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WBMIX Expenses

Carefree
in Fund Discussions
This is the latest..ouch!

Whitebox Tactical Opportunities Fund Share Class: Investor Shares Institutional Shares
Ticker: WBMAX WBMIX
SUMMARY PROSPECTUS
January 16, 2015

TotalAnnualFundOperatingExpenses1 .................. Less Fee Waivers and Expense Reimbursements2 . . . . . . . . . . .
Total Annual Operating Expenses after Fee Waivers and ExpenseReimbursements ............................

Investor Shares
None None None None
1.00% 0.25%
1.00% 0.25% 0.07%
2.57% (0.00)%
2.57%

Institutional Shares
None None None None
1.00% None
1.00% 0.25% 0.07%
2.32% (0.00)%
2.32%

Comments

  • JohnChisum
    That's a big ouch. I wonder why the excessive ER when many of the top 25 holdings are ETFs and other funds?

    http://portfolios.morningstar.com/fund/holdings?t=WBMAX&region=usa&culture=en-US
  • TedTed
    @Carefree: A very expensive and poor performing turkey turkey ! Here is some information from Whitebox Website regarding expenses.
    Regards,
    Ted
    As of the date of the Fund’s current prospectus, the gross expense ratios of the Fund’s Investor Shares and Institutional Shares were 3.10% and 2.85%, respectively (including dividend and interest expense on short sales and acquired fund fees and expenses), and 1.93% and 1.68%, respectively (excluding dividend and interest expense on short sales and acquired fund fees and expenses). Whitebox Advisors LLC has contractually agreed through at least February 28, 2015 to limit total Fund operating expenses (excluding dividend and interest expense on short sales and acquired fund fees and expenses) to no more than 1.60% and 1.35% of the Fund’s Investor Shares and Institutional Shares, respectively. If dividend and interest expense on short sales and acquired fund fees and expenses were included, such net expense ratios through February 28, 2015 are estimated to be 2.77% and 2.52%, respectively.
    Exchange-Traded Funds. In addition to bearing Fund expenses, shareholders indirectly bear the expenses of the underlying ETFs in which the Fund invests
  • Carefree
    As far as this fund...As the late Paul Harvey would say, "Good-Bye"
  • BenWPBenWP
    I think he said, "Good day."
  • msf
    The figures that Ted quotes (accurately, that is what Whitebox states on its website) are wrong. The website states that this is as of the date of the current prospectus, but these figures are from last year's (2014's) prospectus.

    The figures from the current (2015) prospectus are much more reasonable. "Other operating expenses" (the real culprit, and the real unknown) have dropped by 43 basis points (from 0.68% to 0.25%).

    Carrying costs for the short sales ("dividend and interest expense") dropped 12 basis points, but that's more a matter of how much of the fund is invested short vs. long, and of general market interest rates than it is any particular efficiency in the fund.

    The management fee is 1.0% - probably normal for this type of fund (I don't look at these often). And the acquired fund expenses are minimal.

    The reason why this fund looks expensive is because it is shorting a lot. Those ETF top holdings that JohnChisum referred to? They're mostly shorts, and M* shows the fund is around 210% short (and 310% long, including cash). That's what accounts for that 1%+ in carrying costs. The idea of leverage or shorting is that you make more on the borrowing (of the security in the case of shorting) than it costs you. So many people discount this part of the expense ratio.

    As Paul Harvey would say, "and that's the rest of the story."
  • mrc70
    Which Alternate MF you recommend in place of Whitebox Tactical Opportunities fund ?
    I have held it for more than years and it has not moved an inch in these two years. Usually, I give at least 3 years for a fund after I chose, but this is a fund I bought without much conviction. Actually, the entire segment is like that, difficult to choose one with conviction.
  • kevindowkevindow
    Mrc70, you may want to take a look at QLEIX which has a prospectus ER of 1.39%.

    Kevin
  • hank
    edited February 2015
    msf as usual is on target.

    I recall that up until about 10 years ago, long-short funds hid the interest they paid on short sales by adding it to brokerage costs rather than including it the (much more visible) expense ratio. New SEC reporting requirements put a stop to that practice and mandated those costs be included in the ER.

    The net result was an "overnight" jump of around 1% (give or take) in the reported ERs for these funds. (I tried to find that ruling but could not.) The fund companies, as you might expect, objected.

    An ER of 2-2.5% on a fund that routinely shorts equities is not unusual. If I liked the fund, I'd consider that reasonable for these funds.
  • TedTed
    @msf: Thanks for the current prospectus; however I still consider the fund an overpriced turkey
    Regards,
    Ted
  • CharlesCharles
    edited February 2015
    The fund had a terrible 2014 indeed.

    Under-performed across the board...against peers and benchmark...against cash and bonds and SP500.

    Basically, seemed to get everything wrong.

    Working with them to get an updated perspective...the fund just past its 3-year mark...rates only 3 stars from M* and only 2 from us, quantitatively.

    I'm starting to develop this expectation, probably unfair, that it's ok if long-short does not make money in an off year, but it's not allowed to lose money.

    I guess I want them to behave like diodes.

    c
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