So looks who’s come skulking back. Remember in that last post when I said I would never again let this blog go unattended for long periods of time? Well so much for that right? Unlike a lot of financial bloggers, I won’t try to stretch the truth and tell you that I was off starting my own hedge fund, curing cancer or lounging on a yacht with a beautiful princess. There were actually two princesses. Truthfully, after that last post on moving average cross overs, I spent a lot of time looking after my own investments, working with a handful of financial advisors while also devoting more of my time creating original content for my pals at ETF Global and also writing articles for Modern Trader magazine. Not terribly exciting but then again, investing is generally pretty dull with brief periods of fevered excitement.
But you knew it would take something pretty exciting to drag the Yinzer Analyst back from retirement, want to take a guess as to what it was? Was it:
- January’s equity meltdown,
- The trials and tribulations of Janet Yellen
- None of the Above?
Yup, it was D. In fact it was the new rules from the Department of Labor on managing retirement assets that got me excited to come back to the blogosphere. See I said this would be boring, but when you’re talking about the most comprehensive set of changes to how trillions in retirement assets are managed, things can get sexy and fast. And while I have no doubt the DOL is doing its best to reduce conflicts of interest while saving investors billions in fees, they are also sending the message (unintentionally or not) that actively managed investments are something to be avoided and that when in doubt, sticking your client with index funds or shifting the responsibility to third-party manager is the way to go. And while I’m all for saving a few bucks, I’m also going to have to call BS on that one.
One of the benefits of taking some time off is that you get to look back on your work and see what you did right or wrong and to pat myself on the back, I did manage to get a fair bit right. I’ll admit that my European equity manager selections (here) were a bit of a mixed bag with three managers outperforming and three underperforming the MSCI EAFE Index although in my defense, I wasn’t here to update those picks, but Sun America Focused Dividend (FDSAX) has strongly outperformed the broader market and the Russell 1000 Value Index since we discussed it on 1/5/2015. But by far my biggest win was on what to avoid. Remember the Spirit of America Large Cap Value Fund (SOAVX) that we used as an example of what to avoid buying at all costs? Bad performance and high fees can take their toll and it’s underperformed since we talked it about way back in November of 2014, up a whopping .64% through the end of June compared to 3.48% for the iShares Russell 1000 Value fund (IWD) and 6.5% for SPY. Money saved is money earned.
So what lesson is there to take away from that? Only that, some money managers, over a long period of time, can generate returns significantly above that of a benchmark. Maybe not from one quarter to the next, or year-to-year, but there are a handful of people who are really good at what they do and whether it’s from luck or skill, the result is the same. Every investor has heard of Warren Buffet, Peter Lynch or John Neff but what about Fort Washington Investment Advisors? They’re the managers of the Touchstone Focused Fund (TFOAX) that has outperformed the large blend category over the last three, five and ten year periods. Large blend is a tough space thanks to the fact that it’s the core of every investor portfolio and those billions upon billions of dollars mean a lot of name recognition and analyst coverage, what about the world of emerging market equities? It’s been a tough few years in the space and fell off most asset allocators watch-list, but what about the relatively new Seafarer Overseas Growth and Income Fund (SFGIX) and the fact that it’s up nearly 13% in 2016 and has outperformed its category and benchmark by over 500 bps annually over the last three years AND delivered positive returns?
The other realization I had was that investors have some pretty limited options when it comes to finding unbiased information on different funds. There’s a couple of heavy weights like Morningstar and Zacks out there not to mention the wonderful Mutual Fund Observer but for most of the financial media, ETF trends are about the latest mousetrap while mutual funds only merit attention when they begin to self-destruct. What that means is investors are typically forced to rely on fund families for information, making it harder to compare different products. When it comes to clear and concise information about how to find great funds or even a short-list of products, investors are pretty much at their own mercy and over the long-run, there can be some pretty tragic consequences. SOAVX might a pretty tough sell compared to the S&P 500 but it’s only slightly lagged the broader Large Blend category over the last three and five years because the category average fund over has underperformed the broader market by over 200 bps annually!
So why did the Yinzer Analyst come back? To revamp this site into a tool for any investor, novice or professional, who wants to seek out great funds and great managers. This will be a slowly evolving work-in-progress from now on, but what that means is that technical analysis and forecasting will be less prevalent as fund reviews take center-stage. Encouraging intellectual curiosity and education is still the core of this site, but instead of talking trends and cross-overs, we’ll be focusing on what’s happening in the market today, where the money is going and how you can find a great manager, active or passive, to take advantage of that.
My goal is to provide new screens and categories, along with different investment ideas, only at least a weekly basis and overtime we’ll begin to accumulate lists of great funds and keep them updated on at least a monthly basis. My commentary won’t be limited just to active managers, but to passive funds as well given that sometimes you don’t need a great manager just a great benchmark. Hopefully in time we can develop interactive tools to help make your search process even smoother and as always, you will never find sponsored-content on this site! But wait, there’s even more, because in addition to all of that, I intend to offer something you’ll never find on my investment blogs…a track record! Remember, most bloggers desperately want you to avoid checking their history but I believe the only way you can get better is to admit when you were wrong so in the near future we’ll revisit what worked and what didn’t at the Yinzer Analyst.
Now it’s time for the Yinzer Analyst to finally get back to work, look for our next post on small-cap dividend payers later this week!