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I share the sentiment. Why bother with the drama that comes with small or even mid caps. If you are itching to dip into the cap table, DSTL is not a bad one to consider but it is not as active as you may want.
AUERX has only $60M AUM, $20M probably came in the last couple of years. $800K in all inclusive fees is not enough to feed 3 managers and some staff + other expenses. Willing to look past the 2.0 ER. I see the high ER instilling some personal discipline in me not to linger with a fund when it underperforms.
XMHQ is something I will be keeping in the IRA. The current strategy is only good for the past five years. As of yesterday, it is leading SPY over the past five, three, one, and YTD periods. I also own it in the taxable. It is just about 15% tech.
FMIMX is another I am keeping in the IRA. It is currently the largest holding in my IRA since LC's are split between funds. The recent interest in small caps has bumped it ahead of FBALX and PRWCX for now.
I have been looking at XMMO for the taxable for a while. As with XMHQ, the strategy has only been in place the last five years. I don't know why M* and Lipper don't account for this, but they don't.
XMMO has also been running ahead of SPY for five years now, and well ahead over the last twelve months and YTD. Given its makeup, it is likely susceptible to capital gains as holdings graduate to the 500 index. It is 15% tech. I have been holding off due to an unpleasant experience with PTH, a momentum health fund.
Like a lot of SMID's these funds are coming off three-month doldrums and are slightly under 52 week highs.
I own XMHQ but I am hesitant to recommend non-active in the SMID space. But SMID ETFs in a trading account are OK.
I think the X's make an interesting contrast to the pricey boutiques Barrons likes to tout. As yogi's charts point out, mayflies are in season.
I don't have a trading account, but there are reasons I gave FMIMX a headstart on the 5th, and won't hold momentum in the IRA. It should go without saying that people should stick to what they are comfortable owning. But as my grandfather used to say, if it's worth saying once its worth repeating from time to time.
I find XMHQ's thesis simple to understand. I suspect that many active managers consider the factors in their rule set. Of course, it only has a five-year track record to weigh.
XMHQ is a passively-managed portfolio of 80 securities that tracks the S&P mid-cap 400 Quality Index. The equities are selected based on the highest quality score, calculated by the following three equally-weighted fundamental factors: (1) return-on-equity (2) accruals ratio, and (3) financial leverage ratio. The index is being weighted by the total of its quality score multiplied by its market capitalization and is rebalanced semi-annually. Prior to June 24, 2019, the fund traded as Invesco Russell mid-cap Equal Weight ETF (EQWM) and followed the Russell mid-cap Equal Weight Index.
I'm supposed to be dealing with the garage, so enough procrastinating.
Recent market activity may signal improved future performance for certain underperfoming segments. Or it could be just another "head-fake." It's premature to declare recent activity as the "Great Rotation" heralded by some prognosticators.
I too own XMHQ in both taxable and IRA. Its strange chart from beginning of April tells me there are some idiosyncrasies about this fund I do not understand. (E.g., As a quality fund (with 26 D/C ratio), I did not expect this fund to react to change in interest rate expectations as much as it did this year.)
Trading account includes IRA. Anything special (non-plain vanilla like SPY, QQQ, etc.) probably should go into IRA so if it lags for an extended period of time, one does not feel stuck because of cap gain hand cuffs. If in an IRA, one can sell without too much mental friction. I take the blame for encouraging you to add this in your taxable account.
@BaluBalu, losing Super Micro and Deckers probably didn't help. Despite all that, still ahead of the 500.
If it was you who talked me into buying it, thank you very much. I was replacing Vanguard CSRP-based funds that were more alike than different. I am much happier with the mix in my taxable than I was.
LC to SC rotation started on July 10 & can not longer be ruled out as a 1-day fluke. Ratio IWM:SPY stockcharts.com/h-sc/ui?s=IWM%3AONEQ&p=D&b=5&g=0&id=p37185738747 Ratio IWM:ONEQ stockcharts.com/h-sc/ui?s=IWM%3AONEQ&p=D&b=5&g=0&id=p04805111262
Also, rotation from growth to cyclicals, Ratio DIA:QQQ stockcharts.com/h-sc/ui?s=DIA%3AQQQ&p=D&b=5&g=0&id=p19698173155
In the ratio chart of X:Y, up-trend means X outperforming Y, down-trend means X underperforming Y, sideways means X and Y in-line.
What is the size of R2000? How much bigger than APPL? I am guessing any rounding error decrease in money from the MAG7 could have outsized impact on R2000.
Size of R2000 is tiny % of the total market-cap (R3000). As noted in weekend Barron's,
"The SCs R2000/IWM now are near 20-year low at 5.2% (by market-cap; the recent peak was at 8.8% in 2006) of the total Russell R3000 universe."
It should be possible to calculate it as % of AAPL market cap too.
But that is why there are big moves in SC from small flows into it.
Edit/Add. AAPL is 6.27% of R3000 IWV. So, the entire R2000 (IWM) market-cap is 5.2/6.27 = 0.8294 or 82.94% of the market-cap of AAPL.
Note that LC don't have to tank for SC to rally. But if people only stopped believing that LC or LC-growth was a guaranteed path to success, then the rest of stocks will do better.
“Hedge funds and traders held record short positions in small cap stocks going into last week’s CPI report and were caught off guard by the lower than expected inflation,” said Cole Wilcox, chief executive officer of Longboard Asset Management. “This sparked the violent rally in small caps.”
Data on Russell 2000 futures show that traders had pushed their exposure to the most net-short since 2023. About 25% of the $68 billion iShares Russell 2000 ETF’s free float is held short, compared with 9.9% for the $564 billion SPDR S&P 500 ETF Trust and 7.6% for the $302 billion Invesco QQQ Trust Series 1, according to data from S3 Partners.
[snip]
The earnings outlook for small caps has started to improve as well. Consensus revenue and net income growth forecasts for the Russell 2000 show a strong recovery in late 2024, with it approaching the S&P 500, according to an analysis by RBC Capital Markets. The rate of Russell 2000 earnings estimates getting revised higher has also started to move back to parity with the S&P, strategists led by Lori Calvasina found.
I've been looking to dump NUSC and FSSNX from the IRA, but I think I'll let them run a little.
@BaluBalu and @WABAC: I wonder how the "quality" bias in XMHQ is supposed to work. I may have wrongly assumed it would mean lower volatilty on the downside, but it has not proven to be a brake. I agree that a couple of stocks affected recent performance.
I remain confident that John Barr at NEAIX will continue to outperform his peers; the several hot funds featured in yogi's chart can't hold a candle to Needham Aggressive Growth beyond the one-year time frame.
PAVE, a MC industrials fund for all intents and purposes, and AIRR, a SC industrials, are acting just fine during this SC rally.
This week is why I always maintain small cap exposure in my portfolio. My small cap fund (FDSCX) has made huge gains this week, over 3% today alone. Big gains (and losses) tend to happen very quickly with small cap funds.
@BenWP, It initially came to my attention screening for funds with good Martin ratios. Over the time periods of most interest to me--since COVID, and since the end of ZIRP--it has been among the very best in the time slices available at MFO premium. I guess that's part of how it works. The fact that it has outperformed SPY over its lifetime could just be luck, changing investment environment, who knows?
NEAIX is not something I would hold in an IRA. If I was fishing those waters I would be looking at HFCGX. But I'm glad you're happy with it.
I really wish I had bought PAVE when you did. But GRID and FIW have been just fine for the IRA. AIRR has recently come to my attention. There might be room in the taxable. That's my go-to attic now that I'm trying to "simplify" the IRA.
This week is why I always maintain small cap exposure in my portfolio. My small cap fund (FDSCX) has made huge gains this week, over 3% today alone. Big gains (and losses) tend to happen very quickly with small cap funds.
7/17/24 Looks like profit taking today for Tech and a few others. Utilities I have were on both sides of the trades. Energy positive while Industrials negative. Lost all gains of yesterday and then some.
@FD1000 — Rear view mirror investing is such a great strategy! I wonder why nobody has thought of that before. BTW, I could cherry-pick a number of 10-year periods in which small caps have outperformed the Nasdaq or S&P.
Stocks up over 1% for me today were small cap defensive and NVDA and AVGO.
It was generally a wasteland.
But AVGO was indeed up, as they had discussionsmwith OpenAI, the generative artificial intelligence startup backed by Microsoft (MSFT), about building a new artificial intelligence server chip.
Their application-specific integrated circuits (ASIC) is a significant growth driver, and it looks to be doing well.
@BaluBalu I was just thinking about this thread, too. Healthcare a bit of a saving grace, as may be expected, when other broad equity sectors take a whack. Utils a little bit happy.
I'll place this link again, so folks don't have to look for the first page of this post.
Major global and U.S. etf categories This list is set with %Chg, which will be for changes for today, July 24, Wednesday; being from most positive to most negative returns.
Could it be that a Trump victory isn't a shoe in any more with Harris taking the reins? I think recently there was quite a bump in trump sectors that may now not be as secure as thought.
Small note - The Mag 7 (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla) dropped -4.8% today and are down -10.4% from their July 10 high. That's “correction” territory, though from grand heights tis still just a small blip.
Comments
Cash 16%
79 % Micro + SC
134 % Turnover
My thought - can they handle a large inflow of $$$ ?
https://i.ibb.co/L1yX6J0/Hot-SCG-YTD.png
https://i.ibb.co/hspBB3g/Not-Hot-SCG-3-Yrs.png
I share the sentiment. Why bother with the drama that comes with small or even mid caps. If you are itching to dip into the cap table, DSTL is not a bad one to consider but it is not as active as you may want.
AUERX has only $60M AUM, $20M probably came in the last couple of years. $800K in all inclusive fees is not enough to feed 3 managers and some staff + other expenses. Willing to look past the 2.0 ER. I see the high ER instilling some personal discipline in me not to linger with a fund when it underperforms.
FMIMX is another I am keeping in the IRA. It is currently the largest holding in my IRA since LC's are split between funds. The recent interest in small caps has bumped it ahead of FBALX and PRWCX for now.
I have been looking at XMMO for the taxable for a while. As with XMHQ, the strategy has only been in place the last five years. I don't know why M* and Lipper don't account for this, but they don't.
XMMO has also been running ahead of SPY for five years now, and well ahead over the last twelve months and YTD. Given its makeup, it is likely susceptible to capital gains as holdings graduate to the 500 index. It is 15% tech. I have been holding off due to an unpleasant experience with PTH, a momentum health fund.
Like a lot of SMID's these funds are coming off three-month doldrums and are slightly under 52 week highs.
I don't have a trading account, but there are reasons I gave FMIMX a headstart on the 5th, and won't hold momentum in the IRA. It should go without saying that people should stick to what they are comfortable owning. But as my grandfather used to say, if it's worth saying once its worth repeating from time to time.
I find XMHQ's thesis simple to understand. I suspect that many active managers consider the factors in their rule set. Of course, it only has a five-year track record to weigh.
Dinky linky: I'm supposed to be dealing with the garage, so enough procrastinating.
Or it could be just another "head-fake."
It's premature to declare recent activity as the "Great Rotation" heralded by some prognosticators.
I too own XMHQ in both taxable and IRA. Its strange chart from beginning of April tells me there are some idiosyncrasies about this fund I do not understand. (E.g., As a quality fund (with 26 D/C ratio), I did not expect this fund to react to change in interest rate expectations as much as it did this year.)
Trading account includes IRA. Anything special (non-plain vanilla like SPY, QQQ, etc.) probably should go into IRA so if it lags for an extended period of time, one does not feel stuck because of cap gain hand cuffs. If in an IRA, one can sell without too much mental friction. I take the blame for encouraging you to add this in your taxable account.
Thanks.
If it was you who talked me into buying it, thank you very much. I was replacing Vanguard CSRP-based funds that were more alike than different. I am much happier with the mix in my taxable than I was.
Ratio IWM:SPY stockcharts.com/h-sc/ui?s=IWM%3AONEQ&p=D&b=5&g=0&id=p37185738747
Ratio IWM:ONEQ stockcharts.com/h-sc/ui?s=IWM%3AONEQ&p=D&b=5&g=0&id=p04805111262
Also, rotation from growth to cyclicals,
Ratio DIA:QQQ stockcharts.com/h-sc/ui?s=DIA%3AQQQ&p=D&b=5&g=0&id=p19698173155
In the ratio chart of X:Y, up-trend means X outperforming Y, down-trend means X underperforming Y, sideways means X and Y in-line.
"The SCs R2000/IWM now are near 20-year low at 5.2% (by market-cap; the recent peak was at 8.8% in 2006) of the total Russell R3000 universe."
It should be possible to calculate it as % of AAPL market cap too.
But that is why there are big moves in SC from small flows into it.
Edit/Add. AAPL is 6.27% of R3000 IWV. So, the entire R2000 (IWM) market-cap is 5.2/6.27 = 0.8294 or 82.94% of the market-cap of AAPL.
Note that LC don't have to tank for SC to rally. But if people only stopped believing that LC or LC-growth was a guaranteed path to success, then the rest of stocks will do better.
I remain confident that John Barr at NEAIX will continue to outperform his peers; the several hot funds featured in yogi's chart can't hold a candle to Needham Aggressive Growth beyond the one-year time frame.
PAVE, a MC industrials fund for all intents and purposes, and AIRR, a SC industrials, are acting just fine during this SC rally.
NEAIX is not something I would hold in an IRA. If I was fishing those waters I would be looking at HFCGX. But I'm glad you're happy with it.
I really wish I had bought PAVE when you did. But GRID and FIW have been just fine for the IRA. AIRR has recently come to my attention. There might be room in the taxable. That's my go-to attic now that I'm trying to "simplify" the IRA.
https://schrts.co/QCSnsXdn
But AVGO was indeed up, as they had discussionsmwith OpenAI, the generative artificial intelligence startup backed by Microsoft (MSFT), about building a new artificial intelligence server chip.
Their application-specific integrated circuits (ASIC) is a significant growth driver, and it looks to be doing well.
Why is everything Nuclear I follow getting hammered today? Renewable energy stocks are doing well today. No middle ground for this market?
Good to see Bitcoin diverge from equities and from tech equities in particular.
I'll place this link again, so folks don't have to look for the first page of this post.
Major global and U.S. etf categories This list is set with %Chg, which will be for changes for today, July 24, Wednesday; being from most positive to most negative returns.