The 2013 Lump of Coal Awards, Part 2

[unhappycamper]

http://www.thenewstribune.com/2013/12/24/2963534/the-2013-lump-of-coal-awards-part.html

The 2013 Lump of Coal Awards, Part 2
December 24, 2013


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PIMCO and Invesco for being off-target with their target-date funds. Lipper tracks six different dated categories for “mixed-asset target funds” for the years 2025 through 2050 and — when it comes to 2013 performance – Pimco’s RealRetirement funds are at the bottom of every category group that ends with a five (2025, 2035, 2045), while Invesco’s Balanced-Risk Retirement funds lag every year ending in zero (2030, 2040, 2050). The only reason PIMCO wasn’t dead last in all groups was that Invesco was there; the reason why Invesco was not at the bottom in all groups is that it doesn’t have funds for years ending in five. Worse, both fund groups lagged average performance in each of those categories by about 10 percentage points, difficult in a year that forgave almost all investment strategies.

The Vanguard Group, for adding injury to insult in its money-market funds. Investors using money-market funds as safe-haven holding pens for their cash know they’re not getting much in return these days, but what shareholders in Vanguard’s three money funds got in September was completely unexpected, a capital gain. The structure of money funds makes it that they almost never generate capital gains or losses; Vanguard reportedly had not had a similar experience in roughly 40 years running money funds.

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LocalShares, for rooting a little too hard for its hometown. Plenty of people head to Nashville seeking fortune and fame, but they do it in country music, not in mutual funds. But the people behind the LocalShares Nashville ETF (NASH) are singing the mutual-fund tune; they opened this year investing only in companies based in and around Music City, a sensible philosophy only if “the Athens of the South” is somehow immune from what’s happening in the rest of the world. I can name this tune in two notes: OOK and TXF. Those were the tickers for two miserable, short-lived ETFs that had strategies centric to Oklahoma and Texas, respectively. When investors don’t dance to this Nashville tune — and they won’t — you can expect to hear the familiar refrain of “I fought the law (of bad fund ideas) and the law won.”

Directors at the Valley Forge fund for forgetting their job. The way funds are supposed to work is that the board of directors hires a manager who runs the money. At Valley Forge (VAFGX), however, the directors spent two months doing it themselves. The saga started late in 2012, when the fund’s former manager died and the board had terminated his contract within days of, well, his ultimate termination. Enter an interim manager, hired to run the fund through March. After that, until a permanent agreement with that manager could be reached, the board took over running the fund. A prospectus dated May 1 noted that the directors were responsible for any trades made in April and May. “Because none of the members of (the) Fund’s Board of Directors has any experience as portfolio managers, management risk will be heightened during the Interim Period, and you may lose money,” according to the prospectus. “In particular, the Fund will be subject to the risk that (the) Board may fail to take actions that an experienced investment adviser may take.”


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The 2013 Lump of Coal Awards, Part 1 --> http://www.democraticunderground.com/111645046