3 Newly Reopened Funds for the New Year
Mairs & Power Small Cap, FMI International, and IVA International Fund are all open to new investors again.
Susan Dziubinski: Hi, I'm Susan Dziubinski for Morningstar.com. Mutual funds typically close or otherwise limit new investments when they foresee that ongoing inflows may impact their investing style. In some cases, those funds remain closed. Sometimes, closed funds reopen. Here are three Morningstar Medalist funds that did just that in 2018.
Tony Thomas: Silver-rated Mairs & Power Small Cap reopened to new investors in September, and that's good news for investors looking for a good option in the small-cap space. The fund closed at a fairly conservative $330 million in 2016, but that's typical of this conservative firm that likes to be careful with investors' assets. The managers run this fund well. They execute an excellent process that favors high-quality businesses with defensible competitive positions. Investors that understand its process could have anticipated what's happened with the fund over the last couple of years. In 2017, it really struggled. Its good businesses just weren't as favored in that bull market. But in 2018's more volatile market, the fund has done quite well. So, again, this is a good opportunity for investors to get into this small-cap fund.
Alec Lucas: Silver-rated FMI International reopened to new investors in April of 2018. The fund is managed by Milwaukee-based Fiduciary Management. It takes a team committee-based approach. Key managers on the fund though include Pat English and Jonathan Bloom. They are capacity-conscious and picky about the kind of stocks they put in their portfolio. It tends to be a resilient portfolio. The key thing for investors to understand about this fund is they hedge their currency back to the U.S. dollar and that can sometimes help or hurt returns. It's been a big help in 2018's year-to-date results. Over a full market cycle, we think that this fund should outperform based on the managers' stock-picking skills.
Gregg Wolper: IVA International Fund reopened to new investors recently for the first time since 2011. And while it's not appropriate for everyone, it's definitely worth taking a look. Managers Charles de Vaulx and Chuck de Lardemelle have been running this strategy for many, many years--even before the inception of this fund. It's a cautious strategy and it's unusual. They are looking for stocks that are at deep discount to what they think they are actually worth. If they don't find enough of them, they are willing to hold cash; that level has been over 30% at times. It's down to about 18% at least at the end of October, and could be lower now because they may have taken more advantage of the drops in the market. They will also hold gold. They say that's to protect against unforeseen circumstances. This is not a fund that's going to take full advantage of big rallies in the markets, especially if they are led by growth stocks and investors who want to fund it, will do that, would not be happy here. But over time, it's cautious, careful, low-turnover approach should pay off.
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