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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.
  • Vanguard International Explorer Fund adds another manager
    https://www.sec.gov/Archives/edgar/data/1004655/000093247117004797/whitehallmergedsupps.htm
    497 1 whitehallmergedsupps.htm WHITEHALL 497E
    Vanguard International ExplorerTM Fund
    Supplement to the Prospectus and Summary Prospectus Dated February 23, 2017
    Restructuring of the Investment Advisory Team
    The board of trustees of Vanguard International Explorer Fund approved adding TimesSquare Capital Management, LLC (TimesSquare Capital) to the Fund’s investment advisory team.
    Effective immediately, TimesSquare Capital will manage a portion of the Fund’s assets.
    TimesSquare Capital and the Fund’s other investment advisors—Schroder Investment Management North America Inc. and Wellington Management Company LLP—each independently select and maintain a portfolio of common stocks for the Fund. The Fund’s board of trustees determines the proportion of the Fund’s assets to be managed by each advisor and may change these proportions at any time.
    The Fund’s expense ratio, investment objective, principal investment strategies, and principal risks are not expected to change.
    Prospectus and Summary Prospectus Text Changes
    The following is added under the heading “Investment Advisors”:
    TimesSquare Capital Management, LLC (TimesSquare Capital)
    In the same section, the following is added to the list of Portfolio Managers:
    Magnus S. Larsson, Senior Vice President and Portfolio Manager of TimesSquare Capital. He has managed a portion of the Fund since August 2017.
    (over, please)
    Prospectus Text Changes
    The following is added to “Security Selection” section under More on the Fund:
    TimesSquare Capital Management, LLC (TimesSquare Capital) employs a bottom-up investment process driven by fundamental equity growth research conducted by its investment analysts, with a particular emphasis on the assessment of management quality, an in-depth understanding of superior business models, and valuation discrepancies.
    TimesSquare Capital invests the Fund’s assets in a diversified portfolio of stocks that it believes, based on its research, will generate superior risk-adjusted returns. TimesSquare Capital’s research process begins with a collaborative team of skilled and experienced analysts, which identify superior growth businesses with market capitalizations less than $5 billion at the time of purchase. Once a company is identified, rigorous fundamental analysis is performed, projected growth rate and return potential is calculated, and the company’s valuation is assessed on a relative and absolute basis. A company’s relative value is compared to industry peers, as well as firms with similar business models and at a similar point on the value chain. TimesSquare Capital’s sell decisions are based on the same research process, and securities would generally be sold when, among other things, there is no longer high conviction in the return potential of the investment, or when the advisor identifies a significantly more attractive investment candidate.
    The following is added to the “Investment Advisors” section:
    TimesSquare Capital Management, LLC, 7 Times Square, 42nd Floor, New York, New York 10036, is a registered investment advisor that specializes in small- and mid-cap growth equities. TimesSquare Capital’s institutional partner, Affiliated Managers Group, Inc. (AMG), a publicly traded global asset management company, indirectly holds a majority equity interest in TimesSquare Capital, with the remaining portion owned by TimesSquare Capital principals. As of June 30, 2017, TimesSquare Capital managed approximately $17.2 billion in assets for AMG funds, corporations, public funds, unions, endowments and foundations, retirement plans, and other institutional accounts.
    In the same section, the following is added to the list of portfolio managers:
    Magnus S. Larsson, Senior Vice President and Portfolio Manager at TimesSquare Capital. He has worked in investment management since 1995, has managed investment portfolios since 2000, has been with TimesSquare Capital since 2012, and has managed a portion of the Fund since August 2017. Education: B.S., B.A., University of Orebro, Sweden.
    © 2017 The Vanguard Group, Inc. All rights reserved.
    Vanguard Marketing Corporation, Distributor.
    PS 126A 082017....
  • Larry Swedroe: Hazards Of Individual Stocks
    FYI: In a recent article that highlighted the perils of owning individual stocks, I offered the historical evidence demonstrating how only a small percentage of stocks have accounted for all the gains provided by the market—with the vast majority earning a big, fat zero in aggregate cumulative returns, even before considering the impact of inflation or taxes.
    Regards,
    Ted
    http://www.etf.com/sections/index-investor-corner/swedroe-hazards-individual-stocks?nopaging=1
  • Government Money Market Mutual Funds May Be a Better Alternative To Cash
    FYI: It’s generally suggested that most portfolios have at least a small allocation to cash. Not only does it help manage overall portfolio risk, it provides a cash cushion that allows investors to take advantage of dips in the market.
    With equity valuations stretched, investors should look for ways to protect their capital while still earning a competitive rate of return. In this article, we’ll examine how government money market mutual funds (GMMMFs) may be able to fill that need.
    Regards,
    Ted
    http://mutualfunds.com/money-market-funds/government-money-market-mutual-funds-an-alternative-to-cash/
  • Mark Hulbert: Everyone’s A ‘Buy and Hold’ Investor Now. But Can You Stay That Way?
    Most investors want know if their asset allocation is correctly set to their risk tolerance until we get into a severe market downdraft. If one waits too long in the downdraft to start to trim their positions, raising cash, then they might indeed be better off to just ride out the storm. However, I have certain positions I plan to trim and others I plan to raise (including cash) in a stock market decline. The consept is to move money that is invested in the area of greater risk on the right side of the portfolio left towards areas of investment with less risk.
    That is why my asset allocation has investment ranges for my portfolio's areas of investment. For the cash area my ranges are from 15% to 25%, for my income area the ranges are from 25% to 35%, for my growth & income area the ranges are form 30% to 40% and for the growth area the ranges are from 10% to 20%. In extreme market declines cash can be temporarily held above the 25% mark while most of the trimming would come from the growth area of the portfolio since it consist mostly of all equity capital appreciation type funds where the greatest risk is found. I use my market barometer as a tool to help me throttle my asset allocation and rebalance it from time-to-time based upon my market read. Currently, if I were to completely sell out the growth area that would raise my cash allocation to about 35% if all were moved to cash. In the rebound, I'd load the growth area while reducing cash. Most likely, I'd stand pat in the income and growth & income areas of the portfolio.
    In my book ... Buy & Hold does not mean hold forever. Even Mr. Buffett makes holdings adjustments within his massive portfolio form time-to-time based upon his firm's market read.
    I have already developed my market downdraft management plan just in case the market storm arrives. Usually, these market storms come quickly and are unexpected.
    Are you prepared?
    Old_Skeet
  • GASFX
    Hennessy has been raising the fee since they acquired the fund.
    They then introduced an 'institutional' share class with a $250,000 minimum - with a lower fee than the (original, now called) 'investor' class, and in a very! shareholder-unfriendly manner - did not place the original investors in the 'institutional' class.
    Aside - the current institutional GASFX ER is not that different from what the original ER had been, prior to Hennessy acquisition.
    Other funds - can't recall any specifically at the moment - have given the original shareholders - this "grandfather" benefit and lower expense ratio.
    I currently have gains on the fund, that prevent me from liquidating the fund without paying the cap gains tax. If I could sell without paying the C/G tax, I would sell it immediately.
    FWIW (and too late for my "old money") you can duplicate the exposure of the fund, through a mix of MLP and Utility ETFs. The expense ratio would be, in aggregate, MUCH lower than GASFX, and it would be more tax efficient.
    Below - using the wonderful PortfolioVisualizer.com, are a couple of examples
    Match GASFX with MLPX + VPU: http://tinyurl.com/GASFX-match
    Backtest Match of 35% MLPX + 65% VPU, with Annual[*] Rebalancing: http://tinyurl.com/GASFX-backtest
    [*] Other rebalancing options are available. See menu at PortfolioVisualizer, linked above.
    Since
    http://www.etf.com/VPU has ER of 10 bps
    http://www.etf.com/MLPX has ER of 45 bps
    the blend has ER of about 22 bps, which is 79 bps less than the larded up GASFX Investor class.
  • What Will You do When the Bear Arrives?
    Hi @Catch22 and others,
    Cash has the element of stable value ... generally, bonds do not have this stable value feature. So, in stock market swoons fixed income investors could be impacted as well as equity investors who are scrambling to raise capital (sell bonds) to meet equity margin calls. Simply stated, bonds have their own asset class.
    Something to think on.
    Skeet
  • David Snowball's August Commentary Is Now Available

    M* has the minimum for their high yield fund at 25K. Not exactly chump change, and might even be lower at various brokers, but it's probably doable for many folks here. But the 1.20 ER and 12(b)-1 fee on the investor class turns me off.

    His Oaktree Capital seems to specialize in distressed debt. I sense that they cater to very large and institutional investors. They have a high yield mutual fund - however I believe the minimum is quite high.
  • David Snowball's August Commentary Is Now Available
    From David's Commentary - "(Howard Marks') premise here is that investors make the greatest and safest returns on their investment when they are prepared to do what others do not want to do. He posits a situation, analogous to what we see today, where too much money with too little fear is chasing risky investments since the alternative is unappealing ...".
    -
    Marks is an interesting bird. More impressive live (on Bloomberg) than in his writings, I think. I've been plodding through his The Most Important Thing on Audible. It's few hundred pages long, but with a tediously repetitious basic theme. That being: Adjust your risk appetite to market conditions. He's currently quite bearish. I enjoy the book, but listen mostly at bedtime and generally doze off after about 10 minutes.
    His Oaktree Capital seems to specialize in distressed debt. I sense that they cater to very large and institutional investors. They have a high yield mutual fund - however I believe the minimum is quite high.
  • Pimco Has A Manager Who Tops Dan Ivascyn. His Name? Dan Ivascyn
    FYI: Investors in Daniel Ivascyn’s Pimco Income Fund have enjoyed stellar returns. Those who put money in his much smaller closed-end fund have gotten those gains on steroids.
    Regards,
    Ted
    https://www.bloomberg.com//news/articles/2017-08-01/pimco-has-a-manager-who-tops-dan-ivascyn-his-name-dan-ivascyn
    PDI: 17.09% YTD
    PONAX: 5.62% YTD
  • DoubleLine's Gundlach Sues California Wine Merchant Over Bogus Bordeaux
    Not so fast. Gundlach's pretty bright and probably bought the wine as an investment.
    http://www.wineinvestment.com/wine-investment/alternative-investments/
    "The term ‘alternative investments’ is relatively loose, and includes tangible assets such as precious metals, art, wine, antiques, coins and stamps, plus some financial assets such as property, venture capital, funds and trusts.
    "Investing in wine, whether that be a rare bottle, a case of highly-regarded First Growths or an entire cellar, has consistently yielded decent low-risk returns. In fact, for the last 50 years the fine wine market has remained stable, despite the world’s economic crises ..."

    Agree with @Mark. Wine around here's often on sale at 20-30% below list. Some stores offer an additional 10% off if you buy 4. You can almost always find decent tasting Californias for around $10.
  • Fund Manager #@$%*! Fired as Trump's Communications Director
    The plot thickens:
    m.huffpost.com/us/entry/us_597b6e06e4b02a8434b63e5a
    From the article:
    While preparing for his move into government, Scaramucci struck a deal — which is still under regulatory scrutiny — to sell his stake in his hedge fund, SkyBridge Capital, to Chinese conglomerate HNA Group and another company. He assumed that he’d be put in charge of the public liaison office, a job that Valerie Jarrett held in the Obama administration. He had it all mapped out, according to the White House adviser. He identified 2,500 influential business leaders across the United States and had come up with a clever name for them: Trump Team 2,500. He believed these people would help pressure Congress into supporting the president’s agenda.
    Priebus blocked Scaramucci from getting a top administration job in January, telling the president that Scaramucci “played” Trump, according to a source. Scaramucci now calls Priebus “Rancid Penis.”
    But Scaramucci’s plans were foiled in early January. That’s when Priebus, according to a confidant of both Scaramucci and the president, told Trump, “He played you.”
    “How’s that?” Trump asked Priebus, according to the same source, who has spoken to several people within the White House about the conversation.
    Priebus then told Trump that he felt Scaramucci had been offered too much for SkyBridge by HNA Group. The deal, he implied, smelled bad — as if the Chinese might expect favors from within the administration for that inflated price. The source also said that Priebus mentioned there was email traffic between Scaramucci and the Chinese proving this.
    The White House rejected this version of events and declined to make Priebus available for comment.
    Ultimately, Scaramucci was not offered the job.
  • DoubleLine's Gundlach Sues California Wine Merchant Over Bogus Bordeaux
    FYI:(Thank God, the Linkster's bond money is with Pimco, and not with Jeff, the headline seeker !)
    Jeffrey Gundlach, one of the world's best-known bond investors, has sued a California wine merchant he said sold him several dozen bottles of fake wine, including Bordeaux that experts consider among the greatest wines ever made.
    In lawsuits filed on Friday, the founder of DoubleLine Capital claimed that at least 67 bottles he bought from Soutirage were fake, and that it would cost more than $1 million to replace them.
    Regards,
    Ted
    http://www.reuters.com/article/us-funds-doubleline-wine-idUSKBN1AE01G
  • John Waggoner: Morningstar: Advisers Are Overreacting To Fund Manager Changes
    Fund manager changes, especially lead managers and solo managers, should absolutely raise a red flag. There have been many instances where I can look back and say that I should have reacted to manager changes sooner. The fact that a fund is team managed should not change the importance of going back and seeing what that person's contributions were to the success of the fund during her/his tenure. Great example is IVAEX, where one of the team left in mid-2014. The fund had been struggling already that year, and it just got worse. Something was clearly not working with the fund's macro strategy, and the next year was even greater under-performance. In fact, the fund never recovered, and assets dropped from almost $13 billion to $1 billion at year-end 2016. Was the manager leaving the reason? No, but it simply was another sign that should have triggered a sale. We held until mid-2015, and fortunately were able to extract ourselves with some decent long-term gains for the most part. Should you sell every time a team manager leaves? No, but the event should mean a re-evaluation of the thesis for owning the fund and very close monitoring for a period of time thereafter.
    For solo managers, and fortunately there are fewer now than in the past, this event should absolute put any additional purchases on hold until an evaluation of the new manager is completed. This is difficult for individual investors, but fortunately we have access to fund managers and can interview them.
    Lesson learned over the years: funds that employ active macro and thematic strategies are very difficult to evaluate sometimes and can turn on a dime performance-wise. It's not that the managers have taken dumb pills, but rather their unusual approach can suddenly go out of favor in a big way. You really need to understand how the investment philosophy translates to day-to-day management and the many risks involved in the strategies. These funds should be kept on a short leash.
  • GLFOX Return of Capital
    @BenW: I don't see any ROC !
    Regards,
    Ted
    Dividend and Capital Gains Distributions GLFOX
    Distribution
    Date Distribution
    NAV Long-Term
    Capital Gain Short-Term
    Capital Gain Return of
    Capital Dividend
    Income Distribution
    Total
    06/21/2017 17.08 0.0000 0.0000 0.0000 0.0004 0.0004
    03/21/2017 15.28 0.0000 0.0000 0.0000 0.0210 0.0210
    12/22/2016 14.22 0.0963 0.0242 0.0000 0.1569 0.2774
    09/27/2016 13.98 0.0000 0.0000 0.0000 0.0212 0.0212
    08/22/2016 14.10 0.0164 0.0048 0.0000 0.0284 0.0497
  • GLFOX Return of Capital
    Just got an email from Lazard informing shareholders that the June distribution has been characterized as a Return of Capital. Heard of leveraged CEFs doing this, but not an OEF. Probably don't have to worry about changing the basis because this holding is in a Roth. Still, seems bizarre. Anyone had this experience?
  • Investing According To Your Values Can Also Make You Money
    @Jojo26
    The RBC study you referenced looks at the KLD 400 Index. According to MSCI, the index's owner: "The MSCI KLD 400 Social Index is maintained in two stages. First, securities of companies involved in Nuclear Power, Tobacco, Alcohol, Gambling, Military Weapons, Civilian Firearms, GMOs and Adult Entertainment are excluded." https://msci.com/documents/10199/904492e6-527e-4d64-9904-c710bf1533c6
    It is precisely such exclusionary screens for SRI funds I stated the research was neutral about, revealing that such exclusionary indexes/funds either match the market or lag it slightly. It is ESG rankings in which every sector is included but the worst ranked ESG companies are minimized or eliminated that there is strong corroborative evidence for. Since you didn't read the links I provided to the DB report, here is an important excerpt:
    The evidence is compelling: Sustainable Investing can be a clear win for investors and for companies. However, many SRI fund managers, who have tended to use exclusionary screens, have historically struggled to capture this. We believe that ESG analysis should be built into the investment processes of every serious investor, and into the corporate strategy of every company that cares about shareholder value. ESG best-in-class focused funds should be able to capture superior risk-adjusted returns if well executed.
    This is the key finding of our report in which we looked at more than 100 academic studies of sustainable investing around the world, and then closely examined and categorized 56 research papers, as well as 2 literature reviews and 4 meta studies – we believe this is one of the most comprehensive reviews of the literature ever undertaken.
    Frequently, Sustainable Investing is stated to yield ‘mixed results”. However, by breaking down our analysis into different categories (SRI, CSR, and ESG) we have identified exactly where in the sprawling, diverse universe of so-called Sustainable Investment, value has been found.
    By applying what we believe to be a unique methodology, we show that “Corporate Social Responsibility” (CSR) and most importantly, “Environmental, Social and Governance” (ESG) factors are correlated with superior risk-adjusted returns at a securities level. In conducting this analysis, it became evident that CSR has essentially evolved into ESG. At the same time, we are able to show that studies of fund performance – which have been classified “Socially Responsible Investing” (SRI) in the academic literature and have tended to rely on exclusionary screens – show SRI adds little upside, although it does not underperform either. Exclusion, in many senses, is essentially a values-based or ethical consideration for investors.
    We were surprised by the clarity of the results we uncovered:
    100% of the academic studies agree that companies with high ratings for CSR and ESG factors have a lower cost of capital in terms of debt (loans and bonds) and equity. In effect, the market recognizes that these companies are lower risk than other companies and rewards them accordingly. This finding alone should put the issue of Sustainability squarely into the office of the Chief Financial Officer, if not the board, of every company.
    89% of the studies we examined show that companies with high ratings for ESG factors exhibit market-based outperformance, while 85% of the studies show these types of company’s exhibit accounting-based outperformance. Here a gain, the market is showing correlation between financial performance of companies and what it perceives as advantageous ESG strategies, at least over the medium (3-5 years) to long term (5-10 years).
    The single most important of these factors, and the most looked at by academics to date, is Governance (G), with 20 studies focusing in on this component of ESG (relative to 10 studies focusing on E and 8 studies on S). In other words, any company that thinks it does not need to bother with improving its systems of corporate governance is, in effect, thumbing its nose at the market and hurting its own performance all at the same time. In the hierarchy of factors that count with investors and the markets in general, Environment is the next most important, followed closely by Social factors.
    Most importantly, when we turn to fund returns, it is notable that these are all clustered into the SRI category. Here, 88% of studies of actual SRI fund returns show neutral or mixed results. Looking at the compositions of the fund universes included in the academic studies we see a lot of exclusionary screens being used. However, that is not to say that SRI funds have generally underperformed. In other words, we have found that SRI fund managers have struggled to capture outperformance in the broad SRI category but they have, at least, not lost money in the attempt.
    These conclusions go a long way towards explaining why the concept of sustainable investing has taken so long to gain acceptance and even now inspires indifference and even cynicism among many investors. It has been too closely associated for too long with the SRI fund manager results which are not only an extremely broad category (i.e. in terms of investment mandate), but historically were based more on exclusionary – as opposed to positive or best-in-class – screening. ESG investing, by contrast, takes the best-in-class approach. By analyzing the various categories within the universe of sustainable investing, we can now say confidently that the ESG approach, at an analytical level, works for investors and for companies both in terms of cost of capital and corporate financial performance (on a market and accounting basis). It is now a question of ESG best-in-class funds capturing the available returns.
  • Investing According To Your Values Can Also Make You Money
    @Maurice
    If investments were truly socially responsible, then they wouldn't invest in anything related to capitalism. Therefore the only thing left to invest in is government. But no profits, dividends or capital gains there.
    I believe Treasury bonds, savings bonds and municipal bonds are all investments in the government and have managed to generate returns for investors for many years.
  • KKR To Buy WebMD For $2.8 Billion
    FYI: (KKR is one of my income stock, that has had some nice capital appreciation in the last year coupled with a 3.52% dividend yield.)
    .YTD 25.57%
    .1 Year 33.55%
    WebMD Health Corp. agreed to be taken private by buyout firm KKR & Co. for about $2.8 billion, five months after hiring bankers to explore a possible sale.
    Stockholders of the online health information company will receive $66.50 a share in cash, according to a statement Monday. The price is 20 percent more than Friday’s closing level and 29 percent higher than where the shares traded in mid-February, when New York-based WebMD hired JPMorgan Chase & Co. to review strategic alternatives.
    https://www.bloomberg.com/news/articles/2017-07-24/webmd-agrees-to-be-bought-by-buyout-firm-kkr-for-2-8-billion
  • Fund Manager #@$%*! Fired as Trump's Communications Director
    @Lewis: "Fund Manager to Be Trump's Communications Director" I think you need to pay a lot more attention to details before you fire off another anti-Trump post. Skybridge Capital a single fund, SKYIX, which is managed by Raymond C. Nolte and Brendan G. Voege, not Anthony Scaramucci. Next time get your facts straight !!!!!!!!!!!!
    Regards,
    Ted :( :( :( :( :(