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Hello terch,

I just posted a long message so I'm rushing, hope this doesn't sound terse.

...My gut tells me that they will keep the waiver around as long as they are even or losing to the S&P500.

Even Warren Buffett doesn't invest with "his gut." He does homework. I realize that you're just referring to a strategic/marketing decision that these fund guys might or might not make, but what I think I'm seeing in your post suggests that you may be interested in this fund for the wrong reasons.

But as we all know, if youre beating the S&P by 5-6%, people dont really mind paying 2.5% for that outperformance.

No, this is a Global fund, so in my view it will have to beat funds that are true peers in some meaningful way, not just the S&P500 index. Examples might be Oakmark Global (OAKGX) among many others.

...Another thing that I liked about the fund was that I believe I read somewhere that the fund will be relatively concentrated. Like maybe 30 positions or so? This would make it easier for the manager to manage the investments without needing a huge team to do research.

I suggest that you rethink the logic there.

The universe of stocks is huge. It varies constantly and I have no idea what the real number is but there are probably 10,000 potential stocks (and that's not counting OTC) to be purchased around the world. (After all, the Wilshire "total market" index of domestic stocks has 5000).

The notion here is that the fund will have the best possible choices from among those stocks. That means they have to cast the net more widely, not more narrowly. And it takes MORE work to make a small list -- not less! The manager with 300 stocks has 1/10 the amount of work, if you look at it this way.

They say it will be a Value fund. If they want to outperform (thus drawing investors) then they have to find stuff that other people have missed. Well, those other people have researchers combing through financial reports and so on. It would be pretty brash to go up against them without similar resources.

Anyway, if a manager is going to commit his investors' money to fewer stocks, rather than spreading the risk more widely, then he sure as heck has to have a clear idea -- based on something other than gut feelings -- that those stocks are the right ones, and that the remaining 9,970 are the wrong ones.

One of the things thats always bothered me with mutual funds is they own hundreds of positions. Who can keep track of that?

First off, not all funds have such big portfolios. I have one, which used to be called Janus midcap value but I think has a new name, anyway the ticker is JMCVX. It has beaten the Total Market most of the time, but my "complaint" is that its performance has gotten too close to the broad market. Well, part of the reason for that is because it has something like 300 stocks in it.

The reason to have a smaller portfolio is specifically to take more risk and put more power (to succeed OR fail) in the manager's hands. That's particularly true because many of those funds with big portfolios use Technical Analysis or other quantitative means as a screening method for the "first cut" when winnowing the field.

And when you hit that 6 bagger, its doesnt move the needle cause of the 399 other positions that arent home runs.

The investor should know, when going in, that a fund with 400 stocks in it is almost certainly not looking for huge jumps from a single "6 bagger" stock (I hate those baseball phrases, especially since the maximum in baseball is 4 bags). Funds like that generally just want to beat the broad index, usually with less volatility if they're any good. The goals are modest but enough to be draw people away from index funds.

Anyway this discussion is part of why I suggest that you're looking at this the wrong way.

I also suspect this is one of the reasons the funds holdings arent listed yet. They are so small that they are afraid of piggy backing or of looking silly by selling a fund with only a handful of holdings.

If they're afraid of "looking silly" then they are in the wrong business.

Bottom line for me is that this is the first time Ive been really interested in a fund b/c for the first time I feel I know the style/temperament of the manager.

No offense, but this sounds like it should be on a Bill Mann fanzine blog, not an investment discussion. I know that the guy has been around and so on, but I've also spent years reading glowing reviews of the personal traits of fund managers -- who simply did not make much money for their investors.

I mean really, at some point you have to look at NUMBERS, and so far there aren't any for this fund. The cult of personality probably means that a few people will sign up for this thing and take their chances even on Day One, but based on past messages, I think most folks here would wait for more data. I would, anyway.

I dont know how hedge funds really operate but maybe the idea here is to do something like that.

Geez, no. The stuff I saw in my quick scan of the website made no mention of investing in futures or derivatives or options or any other such language. It's just a stock fund with high fees, and my suggestion remains that a motivated investor would write to them and ask them why the fees are so high. It's a fair question and I'm sure they're being asked it every day.

Gotta go. Good luck!
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