June 2012 – Retirement income calculators

By Junior Yearwood

There was a time not so long ago when retirement was something that most Americans took for granted. You worked for a company till you were 65, then you retired and collected a pension that allowed you to live comfortably. Since the 1990’s however, legislation and the changing economic landscape have meant that the number of people covered by pensions has drastically reduced.  With Social Security effectively in a state of permanent deficit, the old notion of flying into your golden years on auto-pilot had vanished for most of us.  By the end of 2004 a majority of individuals had turned to a bewildering array of different contributory programs (401k, 403b, 457, IRAs, Roth, SEP, SIMPLE, Keogh) and personal investments as their primary retirement plan. While the affluent and the less-so vary in the extent of their retirement resources, it’s increasingly the case that we’re all in the same boat: we’re all being asked to make on our own the decisions which will shape the decades we spend in retirement.

Johanna Fox Turner, guest expert

Joining us this month to assist with “The Best of” feature, is our guest expert, Johanna Fox Turner, Certified Financial Planner, owner of Milestones Financial Planning, LLC, and author of a monthly financial tips newsletter, which to our delight includes Johanna’s (Almost) Famous Recipes. Johanna joined me in researching each of our alternatives and provided insightful comments based on her years of expertise. Thank you, Johanna.

Johanna Fox Turner has been a CPA for over 30 years and a Certified Financial Planner since 2007. She is a graduate of David Lipscomb University and a Registered Life Planner.

Johanna is a Fee-Only™ financial planner/investment manager and in addition to Milestones is the owner of  Fox & Co, CPAs in Mayfield, Kentucky. She has served as president of the Mayfield-Graves County Chamber of Commerce, trustee at Mid-Continent University, city of Mayfield councilwoman, and as chairman of the Graves County Republican Party. She is the monthly financial columnist for Paducah Sun’s Four Rivers Business Journal and teaches continuing education classes in financial planning and investing for electricians and contractors.

In this month’s “Best Of” feature we’re taking a look at retirement calculators, those little widgets we find on almost every financial website. Having a reliable estimate is critical to adjusting both our expectations and our current efforts.  Retirement calculators are predictive tools; some offer simple extrapolations while others undertake complex Monte Carlo analyses in which they simulate hundreds of possible markets.  Simple tools tend to produce a single number (“you’ll have $427,218.27”) while more complex ones offer a range of possible outcomes and probabilities for each (“you have a 10% chance of having $600,000 or more, a 50% chance of …”).  Regardless, none offer guarantees.

The question is: who offers a reliable estimate for you?

So how did we choose this month’s “Best of” Retirement Planners?

  1. We createdan imaginary investor, Robin.
    • Age 50
    • Income: $50 000/year
    • 401(k) balance of $100,000.
    • Retirement age 70 (20 years from now) and with end of plan (death) in 20
    • Total annual contribution (employer + employee) of $7000.

    We used the same inputs for projected inflation, rates of return, asset allocation and post-retirement income needs (not all sites requested all of that info).

  2. We identifieda dozen popular web-based retirement income calculators.
    • We searched the phrase “retirement income calculator” reviewing the first 50 sites.
    • We eliminated those requiring registration and those that were duplicated from one site to the next.
    • We limited ourselves calculators to major retirement plan providers, financial news and information sites, and independent organizations (such as AARP or FINRA).
  3. We graded each calculator on three criteria:
    • Ease of use and comprehension
    • 20 minute time limit to get results. Apart from basic personal and financial information we required the following inputs:
      • Inflation rate
      • Social security benefits
      • Investment allocation and/or simulation of multiple market scenarios
    • Quality of output and ability to adjust variables.  In particular we looked for:
      • Results presented in simple terms, either in monthly or annual income
      • The probability of success (or failure), rather than a “magic number”
      • Recommendations to reach your desired goal

We came up with eight finalists. Of these, two met all our requirements while a third fell just short. To emphasize the need to consult a financial professional and not rely solely on retirement income calculators for your retirement planning, we have included a professional report on Robin’s retirement prospects that was prepared by Johanna. Things may not be as rosy for Robin as some of the calculators predict…

T Rowe Price – Retirement Income Calculator

Their Premise

T Rowe Price promises a quick and simple process that should be completed in 10 minutes or less and claims to get us there in three easy steps!

Our Evaluation

The Calulator

https://www3.troweprice.com/ric/ricweb/public/ric.do

The Process

T Rowe Price uses a multi-page approach with little touches of animation. This was one of only two calculators that met all of our input requirements. The “tell us about you” section is pretty straightforward. You begin by entering your basic information and then your status (saving, preparing for or living in retirement).

Ease of Use

This software is easy to use and the pages really fly by. Convenient worksheets are provided to aid you with your calculations should you need them and inflation is automatically calculated. I found the experience simple, pleasant, and straightforward.

Input and time required

Speed-wise, they live up to their promise. The financial evaluation section is pretty straightforward. You begin by entering basic financial information, and then go on to simple asset allocation choices where you can choose a TRP model portfolio or adjust sliders to a mix of investments. (Our investor chose 70% stocks and 30% bonds as his current allocation and 35% stocks, 35% bonds and 30% short term for retirement.)

Finally, you enter your proposed retirement age and other income (such as Social Security, which the system can project).

Quality of Output

You’ll get a couple of compact summaries that include a probability of your money lasting until the age of 95. The first estimates your monthly income, assuming 75% of pre-retirement income. The second scenario projects the total amount that they estimate you will be earning monthly based upon your data entry.

For example, TRP concludes Robin will need $3125.00 a month during retirement while he is set to make $3414.00 from Social Security and his retirement account. If he spends 75% of his previous income there is an 83% chance that his money will last. If he chooses to spend it all, the Monte Carlo results drop to the suggested minimum of 70%.

You have the opportunity to adjust your inputs and compare the results of your adjustments against your current results. On the suggestions page, you’ll see a final wrap up and recommendations that can help you achieve your goals.

Bottom Line

Pros: Easy to use and easy to understand. Solid set of inputs and a quick turnover time. Good output quality and free tools from Morningstar

Cons: Some settings (pre-retirement income percentage and length of retirement) are fixed.

Johanna’s comments: I liked the simplicity of input and the last screen offering options to adjust various numbers was pretty slick. The TRP tool is fairly robust and I must say that the upside to registering is that you can save your information. The interactive presentation at the end is nice if you don’t leave the site too quickly (which I did the first time I ran through the numbers). A problem I have with the presentation, though, is that in offering the choice of allocations, risk is not explained. Users may naturally be drawn to the 100% equity allocation without understanding the impact of volatility, even though the program makes recommendations). Surprisingly again, no inflation numbers that I can find.

CNN Money – Retirement Income Calculator

Their Premise

CNN Money promises to help you evaluate how well your savings program is preparing you for retirement. They also tell you your chances of getting there and offer suggestions if you are falling short.

Our Evaluation

The Calculator

http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp

The Process

CNN Money eschews style for substance choosing a simple, static, tabbed layout. The presentation is simple and the operation straightforward. Enter info, click next.

Ease of Use

Things move along at a quick pace and you are never stuck on a tab for very long. Social security and inflation are also calculated for you. The language is simple to understand and process is as easy as Sunday morning.

Input and time required

All our input requirements were met (although rate of return was dealt with in their output) and the process was over in less than 10 minutes. The calculator is divided into five tabs, four of these are dedicated to input; goals, income, savings and portfolio. Under “Goals” you enter your age, your desired retirement age, your life expectancy, as well as what you currently earn and desired retirement income. Under “Income” you enter your desired retirement age and any expected sources of retirement income including expected pensions and social security (the number is calculated for you). The “Savings” tab lets you enter your current total retirement savings and the total (employer + employee) annual contribution to your retirement. You can also add information about taxable accounts and taxes. Under “Portfolio” you can choose one of seven allocation options, from very conservative to very aggressive. Our investor chose an aggressive portfolio, 70% stock (10% non US) and 30% bonds (5% treasury bills)

Quality of Output

The “Results” tab summarizes using simple and plain language and wastes no time beating around the bush. The tab is broken into two main segments. YOUR NEEDS briefly outlines how much money you will require annually (with adjustments for inflation), and how big a nest egg you need to achieve your goal. Your CHANCES OF GETTING THERE tells you at what rate your investments need to grow in order to achieve your target. It also estimates the probability that your investments will grow by the required rate. CNN Money (unlike T Rowe Price) gives no explanation of how they came up with these results, though. Below the brief summary, a bar chart displays the probability of four different retirement scenarios. You are given options to view your annual cash flow and to tweak your results.

Bottom Line

Pros: Fast and easy to use. Simple and straightforward. Good range of inputs. Gives a range of possible scenarios and the probability of each.

Cons: No explanation of their methodology. How they decide what chance your investments have of growing by a particular rate is not clear. While they give you the probability of reaching your initial savings target, they don’t estimate the chances of your money lasting throughout your retirement.

CNN Money estimates that there is a 99% chance that our investor’s portfolio will grow at the rate required to achieve his retirement savings goal.

Johanna’s comments: The calculator was not especially easy to find from the home page – I would have preferred to have a “Tools” link that took me to the calculator instead of reading and guessing what I needed from a list of questions. These two were the only programs I looked at, however, that let the user choose between portfolio allocations (rather than inputting a desired rate of return) and I liked that feature. I was left to assume that the planner uses Monte Carlo simulations to get to the predicted chance that Robin will reach his goal. I like the cash flow page, which allows skeptical me to do a couple of quick checks on their numbers!

The Rest

MSN Money gets an honorable mention. They take the “less is more” route but ultimately it’s just a bit too lightweight; offering a quick and dirty one page retirement calculator that is useful as a fast reference but little more.

You can find the other five finalists here:

Website

Easy to locate

Ease of Use

Flexibility

Clarity of Results

My Rating

Johanna’s Comments
AARP  YES  YES  YES  SO-SO  2 Like the graph for projected savings. However, it appears that this tool drastically underestimates what Robin will need to have saved for retirement.
Bloomberg  YES  YES  YES  MIXED  5 No consideration for inflation; no guidance on how much you’ll need at retirement. They must have changed the tool but not the directions because they refer to withdrawals but there is no input for them.
Fidelity  YES YES  YES  3 Except for The Voice, this is a nice little tool that is quite adequate for a quick check-up
Kiplinger  YES  YES  NO  YES  4 Helpful home equity section. Problem: asks you to estimate both average return and % of  in equities, even though these figures are highly correlated.
Merrill/BOA  YES  YES  NO  YES  3 Same comments as Fidelity. A little more info than Fido but not happy with the portfolio choices.
TIAA-CREF  NO  YES  YES  NO  n/a  This is a school-employee site. If you’re not one, go elsewhere. If you are, this is for you as it focuses on the unique plans of school employees
Vanguard

NO

YES

YES

YES

1

 My favorite of all, but I had to Google to find the link as it was MIA from the home page. Does not calculate account balance at retirement.

The chart above can be downloaded as a .pdf file, as well.

As always we realize that our picks may have left out a candidate that turns out to be superior. Please contact me if you have a website or calculator that you believe we should add. We always look forward to your feedback.

[cr2012]

May 1, 2012

By David Snowball

Dear friends,

April started well, with the super-rich losing more money in a week than I can even conceive of.  Bloomberg reports that the 20 wealthiest people on Earth lost a combined $9.1 billion in the first week of April as renewed concerns that Europe’s debt crisis might worsen drove the Standard & Poor’s 500 Index to its largest decline of 2012.  Bill Gates, a year older than me, lost $558.1 million on the week. (World’s Richest Lose $9 Billion as Global Markets Decline).

I wonder if he even noticed?

Return of the Giants

Mark Jewell, writing for the AP, celebrated the resurgence of the superstar managers (Star Fund Managers Recover Quickly from Tough 2011).  He writes, “A half dozen renowned managers are again beating their peers by big margins, after trailing the vast majority last year. Each is a past winner of Morningstar’s manager of the year award in his fund category, and four have been honored as top manager of the decade.”  Quick snapshots of Berkowitz, Miller and Bill Gross follow, along with passing mention of Brent Lynn of Janus Overseas Fund (JDIAX), Michael Hasenstab of Templeton Global Bond (TPINX) and David Herro of Oakmark International (OAKIX).

A number of funds with very good long-term records were either out-of-step with the market or made bad calls in 2011, ending them in the basement.  There are 54 four- or five-star rated funds that tanked in 2011; that is, that trailed at least 90% of their peers.  Of those, 23 – 43% of the group – rebounded sharply this year and ended up with 10% returns for the year, through 4/30/11.  The rest of the worst-to-first roster:

American Century Zero Coupon 2015 and 2020

Fairholme

Federated International Leader

Jones Villalta Opportunity

SEI Tax-Exempt Tax-Advantaged

Fidelity Advisor Income Replacement 2038, 2040 and 2042

JHancock3 Leveraged Companies

Templeton Global Total Return CRM International Opportunity

Fidelity Capital & Income

REMS Real Estate Value Opportu

Templeton Global Bond and Maxim Templeton Global Bond

Catalyst/SMH Total Return Income

Fidelity Leveraged Company Stock

ING Pioneer High Yield

Templeton International Bond

API Efficient Frontier Income

Hartford Capital Appreciation

PIMCO Total Return III

Before we become too comfortable with the implied “return to normal, we really can trust The Great Men again,” we might also look at the roster of great funds that got hammered in 2011 and are getting hammered again in 2012.  Brian Barash at Cambiar Aggressive Value, Leupp and Ronco (no, not the TV gadgets guy) at Lazard U.S. Realty Income Open, The “A” team at Manning & Napier Pro-Blend Maximum Term and Whitney George & company at Royce Micro-Cap range from the bottom 2 – 25% of their peer groups.

Other former titans – Ariel (ARGFX), Clipper (CFIMX, a rare two-star “Gold” fund), Muhlenkamp Fund (MUHLX), White Oak Growth (WOGSX) – seem merely stuck in the mud.

“A Giant Sucking Sound,” Investor Interest in Mutual Funds . . .

and a lackadaisical response from the mutual fund community.

Apropos my recent (and ongoing) bout with the flu, we’re returning to the odd confluence of the Google Flu tracker and the fate of the fund industry.  In October 2011, we posted our first story using the Google Trends data, the same data that allows Google to track incidence of the flu by looking at the frequency and location of flu-related Google searches.  In that article, we included a graph, much like the one below, of public interest in mutual funds.  Here was our original explanation:

That trend line reflects an industry that has lost the public’s attention.  If you’ve wondered how alienated the public is, you could look at fund flows – much of which is captive money – or you could look at a direct measure of public engagement.   The combination of scandal, cupidity, ineptitude and turmoil – some abetted by the industry – may have punched an irreparable hole in industry’s prospects.

This is a static image of searches in the U.S. for “mutual funds,” from January 2004 to April 2012.

And it isn’t just a retreat from investing and concerns about money.  We can separately track the frequency of “mutual funds” against all finance-related searches, which is shown on this live chart:

In brief, the industry seems to have lost about 75% of its mindshare (sorry, it’s an ugly marketing neologism for “how frequently potential buyers think about you”).

That strikes me as “regrettable” for Fidelity and “potentially fatal” for small firms whose assets haven’t yet reached a sustainable level.

I visit a lot of small fund websites every month, read more shareholder communications than I care to recall and interview a fair number of managers.  Here’s my quick take: a lot of firms materially impair their prospects for survival by making their relationship with their shareholders an afterthought.  These are the folks who take “my returns speak for themselves” as a modern version of “Build a better mousetrap, and the world will beat a path to your door” (looks like Emerson actually did say it, but in a San Francisco speech rather than one of his published works).

In reality, your returns mumble.  You’re one of 20,000 datapoints and if you’re not a household name, folks aren’t listening all that closely.

According to Google, the most popular mutual-fund searches invoke “best, Vanguard (three variants), Fidelity (three variants), top, American.”

On whole, how many equity managers do you suppose would invest in a company that had no articulated marketing strategy or, at best, mumbled about the quality of their mousetraps?

And yet, this month alone, in the course of my normal research, I dealt with four fund companies that don’t even have working email links on their websites and several more whose websites are akin to a bunch of handouts left on a table (one or two pages, links to mandatory documents and a four-year-old press release).  And it’s regrettably common for a fund’s annual report to devote no more than a paragraph or two to the fund itself.

There are small operations which have spectacularly rich and well-designed sites.  I like the Observer’s design, all credit for which goes to Anya Zolotusky of Darn Good Web Design.  (Anya’s more interesting than you or me; you should read her bio highlights on the “about us” page.)  I’ve been especially taken by Seafarer Funds new site.  Three factors stand out:

  • The design itself is clear, intuitive and easily navigated;
  • There’s fresh, thoughtful content including manager Andrew Foster’s responses to investor questions; and,
  • Their portfolio data is incredibly rich, which implies a respect for the active intelligence and interest of their readers.

Increasingly, there are folks who are trying to make life easier for small to mid-sized firms.  In addition to long established media relations firms like Nadler & Mounts or Kanter & Company, there are some small firms that seem to be seeking out small funds.  I’ve had a nice exchange with Nina Eisenman of FundSites about her experience at the Mutual Fund Education Alliance’s eCommerce show.  Apparently some of the big companies are designing intriguing iPad apps and other mobile manifestations of their web presence while representatives of some of the smaller companies expressed frustration at knowing they needed to do better but lacking the resources.

“What we’re trying to do with FundSites is level the playing field so that a small or mid-sized fund company with limited resources can produce a website that provides investors and advisors with the kind of relevant, timely, compliant information the big firms publish. Seems like there is a need for that out there.”

I agree but it really has to start at the top, with managers who are passionate about what they’re doing and about sharing what they’ve discovered.

Barron’s on FundReveal: Meh

Speaking of mousetraps, Barron’s e-investing writer Theresa Carey dismissed FundReveal as “a lesser mousetrap” (04/21/12). She made two arguments: that the site is clunky and that she didn’t locate any commodity funds that she couldn’t locate elsewhere.  Her passage on one of the commodity funds simultaneously revealed both the weakness in her own research and the challenge of using the FundReveal system.  She writes:

The top-ranked fund from Fidelity over the past three years is the Direxion Monthly Commodity Bull 2X (DXCLX). While it gets only two Morningstar stars, FundReveal generally likes it, awarding a “B” risk-return rating, second only to “A.” Scouring its 20,000-fund database, FundReveal finds just 61 funds that performed better than the Fidelity pick. (emphasis mine)

Here’s the problem with Theresa’s research: FundReveal does not rank funds on a descending scale of A, B, C, and D. Each of the four quadrants in their system gets a letter designation: “A” is “higher return, lower risk” and “B” is higher return, higher risk.”  Plotted in the “B” quadrant are many funds, some noticeably riskier than the others.  Treating “B” as if it were a grade on a junior high report card is careless and misleading.

And I’m not even sure what she means by “just 61 funds … performed better” since she’s looking at simple absolute returns over three years or FundReveal’s competing ADR calculation.  In either case, we’d need to know why that’s a criticism.  Okay, they found 61 superior funds.  And so … ?

Her article does simultaneously highlight a challenge in using the FundReveal system.  For whatever its analytic merits, the site is more designed for folks who love spreadsheets than for the average investor and the decision to label the quadrants with A through D does carry the risk of misleading casual users.

The Greatest Fund that’s not quite a Fund Anymore

In researching the impending merger of two Firsthand Technology funds (recounted in our “In Brief” section), I came across something that had to be a typo: a fund that had returned over 170% through early April.  As in, 14 weeks, 170% returns.

No typo, just a familiar name on a new product.  Firsthand Technology Value Fund, despite having 75% of their portfolio in cash (only $15.5 of $68.4 million was invested), peaked at a 175% gain.

What gives?  At base, irrational exuberance.  Firsthand Technology Value was famous in the 1990s for its premise – hire the guys who work in Silicon Valley and who have firsthand knowledge of it to manage your investments – and its performance.  In long-ago portfolio contests, the winner routinely was whoever had the most stashed in Tech Value.

The fund ran into performance problems in the 2000s (duh) and legal problems in recent years (related to the presence of too many illiquid securities in the portfolio).  As a result, it transformed into a closed-end fund investing solely in private securities in early 2011.  It’s now a publicly-traded venture capital fund that invests in technology and cleantech companies that just completed a follow-on stock offering. The fund, at last report, held stakes in just six companies.  But when one of those companies turned out to be Facebook, a bidding frenzy ensued and SVVC’s market price lost all relationship to the fund’s own estimated net asset value.  The fund is only required to disclose its NAV quarterly.  At the end of 2011, it was $23.92.  At the end of the first quarter of 2012, it was $24.56 per share.

Right: NAV up 3%, market price up 175%.

In April, the fund dropped from $46.50 to its May 1 market price, $26.27.  Anyone who held on pocketed a gain of less than 10% on the year, while folks shorting the stock in April report gains of 70% (and folks who sold and ran away, even more).

It’s a fascinating story of mutual fund managers returning to their roots and investors following their instincts; which is to say, to rush off another cliff.

Four Funds and Why They’re Really Worth Your While

Each month, the Observer profiles between two and four mutual funds that you likely have not heard about, but really should have.  Our “Most intriguing new funds: good ideas, great managers” do not yet have a long track record, but have other virtues which warrant your attention.  They might come from a great boutique or be offered by a top-tier manager who has struck out on his own.  The “most intriguing new funds” aren’t all worthy of your “gotta buy” list, but all of them are going to be fundamentally intriguing possibilities that warrant some thought. Two intriguing newer funds are:

Amana Developing World Fund (AMDWX): Amana, which everyone knew was going to be cautious, strikes some as near-comatose.  We’ve talked with manager Nick Kaiser about his huge cash stake and his recent decision to begin deploying it.  This is an update on our May 2011 profile.

FMI International (FMIJX): For 30 years, FMI has been getting domestic stock investing right.  With the launch of FMI International, they’ve attempted to “extend their brand” to international stocks.  So far it’s been performing about as expected, which is to say, excellently

The “stars in the shadows” are all time-tested funds, many of which have everything except shareholders.

Artisan Global Value (ARTGX): can you say, “it’s about time”?  While institutional money has long been attracted to this successful, disciplined value strategy, retail investors began to take notice just in the past year. Happily, the strategy has plenty of capacity remaining.  This is an update on our May 2011 profile.

LKCM Balanced (LKBAX): LKCM Balanced (with Tributary Balanced, Vanguard Balanced Index and Villere Balanced) is one of a small handful of consistently, reliably excellent balanced funds.  The good news for prospective shareholders is that LKCM slashed the minimum investment this year, from $10,000 to $2,000, while continuing its record of great, risk-conscious performance.

The Best of the Web: Curated Financial News Aggregators

Our third “Best of the Web” feature focuses on human-curated financial news aggregators.  News aggregators such as Yahoo! News and Google News are wildly popular.  About a third of news users turn to them and Google reports about 100,000 clicks per minute at the Google News site.

The problem with aggregators such as Google is that they’re purely mechanical; the page content is generated by search algorithms driven by popularity more than the significance of the story or the seriousness of the analysis.

In this month’s “Best of the Web,” Junior and I test drove a dozen financial news aggregators, but identified only two that had consistently excellent, diverse and current content.  They are:

Abnormal Returns: Tadas Viskanta’s six year old venture, with its daily linkfests and frequent blog posts, is for good reason the web’s most widely-celebrated financial news aggregator.

Counterparties: curated by Felix Salman and Ryan McCarthy, this young Reuter’s experiment offers an even more eclectic mix than AR and does so with an exceptionally polished presentation.

As a sort of mental snack, we also identified two cites that couldn’t quite qualify here but that offered distinctive, fascinating resources: Smart Briefs, a sort of curated newsletter aggregator and Fark, an irreverent and occasionally scatological collection of “real news, real funny.”  You can access Junior’s column from “The Best” tab or here.  Columns in the offing include coolest fund-related tools, periodic tables (a surprising number), and blogs run by private investors.

We think we’ve done a good and honest job but Junior, especially, would like to hear back from readers about how the feature works for you and how to make it better, about sites we’re missing and sites we really shouldn’t miss.  Drop us a line. We read and appreciate everything and respond to as much as we can.

A “Best of” Update: MoneyLife with Chuck Jaffe Launches

Chuck Jaffe’s first episode of the new MoneyLife show aired April 30th. The good news: it was a fine debut, including a cheesy theme song and interviews with Bill O’Neil, founder of Investor’s Business Daily and originator of the CAN-SLIM investing system, and Tom McIntyre.  The bad news: “our Twitter account was hijacked within the 48 hours leading up to the show, which is one of many adventures you don’t plan for as you start something like this.”  Assuming that Chuck survives the excitement of his show’s first month, Junior will offer a more-complete update on June 1.  For now, Chuck’s show can be found here.

Briefly noted …

Steward Capital Mid-Cap Fund (SCMFX), in a nod to fee-only financial planners, dropped its sales load on April 2.  Morningstar rates it as a five-star fund (as of 4/30/12) and its returns over the past 1-, 3- and 5-year periods are among the best of any mid-cap core fund.  The investment minimum is $1000 and the expense ratio is 1.5% on $35 million in assets.

Grandeur Peak Global Advisors recently passed $200 million in assets under management.  Roughly $140M is in Global Opportunities (GPGOX/GPGIX) and $60M is in International Opportunities (GPIOX/GPIIX).  That’s a remarkable start for funds that launched just six months ago.

Calamos is changing the name of its high-yield fixed-income fund to Calamos High Income from Calamos High Yield (CHYDX) on May 15, 2012 because, without “income” in the name investors might think the fund focused on high-yielding corn hybrids (popular here in Iowa).

T. Rowe Price High Yield (PRHYX) and its various doppelgangers closed to new investors on April 30, 2012.

Old Mutual Heitman REIT is in the process of becoming the Heitman REIT Fund, but I’m not sure why I’d care.

ING’s board of directors approved merging ING Index Plus SmallCap (AISAX) into ING Index Plus MidCap (AIMAX) on or about July 21, 2012. The combined funds will be renamed ING SMID Cap Equity. In addition, ING Index Plus LargeCap (AELAX) was approved to merge into ING Corporate Leaders 100 (IACLX) on or about June 28, 2012.  Let’s note that ING Corporate Leaders 100 is a different, and distinctly inferior fund, than ING Corporate Leaders Trust “B”.

Huntington New Economy Fund (HNEAX), which spent most of the last decade in the bottom 5-10% of mid cap growth funds, is being merged into Huntington Mid Corp America Fund (HUMIX) in May 2012.  HUMIX is less expensive than HNEAX, though still grievously overpriced (1.57%) for its size ($139 million in assets) and performance (pretty consistently below average).

The Firsthand Funds are moving to merge Firsthand Technology Leaders Fund (TLFQX) into Firsthand Technology Opportunities Fund TEFQX). The investment objective of TLF is identical to that of TOF and the investment risks of TLF are substantially similar to those of TOF.  TLF is currently managed solely by Kevin Landis (TLF was co-managed by Kevin Landis and Nick Schwartzman from April 30, 2010 to December 13, 2011).

The $750 million Delaware Large Cap Value Fund is being merged into the $750 million Delaware Value® Fund, which “does not require shareholder approval, and you are not being asked to vote.”

The reorganization has been carefully reviewed by the Trust’s Board of Trustees. The Trustees, most of whom are not affiliated with Delaware Investments®, are responsible for protecting your interests as a shareholder. The Trustees believe the reorganization is in the best interests of the Funds based upon, among other things, the following factors:

Shareholders of both Funds could benefit from the combination of the Funds through a larger pool of assets, including realizing possible economies of scale . . .

Uhhh . . . notes to the “Board of Trustees [who] are responsible for protecting [my] interests”: (1) it’s “who,” not “whom.”  (2) If Delaware Value’s asset base is doubling and you’re anticipating “possible economies of scale,” why didn’t you negotiate a decrease in the fund’s expense ratio?

Snow Capital All Cap Value Fund (SNVAX) is being closed and liquidated as of the close of business on May 14, 2012.  The fund, plagued by high expenses and weak performance, had attracted only $3.7 million despite the fact that the lead manager (Richard Snow) oversees $2.6 billion.

Likewise,  Dreyfus Dynamic Alternatives Fund and Dreyfus Global Sustainability Fund were both liquidated in mid-April.

Forward seems to be actively repositioning itself away from “vanilla” products and into more-esoteric, higher cost funds.  In March, Forward Banking and Finance Fund and Forward Growth Fund were sold to Emerald Advisers, who had been running the funds for Forward, rebranded as Emerald funds.  Forward’s board added International Equity to the dustbin of history on April 30, 2012 and Mortgage Securities in early 2011.  Balancing off those departures, Forward also launched four new funds in the past 12 months: Global Credit Long/Short, Select Emerging Markets Dividend, Endurance Long/Short, Managed Futures and Commodity Long/Long.

On April 17, 2012, the Board of Trustees of the ALPS ETF Trust authorized an orderly liquidation of the Jefferies|TR/J CRB Wildcatters Exploration & Production Equity Fund (WCAT), which will be completed by mid-May.  The fund drew fewer than $10 million in assets and managed, since inception, to lose a modest amount for its (few) investors.

Effective on June 5, 2012, the equity mix in Manning & Napier Pro-Blend Conservative Term will include a greater emphasis on dividend-paying common stocks and a larger allocation to REITs and REOCs. Their other target date funds are shifting to a modestly more conservative asset allocation.

Nice work if you can get it.  Emily Alejos and Andrew Thelen were promoted to become the managers of Nuveen Tradewinds Global All-Cap Plus Fund of April 13.  The fund,  after the close of business on May 23, 2012, is being liquidated with the proceeds sent to the remaining shareholders.  Nice resume line and nothing they can do to goof up the fund’s performance.

News Flash: on April 27, 2012 Wilmington Multi-Manager International Fund (GVIEX), a fund typified by above average risks and expenses married with below average returns, trimmed its management team from 27 managers down to a lean and mean 26 with the departure of Amanda Cogar.

In closing . . .

Thanks to all the folks who supported the Observer in the months just passed.  While the bulk of our income is generated by our (stunningly convenient!) link to Amazon, two or three people each month have made direct financial contributions to the site.  They are, regardless of the amount, exceedingly generous.  We’re deeply grateful, as much as anything, for the affirmation those gestures represent.  It’s good to know that we’re worth your time.

In June we’ll continuing updating profiles including Osterweis Strategic Investment (OSTVX – gone from “quietly confident” to “thoughtful”) and Fidelity Global Strategies (FDYSX – skeptical then, skeptical now).  We’ll profile a new “star in the shadows,” Huber Small Cap Value (HUSIX) and greet the turbulent summer months by beginning a series of profiles on long/short funds that might be worth the money.  June’s profile will be ASTON/River Road Long-Short Fund (ARLSX).

As ever,

May 1, 2012, A brief note

By Editor

Dear Gentle Reader,

There will be a slight delay in publishing the May 2012 issue of the Observer.  In the past 24 hours I’ve been laid low by a particularly unattractive virus.  While our monthly essay is pretty much done, I haven’t been able to complete the final pre-publication quality review.  With luck (and a lot of medicine), we’re hopeful of having the May issue available on the evening of May 1st.

Highlights of some of the stories we’re pursuing this month include:

The Greatest Fund that Isn’t.  As of mid-April 2012, data services reported one fund with 180% year-to-date returns.  It turns out to be an old and occasionally troubled friend that’s not quite a fund any longer.

The Return of the Giants, a review of the cheerful notion that the “star managers” have regained their footing in 2012.

“A Giant Sucking Sound” and Investor Interest in Mutual Funds. We’ve updated our link to Google’s analysis of interest in mutual funds and the picture isn’t getting brighter.  We suspect that fund companies, in too many instances, abet the decline through insensitive, desultory communications with their shareholders, so we talk about really good shareholder communication and a new service designed to help smaller fund companies get better.

The Best of the Web: Curated News Aggregators.  Google News manages to draw 100,000 clicks a minute with its collection of mechanically assembled and arranged content.  News aggregators offer a useful service, and it’s possible for you to do a lot better than robo-edited content.   Junior highlights two first rate, human curated aggregators (Abnormal Returns and Counterparties).

As always, we offered new or updated profiles of four cool funds (Amana Developing World, Artisan Global Value, FMI International and LKCM Balanced).

There’s important news from a half dozen fund companies, including a new fund in registration that represents a collaboration of two fine firms, RiverNorth and Manning & Napier.

Except for our monthly highlights and commentary, all of the new content is available now using the navigation tabs along the top of this page.

Thanks for your patience and regrets for the delay,

Amana Developing World Fund (AMDWX), May 2012

By David Snowball

Objective

The fund seeks long-term capital growth by investing exclusively in stocks of companies with significant exposure (50% or more of assets or revenues) to countries with developing economies and/or markets.  That investment can occur through ADRs and ADSs.  Investment decisions are made in accordance with Islamic principles. The fund diversifies its investments across the countries of the developing world, industries, and companies, and generally follows a value investment style.

Adviser

Saturna Capital, of Bellingham, Washington.  Saturna oversees six Sextant funds, the Idaho Tax-Free fund and four Amana funds.  They have about $4 billion in assets under management, the great bulk of which are in the Amana funds.  The Amana funds invest in accord with Islamic investing principles. The Income Fund commenced operations in June 1986 and the Growth Fund in February, 1994. Mr. Kaiser was recognized as the best Islamic fund manager for 2005.

Manager

Scott Klimo, Monem Salam, Levi Stewart Zurbrugg.

Mr. Klimo is vice president and chief investment officer of Saturna Capital and a deputy portfolio manager of Amana Income and Amana Developing World Funds. He joined Saturna Capital in 2012 as director of research. From 2001 to 2011, he served as a senior investment analyst, research director, and portfolio manager at Avera Global Partners/Security Global Investors. His academic background is in Asian Studies and he’s lived in a variety of Asian countries over the course of his professional career. Monem Salam is a portfolio manager, investment analyst, and director for Saturna Capital Corporation. He is also president and executive director of Saturna Sdn. Bhd, Saturna Capital’s wholly-owned Malaysian subsidiary. Mr. Zurbrugg is a senior investment analyst and portfolio manager for Saturna Capital Corporation. 

Mr. Klimo joined the fund’s management team in 2012 and worked with Amana founder Nick Kaiser for nearly five years. Mr. Salam joined in 2017 and Mr. Zurbrugg in 2020.

Inception

September 28, 2009.

Management’s Stake in the Fund

Mr. Klimo has a modest personal investment of $10,000 – 50,000 in the fund. Mr. Salam has invested between $100,000 – 500,000. Mr. Zurbrugg has a nominal investment of under $10,000.

Minimum investment

$250 for all accounts, with a $25 subsequent investment minimum.  That’s blessedly low.

Expense ratio

1.21% on AUM of $29.4M, as of June 2023.  That’s up about $4 million since March 2011. There’s also a 2% redemption fee on shares held fewer than 90 days.

Comments

Our 2011 profile of AMDWX recognized the fund’s relatively poor performance.  From launch to the end of 2011, a 10% cumulative gain against a 34% gain for its average peer over the same period.  I pointed out that money was pouring into emerging market stock funds at the rate of $2 billion a week and that many very talented managers (including the Artisan International Value team) were heading for the exits. The question, I suggested, was “will Amana’s underperformance be an ongoing issue?   No.”

Over the following 12 months (through April 2012), Amana validated that conclusion by finishing in the top 5% of all emerging markets stock funds.

Our conclusion in May 2011 was, “if you’re looking for a potential great entree into the developing markets, and especially if you’re a small investors looking for an affordable, conservative fund, you’ve found it!”

That confidence, which Mr. Kaiser earned over years of cautious, highly-successful investing, has been put to the test with this fund.  It has trailed the average emerging markets equities fund in eight of its 10 quarters of operation and finished at the bottom of the emerging markets rankings in 2010 and 2012 (through April 29).

What should you make of that pattern: bottom 1% (2010), top 5% (2011), bottom 3% (2012)?

Cash and crash.

For a long while, the majority of the fund’s portfolio has been in cash: over 50% at the end of March 2011 and 47% at the end of March 2012.  That has severely retarded returns during rising markets but substantially softened the blow of falling ones.  Here is AMDWX, compared with Vanguard Emerging Markets Stock Index Fund (VEIEX):

The index leads Amana by a bit, cumulatively, but that lead comes at a tremendous cost.  The volatility of the VEIEX chart helps explain why, over the past five years, its investors have managed to pocket only about one-third of the fund’s nominal gains.  The average investor arrives late, leaves early and leaves poor.

How should investors think about the fund as a future investment?  Manager Nick Kaiser made a couple important points in a late April 2012 interview.

  1. This fund is inherently more conservative than most. Part of that comes from its Islamic investing principles which keep it from investing in highly-indebted firms and financial companies, but which also prohibit speculation.  That latter mandate moves the fund toward a long-term ownership model with very low turnover (about 2% per year) and it keeps the fund away from younger companies whose prospects are mostly speculative.In addition to the sharia requirements, the management also defines “emerging markets companies” as those which derive half of their earnings or conduct half of their operations in emerging markets.  That allows it to invest in firms domiciled in the US.  Apple (AAPL), not a fund holding, first qualified as an emerging markets stock in April 2012.  The fund’s largest holding, as of March 2012, was VF Corporation (VFC) which owns the Lee, Wrangler, Timberland, North Face brands, among others.  Mead Johnson (MJN), which makes infant nutrition products such as Enfamil, was fourth.  Those companies operate with considerably greater regulatory and product safety scrutiny than might operate in many developing nations.  They’re also less volatile than the typical e.m. stock.
  2. The managers are beginning to deploy their cash.  At the end of April 2012, cash was down to 41% (from 47% a month earlier).  Mr. Kaiser notes that valuations, overall, are “a bit more attractive” and, he suspects, “the time to be invested is approaching.”

Bottom line

Mr. Kaiser is a patient investor, and would prefer shareholders who are likewise patient.  His generally-cautious equity selections have performed well (the average stock in the portfolio is up 12% as of late April 2012, matching the performance of the more-speculative stocks in the Vanguard index) and he’s now deploying cash into both U.S. and emerging markets-domiciled firms.  If markets turn choppy, this is likely to remain an island of comfortable sanity.  If, contrarily, emerging markets somehow soar in the face of slowing growth in China (often their largest market), this fund will continue to lag.  Much of the question in determining whether the fund makes sense for you is whether you’re willing to surrender the dramatic upside in order to have a better shot at capital preservation in the longer term.

Company link

Amana Developing World

2013 Q3 Report

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Artisan Global Value (ARTGX) – May 2012 update

By David Snowball

Objective and Strategy

The fund pursues long-term growth by investing in 30-50 undervalued global stocks.  The managers look for four characteristics in their investments:

  1. A high quality business
  2. A strong balance sheet
  3. Shareholder-focused management and
  4. The stock selling for less than it’s worth.

Generally it avoids small cap caps.  It can invest in emerging markets, but rarely does so though many of its multinational holdings derived significant earnings from emerging market operations.   The managers can hedge their currency exposure, though they did not do so until the nuclear disaster in, and fiscal stance of, Japan forced them to hedge yen exposure in 2011.

Adviser

Artisan Partners of Milwaukee, Wisconsin.   Artisan has five autonomous investment teams that oversee twelve distinct U.S., non-U.S. and global investment strategies. Artisan has been around since 1994.  As of 3/31/2012, Artisan Partners managed $66.5 billion of which $35.8 billion was in funds and $30.7 billion is in separate accounts.  That’s up from $10 billion in 2000. They advise the 12 Artisan funds, but only 6% of their assets come from retail investors

Managers

Daniel J. O’Keefe and David Samra, who have worked together since the late 1990s.  Mr. O’Keefe co-manages this fund, Artisan International Value (ARTKX) and Artisan’s global value separate account portfolios.  Before joining Artisan, he served as a research analyst for the Oakmark international funds and, earlier still, was a Morningstar analyst.  Mr. Samra has the same responsibilities as Mr. O’Keefe and also came from Oakmark.  Before Oakmark, he was a portfolio manager with Montgomery Asset Management, Global Equities Division (1993 – 1997).  Messrs O’Keefe, Samra and their five analysts are headquartered in San Francisco.  ARTKX earns Morningstar’s highest accolade: it’s a Five Star star with a “Gold” rating assigned by Morningstar’s analysts (as of 04/12).

Management’s Stake in the Fund

Each of the managers has over $1 million here and over $1 million in Artisan International Value.

Opening date

December 10, 2007.

Minimum investment

$1000 for regular accounts, reduced to $50 for accounts with automatic investing plans.  Artisan is one of the few firms who trust their investors enough to keep their investment minimums low and to waive them for folks willing to commit to the discipline of regular monthly or quarterly investments.

Expense ratio

1.5%, after waivers, on assets of $149 million (as of March 31, 2012).

Comments

Can you say “it’s about time”?

I have long been a fan of Artisan Global Value.  It was the first “new” fund to earn the “star in the shadows” designation.  Its management team won Morningstar’s International-Stock Manager of the Year honors in 2008 and was a finalist for the award in 2011. In announcing the 2011 nomination, Morningstar’s senior international fund analyst, William Samuel Rocco, observed:

Artisan Global Value has . . .  outpaced more than 95% of its rivals since opening in December 2007.  There’s a distinctive strategy behind these distinguished results. Samra and O’Keefe favor companies that are selling well below their estimates of intrinsic value, consider companies of all sizes, and let country and sector weightings fall where they may. They typically own just 40 to 50 names. Thus, both funds consistently stand out from their category peers and have what it takes to continue to outperform. And the fact that both managers have more than $1 million invested in each fund is another plus.

We attributed that success to a handful of factors:

First, the [managers] are as interested in the quality of the business as in the cost of the stock.  O’Keefe and Samra work to escape the typical value trap by looking at the future of the business – which also implies understanding the firm’s exposure to various currencies and national politics – and at the strength of its management team.

Second, the fund is sector agnostic. . .  ARTGX is staffed by “research generalists,” able to look at options across a range of sectors (often within a particular geographic region) and come up with the best ideas regardless of industry.  That independence is reflected in . . . the fund’s excellent performance during the 2008 debacle. During the third quarter of 2008, the fund’s peers dropped 18% and the international benchmark plummeted 20%.  Artisan, in contrast, lost 3.5% because the fund avoided highly-leveraged companies, almost all banks among them.

In designated ARTGX a “Star in the Shadows,” we concluded:

On whole, Artisan Global Value offers a management team that is as deep, disciplined and consistent as any around.  They bring an enormous amount of experience and an admirable track record stretching back to 1997.  Like all of the Artisan funds, it is risk-conscious and embedded in a shareholder-friendly culture.  There are few better offerings in the global fund realm.

In the past year, ARTGX has continued to shine.  In the twelve months since that review was posted, the fund finished in the top 6% of its global fund peer group.  Since inception (through April 2012), the fund has turned $10,000 into $11,700 while its average peer has lost $1200.  Much of that success is driven by its risk consciousness.  ARTGX has outperformed its peers in 75% of the months in which the global stock group lost money.  Morningstar reports that its “downside capture” is barely half as great as its peers.  Lipper designates it as a “Lipper Leader” in preserving its investors’ money.

Bottom Line

While money is beginning to flow into the fund (it has grown from $57 million in April 2011 to $150 million a year later), retail investors have lagged institutional ones in appreciating the strategy.  Mike Roos, one of Artisan’s managing directors, reports that “the Fund currently sits at roughly $150 million and the overall strategy is at $5.4 billion (reflecting meaningful institutional interest).”  With 90% of the portfolio invested in large and mega-cap firms, the managers could easily accommodate a far larger asset base than they now have.  We reiterate our conclusion from 2008 and 2011: “there are few better offerings in the global fund realm.”

Fund website

Artisan Global Value Fund

RMS (a/k/a FundReveal) provides a discussion of the fund’s risk/return profile, based on their messages of daily volatility, at http://www.fundreveal.com/mutual-fund-blog/2012/05/artgx-analysis-complementing-mutual-fund-observer-may-1-2012/

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FMI International (FMIJX), May 2012

By David Snowball

Objective and strategy

FMI International seeks long-term capital appreciation by investing, mainly, in a focused portfolio of large cap, non-US stocks. The Fund may invest in common and preferred stocks, convertibles, warrants, ADRs and ETFs. It targets firms with global, rather than national, footprints. They describe themselves as looking “for stocks of good businesses that are selling at value prices in an effort to achieve above average performance with below average risk.”

Adviser

Fiduciary Management, Inc., of Milwaukee, Wisconsin. FMI was founded in 1980 and is employee owned.  They manage over $14.5 billion in assets for domestic and international institutions, individual investors and RIAs through separately managed accounts and the five FMI funds.

Managers

A nine-person management team, directed by CEO Ted Kellner and Patrick English.  Mr. Kellner has been with the firm since 1980, Mr. English since 1986.  Kellner and English also co-manage FMI Common Stock (FMIMX), a solid, risk-conscious small- to mid-value fund which is closed to new investors and FMI Large Cap (FMIHX).  The team manages three other funds and nearly 900 separate accounts, valued at about $5.3 billion.

Inception

December 31, 2010.

Management’s Stake in the Fund

As of December 2011, all nine managers were invested in the fund, with substantial investments by the three senior members (in excess of $100,000) and fair-sized investments ($10,000 – $100,000) by most of the younger members.  In addition, five of the fund’s six directors had substantial investments ($50,000 and up) in the fund.  Collectively, the fund’s board and officers owned 55% of the fund’s shares.

Minimum investment

$2500 for all accounts.

Expense ratio

0.94% on assets of close to $4.1 Billion, as of July 2023. 

Comments

You would expect a lot from a new FMI fund. The other two FMI-managed funds are both outstanding.  FMI Common Stock (FMIMX), a small- to mid-cap core fund launched in 1981, has been outstanding: it has earned Morningstar’s highest designations (Five Stars and a Gold analyst rating), it’s earned Lipper’s highest designations for Total Returns and Preservation of Capital, and it has top tier returns for the past 5, 10 and 15 years.  FMI Large Cap (FMIHX), a large cap core fund launched in 2001, has been outstanding: it has earned Morningstar’s highest designations (Five Stars and a Gold analyst rating), it’s earned Lipper’s highest designations for Total Returns, Consistency and Preservation of Capital, and it has top tier returns for the past 5 and 10 years. Both are more concentrated (30-40 stocks), more conservative (both have “below average” to “low” risk scores from Morningstar), and more deliberate (turnover is less than half their peers’).

Consistent, cautious discipline is their mantra: “While past performance may not be indicative of the future, we can assure our shareholders that FMI’s investment process will remain the same as it has for over 30 years, with a steadfast focus on fundamental research and an emphasis on avoiding permanent impairment of capital.”

Since FMI International is run by the same team, using the same investment discipline, you’d have reason to expect a lot of it.  And, so far, your expectations would have been more than met.

Like its siblings, International has posted top-tier returns.  $10,000 invested at the fund’s lunch at the end of 2010 would now be worth $10,000 by the end of April 2012.  In that same period, its average peer would have lost $500.  Like its siblings, International has excelled in turbulent markets and been competitive in quickly rising ones.  At the end of March, FMI’s managers noted “Since inception, the performance of the Fund has been consistent with FMI’s long-term track record in domestic equities, generally outperforming in periods of distress, while lagging during sharp market rallies.”

It’s important to note that the FMI funds post strong absolute returns in the years in which the markets turn froth and they lag their peers.  Common Stock badly trailed its peers in four of the past 11 years (2003, 07, 10 and YTD 12) but posted an average 15.4% return in those years.  Large Cap lagged three times (2007, 10, and YTD 12) but posted 10.6% returns in those years.  For both funds, their performance in these “bad” years is better than their own overall long-term records.

A number of factors distinguish FMI from the average large cap international fund:

  1. It’s noticeably more concentrated.  The fund holds 26 stocks.80-120 would be far more typical.
  2. It has a large stake in North American stocks.  The US and Canada consume 30% of the portfolio (as of March 2012), with U.S. multinationals occupying as much space in the portfolio (19%) as SEC rules permit.  A 4% stake would be more common.
  3. It has a long holding period, about seven years, which is reflected in a 12% portfolio turnover.  60% turnover is about average.
  4. It avoids direct exposure to emerging markets.  There are no traditionally “emerging markets” stocks in the portfolio, though all of the companies in the portfolio derive earnings from the emerging markets.  It is unlikely that investors here will ever see the sort of emerging markets stake that’s typical of such funds. The managers explain that
    • the lack of good data, transparency and trust with respect to accounting, management, return on invested capital, governance, and several other factors makes it impossible for us to look at many international companies in a way that is comparable to how we operate domestically. China is an example of a country where we simply do not have enough trust and confidence in the companies or the government to invest our shareholders’ money.
    • In China there is little respect for intellectual property, and we are not surprised to see massive fraud allegations in the news with regard to Chinese equities. Investors have lost fortunes in companies such as Sino-Forest, MediaExpress, China Agritech, Rino International, and others. While there are sure to be high-quality, reliable mainland China or other emerging market businesses, for now we plan to focus on companies domiciled in developed countries, with accounting, management, and governance we can trust. As we look to invest in multinational companies that generally have a global footprint, we will get exposure to emerging markets without direct investment in the countries themselves. This will allow our shareholders to get the benefits of global diversification, but with a much greater margin of safety.
  5. The fund actively manages its currency exposure.  The managers are deeply skeptical that the euro-zone will survive and are fairly certain that the yen is “dramatically overvalued.”  As a result, they own only two stocks denominated in euros (Henkel and TNT Express) and have hedged both their euro and yen exposure.  As the managers at Tweedy, Browne have noted, the cost of those hedges reduces long-term returns by a little but short-term volatility by a lot.

On top of the manager’s stock selection skills and the fund’s distinctive portfolio, I’d commend them for a very shareholder friendly environment – from the very low expenses for such a small fund to their willingness to close Common Stock – and for really thoughtful writing.  Their shareholder letters are frequently, detailed, thoughtful and literate.  They’re a far cut above the marketing pap generated by many larger companies.  They also update the information on their website (holdings, commentaries, performance comparisons) quite frequently.

Bottom line

All the evidence available suggests that FMI International is a star in the making.  It’s headed by a cautious and consistent team that’s been together for a long while.  Expenses are low, the minimum is low, and FMI’s portfolio of high-quality multinational stocks is likely to produce a smoother, more profitable ride than the vast majority of its competitors.  Investors, and not just conservative ones, who are looking for a risk-conscious approach to international equities owe it to themselves to review this fund.

Company link

FMI International

March 31, 2023 Semi-Annual Report

RMS (a/k/a FundReveal) provides a discussion of the fund’s risk/return profile, based on their messages of daily volatility, at http://www.fundreveal.com/mutual-fund-blog/2012/05/fmjix-analysis-complementing-mutual-fund-observer-may-1-2012/

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LKCM Balanced Fund (LKBAX), May 2012 update

By David Snowball

Objective

The fund seeks current income and long-term capital appreciation. The managers invest in a combination of blue chip stocks, investment grade intermediate-term bonds, convertible securities and cash. In general, at least 25% of the portfolio will be bonds. In practice, the fund is generally 70% equities, though it dropped to 60% in 2008. The portfolio turnover rate is modest. Over the past five calendar years, it has ranged between 12 – 38%.

Adviser

Founded in 1979 Luther King Capital Management provides investment management services to investment companies, foundations, endowments, pension and profit sharing plans, trusts, estates, and high net worth individuals. Luther King Capital Management has seven shareholders, all of whom are employed by the firm, and 29 investment professionals on staff. As of December, 2011, the firm had about $9 billion in assets. They advise the five LKCM funds and the three LKCM Aquinas funds, which invest in ways consistent with Catholic values.

Manager

Scot Hollmann, J. Luther King and Mark Johnson. Mr. Hollman and Mr. King have managed the fund since its inception, while Mr. Johnson joined the team in 2010.

Management’s Stake in the Fund

Hollman has between $500,000 and $1,000,000 in the fund, Mr. King has over $1 million, and Mr. Johnson continues to have a pittance in the fund

Opening date

December 30, 1997.

Minimum investment

$2,000 across the board, down from $10,000 prior to October 2011.

Expense ratio

0.80%, after waivers, on an asset base of $111.3 million (as of July 17, 2023).

Comments

Our original, May 2011 profile of LKCM Balanced made two arguments.  First, for individual investors, simple “balanced” fund make a lot more sense than we’re willing to admit.  We like to think that we’re indifferent to the stock market’s volatility (we aren’t) and that we’ll reallocate our assets to maximize our prospects (we won’t).  By capturing more of the stock market’s upside than its downside, balanced funds make it easier for us to hold on through rough patches.  Morningstar’s analysis of investor return data substantiated the argument.

Second, there are no balanced funds with consistently better risk/return profiles than LKCM Balanced.  We examined Morningstar data in April 2011, looking for balanced funds which could at least match LKBSX’s returns over the past three, five and ten years while taking on no more risk.  There were three very fine no-load funds that could make its returns (Northern Income Equity, Price Capital Appreciation, Villere Balanced, and LKCM) but none that could do so with as little volatility.

We attributed that success to a handful of factors:

Quiet discipline, it seems. Portfolio turnover is quite low, in the mid-teens to mid-20s each year. Expenses, at 0.8%, are low, period, and remarkably low for such a small fund. The portfolio is filled with well-run global corporations (U.S. based multinationals) and shorter-duration, investment grade bonds.

In designating LKBAX a “Star in the Shadows,” we concluded:

This is a singularly fine fund for investors seeking equity exposure without the thrills and chills of a stock fund. The management team has been stable, both in tenure and in discipline. Their objective remains absolutely sensible: “Our investment strategy continues to focus on managing the overall risk level of the portfolio by emphasizing diversification and quality in a blend of asset classes.”

The developments of the past year are all positive.  First, the fund yet again outperformed the vast majority of its peers.  Its twelve month return, as of the end of April 2012, placed it in the top 5% of its peer group and its five year return is in the top 4%.  Second, it was again less volatile than its peers – it held up about 25% better in downturns than did its peer group.  Third, the advisor reduced the minimum initial purchase requirement by 80% – from $10,000 to $2,000. And the expense ratio dropped by one basis point.

We commissioned an analysis of the fund by the folks at Investment Risk Management Systems (a/k/a FundReveal), who looked at daily volatility and returns, and concluded :

LKBAX is a well managed Moderate Allocation fund. It has maintained “A-Best” rating over the last 5 and 1 years, and has recently moved to a “C-Less Risky” rating over the last 63 days. Its volatility is well below that of S&P 500 over these time periods.

Its Persistence Rating is 50, indicating that it has reasonable chance of producing higher than S&P 500 Average Daily Returns at lower risk. Over the last 20 rolling quarters it has moved between “A-Best” and “C-Less Risky” ratings.

Amongst the Moderate Allocation sector it stands out as a one of the best managed funds over the last year

Despite that, assets have barely budged – up from about $19 million at the end of 2010 to $21 million at the end of 2011.  That’s attributable, at least in part, to the advisor’s modest marketing efforts. Their website is static and rudimentary, they don’t advertise, they’re not located in a financial center (Fort Worth), and even their annual reports offer one scant paragraph about each fund:

The LKCM Balanced Fund’s blend of equity and fixed income securities, along with stock selection, benefited the Fund during the year ended December 31, 2011. Our stock selection decisions in the Energy, Consumer Discretionary, Information Technology and Materials sectors benefited the Fund’s returns, while stock selection decisions in the Healthcare and Consumer Staples sectors detracted from the Fund’s returns. The Fund continued to focus its holdings of fixed income securities on investment grade corporate bonds, which generated income for the Fund and dampened the overall volatility of the Fund’s returns during the year.

Bottom Line

LKCM Balanced (with Tributary Balanced, Vanguard Balanced Index and Villere Balanced) is one of a small handful of consistently, reliably excellent balanced funds. Its conservative portfolio will lag its peers in some years, especially those favoring speculative securities.  Even in those years, it has served its investors well: in the three years since 2001 where it ended up in the bottom quarter of its peer group, it still averaged an 11.3% annual return.  This is really a first –rate choice.

Fund website

LKCM Balanced Fund

LKCM Funds Annual Report 2022

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Manager changes, April 2012

By Chip

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Ticker Fund Out with the old In with the new Dt
XXXXX American Century’s Strategic Allocation funds and the firm’s Livestrong target-date series Irina Torelli, a portfolio manager on the asset-allocation team The other 26 remain 4/12
BJGQX Artio Global Equity Rudolph-Riad Younes and Dimitre Genov Keith Walter 4/12
CHASX Chase Growth Peter C. Wood retires. Edward S. Painvin, previously of Allianz-RCM 4/12
CMMZX Columbia Absolute Return Emerging Markets Macro Richard House and Agnes Belaisch, about whose performance you can say little.  Its closest competitor, Forward Credit Analysis Long/Short, has done a lot better but doesn’t focus on emerging markets. Nicholas Pifer and Jim Carlen 4/12
RFRAX Columbia Floating Rate No one, but … Ronald Launsbach joins the team 4/12
APIAX Columbia Multi-Advisor International Value Subadviser Tradewinds is out. Is this related to Dave Iben’s departure? Dimensional Fund Advisors and Mondrian Investment Partners remain as subadvisors 4/12
FIEUX Fidelity Europe Melissa Reilly Riesteard Hogan 4/12
FDEGX Fidelity Growth Strategie Steven Calhoun Chris Lee 4/12
FISEX Franklin Equity Income Frank Felicelli, manager since inception in 1988 Comanagers Alan Muschott, Ed Perks, and Matt Quinlin remain. 4/12
GCMAX Goldman Sachs Mid Cap Value Comanager Scott Carroll resigned. Other team members will assume his duties. 4/12
GIEYX GuideStone Funds International Equity Tradewinds Global Investors has been terminated as a sub-adviser, just a month after president, David Iben, announces that he’s leaving with three analysts. Ten other subadvisors remain. 4/12
ITTAX Hartford Advisers Irons and Peter Higgins, managers since 2005, are stepping down. Karen Grimes. 4/12
JFAMX JPMorgan Emerging Markets Equity Greg Mattiko Lead manager Austin Forey and comanager and CIO Richard Titherington remain on the fund 4/12
LMVTX Legg Mason Capital Management Value Trust Bill Miller leaves after 30 years.  Sad end to an overblown career. Sam Peters, his planned successor, will continue, as will assistant portfolio manager, Mary Chris Gay 4/12
MERGX Marsico Emerging Markets Charlie Wilson is the latest to leave the firm.  Wilson is the latest in a string of mid- to high-level departures Comanagers Munish Malhotra and Josh Rubin remain 4/12
MERDX Meridian Growth Founder and manager Richard Aster died on February 12, at the age of 72 from a traumatic head injury. Larry Cordisco, a former portfolio manager of Meridian Value (MVALX), returned to the firm to join William Tao.  Kevin O’Boyle, another talented returnee, will oversee research but does not carry a “manager” title 4/12
FASKX Nuveen Large Cap Value Kevin Earley and Brent Mellum Cori Johnson, Gerald Bren and Derek Sadowsky 4/12
FASEX Nuveen Mid Cap Value Kevin Earley and Brent Mellum Karen Bowie and David Chalupnik 4/12
QRAAX Oppenheimer Commodity Strategy Total Return Kevin Baum has resigned from the firm Comanager, Robert Baker, and bond component manager, Carol Wolfe, will remain. 4/12
POAGX Primecap Odyssey Aggressive Growth Howard Schow, comanager, died on Sunday, April 8, at the age of 84. Other comanagers remain. 4/12
POGRX Primecap Odyssey Growth Howard Schow Other comanagers remain. 4/12
POSKX Primecap Odyssey Stock Howard Schow Other comanagers remain. 4/12
PGCOX Putnam Global Consumer Timothy Codrington The existing comanagers remain 4/12
PHSTX Putnam Global Health Care Christopher Stevo The existing comanagers remain 4/12
EBERX Putnam Natural Resources John Morgan The existing comanagers remain 4/12
UMBWX Scout International Fund Gary Anderson Michael D. Stack 4/12
SSGFX Sextant Growth No one, but … Paul Meeks has been hired by advisor, Saturna Capital. 4/12
STRGX Stratton Multi Cap James Beers Andrew DiZio, John Affleck and Shawn Gallagher 4/12
STMDX Stratton Real Estate James Beers Andrew DiZio, John Affleck and Shawn Gallagher 4/12
PRGSX T. Rowe Price Global Stock Rob Gensler, once Price’s hottest young manager, is retiring. Dave Eiswert is taking over as manager 4/12
PRGTX T. Rowe Price Global Technology Dave Eiswert is leaving to take over PRGSX and TRGSX. Josh Spencer will move up. 4/12
TRGSX T. Rowe Price Institutional Global Equity Rob Gensler is retiring. Dave Eiswert is taking over as manager 4/12
TCOEX Tactical Offensive Equity Fund No one, but … Lui-Er Chen of Delaware Management Company is added as a sub-adviser 4/12
TFEMX Touchstone Emerging Markets Equity II Patricia Perez-Coutts Comanager, Stephen Way, will remain 4/12
TEMAX Touchstone Emerging Markets Equity Patricia Perez-Coutts Comanager, Stephen Way, will remain 4/12
BEAAX U.S Equity Alph Thomas Cole John Leonard 4/12
BNGEX UBS Global Equity Fund Nicholas Melhuish Nicholas Irish 4/12
BNVAX UBS US Equity Opportunity Thomas Cole John Leonard 4/12
BNEQX UBS US Large Cap Equit Thomas Cole John Leonard 4/12
VHCOX Vanguard Capital Opportunity Howard Schow, comanager, died on Sunday, April 8, at the age of 84. Other comanagers remain. 4/12
VPCCX Vanguard Primecap Core Howard Schow Other comanagers remain. 4/12
VPMCX Vanguard Primecap Howard Schow Other comanagers remain. 4/12
SFAAX Wells Fargo Advantage Index Asset Allocation Gregory Genung Petros Bocray 4/12
WMMFX Wilmington Multi-Manager International Fund Amanda M. Cogar All the rest remain 4/12

 

May 2012 Funds in Registration

By David Snowball

Bernzott U.S. Small Cap Value Fund

Bernzott U.S. Small Cap Value Fund will pursue long-term capital appreciation, primarily by investing in common stock of small cap US companies. They will target companies with a market capitalization of between $500 million and $5 billion. The Fund may also invest (a maximum of 20 % of assets) in real estate investment trusts (REITs) . The portfolio will be managed by Kevin Bernzott, CEO of Bernzott Capital Advisors, Scott T. Larson, CFA, CIO, and Thomas A. Derse, Senior Vice President. The team has no experience managing mutual funds but they have managed separate accounts using the same discipline since 1995.  The good news: over the past 3, 5 and 10 years, their separate accounts have beaten the Russell 2000 Value by 1-2% per year.  Bad news: the separate accounts beat their benchmark only about half the time, the number of separate accounts is down 80% from its peak, assets are down by 50%.  All of which might help explain the decision to launch this fund  The minimum investment for regular accounts is $25,000. IRA’s, Gift Accounts for minors and Automatic Investment Plans carry a minimum investment of $10,000.  The expense ratio is 0.95% after waivers.  There’s a 2% fee for redemptions before 30 days.

Contravisory Strategic Equity Fund (CSEFX)

Contravisory Strategic Equity Fund (CSEFX) seeks long-term capital appreciation. The Fund will invest at least 80% of its net assets in common stocks of companies of any market capitalization and other equity securities, including shares of exchange-traded funds (“ETFs”). Up to 20% of its net assets may also be invested in the stocks of foreign companies which are U.S. dollar denominated and traded on a domestic national securities exchange, including American Depositary Receipts (“ADRs”). The strategy is based on a proprietary quantitative/technical model, which uses internally generated research. A private database tracks over 2000 stocks, industry groups, and market sectors.  The goal is to create a portfolio which seeks capital appreciation primarily through the purchase of domestic equity securities.  The approach is designed to separate strong performing stocks from weak performing stocks within the equity markets. The Advisor will consider selling a security if it believes the security is no longer consistent with the Fund’s objective or no longer meets its valuation criteria. The fund’s management team will be headed by William M Noonan who is the president and CEO.  The minimum investment for regular and retirement accounts is $2500. There is a fee of 2.00% for redemptions within 60 days of purchase. The expense ratio is 1.51%.

The DF Dent Small Cap Growth Fund

The DF Dent Small Cap Growth Fund will seek long-term capital appreciation. To achieve this the fund will normally invest at least 80% of its net assets (plus borrowings for investment purposes) in equity securities of companies with small market capitalizations. The Fund will target U.S.-listed equity securities, including common stocks, preferred stocks, securities convertible into U.S. common stocks, real estate investment trusts (“REITs”), American Depositary Receipts (“ADRs”) and exchange-traded funds (“ETFs”). While the fund will target companies that in the Adviser’s view possess superior long-term growth characteristics and have strong, sustainable earnings prospects and reasonably valued stock prices, it   may invest in companies that do not have particularly strong earnings histories but do have other attributes that in the Adviser’s view may contribute to accelerated growth in the foreseeable future.

The Fund’s portfolio will be managed by Matthew F. Dent and Bruce L. Kennedy, II, each a Vice President of D.F. Dent who are jointly responsible for the day-to-day management of the Fund.The minimum investment for both standard and retirement account is $2500.00. The redemption Fee ( within 60 days of purchase ) is 2.00%. There is an expense ratio of 1.10%

Jacobs Broel Value Fund

Jacobs  Broel Value Fund seeks long-term capital appreciation, and will invest in securities of companies of any market capitalization that the “Adviser” believes are undervalued. The Fund may invest in publicly traded equity securities, including common stocks, preferred stocks, convertible securities, and similar instruments of various issuers. The Adviser will focus on identifying companies that have good long-term fundamentals (e.g., financial condition, capabilities of management, earnings, new products and services) yet whose securities are currently out of favor with the majority of investors. The Fund will typically hold between 15-30 securities. The number of securities held by the Fund may occasionally exceed this range depending on market conditions. The Fund may, at times, hold up to 25% of its assets in cash. Up to a total of 25% of its assets may be invested in other investment companies, including exchange-traded funds and closed-end funds.  The fund is managed by Peter S. Jacobs and Jesse M. Broel. Mr. Jacobs is President and Chief Investment Officer of the Adviser and Mr. Broel is Portfolio Manager and Chief Operating Officer of the Adviser. The minimum investment is $5000.00 for regular accounts and $1000.00 for IRAs. There is a redemption fee of 2.99% ( funds held 90 days or less) and the expense ratio is 1.48%

Kellner Merger Fund

Kellner Merger Fund will seek positive risk-adjusted absolute returns with low volatility.  The Fund invests primarily  in equity securities of U.S. and foreign companies that are involved in publicly announced mergers, takeovers, tender offers, leveraged buyouts, spin-offs, liquidations and other corporate reorganizations.  The types of equity securities in which the Fund may invest include common stocks, preferred stocks, limited partnerships, and master limited partnerships  of any size market capitalization. George A. Kellner (Founder & Chief Executive Officer) and Christopher Pultz (Managing Director) are the portfolio managers.  The minimum initial investment is $2000 for regular accounts, reduced to $100 for retirement accounts or those set up with automatic investment plans.  The expense ratio, after a fee waiver, will be 2.00%.

Logan Capital International Fund

Logan Capital International Fund will pursue long-term growth of capital and income.  They’ll invest primarily in dividend-paying, large-cap stocks (or ADRs) in developed foreign markets.  Among their other tools: up to 20% emerging markets, up to 15% in ETFs, up to 10% in options and up to 10% short.  Marvin I. Kline and Richard E. Buchwald of Logan Capital will manage the fund.  The team manages about a quarter billion in separately managed accounts, but there is no public report of their composite performance.  The minimum initial investment is $5000, reduced to $1000 for IRAs.  The expense ratio is 1.5%.  There’s a 1% redemption fee on shares held less than six months.

Logan Capital Large Cap Core Fund

Logan Capital Large Cap Core Fund will pursue long-term capital appreciation.  They’ll invest primarily in US stocks, with permissible capitalizations between $500 million and about $500 billion.  The anticipate 50-60% growth and 40-50% value, which they define as financially stable, high dividend yielding companies.  The managers combine macroeconomic projections with fundamental and technical analysis. Among their other tools: up to 20% international, up to 15% in ETFs, up to 10% in options and up to 10% short.  Al Besse, Stephen S. Lee and Dana H. Stewardson of Logan Capital will manage the fund.  The team manages almost two billion in separately managed accounts, but there is no public report of their composite performance. The minimum initial investment is $5000, reduced to $1000 for IRAs.  The expense ratio is 1.5%.  There’s a 1% redemption fee on shares held less than six months.

Logan Capital Large Cap Growth Fund

Logan Capital Large Cap Growth Fund will pursue long-term capital appreciation.  They’ll invest primarily in US stocks, with permissible capitalizations between $500 million and about $500 billion. The managers combine macroeconomic projections with fundamental and technical analysis. Among their other tools: up to 20% international, up to 15% in ETFs, up to 10% in options and up to 10% short.  Al Besse, Stephen S. Lee and Dana H. Stewardson of Logan Capital will manage the fund. The team manages almost two billion in separately managed accounts, but there is no public report of their composite performance.  The minimum initial investment is $5000, reduced to $1000 for IRAs.  The expense ratio is 1.5%.  There’s a 1% redemption fee on shares held less than six months.

Logan Capital Small Cap Growth Fund

Logan Capital Small Cap Growth Fund will pursue long-term capital appreciation.  They’ll invest primarily in US stocks, with permissible capitalizations between $20 million and about $4 billion. The managers combine macroeconomic projections with fundamental and technical analysis. Among their other tools: up to 20% international, up to 15% in ETFs, up to 10% in options and up to 10% short.  Al Besse, Stephen S. Lee and Dana H. Stewardson of Logan Capital will manage the fund. The team manages almost two billion in separately managed accounts, but there is no public report of their composite performance.  The minimum initial investment is $5000, reduced to $1000 for IRAs.  The expense ratio is 1.5%.  There’s a 1% redemption fee on shares held less than six months.

Longboard Managed Futures Strategy Fund

Longboard Managed Futures Strategy Fund, Class N shares, will seek positive absolute returns.  The Fund will hold a mix of fixed-income securities and futures and forward contracts.  Like other managed futures funds, it will invest globally in equities, energies, interest rates, grains, meats, soft commodities (such as sugar, coffee, and cocoa), currencies, and metals sector.  It may offer some emerging markets exposure. The fund will be managed by a team headed by Longboard’s CEO, Cole Wilcox.  Mr. Wilcox ran a managed futures hedge fund for Blackstar Funds, LLC, for eight years.  There’s no publicly-available record of that fund’s performance.  The minimum initial investment is $2500.  Expenses will start at 3.24% plus a 1% fee of shares held for fewer than 30 days.  The fund expects to launch in June, 2012.

Manning & Napier Strategic Income, Conservative

Manning & Napier Strategic Income, Conservative (“S” class shares) will be managed against capital risk and its secondary objective is to generate income and pursue capital growth. This will be a fund of Manning and Napier funds, with a flexible but conservative asset allocation.  It targets 15%-45% in equities (via Dividend Focus and Real Estate) and 55%-85% in bonds (through Core Bond and High Yield Bond).  The allocation will be adjusted based on the team’s reading of market conditions and valuations of the different asset classes.   It will be managed by the same large team that handles Manning’s other funds.  The expense ratio is set at 1.06% and the minimum initial investment is $2000.  The minimum is waived for accounts set up with an automatic investing plan.

Manning & Napier Strategic Income, Moderate

Manning & Napier Strategic Income, Moderate (“S” class shares) will pursue capital growth with the secondary objectives of generating income and managing capital risk. . This will be a fund of Manning and Napier funds, with a flexible asset allocation in the same range as most “moderate target” funds.  It targets 45%-75% in equities (via Dividend Focus and Real Estate) and 25%-55% in bonds (through Core Bond and High Yield Bond). The allocation will be adjusted based on the team’s reading of market conditions and valuations of the different asset classes.  It will be managed by the same large team that handles Manning’s other funds.  The expense ratio is set at 1.03% and the minimum initial investment is $2000.  The minimum is waived for accounts set up with an automatic investing plan.

Northern Multi-Manager Global Listed Infrastructure Fund

Northern Multi-Manager Global Listed Infrastructure Fund will seek total return through both income and capital appreciation. To achieve its objectives the Fund will invest, under normal circumstances, at least 80% of its net assets in securities of infrastructure companies listed on a domestic or foreign exchange. The Fund invests primarily in equity securities, including common stock and preferred stock, of infrastructure companies. The Fund will invest at least 40%, and may invest up to 100%, of its net assets in the securities of infrastructure companies economically tied to a foreign (non-U.S.) country, including emerging and frontier market countries. The Fund may invest in  infrastructure companies of all capitalizations. For a company to be considered it must derive at least 50% of its revenues or earnings from, or devotes at least 50% of its assets to, infrastructure-related activities. The Fund defines “infrastructure” as the systems and networks of energy.  The fund will be managed by Christopher E. Vella, CFA, who is a Senior Vice President and Chief Investment Officer. The management team also includes Senior Vice President Jessica K. Hart. The minimum initial investment is $2,500 in the Fund ($500 for an IRA; $250 under the Automatic Investment Plan; and $500 for employees of Northern Trust and its affiliates). There is a redemption fee of 2.00% (within 30 days of purchase), and the expense ratio is 1.10%

RiverNorth / Manning & Napier Equity Income Fund

RiverNorth / Manning & Napier Equity Income Fund (“R” class shares) will pursue overall total return consisting of long term capital appreciation and income. The advisor will allocate the fund’s assets between two distinct strategies, either one of which might hypothetically receive 100% of the fund’s assets.  One strategy is a Tactical Closed-End Fund Equity (managed by RiverNorth)  and the other is a Dividend Focus (managed by Manning & Napier). The amount allocated to each of the principal strategies may change depending on the adviser’s assessment of market risk, security valuations, market volatility, and the prospects for earning income and total return.   At base, you’re buying two very good funds,  RiverNorth Core Opportunity (RNCOX) and Manning & Napier Dividend Focus (MNDFX), in a single package and allowing the managers to decide how much go place in each strategy.  The RiverNorth sleeve and the fund’s asset allocation decisions are handled by Patrick Galley and Stephen O’Neill who also run RiverNorth Core Opportunity, and the M&N sleever is run by the team that runs all of the M&N funds. The expense ratio is not yet set.  The minimum initial investment is $5000 for regular accounts and $1000 for retirement accounts.

Swan Defined Risk Fund

Swan Defined Risk Fund seeks income and growth of capital. To achieve this the fund will invest primarily in: exchange-traded funds (“ETFs”) that invest in equity securities that are represented in the S&P 500 Index and/or individual sectors of the S&P 500 Index, exchange-traded long-term put options on the S&P 500 Index for hedging purposes, and buying and selling exchange-traded put and call options on various equity indices to generate additional returns. The fund will target equity securities of large capitalization (over $5 billion) US companies through ETFs, but it may also have small investments in equity securities of smaller and foreign companies through sector-based or S&P 500 Index ETFs. The adviser employs a proprietary “Defined Risk Strategy” (“DRS”) to select Fund investments.  Randy Swan, CPA, President of the adviser (and the creator of the DRS system back in 1997 ) serves as the portfolio manager. The minimum investment is $5000.00 and there is a redemption fee of 1.00% ( 30 days). The expense ratio is 1.80%.

Counterparties – Financial News Aggregator

By Junior Yearwood

Counterparties.com is a new Reuters website that is edited by Felix Salmon and Ryan McCarthy. Ryan McCarthy is also a deputy editor at Reuters.com. Prior to working at Reuters he held the position of business editor at the Huffington Post. Felix Salmon is a UK native with a knack for getting attention, as with recent suggestion that The New York Times might choose to sell some of their information, before publishing it, to hedge funds.  In addition to blogging for Thomson Reuters, he’s written for Euromoney magazine and the Bridge News Service, created the Economonitor blog for Roubini Global and the Market Movers blog for Portfolio.com.  Like me, they both Tweet: @felixsalmon and @ mccarthyryanj.

Presentation

Counterparties.com is part of the Reuters network, and that connection is reflected in the site’s slick design and corporate feel.   The design and layout is crisp, smooth and professional. I particularly liked the background color choices. The top and bottom zones are done in a muted red while the main body is in plain white. It has the effect of clearly demarcating the main body of content from the secondary zones. It is a simple design choice that has a big effect, and shows the importance of a good design team.

Content is presented in four distinct segments.  The top row contains four featured stories. Each contains a prominently displayed picture, a rewritten headline of the story, a link to the website and another link to a discussion board.

There are two columns in the main body.  The main body of the website is divided into two parts the right side is a narrow column that is divided into three sections. The wide left hand column contains what the editors’ describe as the day’s best stories. The presentation is information-rich:

Each story has a clickable tag (“deals”).  Click and you get an index of all stories in that category.  There’s a linked title (“Twitter made”) and source (venturebeat.com).  There are links to discuss or Tweet the article.  Each entry ends with a Tweet about the article or with a link to a related story.   The second story is presented with a small favicon or avatar and a one sentence headline that you can click to get the full story. The articles are divided into sections that are clearly separated and easy to differentiate.

The narrower right hand column contains The River and The Browser.  The River contains “stories we love,” and are sometimes presented in a lighthearted manner.  The teaser to one River story declares, “It’s about more than underwear, it’s about redefining what it means to be made in America (4/26).” Unlike the main stories, The River’s presentation is understated: source, category, and teaser. Below The River there are links to “stuff we’re not linking to” and a tally of the sites they most frequently link to (New York Times, Bloomberg, Wall Street Journal, Reuters) and then a feed from a website called The Browser.  Its editors note, “The Browser is not a news website. Our priority is to curate writing of lasting value – whatever its length or form.”  During my visit, the feed highlighted stories on intolerance in Saudi textbooks, Gerard Mercator’s 500th birthday and why thinking in a foreign language makes for better decisions.

The site suffers from three small design weaknesses:

  • There is no clear pattern of story assignment, so there’s no quick way to find stories on a particular subject (e.g., breaking news).  It’s not clear if the stories on the top bar are simply the most recent.
  • Of greater concern was the fact that clicking a link (in both Firefox and Chrome) did not cause a new tab to open, instead the link caused the page to open in the existing tab. That may not be of any concern to some but be prepared to hit the back button often if you don’t have a preview plug-in installed in your browser. You can, of course, right-click and choose new tab but that’s unnecessarily clunky.
  • “Stuff We’re Not Linking To” seems to  add a bit more clutter than value.  The “links we’re not linking to” are undefined.  It’s not immediately clear how relevant the section is.

The overall presentation and layout is excellent and navigation is simple and quick.  The editors inform us that the website is still evolving and they are working  towards improving the overall experience.

Content

Counterparties contains links to content that has been chosen by its editors. The curated links represent a subset of a larger pool of articles. Seventy five percent of this larger set are links that have been manually chosen by the editors and twenty five percent have been suggested by Percolate which is a customizable recommendation engine. In addition to links to current news articles, readers have access to an extensive archive of previous content. There are also links to content from The Browser which is a separate website. The website is updated daily

Selection Criteria

The editors Ryan McCarthy and Felix Salmon choose the links that they recommend on the site. Here is what they say about their selection process. “Counterparties combines our own judgment — what we find interesting, overlooked and important — with the recommendation engine created by our friends at Percolate. That engine regularly monitors all the blogs and Twitter feeds that Felix follows, and keeps an eye out for stories it thinks we’ll find most interesting. The stories we love go into The River, on the right of the page; we’ll move the best to the site’s main section, on the left.”

Quality of Sources

Most of the links that are featured in the main section to the left come from the major players in the industry. In fact the entire top five top sources linked to are industry heavyweights. They also occasionally feature stories from smaller sources and also financial blogs. The fact that the majority of their links are from long standing and well respected sources means that the quality of the content is high. What is refreshing is that the quality of the lessor known sources generally matches that of the major players. A good case in point was a blog entry by one of the investors of Instagram who was responding to criticisms levied against him and his group. Never mind that they are set to make some $78,000,000 from their initial investment of $250,000.

The Human Touch

While  an automatically recommended list of links that is generated by Percolate account for a quarter of the links available to them, the editors manually choose the ones that make it to the site. This best of both worlds approach seems to work well but as is shown by the prevalence of links from major entities, it may have the effect of eliminating content from lesser known sources.

The Bottom Line

With the might of Reuters and the talent of Felix Salmon and Ryan McCarthy behind it Counterparties is the closest thing to curated news nirvana that I have come across so far. Slick professional presentation coupled with a fresh feel, eclectic coverage and great quality adds up to a winner. They may be the new kids on the block, but if they keep their standards to the level they are at now and continue to improve they should be here for a long, long time.

[cr2012]