Walk through a cemetery and you will frequently see phrases such as “forever in our hearts” or “you will always be remembered”.
The mutual fund graveyard is devoid of these fond memories, but if you look at the latest monuments – to funds that passed in 2021 – you’ll see a number of recurring descriptions, most often words like “value,” ” tactical “,” favored “and” Asia “.
Every year, a few hundred traditional exchange-traded funds (ETFs) and mutual funds are killed by management that has become disinterested, disillusioned, impartial, disrupted by market conditions, or unable to care. No one mourns their loss.
The funds that took the big nap this year are no exception, a mix of uninspired, clumsy, mediocre marketing failures and investment mistakes.
Yet some funds have created legacies or lessons that investors should remember. With that in mind – and in the spirit of the year-end retrospectives of famous people who have passed away in the past 12 months – let’s tell some stories of funds that were sent to the mutual fund crypt in 2021.
Among the funds that shed their deadly envelope last year:
CAN SLIM Tactical Growth Fund (ticker CANGX) was based on the Seven Characteristics of Great Equities as defined and described by William O’Neill, the founder of Investor’s Business Daily.
CAN SLIM – the method, not the acronym – is followed by many investors, and the fund was meant to offer investors an alternative to pursuing its principles on their own. The problem is, the processes of large investors don’t always translate into performance in funds.
After 16 years in which the fund lagged its peer group and the Standard & Poor’s 500 index, the $ 31 million fund was closed at the end of August.
Among the saddest stories of the year, IVA in the world (IVWIX) and IVA International (IVIQX) – successors to the legendary SocGen funds headed by Jean-Marie Eviellard – closed in April after seeing two-thirds of assets exit in the past year.
Manager Charles de Vaulx, a protégé of Eviellard, was dedicated to value investing and was a star of classic funds; he was bold, charming and compelling, the kind of personality investors look for when looking for something other than indexing.
He was holding a lot of money in a foamy market, shunning virtually all tech stocks, and sticking to his value and small-cap disciplines in the midst of a raging bull market for growth and large-cap stocks. Morningstar analysts appreciated the funds, but performance was not coming back and investors stopped waiting for a rebound.
Shortly after the business closed, de Vaulx committed suicide.
It’s another reminder that even star mutual fund managers are human; no manager, whatever his track record, is invincible.
Pacer Military Times Top ETF Employers (VETS symbol), VictoryShares ETFs for Top Veteran Employers (VTRN): These pop-up funds have pulled on financial sensitive chords by focusing on national businesses that support the training and professional development of veterans, military, and military families.
It’s an admirable lens, but made for dull backgrounds; they sorted the investment world in a different way, but ultimately were just another general equity fund.
VETS lasted just over two years, while VTRN opened and closed in less than a year, reinforcing a common lesson among departed funds: Marketing ideas that don’t attract assets quickly don’t last long.
the Selective opportunity fund – not to be confused with other funds that have a ‘selected opportunity’ in their name – was launched in 2017 and got off to a flying start, surpassing 1,400 plus funds in the mixed large cap category in 2018, generating a total return of around 8.75%, 15 percentage points better than the group fund average, as measured by Morningstar.
As value managers willing to hold cash, success was short-lived as the market rebounded and value suffered. The manager – quoted during the heady days as saying he was not focused on short term performance, was not able to stay on top for long; the fund was dead last in its peer group for one- and three-year performance when it pulled its lethal reel in June.
Amplify Crowd Office Online Loan and Digital Banking (LEND) tried to harness the power of peer-to-peer lending, but there has been no transfer of power here. In just over two years, it has lost almost a third of its value, another thematic fund failed.
Politicians often talk about reviving the coal industry, and investors have also supported the idea, but the VanEck Vector Coal (KOL) has proven just how difficult this task is, suffering annualized losses of nearly 8.5% over its 13-year lifespan, problems that were dramatically exacerbated by a free fall of 88% in 2016. It is a miracle that the fund did not perish immediately after this disaster. ; when a long-term recovery is hard to envision for an industry, it is harder to imagine for the funds investing in it.
JPMorgan International Advantage (JFTAR) – one of the biggest liquidations in recent memory – proved that you don’t have to be good to grow and save investors for decades. The fund has followed around 95% of its peer group throughout its lifespan, never showing “benefit” to shareholders.
Of the fund’s $ 1.2 billion when the fund entered Big Sleep in February – just before its 20e anniversary – not a penny belonged to the fund managers. Go figure it out.