Plus, Appleseed weeds out big banks, and more.
Morningstar's most recent estimates of fund flow data turned up a few interesting examples of shareholders heading for the exits at two solid funds. Longleaf Partners
Analyst Pick Dodge & Cox International Stock
Despite those recent worries, U.S. fund investors have still poured $19.6 billion into international stock funds so far this year through the end of June. Meanwhile, they've taken almost $17.0 billion out of domestic stock funds. Dodge & Cox International Stock also stumbled over some untimely financials sector investments in the recent bear market. Longer-term results remain strong, though. Since its mid-2001 inception, the fund gained 8.0%, topping rivals' 4.3% and the MSCI EAFE's 1.1% return over that period.
Appleseed Draws Line in the Sand
Banks deemed too big to fail are now too big to own for one socially responsible investing fund. Appleseed
According to Josh Strauss of the fund's portfolio management team, their process will now exclude banks that hold more than $10 trillion in notional value of derivative contracts. That currently makes J.P. Morgan Chase & Co.
Appleseed's managers look for high-quality firms with strong cash flows and clean balance sheets. Price/book value is a key metric in their valuation process for banks, and with securities on bank balance sheets not marked to market, book value has become a fictitious number, Strauss said. He noted that if true restructuring occurs in the banking industry, they would consider discontinuing the screen. The firm opted to change their investment policy regarding big banks now because the team doesn't anticipate meaningful reform happening in the near future.
This young fund's approach has worked so far. Since its late 2006 inception, it has returned about 7% annualized, while its typical mid-cap value peer and the S&P 500 Index are in the red for the period, with losses of 3.6% and 5.0%, respectively.
Torray Scoops Up Separate Account Manager
Torray LLC, advisor to the Torray Fund