I've been horsing around with the Excel version of the database, and along the way I happened to take a look at Vulcan Value Partners Small Cap, VVPSX. It shows a reasonable Ulcer Index of 5.9, but as a "5" for risk (Very Aggressive) with also a "5" for return, (Pretty Crummy). That could reasonably also be expressed as "High Risk/Low Return".
Yet M* data, via Schwab, says 5*/Low Risk/High Return. I'd bet that I'm looking at something the wrong way here, but not sure what. Also, what is actual meaning of the "APR" column? (Annual Percentage Rate doesn't seem to make much sense in this context.)
Comments
Here's customized version for you of these two funds VVPSX and VVPLX.
Note that I added the SP500 numbers for the same three year period.
The "risk" rating looks at the three volatility indices (standard, downside, and drawdown) and compares against the corresponding levels for SP500. If any are greater than those of SP500 by more than 25%, the fund is flagged as "Very Aggressive," since by definition SP500 is "Aggressive."
It's that simple. I'd say that our risk rating is very sensitive. Note also that it is relative to market, not to category, like M* does. So, while a fund like VGENX may be low risk compared to other energy/natural resource funds, probably not the case in the MFO system. Or, more recently, bond and all asset funds, which probably rank "low risk" on other systems, are getting an elevated risk rating, at least temporarily, on the MFO system. Our return rank is within category, but not our risk rank.
Hmm, the APRs look fine to me. APR stands for Annualized Return Percentage (or Compounded Annual Growth Rate CAGR). I added a column for Total Return. I think that if the fund delivered APR for three years, it would result in total level. Which is quite attractive for these two funds...and the SP500 for that matter.
Please let me know if all this makes sense.
Very much appreciate the feedback.
Charles
• I'm a complete dummy, and they felt it not worth their time to offer any insight-
• They didn't know the answers either.
Note that the two possibilities I've mentioned are not necessarily mutually exclusive. But it does give some thought as to maybe in your final product you might consider a column-by column breakdown so as to make it possible for your main body of work to be utilized by as many viewers as possible.
I particularly like your risk rating methodology as being sensitive to the overall S&P, rather than by category, as by combining the M* data with your dataset it provides a much broader picture.
If I can be of any assistance at all in user-testing or any other area be sure to let me know. In my former life I was pretty much the main guy for documentation of San Francisco's 911/Public Safety communications systems, and I really understand the immense value of feedback when you are constructing stuff.
Thanks again!
Looking good!
As we used to say, when all else fails, read the (insert bad word here) manual!
Very cool and nice to know there is another Bay Area resident on this board. I live in the East Bay, was working as a temp in SF up until a few months ago. BART sure is something else, huh?
@Charles Your work is excellent and very much appreciated. Definitions look fine to me. Also available if you need help; not that great at statistics and math, but am a stickler for details.
Same for VVPSX- I've got a bit of that animal also. The main perspective that I get from combining the M* info with Charles' construct is that within it's class VVPSX may be a good performer, but as compared to the S&P overall perhaps it's not worth the trouble. We shall see...
I have VVPSX. 1-3 mo result is so so. I still like it though. Look for longer periods.
Ya, by the time I opened this account at Fido, I missed getting in on Chuck Myers' funds FCPVX & FSCRX and am still a bit ticked as I've yet to come across an open small-cap value fund I like as much as either of those two. SSSFX is good, fortunately got in right before it closed but that is in another account so still looking. SKSEX is intriguing, but don't know anything about the PM's. Thinking of going with MSCFX, hard to go wrong with Mairs & Power.
@Investor Yes, that's what I initially thought in regards to Joe's initial post but didn't have the balls to say. Good catch
Usually comes down to risk/reward and the role or goal of the fund in your portfolio. Sometimes I wonder why investors hold super conservative small cap funds like ARIVX for example (no offense to any shareholders), when they can just allocate a tiny percentage to something with some upside capture ratio or avoid the category all together instead of paying 1-1.5% in fees to a manager holding over 50% cash. Just my opinion..