Yesterday, all fund risk and return metrics, ratings, and analytics were uploaded to MFO Premium, reflecting performance through December 2019 … end of the decade.
The decade brought us …
- Low Volatility. By several measures, it was the lowest in decades, as described in Historically Low Volatility. In 2017, there was a stretch of 12 consecutive months with no drawdown in the S&P 500. While there were a few “sightings,” there were no bear markets.
- Low Interest Rates. The 3-month T-Bill, one measure of “risk-free” investment, returned just 0.6% annualized … the lowest level since the 1930’s and 1940’s.
- Longer Bull. The current bull market, which started in March of 2009, is now 130 months old. It has returned 450%, or 17% annualized. For the decade, 13.5% annualized returns versus -0.9% in the previous, which included two bear markets each inflicting 50% drawdown.
To mark the decade’s end, we’re bringing attention to a short list of funds that delivered exceptional returns while protecting downside, which has been at the heart of MFO’s Rating System since 2013.
We’ll call them MFO Premium’s Best Funds of the Decade:
- Alternative: Metropolitan West Strategic Income M (MWSTX) – Team Managed
- Bond: PIMCO Income Inst (PIMIX) – Daniel Ivascyn
- Global Equity: Steward Global Equity Income Inst (SGISX) – John Wolf
- International Equity: Hennessy Japan Inst (HJPIX) – Masakazu Takeda
- Mixed Asset: Vanguard Wellesley Income Inv (VWINX) – W. Michael Reckmeyer III
- Municipal Bond: Wells Fargo CoreBuilder Shares – Series M (WFCMX) – Team Managed
- U.S. Equity: Akre Focus Retail (AKREX) – Charles Akre Jr.
There are just seven; one for each of the major subtypes. Each delivered the highest risk adjusted return based on Martin in their categories. Each delivered top quintile absolute return and averaged top quintile absolute return across 85 rolling 3-year periods. Each bested the annualized return on the 10-year T-Bill at the start of the decade, which was 3.7%. Here are their risk and return metrics, sorted by MFO Risk (volatility) then annualized return:
If Morningstar still selects Manager of the Decade, I suspect Dan Ivascyn and Charles Akre will be among the top contenders.
Other thoughts on the decade: Vanguard dominated and PIMCO stumbled, ETFs exploded, robo-advisors emerged as did FinTweet, numerous money managers launched podcasts, and we almost had a fiduciary rule. Perhaps most significantly, there’s been a race to the bottom on industry fees.
At decade’s end, there remain more than 12,200 funds, including 2,100 ETFs. It’s a lot to choose from. The primary goal of the premium site is to help you filter down … enabling you to construct satisfactory investment portfolios, individually and for your clients.
On January 15, we’ll be conducting another webinar to highlight the site’s latest features.
Once again, Happy New Year!