MFO Ratings Updated Through September 2019, plus New Metrics for Risk-Averse Investors

All fund risk and return metrics, ratings, and analytics have been uploaded to MFO Premium, reflecting performance through September 2019.

We went live last Monday evening and today we added three new metrics (well, the first is newly revised) and attendant ratings to MultiSearch, which should be especially appealing to risk-averse investors:

  • Bear Market Deviation, which attempts to anticipate level of loss funds will experience during a market downturn based only on so-called “bear market months.” Morningstar defines a bear market month when the monthly market return drops below 3% for equity funds and below 1% for fixed income funds.
  • Down Market Deviation, a companion metric, which attempts to anticipate level of loss funds will experience based only on down or negative market months.
  • Three Alarm Risk, which is the metric used to compute the Three Alarm Risk Score. It attempts to anticipate level of loss funds will experience during a bad year … in a very direct way.

If you don’t like the Three Alarm Risk (TA Risk) number you see in the MultiSearch results table for a fund in your portfolio, then you may opt to adjust its allocation. For example, Dodge & Cox International Fund (DODFX) is the best performing international large-cap core fund since it launched over 18 years ago … it has a TA Risk this past year of -40.0 percent per year.

All are searchable via MultiSearch under Period Metrics & Ratings heading.

You can read more about these new metrics in A More Robust Down-side Market Metric and on the Definitions page.

As always, if you see anything amiss or have suggestions for improvement, let us know and we will respond soonest.

Please enjoy the latest data and site features.

MFO Ratings Updated Through August 2019

All fund risk and return metrics, ratings, and analytics have been uploaded to MFO Premium, reflecting performance through August 2019.

We went live Saturday evening. Lipper drops the full month-ending data about 5am Pacific the first Saturday following the last day of the month. It takes about 12 hours to prepare the data, crunch the ratings, and refresh our site.

Some brief background on Lipper Analytical Services, according to Wikipedia and NYT:

It was founded in 1973 by securities analyst A. Michael Lipper. (He publishes a weekly blog.) Reuters acquired the firm in 1998. Thomson and Reuters merged in 2008. Last year, Blackstone Group bought a 55% stake and Thomson Reuters was renamed Refinitiv.

Last month, the London Stock Exchange Group agreed to buy Refinitiv outright for $27B, a 35% increase over last year’s valuation.

A couple highlights in this month’s data:

  • Equity funds were generally off a few percent in August (SPY -1.6,QQQ -1.9, IWV -2.1, VEU -2.3, EEM -5.0) … SPY is up 18.2% YTD.
  • Bond funds enjoyed a great month (AGG +2.6, LQD +3.7, TLT +10.9) … TLT is up 23.3% YTD.
  • Morningstar’s new fund family is off to just a so-so start … from a performance perspective. (As an asset gatherer, it’s off to a great start … $2.4B!) Six of its nine funds launched nine months ago are trailing their peers, placing the fund family “Lower” on MFO’s Scorecard. Two funds, however, have strong performance out-of-the-gate: Global Income (MSTGX) and Total Return Bond (MSTRX).

We’ve added the long-awaited Portfolio Analysis tool, which enables users to determine risk and return metrics at rolled-up portfolio levels. We’ve also added Calendar Year and Fixed Period Return headers to the MultiSearch Results table and a blog post on the WisdomTree Fund Family.

As always, if you see anything amiss or have suggestions for improvement, let us know and we will respond soonest.

Please enjoy the latest data and site features.

Our New Portfolio Analysis Tool

Just after midnight Vancouver Island time, we went live with our Portfolio Analysis Tool, as described in this month’s commentary.

It brings together many features developed for other tools (like Watchlists and QuickSearch), but with one very unique difference … it computes in real-time the MFO risk and return metrics for the display/evaluation period specified.

In addition to computing those metrics for individual funds, it provides MFO risk and return metrics at the rolled-up portfolio level, based on the portfolio weightings (aka allocations) assigned by users.

Here’s link to the new tool, denoted on the navigator bar on top of each page: PORTFOLIOS.

To illustrate its utility beyond the couple examples presented in the commentary, we’ll run the example from the entry page …

MAPOX (Mairs & Power Balanced) 40%
IOFIX (AlphaCentric Income Opportunities I) 30%
DODIX (Dodge & Cox Income) 20%
ZEOIX (Zeo Short Duration Income I) 10%

Translated on the Portfolios input page:

MAPOX [40] IOFIX [30] DODIX [20] ZEOIX [10]

Then, press the Portfolio Name (or adjacent right arrow) and get the following:


At the rolled-up level, this portfolio rates an MFO Risk of 2, or “Conservative,” which means its volatility over the evaluation period is between 20 and 50% of the S&P 500 volatility.

The “evaluation period” defaults to the age of the youngest fund in the portfolio (similar to our Correlation tool). It can be changed (to periods shorter than the youngest fund) on the results page.

As mentioned in the commentary, we’ve launched a pretty basic version of this important tool and will be incorporating enhancements in weeks ahead.

WisdomTree Fund Family

WisdomTree launched in 2006. They now offer 78 ETFs with AUM totaling $39B. I first learned of them through Jeremy Schwartz, whom I met briefly thanks to Wesley Gray at one of AlphaArchitect’s Democratizing Quant conferences and again at #MFTF last year. Jeremy’s title is Executive Vice President, Global Head of Research. I’ve always found him thoughtful, down-to-earth and very approachable. He’s a Wharton grad, which is probably one reason the firm maintains a close relationship with famed Professor Jeremy Siegel.

The firm espouses a strategy called “Modern Alpha,” which combines “the outperformance potential of active management with all of the advantages of passive management to create ETFs designed to perform.”


Through July nearly 2/3rds of WisdomTree funds have beaten their peers since launch, by 1% annualized on average. As such, WidsomTree earns an “Upper” rating on MFO’s Fund Family Scorecard. It helps that its average ER is just 0.43% annual.

Its family of funds is outperforming numerous other fund families, including AllianceBernstein, BNY Mellon, Brighthouse, Deutchse, Eaton Vance, Federated, First Trust, Global X, Goldman Sachs, Ivy, Mainstay, NorthernTrust, Proshare, Prudential, SunAmerca, Van Eck, Voya, Wells Fargo, Aberdeen, AQR, Guggenheim, ProFunds, Putnam, Russell, and Transamerica.


Below are risk and return metrics on all its funds (3 months or older), since launch through July. You’ll find eight MFO Great Owls, meaning these funds have returned top quintile risk adjusted returns (based on Martin) the past 3, 5, and lifetime years (less than 10 in WisdomTree’s case). The list is sorted first by risk (volatility), lowest to highest, and then by annualized return versus peer, highest to lowest.

Some of its most popular funds by AUM are also the best performing, including WisdomTree US MidCap Dividend (DON), Europe Hedged Equity (HEDJ), US Quality Dividend Growth (DGRW), International SmallCap Dividend (DLS), US MidCap (EZM), International Equity (DWM), US SmallCap (EES), Europe SmallCap Dividend (DFE), and International Hedged Quality Dividend Growth (IHDG).


MFO Ratings Updated Through July 2019

All fund risk and return metrics, ratings, and analytics were uploaded yesterday, reflecting performance through July 2019.

Some highlights and lowlights:

  • Deutsche rebranded from Deutsche Asset Management to DWS, following a similar rebranding to DBX Advisors, the fund family’s advisor. It’s a trend. Why do you think that is? DWS begins its value statement with: “Openness, transparency and accountability …”
  • Some funds actually don’t even bear their company name, like Stock Dividend (SDIVX) and High Income Securities (PCF). No brand whatsoever. Why is that? MFO maintains its own fundname master list in a small attempt at transparency. Our name for PCF is Bulldog High Income Securities, after its advisor, and we preface iShares with BlackRock. We still call Deutsche Deutsche.
  • Our Fund Family Scorecard shows 25 families with 100% records, meaning every fund in those families have beaten their peers since launch. They include perennially good (if not perfect, except in this case) families, like Dodge & Cox, and others that may surprise you.
  • The same tool shows 29 families with 0% records … every fund has underperformed since launch. As a fund company, it’s a designation I would generally not want to advertise. As an investor or financial advisor, I would definitely want to know. The scorecard tracks more than 400 fund families.
  • Speaking of brands: USAA fund family is no more.

As promised, we successfully migrated to a new homepage and user portal. If you have not yet logged-in (not required for Blog page), you can do so via resetting your password here.

As always, if you see anything amiss or have suggestions for improvement, let us know and we will respond soonest.

Please enjoy the latest data and site features!

US Market Over The Long Run

I’ve been thinking a lot lately about how long is long enough to give a strategy the opportunity to prove successful.

Roy Weitz used five years. He founded our predecessor site Fund Alarm. If a fund was in the basement the past 1, 3, and 5 years, he sounded the alarm … designating the fund a “Three Alarm” fund.

If you’re a fund manager that time frame is driven by how long your investors believe in your strategy … how long they stick with you. Setting expectations is key here.

Our US market history, back nearly 100 years, suggests much success in a buy & hold overall market strategy. In fact, based on geometric history, investors in the S&P index can expect a “ten-bagger” every 23 years.

Can you believe that?


Which is why smart folks like Warren Buffett invest for the long run … “in companies you want to hold forever.” Such advice is music to the ears of mutual fund companies.

While it’s very, very hard of make lots of money in the short term, making it over the long haul seems quite achievable given the history of the US market.

But through some 10-plus year stretches (long), the market returned nothing but volatility.

Which means, despite its beautiful long-term climb, investors may not be positively rewarded for their risk if they are unlucky (or unwise) enough to get in at wrong time. But, alas, no one knows ex ante when the wrong time is.

And if you have a more concentrated strategy than say the S&P500, I suspect, the periods could be longer. “Out-of-favor” has become quant-speak for under-performing.

Starting to think that with any long-only equity strategy, the fund (or index) manager in fairness needs probably 10 years. And that’s the time frame they should tell prospective investors.

It seems like a lot to ask, but anything less is probably unrealistic, if not misleading.

Introducing MFO Premium’s New Home Page

Our MFO Premium site has moved!

Well, actually, that’s not the biggest news.

The biggest news is that we’ve adopted several new features that will make our search tools site more friendly and support its growth.

The new website location is: member.mfopremium.com. Shortly, we will simply redirect visitors of current location to make the move transparent.

You should have received an email, entitled “Set Your New Password” from MFO Premium (admin@mfopremium.com). You may need to check your junk mail folder, unless you’ve added us to your “Safe Senders List.” (You can also just go to the site’s Account tab and request a new password.)

You should not notice much difference in our appearance, but behind the curtain, a lot has changed. Principally, we’ve adopted the WordPress website management system platform, which powers more than a third of the websites across the world and offers numerous features to enhance user experience.

The first such feature is a new user portal, which should make it easier for users to subscribe (including corporate accounts with up to 10 sub-accounts), renew/extend, and reset passwords.

Please note that we’ve also adopted a new policy to make all subscriptions non-recurring, but you can extend your subscription at any time and you will receive a renewal email reminder a month before expiration. We find the practice of automatically recurring subscriptions presumptuous.

Finally, to help compensate for any inconvenience our transition may cause, we’ve extended all subscriptions by two months, including expired ones (which will be reactivated for two months).

As always, if you see anything amiss or have suggestions for improvement, let us know and we will respond soonest.

MFO Ratings Updated Through June 2019

All fund risk and return metrics, ratings, and analytics have been uploaded, reflecting performance through June 2019.

Some highlights:

  • markets rebounded in June, S&P 500 up 7.0% and 18.5% year-to-date (YTD); in fact, S&P 500 is up 14.7% annualized the past 10 years, helping make-up for previous lost decade … core bonds also up 6.1% YTD
  • the following funds have smaller assets under management ($250M or less), dual MFO Great Owl and Honor Roll designations, and delivered 20-30% YTD: DF Dent Premier Growth (DFDPX), DF Dent MidCap Growth Inv (DFDMX), YCG Enhanced R (YCGEX), Wasatch Global Opportunities Inv (WAGOX), which Robert Gardiner once managed, and Sarofim Equity (SRFMX), which David profiled in 2014
  • Hodges Capital of Dallas, TX remains in the bottom quintile of MFO’s Fund Family Scorecard … 4 of 5 Hodges’ funds are on MFO’s Three Alarm list
  • added 6, 8, and 9-yr evaluation periods to MultiSearch, bringing total to 42

Plus, encore reminder that we will be introducing a new user portal, which will make it easier for users to subscribe (including corporate accounts with up to 10 users), renew/extend, and reset passwords. It should roll-out this month. Once live, we will be stopping the auto-renewal feature, which we believe has become a presumptive practice.

As always, if you see anything amiss or have suggestions for improvement, let us know and we will respond soonest.

Please enjoy the latest data.

Barron’s Best Mutual Funds You’ve Never Heard Of

Recently, I subscribed to Barron’s, thanks to recommendations from folks on MFO Discussion Board.

Here’s link to sweet piece by Daren Fonda, entitled “The Best Mutual Funds You’ve Never Heard Of.”

The five funds are: Bernzott US Small Cap Value (BSCVX), DF Dent Premier Growth (DFDPX), Conestoga SMid Cap Inv (CCSMX), YCG Enhanced R (YCGEX), and Homestead Value (HOVLX).

Four are MFO Honor Roll funds, two are MFO Great Owls.

Here’s how they look in MultiSearch, launch through May 2019:

Fairholme Rebounding

As this decade comes to a close, legendary investor Bruce Berkowitz appears to be getting things right again. After making ill-timed bets on bank in 2011 and ill-advised bets on Edward Lambert and Sears in the years since, Fairholme is enjoying a resurgence. Much of the turnaround likely do to his speculation in Fannie and Freddie, which have tripled this year. (Story in WSJ today about regulators pressing to turn Fannie and Freddie private again.) Below are the YTD risk and performance numbers of his three funds: FAIRX, FOCIX, and FAAFX. Today’s AUM of $1.4B is perhaps 5% of its peak, when Mr. Berkowitz won Morningstar’s Fund Manager of the Decade in 2010.