I have ranted about some fund families in the past. However, today I want to do a mea culpa. No, this is not about Hussman.
Just wanted to know which fund family you have invested with which has disappointed you of late. Friends don't let Friends invest in such families. I'm not talking about the Van Wagoner's and the Janus' here. I'm also not talking about Whitebox, or any fund family which is now extinct and irrelevant.
My pick - Riverpark. Yeah, might seem strange. I do feel all external managers will do well to strike out on their own. Whatever is left, hasn't really done diddly. I've already sold RLSFX in my IRA and replaced with ETNMX. It was not about a like for like replacement. It was about controlling "volatility" and this fund has done anything but.
Good Morning.
Comments
I'd go with Templeton. Not just because I finally sold out of TGBAX last month after several years, but the firm just seems to be way behind the times in terms of offerings, fees, loads, and so forth. I was also less enthused by the firm's processes for conducting shareholder communications when "little" things like major distribution cuts or distribution policy changes were (quietly) announced.
I also don't like funds/firms (not Templeton, in this case) who have their rock stars ALWAYS out in the media -- while some of their products may be awesome, I like my fund firms to be fairly boring and not constantly seeking AUM or publicity.
In thinking about naming a family, what came to mind was one that I've been underrating. Fidelity. My mind is still stuck in the 90s, when it pandered to mediocrity (pension funds), and most of its offerings struggled to meet that low bar. These days, their fund managers hang around longer, and they've put together some very respectable funds.
Following JohnChism's thinking, a family that comes to mind is FPA. FPACX has always been a fine fund, but always overpriced (with costs out of line with the rest of its family). As Rodriguez moved out of active management, his charges (FPPTX, FPNIX) lagged, and funds seemed to shift categories. I suspect few people here followed this family since it was until recently a load family, but it seems to be clinging to its former reputation.
I disagree with rforno about FT. First, because it is much, much bigger than Templeton (the question was about fund families, e.g. VF mentioned Janus, not its Perkins subbrand). Second, because performance of funds in his rear view mirror may appear smaller than they are
That said, its Mutual Series funds are not the funds they were under Michael Price, any more than its Templeton funds are the same ones managed by Sir John. But that doesn't automatically make them overrated.
Doubleline - With the exception of DSENX, the performance of their funds seems to be average at best. Not sure how much Sir Jeff has to do with the day to day operation of DSENX. DBLTX is doing reasonably well within its narrow category (mortgages, I believe), but not a core holding in my opinion.
AQR - With the exception of long/short, most of their alternative funds (including what may be their signature fund, QSPIX) aren't doing well in their respective categories. As for their value as diversifiers (for example, managed futures), many of them certainly qualify as such - nothing but down. I know diversifiers need to be held through an entire cycle, but when will the upcycle start?
Sort of reminds me of the Arnott group - AQR strategies will likely be a valuable addition to one's portfolio, but when?
My experience only encompasses about 10 families. Can give only give a very limited perspective.
My nomination for most overrated: is Calamos. 15 years ago when I decided to invest with them, reviews from many reputable sites suggested they were top-notch. Could damn near walk on water - especially during tough markets. That was not my experience after a decade and I abandoned them.
My nomination for underrated: Oakmark: While overall reviews of OAKBX have been good, it's taken considerable flack, including here, for lagging benchmarks and peers. I've always felt this was a tough fund to benchmark. These are deep value long-term focused investors who try to avoid currently hot stocks and sectors. They'll buy things that are unpopular with the crowd and slowly build a position. They'd rather sell early than eat a big loss. So they abandoned long term bonds a few years too early which hurt them relative to peers. I don't fully understand their hedging strategy designed to protect against big losses. But it seems to depend on certain components like smaller energy producers, big defense contractors, financials, beaten down large caps, and, when appropriate, government bonds.
Re: Franklin Templeton (nominated by rforno): My first and only fund for the first 20 years was TEMWX. During the 70s, 80s and most of the 90s these guys seemed to have a license to print money. I and several coworkers did very well by them. So it's with sadness that I observe that fund's lackluster performance over the past decade or more. I don't know what happened to a once very fine company.
Clip from Wikepedia (the Free Encyclopedia) on their rapid expansion through acquisition and merger beginning in '92. Might have contributed to their problems:
"In October 1992, Franklin acquired Templeton, Galbraith & Hansberger Ltd. for a reported cost of $913 million, leading to the common name Franklin Templeton. Mutual fund pioneer Sir John Templeton was the owner of Templeton, Galbraith & Hansberger Ltd together with his son Dr. John Templeton and John Galbraith who together owned 70% of the firm. In November 1996, Heine Securities Corporation, known for the Mutual Series of funds, merged into the Franklin Templeton complex. In October 2000, Franklin acquired Bissett Funds to increase its Canadian presence, and Bissett remains a key brand from Franklin in the Canadian market. The Fiduciary Trust Company was acquired by Franklin Templeton in April 2001."
TEMWX - NTF at Fidelity (to address a concern with FT loads).
Another overrated family - Dimensional (DFA). Excellent for small cap value (domestic or international), less so outside of its wheelhouse. Its major advantage there (low cost) is impaired by its general requirement to invest through advisers. (Though there are more and more ways to circumvent this now, including 529 plans and VAs.)
Points taken about Templeton - I don't necessarily disagree w/the counter-arguments there, although I was referring to the firm and not just a specific fund.
Regards,
Ted
However, if you were investing in funds in the 70s-80s (as I was) when someone said "Templeton", Templeton World lept to mind. It was their flagship fund, run by Sir John himself for many years. Don't know how many other funds they had back than, but it would be only a fraction of all the funds now under the Franklin Templeton umbrella. Sometimes bigger isn't better.
Ahh - Yes the loads too. I think loads were less of an issue for many of us in workplace plans in the 70s and 80s. First, we received group discounts. Second, we didn't have the plethora of no-load funds to choose from that are available today. And third, there wasn't nearly the amount of fund information which we now take for granted (this site being a prime example). Many of us new inexperienced investors were operating in the dark and relied on the advice of an experienced commission-based advisor, even if it did cost us a few pennies on the dollar.
PS - I'm not aware of a single Internet site devoted to mutual funds in the 1970s when I bought my first shares of TEMWX.
MFO: "How Good Is Your Fund Family" 2016 Edition
WSJ/Barron's: One, Five, and Ten Year Rankings, through end of 2015, plus methodology (Lipper)
Best Fund Families of 2015 (adds category rankings, e.g. domestic equity, taxable bond)
I agree with hank that bigger is not always better. But it does increase the odds of finding a good fund among the also rans in a family. Hence Fidelity winds up well represented on many "best funds" lists by sheer size. Such lists are not family rankings and don't address family reputation.
Hank - no offense taken! And yes, the modern Templeton isn't Sir John's, that's for sure. :/
In their defense, I've held their tax-free FKTIX in my portfolio since (I think) the late '80s, and also think their utility/income funds were pretty good, though I don't own those.
I'll echo someone's earlier point about Arnott's Research Associates. PAUIX/PAAIX were all the rage and hyped everywhere around the GFC, then (as now) you rarely see them mentioned and only sometimes see RA in the media.
Not a "site" exactly, more of a feed. But definitely internet (i.e. uucp gateway'd to ARPAnet). FWIW, here's a page with the 1982 newsgroups (scroll to appendix near bottom). No mutual fund group back that far.
We're off early tomorrow to the country, so that should let things settle down.
Take care.
As appears to be common with quant funds, Bridgeway's rule based systems (or model based, if you prefer) worked until they didn't. Between about 2007 and 2011 Montgomery worked on developing new models. You can see the change in performance of several funds around then. Sometimes the changes worked for a longer period of time, sometimes they only worked for a couple of years (BRUSX).
When Quant Funds Fail, M*, August 2010.
Was Bridgeway overrated? It may be the best of the bunch (quants), so perhaps the question might be rephrased as "are quant funds overrated?"
Compare that to, say Arnott's PAUIX which has (last check) like 20 different slices represented by PIMCO funds -- with a ton of overlap if memory serves -- and percentages that are, imho, totally useless in terms of generating meaningful investment performance or diversity (ie, ABCDE position is 2%, etc.). Heck, some of these robo-advisors do that too ... frankly I think anything less than 10% isn't really much of a 'diversifier' anyway.
Are not CAPE / DSEEX / DSENX quant?
Whatever it is, it's method is working well right now. It is 10% of my self managed portfolio.
Question for @davidrmoran, do you know how to find out what 4 of the 10 sectors of the S&P the fund is invested in at any given time?
Okay, FWIW. First let's deal with a technical item. Even assuming that CAPE is a quant fund, IMHO DSEEX would not be because its objective and technique is to beat the model by using leverage and bonds. It does this in a manner similar to an equity-linked note that provides index exposure by buying index options and downside protection by using the remaining assets to purchase debt. DSEEX uses the latter to provide upside potential as opposed to downside protection. (It also amplifies exposure with leverage.) Besides, where's the model for the bonds?
My take on what a quant fund is includes two axes, a major one and a minor one. The major one is how static the model or models are. If they never change, what you've got is a fundamental index. The models may be updated often, in which case you've got a quant fund. What I care about is how good the team is in continually improving the models, recognizing that markets don't literally repeat. (For example, the "January effect" is thought to have gradually diminished over the years.)
The other axis is human intervention in security selection, as opposed to model design. ISTM that the more discretion there is held by humans, the less quantitative the fund is.
The CAPE ETN seems to operate the same way as any other fundamental index fund or note. It has a fixed set of rules that it uses to select securities and periodically "resets" its portfolio. Fundamental indexes may use a set of rules as simple as equal weighting or as complex as those in any fund. Call them quant funds if you wish, but then borrowing from rforno's sense of lite-ness I'd call them consomme, clear and nearly colorless.
FT's lexicon defines quant as 'using computer-based models to inform their decisions on whether to buy or sell securities.'
>> ... the more discretion there is held by humans, the less quantitative the fund is [@msf].
Why I asked. Since there is no discretion for CAPE, seems to me it's as quant as can be. Hence in answer to your 'overrated' query, since for the last 4y it matches or outperforms (depending on timeframe) about all other SP500 constructions, it seemed to me that maybe it was the opposite of overrated. - ?
@MikeM ---
>> what 4 of the 10 sectors of the S&P the fund is invested in at any given time?
No. This is as recent as I have uncovered:
http://www.etnplus.com/US/7/en/details.app?instrumentId=174066
Anybody remember Mathers Fund? Henry van der Eb was almost 100% cash in the 1990s writing lucidly why the market was wrong. He was eventually right but by that time the fund dissolved.
In rank order of most disappointing families (ie not worth the ER)
American funds... Maybe I would feel more positive if I had made any money with them or if I could tell them apart. They all look pretty homogeneous to me and too big
Franklin Templeton. too expensive, rarely excel. Bond funds are Ok but too expensive. to make up their expense ratios they go out on a limb. I ended up in some of them when Michael Price sold out, but have stuck with MDISX given large capital gains, and their ability to slide over to new management relatively successfully
Fidelity Most too big too identical. Too much work to tell what is going on.
Janus They seemed to know what they were doing in the go go 1990s but we all know how that turned out.
@JoJo26 noted: "Most overrated, BY FAR = Fidelity", @sma3 noted: "Fidelity Most too big too identical" and your notation of ditching your RiverPark and moving the monies to Eaton; I will note.....
>>>One must consider what might be found at a "fund house", sort what you find of value for your investing needs, quality of timely and accurate data processing and ease of use of the existing structure.
Fidelity has had a long list of mutual fund choices for a number of years, including what were first of a kind choices for the "common folk" investors with the introduction of the "select" funds. Fidelity also helped beat down the cost of investing from the full "load" fees charged by the big retail houses of the earlier period for mutual fund investing.
We use Fidelity (since late 1970's) as a portal for investments. There is nothing written stating that one's brokerage account is restricted to Fidelity offerings.
The portal is as flexible as needed by this house.
Over the years, from the point of Fidelity fund choices; we have traveled into these choices (may be a few that escape memory at this time):
FCNTX FDGRX FLPSX FAGIX FSPHX FLBIX SPHIX FRIFX FNMIX FINPX and several of the select funds.
The majority of our holdings today are not Fidelity funds; with the brokerage portal allowing travel to........well, everything, to which, we desire access.
If one can't find an investment path(s) within this fund house; I can't offer another solution.
Our 2 cents worth.
Catch