Great Owl Ratings are Based on Relative Return in Category

GO distinctions are based on a fund’s relative risk-adjusted return within category. So, the category can perform badly, like commodities and EM have done last few years … indeed among the most hated funds, but individual funds can still get high marks.

 

BRCNX and JOEMX have both delivered top quintile performance the past 3 and 5 year periods in their respective categories.

 

Continue reading “Great Owl Ratings are Based on Relative Return in Category”

3 Bottom Fund Families Each with $1B AUM

I continue to marvel at results of Fund Family Scorecard, which went live on the premium site last week.

 

How do poor performing fund management companies persist? Could be that absolute return is not a concern, that it’s all about risk adjusted return. Could be that some of the funds did well initially, then went south but investors are too stuck to change. Could be that these firms just have strong marketing and, my friend Ed offers, “write good newsletters.” Could be that they are just having a run of bad luck and stuck in an uncooperative and “irrational” market … but given enough time and a return to sanity, the Great Pumpkin will appear.

 

Continue reading “3 Bottom Fund Families Each with $1B AUM”

Investing In Five-Star Funds?

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.”

 

Continue reading “Investing In Five-Star Funds?”

Year-end 2015 Category Summary

Below is a simple table summarizing performance for year, organized by SubType and Category … showing Peer Count and Total Return Averages.

 

Results are computed from our Lipper database month ending December 2015, excludes money market funds. Funds at least one year old. Oldest share class only, includes max front load, if applicable.

 

Continue reading “Year-end 2015 Category Summary”

The Invisible Chasm

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.

 

Continue reading “The Invisible Chasm”

The Eternal Losers List

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.

 

Mostly. Vanguard’s Total Stock Market Index took 52 months to recover from the crisis; that is, it took 52 months to regain its October 2007 levels. The Total Stock Market gained 6.2% annually if you measure from October 2007 and 19.5% if you measure from March 2009. The relentless bull market that began in March 2009 has lifted all boats.

 

Almost all boats.

 

Continue reading “The Eternal Losers List”

The MFO Screener: Technology Funds

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.

 

To do that, using MultiSearch tool, we selected “Science & Technology” funds from the fund “Category” (upper left) then picked “Display period” to “Down Cycle 4: 2000-2002.” Click! (…on “Submit Search” button.) We sorted the resulting list to show the smallest Maximum Drawdown and, as a double-check, sorted again for the smallest Ulcer Index. The difference is that the Ulcer Index incorporates both the size of the Maximum Drawdown and the funds’ Recovery period.

 

Continue reading “The MFO Screener: Technology Funds”

The MFO Screener: Learning By Doing

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.

 

Here’s an example: you might want to discover which small-cap funds bounced back most quickly from the 2007-09 debacle. That would likely reflect funds that had modest drawdowns and strong rebounds.

 

Continue reading “The MFO Screener: Learning By Doing”