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No. of Recommendations: 3
Are they kidding us this is the most ridiculus thing I have seen

From the foolfund.com website:
Minimum Balance $3,000
Minimum Automatic Investment $100
Account Maintenance Fee
(for accounts with balances less than $10,000)
$24

Fees and Expenses
Total Net Expense Ratio 1.35%
Gross Ratio 2.30%
Base Management Fee 1 0.95%
Short-Term Redemption Fee
(fewer than 90 days)
2.00%

If it was April 1st I would think they were kidding around but I am extremely disappointed and quite frankly amazed. I would hope that they would at least come in with something that had a reasonable expense ratio.
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No. of Recommendations: 6
As has been pointed out on several Fool boards, the Fool has become what it once mocked.

KennyO
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So how has the fund done? I do not see any performance data anywhere.
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What is the ticker symbol for this fund?
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from the website Foolufund.com the ticker is still pending.

Start date was 6/16/09.

Check out the website for information. NAV is the only current information on Morningstar if you type in the name
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>> As has been pointed out on several Fool boards, the Fool has become what it once mocked. <<

Yep. Somewhere along the way, they sold out to the Man. Or is it "The Wise"?

#29
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No. of Recommendations: 9
I am not by any means an apologist for fools nor for The Motley Fool. However I am a stickler for research and accuracy, to the extent possible with a reasonable effort. And it's not happening in this thread.

Like, two people posted URLs for this fund company but neither one spelled it right. Jeez. Try http://www.foolfunds.com/

The first post said absolutely nothing about the fund except for the fees and expenses, and painted it in as negative a light as possible. Well, I do not believe in things like a $24 fee for "small" balances (under $10,000) so I won't defend that. It's just plain wrong. But the rest of those numbers are nothing extraordinary, so what's all the fuss?

1) A 90-day short-term redemption fee of 2% is well within industry norms, and 3 months is shorter than the 6-month period enforced by brokers like TDAmeritrade.

2) A total NET expense ratio of 1.35% is much higher than a typical Vanguard index fund but is nowhere near the top end of the range for an actively managed stock fund.

3) A minimum initial investment of $3000, and/or minimum automatic investment of $100 a pop, are both reasonable and make the fund affordable to the majority of small investors.

So my reaction to the first post is just one of curiosity. Again, I am not ready to pitch for these guys because I don't know that much, but how come nobody posted any other information here?

I looked around and found stuff that seems at least as pertinent as the collection of factoids cited above. Like:

"Guiding Principles
At Motley Fool Funds, we aim to get right what much of the fund industry gets wrong. Our approach all begins with a unique, shareholder-centric philosophy.

We are -- and will remain -- significant investors with you in Motley Fool Funds...

We will not impose loads or 12b-1 charges, and we will apply redemption fees only to discourage short-term trading...

We will be advocates on your behalf with company managers and boards, in the interest of enhancing the value of your shares.

We will communicate with our shareholders as clearly and candidly as possible..."


About the Independence Fund:

"The Independence Fund seeks great companies at value prices.

We look for well-managed companies, both in America and abroad, that boast strong financial positions and operate in industries that our management team truly understands. Performing rigorous, fundamental analysis, we dissect each company's strategy, competitive position, operations, and performance, and we review all pertinent public documents and official communications about the company.

Although we will invest with an intention to hold for the long term, we will also insist on keeping a solid margin of safety on all Fund holdings. As a result, we will sell any holding that we believe has appreciated beyond its intrinsic value."


The site's 1-day fund snapshot from the last trading day (last Thursday, 7/2/09) shows the fund losing 2.48%. For comparison, the DJ Wilshire 5000 total market index fund lost over 3% on that same day.

We'd all like to know what's in the portfolio. Well, IF you were to look around the site (like http://www.foolfunds.com/funds/independence/composition.aspx...) you would find what's up with that:

"The Independence Fund's investment portfolio is generally composed of at least 30 investment positions, with the 10 largest positions representing not more than 40% of the Fund's net assets. To limit the risks associated with highly concentrated holdings, the Fund will not invest more than 5% of its net assets in the securities of any one issuer.

Following the Fund's first quarter of performance, the composition of Independence Fund assets will be broken down by geographic region, major market sectors, and asset class, and the Fund's top 10 holdings and their percentages will be made available.

The Adviser's investment process focuses on issuers of all sizes, engaged in a broad range of industries in many countries..."


So: it's an All-cap Global Value Stock Fund. There is some bias (in the language on the site) toward small-caps so one might assume that the market cap will average out toward the Mid-cap range, and since they say they'll sell stocks after a lot of appreciation, it would most likely stay in the Value-Blend range.

With "at least 30" stocks (but no guarantee of a lot more) they make it sound like they're planning on a concentrated fund that will depend on stock-picking.

Will it be worth owning? Obviously it's too soon to tell, but in my very quick (5 minute) visit to the site I didn't see anything that merits so much derision. One would wish for lower expenses but these guys know darn well that people like us are reading those numbers and commenting negatively. So I assume there must be something about starting up a mutual fund that is expensive.

Maybe one of you ace reporters could write to them, find out, and report back here what they say about the expense ratio. And the $24 maintenance fee. Other than that I don't see anything so terrible.
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Although we will invest with an intention to hold for the long term, we will also insist on keeping a solid margin of safety on all Fund holdings. As a result, we will sell any holding that we believe has appreciated beyond its intrinsic value.

Typical optimism. They just assume that they will have to sell if the stock goes up too much.

What if it tanks? Think of it as a buying opportunity?

Remember, these are the guys who, in one of their model portfolios, bought 3COM, watched it double, then watched it tank, and finally sold it for a loss. Well, maybe they have learned, but I doubt it.
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"Although we will invest with an intention to hold for the long term, we will also insist on keeping a solid margin of safety on all Fund holdings. As a result, we will sell any holding that we believe has appreciated beyond its intrinsic value."

Typical optimism. They just assume that they will have to sell if the stock goes up too much.

What if it tanks? Think of it as a buying opportunity?


I think the issue they were addressing in the paragraph quoted above is specifically to reassure investors about the conflict between their strategy of holding onto stocks for long times, versus the possibility that a stock can become overvalued (and/or its fundamentals change for the worse) while they own it.

That's pretty exactly the scenario you described further on: ...the guys who, in one of their model portfolios, bought 3COM, watched it double, then watched it tank, and finally sold it for a loss.

The paragraph above specifically says (in so many words) "If a stock doubles then we'll probably sell some or all of it -- rather than watch it go back down again." It seems like they were anticipating your critique!

Personally, I found things on the website that make me a little skeptical or cautious, but none of those things had been cited in the thread earlier. The website identifies the manager but I didn't look that closely; it'd be interesting to see just how independent he can be if he doesn't agree with what the columnists are writing here.

I'm curious to find out what they're holding, and whether they can beat the street. But I would not buy a fund so new in any case, so for me it's all academic.
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Hey Littlechap,
I appreciate your reasoned response to the overly negative reaction to this fund. You made a lot of sense.

I too was a little taken aback by the 1.35% expense ratio that could even go higher. It seems to me that starting this expense ratio at .95% would have been more Foolish.

That said, the manager is Bill Mann who is pretty respected at TMF. He has been around a while and a lot of people have been asking what happened to him since Jan 1. Now we know.

One fear I have is that Bill Mann is just the nominal manager but all the actual managing is done by the other 3 people listed. Not to knock them because Im sure they are pretty sharp, but Id rather my money with Bill Mann. Other TMF services like to put David or Tom Gardner on the billing but in actuality they have very little to do with the service, especially with TG. I would hope that this will not be the case with this fund.

One thing I like about the Fund is that I actually feel like I know the manager. Ive been reading his work for years. With other funds, Ive never felt I know anything about the manager. All I can look for is years of service and how invested they are in the fund, but I never know anything about them.

Im interested by what else in the prospectus was making you skeptical/cautious. Im personally not too worried about investing in this new fund b/c I know a lot about the manager. My real worry is whether or not he actually does anything or just puts his name there and then drums up business and new mutual funds.

I will say that to invest alongside Bill Mann has been an interest of mine for some time.
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Hi,

Thanks for the kind words.

...I too was a little taken aback by the 1.35% expense ratio that could even go higher. It seems to me that starting this expense ratio at .95% would have been more Foolish.

As others no doubt saw in the initial post (or on the website), the actual "gross" expense ratio is well over 2%. They arrived at the lower "net" number (1.35%) by way of a temporary waiver of about 1/2 the total expenses.

Those who've been around have seen such "temporary" waivers become permanent at some funds (I think the Fidelity Spartan funds are an example, if fading memory is correct). But it's not true in all cases, so an investor ought to be wary of that number possibly rising on the predicted date.

And in the meantime, one might ask them just why the number is as high as it is. I honestly would not be surprised that it's due to inefficiencies that a company faces when it is just starting up in this business, but I don't know. In any case it does jump out at any reader who is familiar with The Motley Fool.

...the manager is Bill Mann who is pretty respected at TMF... One fear I have is that Bill Mann is just the nominal manager but all the actual managing is done by the other 3 people listed. Not to knock them because Im sure they are pretty sharp, but Id rather my money with Bill Mann.

Regardless of one guy's chops, I would never ever invest in a fund like this -- which says it intends to pick stocks from every industry, and from every corner of the planet -- without a really good team and competent research staff. The universe of potential opportunities is too large for one person to sift through. So if the other 3 people have decent credentials, I think I'd be reassured by their presence, rather than disturbed.

Im interested by what else in the prospectus was making you skeptical/cautious.

Well, first off I didn't read the prospectus. I just scanned the stuff they had on the website. I suppose it probably summarized a lot of the prospectus content in a different format. In any case my impression was formed from a rather hurried and casual reading, so I can't parse each sentence and tell you the specific cues that got my attention. I tend to look for nuance that other people might dismiss.

But the easy part is that I would be "skeptical/cautious" about any fund whose manager hasn't run a fund before and whose portfolio is described in only the vaguest of terms. I mean, if this fund has a NAV as of today, then necessarily it must own stocks as of today. There might be good reasons for delaying the revelation of this information -- but offhand I can't think of any except to give the management time to tinker, and perhaps do some window dressing, right up until the day they lift the curtain.

Put another way, I can't recall hearing about a new fund being announced in which the portfolio was kept secret. It may have happpened -- may even be common -- but I don't know of any cases.

Im personally not too worried about investing in this new fund b/c I know a lot about the manager.

On this board we sometimes discuss the "cult of personality" that some managers acquire, evidenced (for instance) by Morningstar analyses that glow about a manager's expertise even when his fund does poorly for 8 years out of 10, or whatever. It's one thing to believe that a guy is smart, or perhaps that he writes well about investing. It's another thing to give him your money without him having proven that he knows how to make money grow faster than all the other 10,000 mutual funds out there.

That is the kind of criterion I personally look for. Not literally comparing one against 10,000, but one against its category peers, or against funds that provide exposure to a similar range of stock categories. Or, if nothing else, comparing against longterm returns from the Total Stock Market and Total Bond Market indices.

And of course, longterm comparisons will be unavailable for a long time. This is another topic we discuss here from time to time, which brings me to the beginning and end of my reaction: I simply would not buy a fund in the first month of its existence. I think I may have bought a fund one time -- from an established management company -- that was only a year old or so, and I think some folks here commented that my decision seemed rash to them. :-)
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I am underwhelmed by all of the mutual funds I have looked at in the last 4 years. If ANY of them have made a (significant)profit I would be surprised.

TMF's new fund only needs to make 2 or 3% to be like all the other funds in the world.
I used to relish the articles raking these funds over the hot coals.

There is money to be made in these funds.... by the fund operators. How much of TMF money will be invested in this fund?

A $24.00 annual fee for less than 10,000 invested? What happens after I invest 10,000 and they lose 82% of it? Will I still be charged the fee?

Of course, since we are poised at the (alleged) bottom of this current depression, I feel it is an excellent time to start a new fund since all boats rise with the tide, but outperform? Remains to be seen, especially after the huge fees and taxes.

Might be a good place for ROTH IRA money if you are in that bracket, but even a CD will get you 2-3% without the risk.

CB
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Littlechap,
Again a well reasoned argument.

Im kinda playing devils advocate here b/c I too was put off by the high fees and lack of transparency so far in this new fund. I still dont know that Ill invest but for the first time Im intrigued by a mutual fund. Heres what Im thinking as of now.

I think every TMF person associated with this fund is reading this discussion board and every negative article thats been posted about it on the web. The press about the fund has been withering. Everyone is crying hypocrisy about a company that dismissed mutual funds except for the lowest priced, longest tenured, highest rated ones and that now is starting an expensive fund with a brand new manager with no rating. Either TMF has sold out to the highest degree, or they know what theyre doing.

My gut tells me that they will keep the waiver around as long as they are even or losing to the S&P500. I think that if they significantly outperform it, they will waive teh waiver and start charging the higher fees. But as we all know, if youre beating the S&P by 5-6%, people dont really mind paying 2.5% for that outperformance. If TMF waived the waiver after one year and they werent outperforming the S&P, itd be enough for me to remove all my money (minus 2.3%!) and also immediately stop subscribing to all newsletters. It would be such a slap in the face that Id likely never use TMF for investment info again. I imagine they know that.

I think I still would disagree on the apparent lack of experience of Bill Mann. He has been picking stocks for many years now and for the most part has done a very good job. The International Stock newsletter he ran hasnt done so well but its still early. I still would give him the benefit of the doubt though I accept that most knowledgeable mutual fund investors would laugh at trusting money to someone with no track record.

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. One of the things thats always bothered me with mutual funds is they own hundreds of positions. Who can keep track of that? And when you hit that 6 bagger, its doesnt move the needle cause of the 399 other positions that arent home runs. 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.

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. Ive seen how hes operated for 5 years or so and read his writings. What kills me is that TMF would charge such a high fee for this service. It really flies in the face of all theyve ever preached. But again, if they significantly outperform, it wont really matter.

I dont know how hedge funds really operate but maybe the idea here is to do something like that. The fees are certainly moving in the hedge fund direction. Are hedge funds more concentrated? I know they also scour the universe of investments for undervalued opportunities and some do it very well. I wouldnt have a clue how to value a warrant, but there are some who can make a killing off of them.

Thanks for challenging my thoughts LC. Still not sure where Im going with this one but your reasoned input is helpful.
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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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Is there actually any documentation of Bill Mann's record? I don't mean something that says he believes certain stocks are good. I mean something that says what he bought or recommended and when, and what he sold and when.

I do know that when the Motley Fool was publishing portfolios, they did not do very well. For one thing they held AOL forever, when it was a pretty clear sell when they merged with TW.

For example, it is great to say you picked AMZN back in 1997, and it is up big time since then. But it also took a dive of about 90% in the meanwhile. Did you protect capital and sell ahead of that? Did you buy back in at some point? Do you hold it now?

Those are the important questions when looking at somebody's record.
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Looks to me like they are copying an already successful mutual fund company......YACKX or YAFFX. The Yacktman Funds. But, if I am not mistaken they are charging higher fees than the Yacktman Funds. Very very close to the same investment strategy.
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I pretty much agree - I don't understand the original complaint about the MFI fund. However, the salient points that attract me to it are a little different than Littlechap.

I want a managed fund to get the benefit of good research. With a value fund that is key. For serious research by good people you have to pay a little more than an index. Time will tell as there is no history. But they Advisors are invested in the fund and seem to have the right mindset and experience given the prospectus.

I agree that international small and mid caps are likely to be the most fertile hunting grounds. I can't begin to do that research for myself.

The plan is to sell the holdings when they become fairly valued rather than speculating on illogical or bubbly valuation. Then spend the proceeds on more beaten down or otherwise overlooked stocks (etc.). Buy low sell high. You can't get that in an index.

The planned hold time is reasonable for a value portfolio, long enough to give the stocks a chance, but does not stretch into a very uncertain far future.

Most important of all is the application of a strict margin of safety. This is key. This is what most differentiates this fund for me.

The Advisors will have to work pretty hard to find good candidates with the MOS a rule. Here's hoping they can do it. --BM
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The emperor has no clothes. What a sham. High fees and just average performance, so far. Where's the beef?
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I guess I'm confused. Going to this URL: http://www.foolfunds.com/learn/invest-with-a-rising-star-mot... I see that at a minimum this fund has gained over 24% in the last year. Is this mediocre performance?

Can someone please illuminate me?
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I guess I'm confused. Going to this URL: http://www.foolfunds.com/learn/invest-with-a-rising-star-mot...... I see that at a minimum this fund has gained over 24% in the last year. Is this mediocre performance?

Can someone please illuminate me?


The page you cited says that those performance numbers are through June of 2011. That means they are now 3 months out of date.

Also, that page compares the fund's performance to the MSCI World Index, which one would think it cites because it appears to beat that index. But on the same page it says "we make no attempt to match its [the index] holdings or to mimic its performance" which to me is another way of saying that it is not appropriate to use that index as a benchmark of performance. In short, the marketers want to have their cake and eat it, too, and they hope you don't notice.

You might want to find whether the fund has done as well since June, and also whether there are other funds -- regardless of index or category, obviously -- that have better numbers.

I don't have much interest in it, since (among other reasons) it's still too young for my taste. But in any case this info should help evaluate its marketing pitch.
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