Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
@Ptak I think I was not clear. Suppose a new share class was introduced 1 year ago. Its one year performance is its own, but its 5 year performance (extended performance) is computed based on the other, older share classes. So the 1 year performance…
Thanks folks! Could it be possible that funds time the introduction of new share classes when the markets are doing well. So then extended performance could help avoid buying a share class, which might look good based on its record, but is part of a…
That makes sense. Thanks! My guess is that Morningstar discontinued stewardship because constructing it was more data and labor intensive. For example, constructing board independence would take a lot of effort.
Thanks! From these slides, Stewardship appears different from Parent. I can see the Parent ratings in the fund data now, but no Stewardship grades. Has Stewardship been discontinued?
@msf, thanks for sharing the SEC filing. Good find! It is puzzling that AF would use wholly owned subadvisors, when they are practically part of the advisor. Is this perhap a way to get around the restriction of not owning more than 10% of a single …
Thanks, @msf! You understand the distribution side of the business very well.
On the investment management side, would there be any way to find more about the three independent equity investment groups that they use? They seem to be more like sub-a…
@BobC, thanks! I agree that they are good at marketing, but at the same time they appear to be good at investing. My interest lies primarily in understanding what features in their investment processes are responsible for their good performance and …
Thanks, all! I think this structure is different. I think that the three equity investment groups are at the level of sub-advisors, which could explain why they file separate 13F reports. Also, the names of the three investment groups do not suggest…
Thanks. Does Morningstar cover them? I am assuming that they do not trade in exchanges like typical closed end funds do. Is that correct? Also, how do you go about identifying them. I would like to track the returns of some of them if possible.
Tha…
@MSF: You seem to know a lot about mutual fund distribution issues. Could it be that a wrap fee of 1% could work better in that it aligns the incentives of the financial advisor and the client? The typical criticism when financial advisors get comp…
This issue came up about 10 years ago, when an academic study looked into this. See http://www.nytimes.com/2006/07/09/business/mutfund/09stra.html?_r=0. I wonder what is different this time.
Alban
Could the new rule also cause brokers to stay away from recommending riskier types of mutual funds? Brokers might get nervous given that a fiduciary responsibility could increase scrutiny and make it more likely for them to get sued.
Sorry I am getting a little off topic here. But since this is a mutual fund forum, I am curious what effect, if any, this rule will have on the mutual fund distribution methods in the long term. Could it be that the share classes that charge loads, …
Thanks, Msf! Not the smoothest read and I was simply looking at the data section.
Also, I agree that the 10% filter does not make any sense and appears arbitrary. I wonder whether these results still hold without this filter.
I looked at this study but could not figure out whether the authors' data suffer from survivorship bias. If the dead funds are not included in the database and analysis, the findings of this paper could mean nothing. Suppose that a fund disappeared …
vkt,
I read this and your later discussion with interest. If I understand this correctly, you are saying that the company likes to give the impression of "big" valuation in the last round. To do this, you say that the company will strike a deal. Do…
Large outflows can also trigger realization of capital gains.
However, predicting which funds will make distributions is also complicated by the fact that some funds are aware that their large embedded capital gains are being watched and deterring …
OK, I see. But this does not seem to be such a bad thing from the point of view of investors. Once annuities are better explained to them, fewer of them will want to buy them.
I do not agree that brokers will be less willing to sell annuities because they require more work. Yes, it will be more work, but the payoff will also be higher.
I was not aware of this issue, but this seems to be problematic from the point of view of investors. So, I was wondering what folks in this forum know about this issue.
Does anyone here have any idea regarding the nature of these revisions in terms …
Hi Old_Joe,
I am not sure I understand this very well. When you say "revised" prospectus, do you mean that the fund filed another prospectus after it filed its annual prospectus? I thought that funds are required to file one prospectus every year. S…
I think Fazzini & coauthors are respectable researchers, and their approach is reasonable. Once you sort funds that use the same benchmark by their active share measures, the predictive power of active share disappears.
However, I echo David's…
Thanks, Ted! It remains a puzzle to me that if even though buy-side analysts have such strong abilities, as suggested by this and other studies, you do not see many of these funds run by analysts.
