Briefly Noted . . .

By David Snowball

Herewith are notes about the month’s announced changes in the fund industry: closings, openings, name changes, liquidations and more.

Thanks, as ever, to the anonymous and indefatigable Shadow for his yeoman’s work in keeping me, and the members of MFO’s discussion board, current on a swarm of comings and goings.

Effective mid-January, 2017, the AB Wealth Appreciation Strategy (AWAAX) and AB Balanced Wealth Strategy (ABWAX) will no longer invest in other AllianceBernstein funds. Instead, they’ll invest directly in equities. Color me “confused.” The funds currently seem to hold shares of just one AB fund (Multi-manager Alternative Strategies) along with a ton of individual equities. Continue reading →

September 1, 2016

By David Snowball

Dear friends,

It’s fall. We made it!

The leaves are still green and there are still tomatoes to be canned (yes, I do) but I saw one of my students pull on a sweater today. The Steelers announce their final roster this weekend. The sidewalks are littered with acorns. It’s 6:00 p.m. and the sun outside my window is noticeably low in the sky. I hear the distant song of ripening apples. Continue reading →

Certificate in ETF Punditry

By David Snowball

The latest vogue in higher education, an industry rife with voguishness, is stackable certificates. Stackable certificates are academic credentials certifying your ability to complete some specific task. Some of the certifications (Craft Brewing) seem modestly more concrete than others (Dream Tending). Since they’re relatively easy to obtain in relatively short periods, students can accumulate a bunch of them while still earning a conventional degree. That’s the “stackable” part.

In order to shore up the Observer’s finances, we’ve decided to capitalize on the trend and launch our new Certificate in E.T.F. Punditry program. Continue reading →

Behind the Curtain

By Edward A. Studzinski

“Moon in a barrel: you never know just when the bottom will fall out.”

 Mabutsu (19th Century Japanese haiku poet)

So, August as usual is the period of the “dog days” of summer, usually a great opportunity to catch up on reading. A site I commend to you for all things investment is Hurricane Capital, recommended to me by my friend Michael Mauboussin, of Credit Suisse. Among other things Michael pointed out that the writer of this blog (from Sweden) had posted all of Michael’s strategy and thought pieces going back for years. A recent one, which I would suggest is worth a read is Continue reading →

The Diversified Portfolio of Less Correlated Asset Classes

By Charles Boccadoro

“… over the long term the benefits offered by diversifying a portfolio of less correlated asset classes can be significant … investing in a diversified portfolio across equity and fixed income is the best option for most individuals,” wrote Jeremy Simpson in 2015, then director of Morningstar Investment Management in the article The Benefits of Diversification.

In Mebane Faber’s classic The Ivy Portfolio, he cites multiple sources on the benefits of diversification Continue reading →

Woe! We’re Halfway There

By Leigh Walzer

Over the past eight years the US mutual fund industry has witnessed a massive shift from active to passive management. In the Trapezoid universe, 35% of equity funds are now passively managed compared with 28% a year ago. This figure is AUM weighted, includes exchange-traded and closed-end funds, captures flows through July. The fixed income universe gets less attention but we observe 12% of AUM are now passively managed. Continue reading →

Mairs and Power Small Cap Fund (MSCFX), September 2016

By David Snowball

Objective and strategy

The fund seeks “above-average” long-term capital appreciation by investing in 40-45 small cap stocks. For their purposes, “small caps” have a market capitalization under $3.4 billion at the time of purchase. The manager is authorized to invest up to 25% of the portfolio in foreign stocks and to invest, without limit, in convertible securities (but he plans to do neither). Across all their portfolios, Mairs & Power invests in “carefully selected, quality growth stocks” purchased “at reasonable valuation levels.” Continue reading →

What if…

By Robert Cochran

Investors with any experience at all can recite the long-term results:  the U.S. stock market has averaged about 9-10% total returns over the last 30 years and about 6% the last 15 years.  The bond market has averaged about 5%.  In truth, the average stock market investor has gained only about 3.5%, on average over the last 15 years, and the average bond investor only 3.8%.  The lower investor returns are due to the inability of people to stay in the markets during turbulent time periods, when they cash out near market lows and then miss out on corresponding gains.  All kinds of studies have shown that staying invested pays off, but when risk becomes reality, investors become their own worst enemies, seemingly embracing the “sell low, buy high” concept they are trying to avoid.  Bond investors have realized gains that are almost 25% lower than average, for the very same reasons. Continue reading →

Seafarer Overseas Growth & Income closing

By David Snowball

Seafarer Overseas Growth & Income (SFGIX/SIGIX) closing to new investors

On August 31, 2016, Seafarer announced the imminent closure of its flagship Seafarer Overseas Growth & Income fund. The closure is set to become effective on September 30, 2016.

Highlights of the announcement:

    • The fund will soft-close on September 30, so that existing investors will still be able to add to their accounts. There are the usual exceptions to the closure.

      • Continue reading →

Elevator Talk: Michael Willis, Index Funds S&P 500 Equal Weight (INDEX)

By David Snowball

Since the number of funds we can cover in-depth is smaller than the number of funds worthy of in-depth coverage, we’ve decided to offer one or two managers each month the opportunity to make a 200 word pitch to you. That’s about the number of words a slightly-manic elevator companion could share in a minute and a half. In each case, I’ve promised to offer a quick capsule of the fund and a link back to the fund’s site. Other than that, they’ve got 200 words and precisely as much of your time and attention as you’re willing to share. These aren’t endorsements; they’re opportunities to learn more. Continue reading →