Barron's Funds Quarterly

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Barron's Funds Quarterly is a supplement that is published soon after the quarter-end (so, in early-January, early-April, early-July, early-October). It has features on funds (mutual funds/OEFs, ETFs, CEFs) along with quarter-end and multiyear fund statistics. The Supplement may have a theme. Sometimes the Supplement may include the Cover Story. 


2020/Q4 - January 11, 2021

Pg L4: Walmart/WMT has made huge progress on ESG issues; it issued a 140-page ESG report. CEO Doug McMillon is serving 2-yr term as Chair of the Business Roundtable, a CEO group. Several ESG funds [CSXAX, PNOPX] now hold WMT. The origin of its ESG efforts go back to 2005 Hurricane Katrina relief efforts. So far, the ESG efforts has been good for business and reputation. They also show that WMT, although huge, can be adaptive as also seen in its e-commerce business [79% growth; Walmart+ program] and Covid-19 responses [same-day delivery; parking lot pickups; personal shoppers; bonuses]. It has improved wages, healthcare and retirement [401k matches; part-time workers can participate in 401k] benefits, employee training. It is using more renewable energy and recyclable/reusable/compostable packaging to reduce carbon footprint [goal is zero carbon emissions by 2040].



Pg L10: Nancy Zevenbergen of growth SAGAX has done well by owning founder-led/controlled highflyers with exceptional revenue growth [TSLA, SHOP, MELI, ZM, etc] and IPOs [LMND, GDRX, etc]. Fund portfolio was changed significantly during Covid-19. Seattle-based boutique fund manager is 20% owned by Virtus/VRTS.



Pg L12: Boring target-date funds [TDFs] did fine in volatile 2020 as they prevented investors from making rash mistakes. Critics say that allocations vary a lot among TDFs with similar target-dates and they hold too much stock for retirees [typically 50% at the target age].



Pg L13: TDFs may soon include private-equity investments that were approved by the DOL in June 2020. They may also include deferred-income annuity options during accumulation and annuitization options at retirement as permitted by the 2019 Secure Act [varity of options; portability; rollover; termination]. BLK, WFC, etc, working with insurance companies, are starting to offer those via CITs [collective/comingled investment trusts that are unlisted and regulated by the OCC] and that may eventually extend to mutual funds [OEFs; listed and regulated by the SEC].



Pg L14: It is hard to diversify when market-cap based indexes such SP500 and total stock market are heavily skewed towards large-caps and techs. Top 5 in SP500 account for 21% of its market-cap and most of its gains; rest of the SP500 stocks haven’t done much and 30-33% remain in bear market [data are included from September and December]. One can use non-market-cap based indexes/funds [equal-weight RSP; factor-based SPLV], or other strategies for less correlated stocks [MXDU] and high Active Shares.



Pg L40: In continuing rally in 2020/Q4 [SP500 +11.98%], among general equity funds, the best was SC-value +31.30% and the worst was LC-growth +11.20%. Among other equity funds, the best was natural resources +32.87% and the worst was precious metals -3.12%. Among fixed-income funds, LT +2.55%, world income +5.64% [not very refined in Lipper mutual fund categories listed in Barron’s].

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2021/Q1 - April 3, 2021

Pg L4: LIQUID ALTERNATIVES are liquid mutual funds/OEFs and ETFs that offer hedge-fund type strategies [otherwise available with eligibility restrictions and gates]. Although a very heterogeneous category [so, category returns are meaningless], the newer LIQUID ALTS 2.0 are more streamlined and have lower ERs. Investors are also looking beyond traditional stock-bond allocations and a simple extension is MULTI-ASSET funds that mix stocks-bonds-alternatives. Think of alternatives as return enhancers, portfolio diversifiers, volatility dampeners. Most retail investors should use them only in small amounts. Mentioned are OEFs JHQAX, CVSIX, GATEX, BXMIX, VASFX [Vanguard; closed but VPGDX has 10%], MERFX, AQMNX, NLSAX, LDVIX, LDPIX, etc; ETFs MNA, IVOL, DBMF, WTMF, VNQ, etc.



Pg L8: CHRIS DAVIS, Davis Advisors [founded by father Shelby, 1969- ]. Market has had a wide dispersion between growth and value. He isn’t hung up by labels and looks for growth in value, and value in growth. His idea is to look for DURABLE-VALUE, i.e. companies that have attractive values, have good balance sheets and will be around for a long time. He likes high-quality FINANCIALS. Banks are much stronger now due to stress-testing, but they still fell hard during the pandemic. Key to banking is the spread business and there have been tremendous innovations and changes over the years, so the industry will also handle the new FINTECH; it is unlikely that only these new fintech will survive. Monetary and fiscal policies have created a sea of liquidity that has led to low bond returns and made cash trash. Rates are going higher but productive businesses will do fine. He doesn’t own gold or Bitcoin.



Pg L10: Mutual funds for RECOVERY plays with cyclicals and value: CIVVX, DODFX, NPNAX, OAKIX, PARWX, TRVLX.



Pg L13: VALUE is not well-defined and value ETFs vary a lot; M* value category has 200+ ETFs. Diversified value includes RPV, SC RZV. Then there are quality-value VALQ, SC SVAL; momentum-value SPVM, SC XSVM; foreign with value-tilts EFV, SC/MC PDN.



Pg L14: UNCONSTRAINED/NONTRADITIONAL [U/NT] bond funds struggled when yields declined but may do better as yields rise. Risk is that if yields rise too fast or too much, causing a stock market rout, then Treasuries would be a better place to be. So, there may be only a short window for U/NT managers to prove their worth. In the past, their high ERs and all that go-anywhere flexibility didn’t work out well. Mentioned are JSIAX, COSIX, BASIX [5%+ in stocks], PUBAX, MWCRX, FPFIX [new], TPINX [recent wrong bets on rates], RPIEX.



Pg L40: In the continuing rally in 2021/Q1 [SP500 +6.05%], the top and bottom styles were the same as in 2020/Q4: among general equity funds, the best was SC-value [again] +21.94% and the worst was LC-growth [again] +1.23%. Among other equity funds, the best was natural resources [again] +22.79% and the worst was precious metals [again] -11.33%. Among fixed-income funds, LT -0.96%, world income -3.27% [not very refined in Lipper mutual fund categories listed in Barron’s].

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2021/Q2 - July 5, 2021

Pg L5: Big 5 tech FAAMG account for 22% of SP500. In a market selloff, these 5 can take down SP500. Some funds with lower % for FAAMG are JENSX (17.9%), AMCPX (13.9%), POGRX (0%), AKREX (0%), CAMOX (0%).



Pg L9: CHINA is both attractive and risky (the article goes over several points). It may be better to use funds: OEFs FHKAX, MCHFX, GOPAX; ETF KWEB.



Pg L12: ESG funds are finally coming to workplace 401k/403b. This is a reversal from the recent years when workplace plans hesitated to include ESG funds. But the ERISA/DOL is changing its tune and the ESG funds (and their inflows) in 401k/403b will catchup with what is going on in the taxable space. New ESG target-date funds (TDFs) have existed only since 2017 and many more may be introduced and some of these may even become default auto-signup options. The Fed TSP, the largest retirement plan in the US (AUM $760 billion), will soon have “mutual fund window” that will allow access to non-TSP funds, including the ESG funds.



Pg L13: MEB FABER, Cambria. Firm’s dozen ETFs include shareholder-yield SYLD, value and momentum VAMO, real estate BLDG, cannabis TOKE, etc; 12 more ETFs are coming. In uncertain times like these, with most experts wrong, have a plan, diversify (globally and by assets), use value but avoid value-traps, watch the downside, avoid home and/or regional biases. Market-cap based weighting isn’t optimal. A tiny bit of speculation in cryptos is OK. Trends in fees and tax-efficiency are favoring ETFs over mutual funds. Growth is overvalued but it doesn’t have to crash, and it could be sideways for quite a while. Several Cambria ETFs use hedging (long-short strategies).



Pg L40: In the continuing rally in 2021/Q2 [SP500 +8.43%]: Among general equity funds, the best was LC-growth +11.24% and the worst was SC-core +4.12%. Among other equity funds, the best were natural resources [again] +11.56%, real estate +11.43% and the worst was Japan -0.51%. Among fixed-income funds, LT +1.70%, world income +2.22% [not very refined in Lipper mutual fund categories listed in Barron’s].

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Barron’s Fund Quarterly (2021/Q3–October 11, 2021)



Pg L4: COVER STORY, “Sizing Up DC/All Eyes on Washington/The New Investing Landscape”.. Several FEDERAL POLICIES are affecting the economy and the markets. There are the MONETARY and FISCAL policies, with a huge INFRASTRUCTURE STIMULUS expected soon that will include big changes to healthcare, drugs, taxes, student loans, retirement savings, etc. Most investors should just wait to see the final changes. Then in the foreign policy area, there are the US-China relations (SP500 companies have only 5% revenue exposure to China but much higher earnings exposure) and global SUPPLY-CHAIN issues (some are no longer just pure business issues). Rising RATES will affect individuals, corporations, government (debt-servicing) and the stock market (valuation level). INFLATION pressures are rising. Market VOLATILITY has gone up and some of it is news driven. High EARNINGS expectations have yet to come down – that is not in the market yet. BONDS are no longer providing ballast effect for stocks. Lower future RETURNS may lead to troubles with pension funds, insurance companies and shortfalls in consumer spending. Like it or not, the ESG trend is growing and cannot be ignored. Stick with multi-facet/asset diversified portfolios.



Pg L8: David HAMMER, manager of the new active muni ETF MINO (also manages several Pimco OEFs, ETFs, CEFs). ACTIVE management is good for the complex muni market that has low liquidity now (so higher volatility). Muni INFLOWS are strong and CREDIT conditions are improving due to a combination of monetary and fiscal policies and economic recovery; moreover, the local and state income and property tax collections remained strong in this strange recession and early fears were not realized. There are more UPGRADES than downgrades (even IL got its 1st upgrade in 25 years); CA had budget surplus; NJ is doing fine. However, big CITIES are in trouble as there are revenue shortfalls from transportation, entertainment and tourism. Pimco looks at a universe of 50,000 muni issues; avoids downgrades and defaults; looks for smaller less-covered, complex public-private project, and mispriced callable issues. Due to their tax exemptions and callability, munis are less severely impacted by rising TREASURY RATES. INFRASTRUCTURE STIMULUS will benefit munis over a long-term. Higher personal and corporate TAXES are also tailwinds for munis; almost 30% of munis are held by banks and insurance companies. DEFAULT rates for munis are a fraction of those for similarly rated corporate bonds.



Pg L10: ETFs jumped on the indexing trend in the early 1990s and have now picked up another hot trend, ACTIVE ETFs (still only 4% of $7 trillion AUM in ETFs). The big breakthrough came in 2019 when the SEC approved several models for semitransparent ETFs (after some earlier complex opaque versions didn’t gain traction). Several firms now have active ETFs that CLONE their well-known mutual funds or were CONVERTED from mutual funds to ETFs (American Century, Capital Group/American Funds, DFA, Fidelity, Franklin Templeton, Price, etc). Advantages of ETFs include lower ERs (but still not low enough), tax-efficiency, continuous trading during market hours. The 10 biggest active ETFs are tech ARKK, ultra-ST JPST & MINT, core equity DFAC, FR/BL SRLN, preferreds FPE, biotech/genomics ARKG, low-duration mortgage/mortgage-related LMBS, value DFAT, commodities PDBC. Many successful active ETFs are from niche players. Cathie WOOD’s ARK investment Management came out of nowhere to become a giant with 2 entries in the top 10. Shift from active mutual funds to active ETFs would accelerate if there weren’t related tax issues (the only tax-free switches possible now are from Vanguard indexed mutual funds to their ETF classes).



Pg L12 Crowd can be right at times. So, M* has new “CROWD SENSE” fund scores (a Premium feature) within the fund categories that use “ATTENTION” (number of M* fund page views) and “APPEAL” (M* Analyst Ratings). (Description in the article and the data at M* are not very clear and I will have to study this in more detail later)



Pg L37: In flat 2021/Q3 (SP500 +0.47%): Among general equity funds, the best was LC-growth +0.43% and the worst were SC (core -2.29%, growth -2.11%, value -2.09%). Among other equity funds, the best was Japan +4.70% and the worst were China -13.13%, precious metals -12.33%. Among fixed-income funds, LT +0.28%, world income -0.79% (not very refined in Lipper mutual fund categories listed in Barron’s).

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Barron’s Fund Quarterly (2021/Q4–January 10, 2022)

Pg L4: COVER STORY, “The Commodities Boom/Why It’s Time to Invest in COMMODITIES, and How to Do It”. Factors driving commodities include inflation, China and energy transitions. Bloomberg commodity index rose +27% in 2021 and more gains are ahead, especially for oil and ag-commodities. INFLATION is driven by pent-up demand and constrained supplies due to supply-chain disruptions. Greenflation is also contributing as the ESG movement has costs. CHINA is a huge consumer of commodities, and it is slowing. Its property sector is in trouble. Yet, commodities need China. ENERGY TRANSITIONS and ESG are driving the demand for several commodities. Rising energy and other prices feed into higher AG-COMMODITY prices. Plant substitutes for meats are boosting demand for several ag-commodities. WEATHER has been difficult in many areas. Most commodities are in BACKWARDATION (i.e., the prices of near-futures are higher than those for far-futures); futures-based commodity funds benefit from backwardation during their periodic future rolls. It is hard to find active commodity funds but an article in FundQ mentions 3.

Pg L7: COMMODITY indexes vary widely. The S&P GSCI commodity index has 60% in energy; the Bloomberg commodity index has 33% in energy, 33% in metals. Yet neither has lithium, copper, tin, metals essential for electrification. So, use active commodity funds such as PCRAX, CCSAX, BCSAX; indexed/passive funds are more common. Beware that commodity funds are volatile.

Pg L8: Be aware of several changes coming for 401k: More ESG options including the default options; guaranteed-income option (immediate or deferred/QLAC) at retirement included within the target-date funds (TDFs); pooled employer plan (PEP) 401k for small businesses. On the other hand, the Backdoor Roth IRA loophole will be closed.

Pg L10: Amy DOMINI of Domini Impact Investments (AUM $3 billion in 5 funds) was an early ESG pioneer (Domini 400 Social Index/MSCI KLD 400 Social Index, KLD Research & Analytics that was bought by MSCI, books, etc). PERFORMANCE of ESG funds doesn’t lag general funds; in fact, they have better risk-adjusted performance. There is now appreciation that ESG is everybody’s business. There is work still to be done on ESG STANDARDIZATION and Europe is ahead on this. The SEC needs to get into this; the DOL is cleaning up the mess that it has created. Her funds use a combination of exclusions and inclusions based on ESG criteria (featured fund is DSEPX). They also use industry specific ESG standards. She notes that although Larry FINK of BlackRock/BLK makes lots of noises on ESG, BLK has a record of mostly voting with managements (Larry Fink/BLK declined comment). Her recent book, People, Planet, & Profit, November 2021.

Pg L36: In 2021/Q4 (SP500 +10.90%): Among general equity funds, the best was LC-core +9.80% and the worst was SC-growth +1.84%; NO category beat SP500. Among other equity funds, the best was real estate +14.42% and the worst was Japan -4.25%. Among fixed-income funds, LT -0.01%, world income -1.19% (not very refined in Lipper mutual fund categories listed in Barron’s).

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Barron’s Funds Quarterly (2022/Q1–April 11, 2022)

Pg L3: Funds for INFLATIONARY times:

Real-Assets: AAAX, PZRMX, GSG

Equity: ACSTX, FLCSX, IWM

Bonds: DODIX, FTHRX, VIPSX, PRFRX, SRLN

Savings I-Bonds


Pg L7: Data on the disaster in bond funds notes outflows and sharp declines: Treasury TLT -10.9%, corporates LQD -8.7%, total bond market VBMFX -6.5%, muni MUB -5.7%, HY HYG -5.4%. Data on several poorly performing equity funds is also provided (growth, international, China, emerging markets).

Pg 16 (Better fit here): There are opportunities after an epic selloff in BONDS. Lot of rate hikes ahead may be in the market as the FED has been talking aggressively. Bonds may also be attractive for those who think that core inflation will come down later. But be careful as actual monetary tightening has barely started.

Munis: VWITX, BTT, NEA

Treasuries: SHY, TLT, TIP; Savings I-Bonds

Corporates: PRCIX, MDFIX (mostly CEFs), VCSH, AGG

HY: PRFRX, HYG, BXSL

Preferreds: PFF; individual JPM-M, Qrate-P

Convertibles: PACIX, CWB


Pg L34: In 2022/Q1 (SP500 -4.60%): Among general equity funds, the best was mid-cap-value -0.23% (yes, negative) and the worst were MC-growth -13.62%, multi-cap-growth -12.69%, small-cap-growth -12.52%; ALL categories were negative. Among other equity funds, the best were natural resources +32.98%, Lat Am +22.47%, precious metals +13.71% and the worst were China -19.22%, Japan -13.19%, science & technology -13.12%, global multi-cap-growth -13.08%. Among fixed-income funds, domestic long-term FI -4.10%, world income -6.17% (not very refined in Lipper mutual fund categories listed in Barron’s).

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Barron’s Funds Quarterly (2022/Q2–July 11, 2022)
www.barrons.com/topics/mutual-funds-quarterly

Pg L2: It took a bear market for ACTIVE funds to shine. Over 50% of active funds outperformed their passive peers; the drag was from active growth funds and only 30% outperformed passive peers; active funds in 6 of 9 M* 9-styles outperformed their passive peers. Value/cyclicals outperformed growth. Active managers can better sort out among profitable and unprofitable companies and the latter did much worse with rising RATES (low rates encouraged speculation). Wide sector divergences also work for active managers. Passive mutual fund AUMs have exceeded those of the active mutual funds since 2019; some of the shift has been from active mutual funds to ETFs. But the record of active funds remains dismal over the long-term. An ACTIVE-PASSIVE strategy can also work – active for smaller, less liquid areas (SCs, HYs, EMs, etc), passive for larger, liquid areas (LC-growth, etc). CAUTIONS: Aggressive active funds may differ widely in performance; long-term performers aren’t short-term chart beaters, but those that consistently remain in 2nd-3rd quartiles. Active funds mentioned for long-term:
Growth: PRWAX, APGAX, ANOIX, GQEIX (cyclical growth)
Blend: BOSOX, FSCRX, IHGIX, PRSVX
Value: DAGVX, OIEIX, PEYAX

Pg L7: It was a tough quarter for ETFs. Even the energy ETFs tumbled in Q2. The EMs have been losing steam since 2021/Q1, but their China weight helped them some in Q2. Bond ETFs sold off as well. The ETFs that bet on rates, currencies and volatility did better.

EXTRA: While STOCK funds did poorly in Q2, it was a quarter to forget for BOND funds. There were heavy outflows from bond funds. Short-term and FR/BL funds held up better. COMMODITY funds did fine (but they had a late selloff).

EXTRA: High INFLATION will be around for a while. The following funds may offer inflation protection (some choices like core bond funds are unclear):
Real Assets: AAAAX, PZRMX; GSG
Stocks: ACSTX, FLCSX; IWM (cyclical exposure)
Bonds: DODIX (?), FTHRX (?), PRFRX, VIPSX; TIPX
I-Bonds (limited annual amounts)

Pg L33: In 2022/Q2 (SP500 -16.21%): Among general equity funds, the best was equity income -10.77% (yes, it was a BAD Q2) and the worst were all growth categories, multi-cap-growth -23.13%, MC-growth -21.70%, LC-growth -21.60%, SC-growth -19.10%; ALL general equity categories were negative by double-digit %. Among other equity funds, the best was China +3.68%, and the worst were precious metals -27.08%, science & tech -24.09%, Lat Am -22.17%. Among fixed-income funds, domestic long-term FI -5.26%, world income -8.41% (not very refined in Lipper mutual fund categories listed in Barron’s).

Accessible from Morningstar (M*), Mutual Fund Observer (MFO), Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).

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Barron’s Funds Quarterly (2022/Q3–October 10, 2022)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2022/Q3 and YTD to 9/30/22)

Pg L3: Good ACTIVE mutual funds that are OPEN, BROAD-based, in the TOP 20% of peers in various timeframes, have average ERs and have manager succession plans: LC-growth OLGAX, FDSVX; dividends PRDGX, IHGIX; SC-value BRSVX, AASMX; international MIEIX, DPWRX; fixed-income DODIX, SCCIX.

Pg L10: Large-cap GROWTH funds have disappointed in 2022 (-4.1% in Q3; -32.1% YTD to 9/30/22) and there were outflows (but some related ETFs had inflows (VUG, SPYG, etc)); as expected, there were funds that did much better (BPTRX, etc) or worse (MSEQX, etc) than the averages. Large-cap VALUE also disappointed in Q3 (-5.9%) but was relatively better YTD (-16.6%). Several funds with large losses and outflows may have large YEAREND CG distributions (bad in taxable accounts; not relevant in tax-deferred/free accounts). MANAGED-FUTURES did well (after several disappointing years) and attracted inflows (QMHNX, PQTAX, etc). COMMODITY funds also saw inflows (DBC, FTGC, etc). Interestingly, despite the market selloff in both stocks and bonds, several INDEX funds had inflows, stocks (VOO, IVV, VTI, etc) and bonds (TLT; IEF, BND, LQD; SHY, VCSH, etc) (bulls will point to this as strength, bears as lack of capitulation yet).

EXTRA from Part 2: Pg 22: Katrina DUDLEY, EUROPE TEMIX. Things couldn’t be worse for Europe but that is how opportunities develop. Costs have risen sharply due to supply-chain disruptions, energy crisis, Russia-Ukraine war. However, Europe wasn’t overvalued before all this, jobs are holding up so far, and any recession may be short and shallow. Be selective as countries are following different paths. Lower currencies (vs DOLLAR) are hurting the returns of the US investors. She LIKES telecom, energy, industrials, insurance, aircraft leasing, etc; she is AVOIDING travel, entertainment, etc. CHINA will remain a global growth engine despite pause or slowdown, so European companies with China exposure would be fine. RISKS include the ECB polies, energy crisis.

Pg L37: In 2022/Q3 (SP500 -4.88%): Among general equity funds, the best were SC-growth -1.61%, MC-growth -1.65% (yes, it was BAD Q3, following terrible Q2) and the worst were equity-income -5.75%, multi-cap-value -5.64%, LC-value -5.60%, MC-value -5.45%; ALL general equity categories were negative. Among other equity funds, the best were short funds +6.54%, Lat Am +5.28%, and the worst was China -21.55%. Among fixed-income funds, domestic long-term FI -2.72%, world income -4.16% (not very refined in Lipper mutual fund categories listed in Barron’s).

Accessible from Morningstar (M*), Mutual Fund Observer (MFO), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).

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Barron’s Funds Quarterly (2022/Q4–January 9, 2023)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2022/Q4 and YTD to 12/31/22)

Pg L2: BOND and INCOME funds are back after a disastrous 2022 in which the FED hiked rates rapidly. The Fed isn’t done yet and there may be a recession, so stick to quality short/intermediate-term funds (core, corporates, munis, convertibles/preferreds). Mentioned are ABNDX, AGG, BND, DFCF, DFNM, MDNLX, MUB, PFF, PPSIX, SBFMX, SHY, SLQD, SPTI, VCSH.

Pg L5: ESG funds struggled in 2022 as they missed the boat on energy and defense, while growth and tech stocks sank. Criticisms of the ESG grew and several states banned then from state funds. Inclusive/relative-ESG funds did better than exclusionary/absolute-ESG funds. Still, there were inflows into the ESG funds vs outflows from general funds. A Morningstar study of the ESG funds with 15-yr history found that 44/69 funds outperformed their peers and a list of 10 such funds follow (M* owns the ESG rating firm Sustainalytics): BOSOX, CLDAX, CSIEX, FIW, MMDEX, PARWX, PHO, PIO, PRBLX, VCSOX.

Pg L7: Investors started venturing into stock funds in 2022/Q4 with blend and value (IVV, SPYV, etc) outperforming growth; energy was a partial explanation. Foreign funds rebounded (CIVVX, FIVLX, OAKIX, PRESX, TRIGX, etc); weaker dollar was a partial explanation. Several funds had strong outflows (and high yearend CG distributions; FCNTX, TRBCX, etc); some of the outflows went into the ETFs in the categories (and into the related CITs). Inflow champions were IVV, VTI. Tesla/TSLA sank several previous highflyers (BPTRX, BFGFX, FSCPX, VCR, XLY, etc). Alternatives funds (PQTAX, etc) couldn’t play good offense in Q4 after playing good defense previously. Among the bond funds, HY had inflows (HYG, etc) while TIPS had outflows. (By @lewisbraham at MFO)

Pg 10 (Fits better here): Cathie WOOD’s ARKK fell -67% in 2022 but she is mostly sticking with her convictions (EXAS, ROKU, SQ, TDOC, TSLA, ZM, etc). She believes that her holdings in innovative technologies will bounce back. She thinks that the US has been in recession since early-2022 and the Fed is overtightening. There is also a short-ARKK ETF SARK.

Pg L33: In 2022/Q4 (SP500 +7.37%): Among general equity funds, the best were LC-value +12.80%, multi-cap-value +12.63%, MC-value +12.39%, SC-value +12.01%, and the worst were multi-cap-growth +1.82%; ALL general equity categories were positive. Among other equity funds, the best were natural resources +19.76%, Europe +19.66%, international multi-cap-value +19.08%, and the worst were sc & tech +1.76%, real estate +3.44%; ALL “other equity” except short funds were positive. Among fixed-income funds, domestic long-term FI +2.03%, world income +5.71%; ALL FI categories were positive too (FI isn’t very refined in Lipper mutual fund categories listed in Barron’s). So, a good Q4, but still a bad 2022.

Accessible from Morningstar (M*), Mutual Fund Observer (MFO), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).

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Barron’s Funds Quarterly (2023/Q1–April 10, 2023)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2023/Q1 and YTD to 3/31/23)

Pg L3: After lagging for several years, the INTERNATIONAL/GLOBAL funds are relatively cheap (value cheaper than growth) and may outperform. Use risk control strategies – lower SDs, favorable U/D CR, etc. For the US investors in foreign funds, a strong DOLLAR has been a headwind. OEFs: AIVBX, BISAX, FISMX, FMIJX, GQGPX, RNWOX, SGENX, SIGIX, TBGVX; ETFs: ACWV, EFA, EFAV, EFG, EFV, EEM, HDG, HEFA, VIGI. (By @lewisbraham at MFO)

Pg L8: The US-China DECOUPLING will take a while. China has also been tough on its big techs. But small-caps have escaped the watchful eyes of the Chinese government. OEFs: FHKCX, MCDFX, MCHFX, MCSMX, RNWOX, SIGIX, SGOVX; ETFs: ASHR, CHIQ, CNYA, CQQQ, CXSE, EWH, FXI, GXC, KBA, KWEB, MCHI, PGJ. (By @lewisbraham at MFO)

Pg L9: GROWTH funds are rebounding, but be selective. Some former big techs have fallen off the growth wagon and some energy companies have joined. Large-cap growth (IVW, MGK, RPG, SCHG) has been outperforming small/mid-cap growth (IJT, RZG). The OEFs mentioned are HCAIX, TRBCX, VWIGX.

EXTRA: FAITH-BASED funds cover a wide variety and several are rebounding. Vatican published its investment guidelines in November 2022 that also included responsible ESG. Private direct-indexing is a growing area. (By @lewisbraham at MFO)

Fund news from elsewhere in Barron’s (Forthcoming Part 2).

Pg 13, FUNDS. MUNI MONEY-MARKET funds (tax-exempt) with near juicy 4% yields are attractive. This is a tiny area with $130 billion AUM only vs $500 billion AUM pre-GFC-2008, and $5 trillion AUM for taxable money-market funds. These invest in floating-rate munis (VRDNs) that reset rates weekly according to the SIFMA rates. Typically, the SIFMA rates are 40-80% of (taxable) fed fund rates, but they are elevated now due to redemptions to pay taxes (so, these high rates may not last beyond April). These funds partner with BANKS to provide daily and weekly liquidity guarantees. By definition, their DURATION is considered to be the rate reset period regardless of the maturities of the underlying munis (so, don’t get alarmed when looking at their holdings and maturities). Mentioned are FTEXX / FTCXX, SWTXX, VMSXX, VTMXX. (Their overall structure and rate resetting process seem complicated and may have unknown risks)

Pg 24, INCOME INVESTING. Selected REITs are attractive after their recent battering. Their earnings have been cut but the SP5500 earnings remain OK (so, the REITs client companies are doing fine). A FED pause will benefit the REITs, but RECESSION won’t, so it’s time only to nibble in REITs. Attractive REITs are industrial (PLD, ADC, GLPI), residential, self-storage, data-centers. Avoid REITs for offices and malls (big/regional or strip/local). Several publicly traded REITs are more attractive than private real estate (that suffer from lagging mark-to-market; negative news on monthly/quarterly redemption limits for several nontraded-REITs).

Pg L33: In 2023/Q1 (SP500 +7.50%): Among general equity funds, best were LC-growth +13.52%, multi-cap-growth +11.35%, and worst were small-cap-value +0.77%, mid-cap-value +0.84%, equity-income +0.95%; ALL general equity categories were positive AGAIN. Among other equity funds, the best were sc & tech +18.80%, telecom +11.66%, global large-cap-growth +11.10%, and worst were financials -7.77%. Among fixed-income funds, domestic long-term FI +2.55%, world income +2.96%; ALL FI categories were positive too AGAIN (FI isn’t very refined in Lipper mutual fund categories listed in Barron’s). So, good 2022/Q4 (value shined) & 2023/Q1 (LC growth shined).

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Barron’s Funds Quarterly (2023/Q2–July 10, 2023)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2023/Q2 and YTD to 6/30/23)

Pg L2: Growth is outperforming value/cyclicals as techs have led on AI-hype. But rates are still rising, and growth valuations are stretched; recession may be out there. Stick with high-quality growth; there are also several large-cap growth ETFs. Small-cap growth may be attractive. Funds mentioned include FBGRX, IVV, QGRO, XLK, VUG, QQQ, SLYG. (By @lewisbraham at MFO)

Pg L7: It may be time to go beyond T-Bills, money-market funds and short-term bonds. The Fed is almost done raising rates and they should remain high for a while. Funds mentioned include MWTRX, VBTLX, PONAX, SLQD, BIV, IBMN.

Pg 9: The SP500 has become a mega-cap tech growth fund with big 7 accounting for 30%. But there are many alternatives – small-cap value AVUV; value IVE, SPYV, VOOV; foreign IXUS, VXUS, VEU, DFAI; glide-path hybrids target-date funds (TDFs).

Fund news from elsewhere in Barron’s (Part 2).
Pg 20, INCOME. Don’t stay in T-Bills and money-market funds for too long. Use a barbell to mix short-term and intermediate/long-term bond funds including the MBS. Eventually, when the rates fall, these would have capital gains. Mentioned are preferreds PFLD, PSK, PFF.

Pg L33: In 2023/Q2 (SP500 +8.30%): Among general equity funds, best were LC-growth +12.34%, and worst were SC/MC +3.xx%; ALL general equity categories were positive AGAIN. Among other equity funds, the best were Lat Am +15.85%, sc & tech +12.14%, and worst were China -10.36%, precious metals -7.75%. Among fixed-income funds, domestic long-term FI +0.14%, world income +0.83%; ALL FI categories were positive too AGAIN (FI isn’t very refined in Lipper mutual fund categories listed in Barron’s).


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Barron’s Funds Quarterly (2023/Q3–October 9, 2023)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2023/Q3 and YTD to 9/30/23)

Pg L2: SMALL-CAPs (SCs) have attractive relative valuations and their time may finally come; SC-value is especially attractive (some energy, financials, regional banks). But recession poses a high danger for SCs; they may be fine with SOFT LANDING. Mentioned are:
SC-Value AVUV, QRSVX,RYSEX
SC-Blend DFAS,FDSCX, FOSCX, RPMAX
SC-Growth FTXNX, NEAGX
SC-Indexed IWM, IWO, IWN (poor Russell indexes; not selective); SPSM (better S&P index))
SC-Foreign DRIOX, FISMX, MOWNX
All-Cap FLPSX (heavy in SC, MC, foreign)
(By @lewisbraham at MFO)

Pg L6: BEST MONEY MARKET Funds (MMFs). M-Mkt funds have attracted huge inflows. They offer high rates, safety and liquidity. MMF ERs matter the most. (The 2014/16 reforms introduced gates/redemption fees and 3 types of MMFs – Government, Prime-Retail, Prime-Institutional). The new 2023 reforms have removed the gates (i.e. the problematic redemption suspensions) but will allow redemption/liquidity fees when there are heavy daily outflows (5%+ of AUM). So, basically, the distinction between the Government and Prime-Retail MMFs will become less significant for large MMFs. (I don’t recall Barron’s doing the Best MMFs before)
Government MMFs AEAXX, AMAXX, FOBXX, INAXX, PCEXX
Prime-Retail FMEXX, GMGXX, IPPXX, TSCXX, VMRXX
Treasury MMFs BITXX, FZFXX, GABXX, PRTXX, UATXX
Muni MMFs FMOXX, GMHXX, MOTXX, SWTXX, VMSXX

Fund news from elsewhere in Barron’s (Parts 1 & 2).

STREETWISE. Hurt by rising rates, REITs are now attractive. Their yields and FFOs are good; they trade at discounts from book values. REITs are better capitalized than private property owners and should benefit from the CRE weakness/consolidation; some bigger REITs may buy smaller REITs. There are growth/”hare” REITs – hotels (HST, RHP), industrial (CDP, FR), drug research facilities, apartments (ARE, CPT, UDR), senior housing (LTC, SBRA); and income/”tortoise” REITs – casinos (GLPI, VICI), nursing centers, ground leases. What about office REITs? Forget them! Headwinds include higher rates, tighter credit conditions, recession. (Real-estate has been a GICS sector since 2016; mREITs have remained with the financials.)

INCOME. Attractive PREFERREDs include the ETFs EPEI, PFF; the CEFs FFC, JPC; and individual preferreds from C, GS, WFC, etc (both $25 & $1,000). Also look at JUNIOR CORPORATE bonds from ENB and APOS/APO.

Pg L29: In 2023/Q3 (SP500 -3.27%): Among general equity funds, the best was SC-value -1.79%, and the worst was SC-growth -6.32%; ALL general equity categories were NEGATIVE. Among other equity funds, the best was natural resources +11.99%, and the worst were precious metals -9.32%, utilities -8.83% (strange mix). Among fixed-income funds, domestic long-term FI -0.98%, world income -1.86%; ALL FI categories were NEGATIVE (FI isn’t very refined in Lipper mutual fund categories listed in Barron’s).

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Barron’s Funds Quarterly (2023/Q4–January 8, 2024)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2023/Q4 and YTD to 12/31/23)

Pg L2: With higher bond yields, allocation/balanced funds have comeback from dead yet again. But not all allocation/balanced funds are the same. Some have growth or value tilt in their equity portion. Multi-asset funds mix stocks, bonds, and alternatives (HY, FR/BL, convertibles, REITs, option-writing, EMs). M* studies have shown that “boring” allocation funds have the lowest investor-return-gap (= fund TR – asset-weighted fund TR) and one explanation is that their holders tend to stick through good and bad times. There are several types of allocation/balanced funds that follow. (By @lewisbraham at MFO)
CA, 15-30% Equity*: BLADX, USCCX
MCA, 30-50% Equity*: FMSDX, VWINX
MA, 50-70% Equity*: ABALX, AOR, CGBL, FPURX, VBIAX, VWELX; includes classic Allocation 60-40.
MAA, 70-85% Equity*: FPACX
Tactical Allocation: CTFAX, LCORX, SFHYX
Global Allocation: EDIAX, LGMAX, RPGAX, SGENX, VGWLX
Target-Date Funds (TDFs) have glide-path allocations. These are often found in 401k/403b plans but are also available to retail investors. Mentioned are those from AF, BlackRock, DFA, Fidelity, Price, TIAA, Vanguard.
*Nominal-Equity. Effective-equity is typically higher.

Pg L6: JAPANESE market (fwd P/E 14.6) awakened in 2023 from a long slumber. There is finally inflation and corporate governance has improved (one can even look for dividends in Japan). The BOJ has widened the trading band for weak yen. But high government debt and BOJ monetary easing remain issues. Mentioned are BBJP, DXJ (hedged), EWJ, FJPNX, FJSCX, FLJP, FSJPX, HEWJ (hedged), HJPIX, MDLOX, MJFOX, PRJPX; diversified international VEA has decent exposure to Japan.

Pg L29: In 2023/Q4 (SP500 +11.55%): Among general equity funds, the best were LC-growth +14.19%, multi-growth +13.90%, SC-value +13.45%, & the worst were equity-income +9.69%, multi-value +9.73%, LC-value +9.83; ALL general equity categories were POSITIVE. Among other equity funds, the best were sc & tech +17.76%, financials +17.49%, and the worst were natural resources -4.68%, China -3.38%%. Among fixed-income funds, domestic long-term FI +5.43%, world income +7.91%; ALL FI & hybrid categories were POSITIVE (FI isn’t very refined in Lipper mutual fund categories listed in Barron’s).

MORE Fund Stories

Pg 20, Q&A. Michael LIPPERT, BIOPX / BIOIX, BTEEX / BTECX. He looks for secular growth opportunities with big themes – AI, cloud computing, digitalization, genomics, SaaS, cybersecurity, autonomous driving. He likes companies with multiple lines of business and strong management; he holds up to 50 stocks. He no longer owns AAPL, NFLX, etc.

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Barron’s Funds Quarterly (2024/Q1–April 8, 2024)
www.barrons.com/topics/mutual-funds-quarterly

(Performance data quoted in this Supplement are for 2024/Q1 and YTD to 3/31/24)

Pg L2: SP500 is dominated by Magnificent 7 (or 5). For looking BEYOND SP500, consider LC-growth MRFOX; LC-value DAGVX, SMVLX, SPYV; LC-blend DHAMX (hedged); MC-value FSLSX, COWZ; SC-value AVUV; foreign DFJ; sector funds (with lower R^2) SGGDX, RING; FCG, XOP; URA; IAI; IYH, IHF; XLU. (By @lewisbraham at MFO)

Pg L6: New spot-Bitcoin ETFs (IBIT, FBTC, etc) led in inflows and performance; the old GBTC trust that up-converted into ETF GBTC had huge outflows as it stuck to very high ER. Next were energy, LC-growth and Japan (it rallied after many miserable years). Inflows into money-market funds were strong. The top asset gatherer was SP500 VOO. Despite the gold rally, the gold bullion funds had outflows. (By @lewisbraham at MFO)

Pg L?: In 2024/Q1 (SP500 +10.54%): Among general equity funds,... Among other equity funds,.... Among fixed-income funds,..(FI isn’t very refined in Lipper mutual fund categories listed in Barron’s). NOTE – Funds Quarterly online is missing almost half of its content. This quarterly review will be updated later.

MORE Fund Stories

FUNDS. Uncertainties about the fed fund rates are headwinds for bonds. But they will benefit from rate cuts (maybe in June or later). Stick with short/intermediate durations for now, some credit risks with FR/BL BKLN, SRLN; dividend stocks (XLP, XLU).

Edit/Add. In response to an email inquiry, Barron's responded that the Funds Quarterly issue has been severely shrunk. The new fund listing threshold is $800 million (vs $200 million). No comments on missing Lipper's quarterly stats for fund categories.

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