Matt Hougan of Inside ETFs and Dave Nadig of ETF.com hosted an Inside Smart Beta Conference this past month in New York City. Their career paths overlapped at ETF.com, which promotes itself, arguably so, as the “world’s leading authority on exchange-traded funds.” I find both Matt and Dave articulate thought leaders on ETFs and investing generally. They co-authored CFA’s A Comprehensive Guide to ETFs. Continue reading
The managers seek total return over the long term. They invest in debt issued by Asian corporations, governments and supranatural institutions. The managers invest, primarily, in high-yield, dollar-denominated debt though they define that term broadly enough to incorporate both high-yield bonds and debt-related instruments such as convertible bonds, hybrids and derivatives with fixed income characteristics. Around 20-25% of the portfolio has been in convertible bonds since inception, and that percentage is been pretty stable from year to year.
Matthews International Capital Management, LLC, the Investment Advisor to the Matthews Asia Funds, was founded Continue reading
On April 24, 2017, Artisan Partners launched Artisan Thematic Fund (ARTTX). The managers seek to identify secular themes that will have an enduring impact on business, ideally identifying those themes sooner and more clearly than their competitors. There’s a point at which a development transitions from being geeky-cool to being a driver of corporate profits; Artisan refers to that as Continue reading
Before fund companies are allowed to offer mutual funds to the public, they need to submit them to SEC review. The SEC has 75 days to ponder the fate of the newly-registered funds before allowing them to proceed. The registration period is also called “the quiet period” because fund companies are not allowed to talk about their funds in registration. This month’s good news is that most of the mutual funds in registration are sensible strategies from respected shops: Artisan, AQR, Brown Advisory, T. Rowe Price and others. The other part of the news is that the ETF industry continues to crank out a freakish mishmash. That includes the Quincy Jones Streaming Music, Media & Entertainment ETF, the Republican Policies Fund (GOP), the Democratic Policies Fund (DEMS) and the European Union Breakup Fund (EUXT). Continue reading
It’s been a relatively unexciting month on the manager change front, perhaps with folks regrouping over the quiet summer months. Five of the departures were triggered by announced retirements, which is a bit higher than usual. FPA got bounced off the team at Litman Gregory Masters Smaller Companies (MSSFX). On the one hand, that’s not terribly surprising: the managers’ main charge, FPA Capital (FPPTX), has trailed 94% of its Morningstar peers over the decade that lead manager Dennis Bryan has been in place. On the other hand, it is surprising that they lasted so long: FPA has been managing a portion of the portfolio for a decade, while the average tenure of managers at MSSFX is two to three years. It’s worth pondering the implications of that turnover: Litman Gregory’s specialty is manager selection and they have a lot of resources to deploy in finding the best managers and still, within a very few years, the majority of them are no longer contributing enough to remain. It does highlight the Continue reading
Chuck Jaffe has been named editor-in-chief of RagingBull.com. Do I even make jokes about Chuck and a site that highlights “bull”? No. No, I do not. Chuck’s appointment is part of a process to increase the stock-touting site’s journalistic integrity and transparency. Continue reading
Dear friends,
“And they’re off!” signals both the start of a horse race and the end of a class’s years at college.
Augustana just launched 485 more grads in your direction. It’s our 157th assault on adult life, and one of our largest. I’m pleased that Mike Daniels was the student selected to speak at commencement but he’s so durn Augie. Mike’s a defensive lineman, but also a jazz musician. He’s an accountant, but also a first team NCAA Academic All-American. He’s been to Italy (with the football team), but also managed to sneak in three internships on his way to working for Deloitte & Touche. He’s a good man who overtly rejects “good enough” as a goal; that is not, he said, Continue reading
“Put your trust in God but keep your powder dry.”
Oliver Cromwell, 1650, to the soldiers of the New Model Army as they prepared to forge an Irish river and head into battle.
Cromwell was a dour, humorless (or “humourless”) religious fanatic charged with squashing every Catholic and every independent thought in the British Isles because, well, that’s what God demanded. Famine, plague, deportations, mass death and deportations followed.
But even Cromwell knew that the key to victory was Continue reading
As I noted in my publishers letter this month, this article, originally published in May, contained a substantial and utterly boneheaded mathematical error. After we published it, two things happened: first, readers took the article seriously enough to find the error and report it; second, our colleague Charles, substantially revised the method for calculating the maximum drawdown for funds in my portfolio which haven’t been around for a full market cycle. Because those changes were material, we decided to re-present this article as a public service.
Sorry, I don’t have a really gender-neutral alternatives to “big-boy pants.”
In all likelihood, you might expect to experience considerable ugliness in financial markets in the months ahead. That’s not a timing call, it’s a statement of the obvious.
What’s behind it?
The bull market in stocks is Continue reading
In last month’s commentary, David challenged readers to review their portfolios and be sure they understand how bad it could get when markets head south. “There’s a break in the rain. Get up on the roof!” he’ll often advise. He shared his own portfolio, which maintains a modest 50/50 stock/bond allocation. He estimated his drawdown to be 30% for perhaps three to five years, using the bear market of 2008 as guide. A look back at US market volatility since 1926 helps provide further insight into the question of just “How Bad Can It Get?”
The results presented below use the monthly database maintained by Amit Goyal, the same database referenced in Timing Method Performance Over Ten Decades, but updated as appropriate from January 1960 through April 2017 with our Lipper Data Feed Service. The three principal indicies modeled are S&P 500 Monthly Reinvested Index, Bloomberg Barclays US Treasury Long Total Return Index, and US 3-Month Treasury Bill Total Return Index. Continue reading