Dear friends, Welcome to Really, Really Summer … and to the July issue of Mutual Fund Observer. Summertime is an especially blessed and cursed interval for those of us who teach. On the one hand, we’re mostly freed from the day-to-day obligation to be in the classroom. Some of us write, some travel, and some undertake “such other duties as may from time to time be assigned” by our colleges. On the other hand, we hear the clock ticking. All year long, as we try to face down a stack of 32 variably literate essays at 11 p.m. Sunday night, we think “If I can just make it to summer, I’ll recharge ..read more

Fund families that get it right, over and over Briefly brilliant performance isn’t all the tough. It requires rather more luck the skill and it can be wildly profitable for the adviser, though deadly for the investors. ARK Innovation ETF is, of course, the current poster child for boom-then-bust. The fund posted triple-digit returns in 2020, saw its assets explode then promptly (and predictably) crashed. Anyone who bought five years ago and has devoutly held on has lost 1% annually and has trailed 99.9% of all similar investors. Those who bought at the peak three years ago have clocked annual ..read more

Firms with 100% 5- and 10-Year Success Ratios No liquidations, no mergers, and 100% of funds posted above-average returns. Of the 68 firms with a 100% 10-year success rate, 41 also have a perfect five-year record.   Firm Success Ratio 10-Year Firm Success Ratio 5-Year # of funds Appleseed 100 100 1 Auer 100 100 1 Bretton Fund 100 100 1 Caldwell & Orkin 100 100 1 Cantor Fitzgerald 100 100 2 Changing Parameters 100 100 1 Channel Investment Partners 100 100 1 Clark Fork 100 100 1 Cook & Bynum Capital 100 100 1 Disciplined Growth Investors (DGI) 100 100 1 Dodg ..read more

My largest holding by far is an actively managed, total stock market fund of funds with a tilt toward large-cap growth stocks.  According to multpl.com, the Price-to-earnings ratio of the S&P 500 is 28.5 which is 50% higher than the average of 19.8 since 1970 and higher than 80% of the years since 1970. Table #1 shows the price-to-earnings ratio of Vanguard sectors and style exchange-traded funds. While most sectors are historically high, the P/E of the Information Technology sector is particularly concerning at 50% higher than the S&P500. Warren Buffet is the CEO of Berkshire Hat ..read more

On Wednesday, 10 July, at 11 a.m. Pacific (2 p.m. Eastern), we will be conducting our mid-year webinar to review funds and MFO Premium. If you can make it, please join us by registering here. We will use MultiSearch Pre-Set screens and other custom criteria to review fund performance in 2024. MultiSeach is the site’s main tool, enabling searches with numerous screening criteria. We will also demo some of the many features across the site. MFO Flows, short for fund flows (see example below for Fidelity’s Total Bond Fund ETF), is a significant upgrade this year, as is the new Analytics user ..read more

International Investing in Theory Sometimes I wish I lived in Theory. In Theory, investing is such a reasonable, predictable activity. Theoretical Investors know that they’re buying pieces of a company’s future earnings stream. And, being rational, they know that they’re better off buying $1 worth of future earnings for $0.60 rather than for $0.90. In Theory, investors will logically and smoothly migrate from high-cost providers to low-cost providers of an earnings stream. In Theory, if investors saw a low price/earnings ratio of 13 on one continent (let’s call it “Europe”) and a high price/ea ..read more

Our colleague Devesh Shah has been in search of a reason to have any direct international exposure. That is, for an answer to the question, “Why should I invest one cent in an international equity fund?” He notes that the default for many endowment portfolios is 18% international, but that – over the course of the 21st century so far – the actual efficient frontier portfolio held only 5% international equity. International stocks are 40% of the total global capitalization. They are 18% of an endowment’s target. But should they actually be a 5% squidge? The problem is multiplied if you choose t ..read more

Updates Effective June 3, 2024, David Baron and Michael Baron became Co-Presidents of Baron WealthBuilder Funds and of Baron Asset Management. Ron Baron remains Chairman, CEO, and Portfolio Manager. On or about August 28, 2024, IQ Winslow Large Cap Growth ETF and IQ Winslow Focused Large Cap Growth ETF will change from semi-transparent active ETFs to fully transparent active ETFs which will publicly disclose all of its actual portfolio holdings on a daily basis. Briefly Noted . . . Devesh’s warnings about overreliance on options-based strategies as a magic bullet notwithstanding, the following ..read more

Dear friends, It’s been a whirlwind month for us. In just about 30 days, I got married (waves to Chip!), finished my 68th trip around the big ball o’ fire in the sky, bade farewell to my 40th group of seniors (just a heads up, world. They’re coming for you!), visited with the managers from FPA (really, if you put Mr. Scruggs in a cardigan he’d totally rock the Mr. Rogers’ look), watched the Dow hit 40,000 and visited my brothers and sisters in Pittsburgh for the first time in two years. There’s a certain vogue in decrying today’s college students as unserious cell phone junkies more interested ..read more

Hi, guys. You made it. You survived Covid and being kicked off campus midway through spring of your freshman year. You survived a year of Zoom. You survived that weird casserole the dining commons kept serving. You survived me. And, at the end of it, you were standing together, laughing and glowing. We’re incredibly proud of you and hopeful for the good you can do in the world. I’ve never aspired to deliver a “last lecture” for graduates, but you might consider this as my last advice before you sail too far from the safe harbor we’ve offered. Here’s the gist of it: Do not let money rule your l ..read more