management fee, not total e.r. but management fee is the thing most easily controlled by the advisor.
David
If you readily have the links, could you please direct me to info that confirms the fund strategy is long value companies and short growth companies? M* does show the fund in the value box for all years since inception.
The fund's performance since inception is good, though the fund's negative performance since June 8, 2022 gives me a pause if in a malaise whether cash is not a better option. If we are already getting closer to the bottom of the current bear market, is this the right fund to be in to spring up. I think this is a good fund but I will have to think if now is a good time to get into it, giving up cash.
With current money market fund yields in the 3-4% range, the fund should be able to cover its ER from the cash it holds (net long seems to vary 20-30%).
From their website:
https://www.invenomic.com/ (See soft closed sticker)
https://www.invenomic.com/_files/ugd/8592d8_a1ac66bac0af4f1fa27aa3aa0577f808.pdf
@Balu, @Dennis -- I bought at Schwab through a grandfathered eligibility situation which might not be available to everybody. I've been watching this fund since February when I just missed buying into it before it publicly closed. Strategy is quant + fundamental as described at https://www.invenomic.com/_files/ugd/8592d8_c3a2c82a2bdd4701b77dcfdf2100a230.pdf Currently net 25% long positioning which I'm good with. Invenomic provides monthly commentary which is not common. Standpoint's Eric Crittenden provides monthly commentary too
Per portfolio visualizer inception to date performance is over 22% vs. SPY which is over 9%. 3Y performance numbers starting 10/01/2019 are 34% and 8% respectively. Any performance numbers below 3 years I don't pay much attention too but BIVIX has been on fire in 2022 YTD 30% vs. -23% for SPY