We thought we’d start continue up with the 130 U.S. equity funds which have passed their second anniversary but have not yet reached their third, which is when conventional trackers such as Morningstar and Lipper pick them up. As Charles has repeatedly demonstrated, the screener at MFO Premium allows you to answer odd and interesting questions. When markets are rising, everybody’s question is the same: who’s making the most?
We thought we’d start catching up with the 130 U.S. equity funds which have passed their second anniversary but have not yet reached their third, which is when conventional trackers such as Morningstar and Lipper pick them up. As Charles has repeatedly demonstrated, the screener at MFO Premium allows you to answer odd and interesting questions. I’ll try to look at several questions over the next week, starting with “which of these new funds might be badly miscategorized?”
I just finished the GP Annual Report and June quarterly letter.
- All of their strategies, except EM Opportunities (GPEOX/GPEIX), are substantially outperforming their benchmarks, YTD (through 6/30/17). In general, the lead is between 400 – 500 bps. The EM lag reflects the fund’s small cap orientation (it trails the EM Small benchmark by much less than the EM All benchmark, reflecting the generally softer performance of small caps), valuation concerns that led to an outsized cash position early in the year, and a few individual-issue problems. It remains a five star fund and a Great Owl.
There are an interesting article in the WSJ today reporting that on Monday SPY, the SPDR S&P 500 ETF, had its lowest trading volume in 11 years. 32 million shares changed hands, down from an average of about 80 million shares a day. Of necessity, that means that “sophisticated” investors sat out.
Risk/return data for AMG Chicago Equity Partners Balanced (MBEAX), Lipper flexible portfolio peer group, Vanguard Balanced Index (VBINX – 60/40 passive) and Vanguard STAR (VGSTX – 60/40 active).
For readers interested in a quick glance at the raw data that we referred to in the February 2017 MBEAX profile, these tables might be helpful. The full data set, including other time periods and other measures, is available by entering MBEAX in the “fund ticker” window of the Multi-Search.
It’s not as daft as you’d think.
We asked the good folks at Morningstar if they’d generate a list of all five-star funds from ten years ago, then update their star ratings from five years ago and today. I’d first seen this data several years ago when it had been requested by a Wall Street Journal reporter and shared with us. The common interpretation is “it’s not worth it, since five-star funds aren’t likely to remain five-star funds.”
One difference between Morningstar’s results reporting (1-, 3, 5 and 10 year) and ours (up cycle, down cycle, full market cycles plus standard periods) is that theirs contains an invisible chasm. That chasm exists for funds that were around during the 2007-09 market crisis but that do not have a 10 year track record yet. The only thing that Morningstar will report is their records for the past five years or less. No matter how catastrophic their performance during the meltdown, they receive no penalty for it. Their 3- and 5-year return ratings cover only the recent bull market and their star ratings (and risk grades!) are based only on their performance in the good times.
The current full market cycle began in October 2007 as domestic markets peaked just ahead of the worst financial meltdown since the Great Depression. Domestic markets hit bottom in early March, 2009, and have rebounded sharply since then.
We were wondering whether there were any “safe” Technology Funds to consider for the potentially turbulent years ahead. We thought we’d start by asking “who did well during the last two crashes?” and seeing if anyone avoided the worst of the bloodshed in both 2000-02 and 2007-09.
Our screener has two functions. The first is to allow side-by-side comparisons of a dozen or more funds over meaningful time periods. The second is to allow you to generate lists of funds whose accomplishments are particularly meaningful to you.