Speaker 1: Welcome a trillions. I'm Joel Webber and I'm Eric belchunis
Speaker 1: Eric happy last days the summer? You're remote, I'm remote.
Speaker 1: Let's do this together one more time, remote.
Speaker 2: One last hurrah before the cold bucket of water of
Speaker 2: return to office sets in.
Speaker 1: You've got a new team member who is yes.
Speaker 2: So believe it or not. We hired a mutual fund analyst,
Speaker 2: which when I posted on LinkedIn that we're looking for this,
Speaker 2: this guy replied with, this is like Elon Musk looking
Speaker 2: for an internal combustible engine designer. Like what are you
Speaker 2: talking about, right, because everybody kind of knows me as
Speaker 2: ETF and passive and I read about Vanguard a lot
Speaker 2: like why would you do this? But we noticed when
Speaker 2: we covered mutual funds and notes, because sometimes we do,
Speaker 2: the readership was really good because a lot of terminal
Speaker 2: users are these mutual fund companies, and the sort of
Speaker 2: horse race between them who's winning, who's leasing, really played
Speaker 2: well on the terminal and it was still twenty six
Speaker 2: trillion dollars in mutual funds. And there's a lot of
Speaker 2: good active managers, even though the majority of them tend
Speaker 2: to not beat the benchmark, And so we just thought
Speaker 2: we should cover this and also add a counterweight to
Speaker 2: their team's sort of bias towards passive and ETFs, And
Speaker 2: so we hired David Cohene, who joined us a couple
Speaker 2: months ago and has been kicking butt right off the bat,
Speaker 2: writing a lot of notes, and this week he had
Speaker 2: one that crushed it. It got the equivalent of like
Speaker 2: a three run Homer in sort of readership terms for US,
Speaker 2: and so I thought we should just go with some
Speaker 2: of his interesting finds because there's been a couple of
Speaker 2: notes he's written that I've just just been really surprising
Speaker 2: to me and interesting, and I thought we should, you know,
Speaker 2: dive into some of those.
Speaker 1: Can't wait to explore this with David Cohne, who is
Speaker 1: a mutual fund analyst with Bloomberg Intelligence, this time on
Speaker 1: Trillian's five Interesting Finds from the Mutual fund world. David,
Speaker 1: Welcome to Trillions.
Speaker 3: Thank you for having me.
Speaker 1: Okay, so, how do you feel about ETF We got
Speaker 1: to start there.
Speaker 3: I mean, they have their purpose more of an active guy,
Speaker 3: So I like mutual funds and active ETFs, but you know,
Speaker 3: there's a lot of areas of the market where many
Speaker 3: managers struggle. So ETF serve a great purpose and a
Speaker 3: lot of portfolios.
Speaker 1: Do mutual funds still exist?
Speaker 3: Yeah, yeah, there's a ton of assets. You think of
Speaker 3: all the defined benefit plans for one k's, there's just
Speaker 3: they're all mutual fund assets. A lot of it's still
Speaker 3: actively managed, so they still have their place.
Speaker 1: Okay, So you wrote a recent note that really did
Speaker 1: crush it on the Bloomberg terminalized Eric mentioned, and it's
Speaker 1: about QQQ, which we actually the last episode of Trillions
Speaker 1: was all about how QQQ is this wildly successful ETF
Speaker 1: and yet makes no money for Invesco, its owner. You
Speaker 1: actually almost one up dust. What did you discover in
Speaker 1: this note?
Speaker 3: Well, I mean, if you look at the QQQ, it's beaten,
Speaker 3: you know, the major market indexes. You look at some
Speaker 3: of the other ETFs like SPY and VTI, and it's
Speaker 3: just destroyed those over the last fifteen years. And it's
Speaker 3: also been destroying just about every single mutual fund. But
Speaker 3: there's been about a handful of mutual funds that have
Speaker 3: been able to outperform the QQQ, basically by taking more risk,
Speaker 3: whether that's concentrated bets or investing in lower quality companies.
Speaker 1: Okay, So talk to us about this mutual fund of note.
Speaker 3: Well, the big one is the Baron Partners Fund, managed
Speaker 3: by Ron and Michael barn This fund's been around for
Speaker 3: a while. It's actually outperformed the QQQ over five, ten
Speaker 3: and fifteen years. It's fifteen year annualized return to seventeen
Speaker 3: point eight, which is pretty good. And the thing with
Speaker 3: this fund is it's extremely concentrated. It only held about
Speaker 3: twenty stocks as of June thirtieth, with a allocation of
Speaker 3: about forty point five percent to Tesla, which is pretty
Speaker 3: huge for a mutual fund. You know, none of the
Speaker 3: big company's, big mutual fund families typically allow their funds
Speaker 3: to be this non diversified. And it's really kind of
Speaker 3: written Tesla the last few years to outperformance.
Speaker 2: Yeah, this is so interesting, Joel, because David's looking through
Speaker 2: thousands of funds. This isn't even just growth managers. Anybody
Speaker 2: beat the cues. And as we said last week, the
Speaker 2: cues can be bought for twenty basis points and now
Speaker 2: fifteen there's a mini me cues that does the same
Speaker 2: thing for fifteen basis points. And think about that one
Speaker 2: soul fund and what did that fund do? It got crazy.
Speaker 2: I mean, we've been talking on the team lately about
Speaker 2: how in order to beat the cues, you have to
Speaker 2: kind of forget your CFA, you have to forget everything
Speaker 2: you learned and just go wild. I'd even think the
Speaker 2: Baron Fund, that the one that beat it, went even
Speaker 2: you know, more wild than Kathy would, because Kathy would
Speaker 2: in her portfolio, she has Tesla, and she Tesla obviously,
Speaker 2: but when Tesla has a nice run, she'll sell it
Speaker 2: to keep the waiting at ten percent or eleven percent,
Speaker 2: so she's always profit taking. This guy just let it run.
Speaker 2: And so he let this one stock run, which denominated
Speaker 2: the portfolio, and it really gave him the juice, and
Speaker 2: so he just got crazier than the cues. And I
Speaker 2: just think this is a really I don't know if
Speaker 2: ironic or a conundrum, which is that all these managers
Speaker 2: go to schools, they take all the tests, they have
Speaker 2: the numbers, and they see these highly these stocks with
Speaker 2: just really high valuations. They're expensive, and their CFA brains
Speaker 2: are like, there's no way this can keep going up.
Speaker 2: I've got to invest in something that's cheaper, and that
Speaker 2: just hasn't worked. Now it's some of it you can
Speaker 2: beat this spy that way, but the CUES is like
Speaker 2: just full of momentum and just the juggernaut I compared
Speaker 2: to a locomotive train, And it's just interesting. And so
Speaker 2: I think when when Dave wrote that no this week
Speaker 2: that only one manager beat the mighty Cues, I think
Speaker 2: a lot of our clients were like, yeah, I wonder
Speaker 2: who it was, because I know I didn't. And so
Speaker 2: it's just interesting and this could all change. The CUES
Speaker 2: is a you know, has a high valuation, right, a
Speaker 2: high average pe ratio. So if there's a move to
Speaker 2: value that's long term, these people could outperform the cues
Speaker 2: in mass. I'm not saying it can't happen, but the
Speaker 2: last fifteen years it's really just been almost impossible to beat.
Speaker 1: So Dave. Obviously the knock on active is always that
Speaker 1: you might be able to beat something, but by the
Speaker 1: time you account for fees, maybe not so much. What's
Speaker 1: the fees look like for the fund that they've been
Speaker 1: able to crush the cues like this.
Speaker 3: It's not terrible. It is still a little bit higher
Speaker 3: than I mean, obviously it's a lot higher than the
Speaker 3: typical ETF. So an investor is basically willing to pay
Speaker 3: a fee to outperform the cues, which is the case here,
Speaker 3: and you know, willing to take that risk that comes
Speaker 3: with it.
Speaker 2: I mean, you know, and this is how you can
Speaker 2: tell daves from the mutual fund world. One point six
Speaker 2: nine percent. That's that's at that's a lot higher. But
Speaker 2: for a mutual fund, it's not that bad. It's within
Speaker 2: the range of normalcy. But for an ETF one point
Speaker 2: sixty nine would be like, you know, a million dollars.
Speaker 2: I mean again, qqq M, which is tracks then has
Speaker 2: that one hundred is fifteen basis points, and a lot
Speaker 2: of the you know, vanguard funds are under five. It's interesting, though,
Speaker 2: this fund has seven billions, so it clearly has gotten
Speaker 2: some interest. Seven billion is a pretty big size for
Speaker 2: an active mutual fund, and it's taken in some money,
Speaker 2: about half a billion over say the past five years.
Speaker 2: But that's not a ton of money considering this performance.
Speaker 2: So a lot of that seven billion roll came from
Speaker 2: just the performance. So even though this mutual fund had
Speaker 2: had such a nice run, it was the only one
Speaker 2: to beat the cues, it barely got rewarded with flows.
Speaker 2: Whereas Kathy would which she had her run got rewarded
Speaker 2: big time. So you have to wonder if Baron wasn't
Speaker 2: an ETF rapper, maybe it would have gotten more attention.
Speaker 2: You know. Is this part of this sort of difficulty
Speaker 2: of mutual funds having to overcome their vehicle so that
Speaker 2: even if there is one that's really dynamic, maybe some
Speaker 2: people don't even give it a look anymore. I don't know.
Speaker 2: It's just an interesting case study for a lot of reasons.
Speaker 1: Day when you dissected the portfolio, we talked about the concentration.
Speaker 1: What else stood out to you about how they were
Speaker 1: able to achieve this?
Speaker 3: I mean one thing, you know, in addition to the Tesla,
Speaker 3: it's kind of funny. I noticed that they have an
Speaker 3: eight point three percent allocation to SpaceX and then just
Speaker 3: a below one percent allocation to X holding, so they
Speaker 3: seem to be a fan of Elon. It's kind of noteworthy,
Speaker 3: you know. I mean, the Tesla's really been growing the
Speaker 3: last three years or so. They've held it longer than that.
Speaker 3: But the thing that's interesting is they continue to take
Speaker 3: concentrated picks. So if you go back ten years, it's
Speaker 3: a different company that has a huge allocation and so
Speaker 3: they're really just making big bets on companies and you know,
Speaker 3: keeping this really really concentrated portfolio.
Speaker 2: They have some other stocks in here that people probably know,
Speaker 2: like Hyatt MSCI, which is an index company, Veil Resorts,
Speaker 2: Charles Schwab fact Set, which is a Bloomberg competitor, but
Speaker 2: not all big weights. So those are two three percent
Speaker 2: of the portfolio. Like you said, half the fund is
Speaker 2: basically Elon. I mean, they might as well call it
Speaker 2: the Elon Musk fan Club fund.
Speaker 3: This this isn't This fund doesn't have to It's kind
Speaker 3: of a I wouldn't say, go anywhere fund, but it's
Speaker 3: not you know, a large cap. It kind of can
Speaker 3: invest in any companies it wants, basically, So I think
Speaker 3: that's a benefit. It's not really put into one little
Speaker 3: category that it must be one specific benchmark. It kind
Speaker 3: of just invest in what they want and it's worked
Speaker 3: for them so far.
Speaker 1: Interesting to get that SpaceX exposure to you like, that's
Speaker 1: not we wouldn't see that in a ETF easily. I
Speaker 1: don't think, Eric right.
Speaker 2: No, I have to look at this, but I believe it.
Speaker 2: David could correct me. Mutual funds can dabble in private
Speaker 2: equity a little bit. They can't go full on. I
Speaker 2: forget the percentage, but like, there are definitely some Fidelity
Speaker 2: funds that have a little bit of private equity in there,
Speaker 2: like little doses.
Speaker 3: Yeah, no, they their mutual funds can hold private companies.
Speaker 3: Just the interesting thing is every mutual fund will value
Speaker 3: their private companies differently, so they'll place a different value
Speaker 3: than than a different mutual fund will place on the
Speaker 3: same company. So it kind of is hard if you're
Speaker 3: looking at their holding to determine the exact value. So
Speaker 3: you kind of just have to go with what they say.
Speaker 3: But they seem to be a big fan of Elon
Speaker 3: and they're they're going with it right now.
Speaker 1: Okay, so we mentioned Fidelity briefly there. I also want
Speaker 1: to bring that in because you had some interesting research
Speaker 1: about how fidelities active equity managers have performed. How have
Speaker 1: they been doing.
Speaker 2: They've been doing pretty well.
Speaker 3: I do want to mention first though, that actually over
Speaker 3: five years, there were two Fidelity funds that outperform the
Speaker 3: QQQ Fidelity Series Growth Opportunity or Growth Company and Fidelity
Speaker 3: Advisor Growth Opportunities. And so those those two funds were
Speaker 3: able to perform over five years. But if you're looking
Speaker 3: at all fidelities active equity managers, we did a study
Speaker 3: and it looked like about approximately fifty percent have outperformed
Speaker 3: their benchmarks. And that's taken in into account sector funds
Speaker 3: against their primary benchmarks, which are which is the S
Speaker 3: and P five hundred. But then actually when you remove
Speaker 3: the sector funds, their active managers do even better. And
Speaker 3: so they're they're doing pretty well for themselves. And you know,
Speaker 3: it's a big company, and you know, they've got a
Speaker 3: great program where they train analysts from the ground up
Speaker 3: that eventually become their PMS, and so a lot of
Speaker 3: them are doing well. And one thing I did notice
Speaker 3: with a lot of the growth stocks, they had a
Speaker 3: lot of exposure to Navidia and in fact, I think
Speaker 3: they were the third largest holder of Navidio, which is
Speaker 3: I covered in a different note, which is really driven
Speaker 3: a lot of their gains this year.
Speaker 2: Again, latching onto a juggernaut stock seems to be key
Speaker 2: for pms at least in this era, versus finding like
Speaker 2: a value play. Yeah, you're right. They're the third biggest
Speaker 2: holder after Vanguard and black Rock and bigger than State Streets.
Speaker 2: So they definitely overweight. The other thing about Fidelity, it's interesting.
Speaker 2: Obviously they have this famous name for active, but they
Speaker 2: haven't done a ton in the ETF world, and you
Speaker 2: know they're active mutual funds. Some see inflows, some see outflows,
Speaker 2: but where they get most of their flows these days
Speaker 2: is in their index mutual funds, which now have over
Speaker 2: a trillion dollars roll. If Fidelity converted all of its
Speaker 2: index mutual funds into ETFs, they'd be bigger than State
Speaker 2: Street in terms of assets. So they have a lot
Speaker 2: going on. They're just they're a private company. You don't
Speaker 2: hear a ton about them anymore, but I think we're
Speaker 2: gonna hear big things. I think they're gonna try to
Speaker 2: take some of what David found, these managers who are
Speaker 2: bucking the trend. If you have over half being their benchmarks,
Speaker 2: that's way better than the average, because the average about
Speaker 2: a third. They're probably going to try to figure out
Speaker 2: how to move that that brain power and that ip
Speaker 2: into the ETF rapper. I think we're going to see
Speaker 2: that happen over the next ten years from Fidelity and
Speaker 2: many other companies. But Fidelity, with that track record, it
Speaker 2: should help them a lot. I think their price point,
Speaker 2: how they where they put the expense issio will matter.
Speaker 2: But overall, if you can perform that consistently, you're going
Speaker 2: to get looks.
Speaker 1: Okay. So the irony here is obviously you've written a
Speaker 1: book about Jack Bogel and what Jack Bogel did at Vanguard.
Speaker 1: Fidelity not known for indexes or anything touching passive. So
Speaker 1: so what stands out to you, Eric about how Fidelity
Speaker 1: has found some success here.
Speaker 2: I mean, honestly, Bogel relished this, he loved Fidelity used
Speaker 2: to basically, you know, dump on passive back in the day.
Speaker 2: I think I think they're the ones who say, would
Speaker 2: you pay for an average surgeon if you were having
Speaker 2: heart surgery? You know, an indexes like average. And there
Speaker 2: was a lot of pushback on what Bogel was doing
Speaker 2: back in the day, but Fidelity kind of came around
Speaker 2: to their credit. They swallowed their pride and launched a
Speaker 2: series of low cost index funds. And now when Fidelity
Speaker 2: puts out a press release, they say, every single one
Speaker 2: of our index funds is cheaper than the Vanguard equivalent,
Speaker 2: and they are a lot of them are zero to
Speaker 2: one to two basis points but Bogel loved this because
Speaker 2: he wanted to change the whole game, not just how
Speaker 2: Vanguard gets successful. So he would be happy that Fidelity
Speaker 2: is seeing so much success in the low cost index
Speaker 2: funds that they put out. But I think what blows
Speaker 2: me away is that trillion dollars. That is a ton
Speaker 2: of money that no one talks about because it's in
Speaker 2: the mutual fund rapper. Again, if Fidelity was an ETF,
Speaker 2: if all those index mutual funds were ETFs, Fidelity be
Speaker 2: the talk of the town. David, speaking of fees, one
Speaker 2: other note you did that we sort of collaborated on
Speaker 2: to a degree, was you looked at flows and mutual
Speaker 2: funds based on expense ratio buckets, just to see if
Speaker 2: there was a connection between that, because you know what's
Speaker 2: more important now if you're active, your performance or your fee,
Speaker 2: And just tell me what you found when you look
Speaker 2: at that.
Speaker 3: So I separated mutual funds into three feed buckets under
Speaker 3: forty basis points, between forty and eighty basis points, and
Speaker 3: over eighty basis points. And similar to findings that Eric
Speaker 3: and the rest of our team have found on the
Speaker 3: ETF side, if you look at mutual funds under forty
Speaker 3: basis points, they're seeing better flows than the rest of
Speaker 3: you know, than the rest of their counterparts or peers.
Speaker 3: So on the equity side, it's more of less outflows.
Speaker 3: So equity mutual funds are still seeing significant outflows, but
Speaker 3: once you drop down to below forty basis points, the
Speaker 3: outflows is considerably less than the other two buckets. On
Speaker 3: the fixed income side, it was actually seeing a lot
Speaker 3: more inflows. So fixed income mutual fun low with under
Speaker 3: forty basis points are seeing a ton of flows compared
Speaker 3: but once you go over forty or even over eighty,
Speaker 3: it's disastrous on both the equity and the fixed income side.
Speaker 2: And so this completely is intugual with what we've done
Speaker 2: on the ETF side. Research wise, active ETFs are finally
Speaker 2: having their day. It took them ten years, but it
Speaker 2: wasn't until they got cheap and forty basis points appears
Speaker 2: to be some kind of a magic number for advisors
Speaker 2: because ninety five percent of the flows into active ETFs,
Speaker 2: which are massive these days, is into ETFs under forty
Speaker 2: BIPs that are active. It's so only and they only
Speaker 2: make up twenty five percent of the products. So think
Speaker 2: about that that's punching way above its weight. It's very clear.
Speaker 2: My theory on all this, and we've gone I thought
Speaker 2: about this heavily and it's kind of our equals MC
Speaker 2: squared is you have to now beta adjust your fees
Speaker 2: if you're active. So what do I mean by that beta?
Speaker 2: Which is just owning the whole market? And an index
Speaker 2: fund is free. So if you own a lot of beta,
Speaker 2: like I'm talking Apple, Microsoft, if that's the top of
Speaker 2: your portfolio and you're beta heavy, you have to lower
Speaker 2: your fee because an advisor's like, well I can get
Speaker 2: most of that for free, Now why am I going
Speaker 2: to pay you one percent? So as you have a
Speaker 2: fund a manager that's close to the index, if they
Speaker 2: come down and fee and that way they sort of
Speaker 2: beta adjust their fees. I think that in advisors like, well, okay,
Speaker 2: you're just charging me for the active And that's why
Speaker 2: we say you have to be either cheap or shiny
Speaker 2: if you're active. If you want to charge seventy one
Speaker 2: hundred basis points, you've got to be baron funds or arc.
Speaker 2: You got to go hog wild and swing for the
Speaker 2: fences like Babe Ruth and there, because there you can
Speaker 2: actually double or triple the S and P and not
Speaker 2: just beat up by two three percent. But if you're
Speaker 2: one of these managers looking for a little bit of
Speaker 2: excess return beyond the benchmark, I just think that beta
Speaker 2: being free is such a massive innovation that Bogel and
Speaker 2: Vanguard brought along over the last forty years. You have
Speaker 2: to adjust to that, and I think the mutual funds
Speaker 2: show it, and the ETFs really show it.
Speaker 1: Okay, Dave, you got another note where you looked at
Speaker 1: fact a factor, particularly quality and the stock picking in
Speaker 1: small caps. Would you would you learn there?
Speaker 3: Well, it's actually interesting because a lot of the funds
Speaker 3: I noticed that did upperform the QQQ. They took on
Speaker 3: a lot more risk. But this is actually on the
Speaker 3: opposite side. This is a as you know, most small
Speaker 3: caps are underperforming large caps for a big part of
Speaker 3: the year, and but this fund, that's the Ker Small
Speaker 3: Cap Fund, they have a quality factor type approach where
Speaker 3: they're looking for reality quality type companies and so they've
Speaker 3: been able to do that keep their risks down and outperform.
Speaker 3: But one thing I do want to mention about this fund,
Speaker 3: like Barons, it's a concentrated fund. It just instead of
Speaker 3: the high flyers. This is much more of a you know,
Speaker 3: better for companies that would be considered part of the
Speaker 3: quality factor, great balance sheet, it's just really good companies.
Speaker 3: But they're basically making massive bets on a few companies.
Speaker 1: I'm sensing a theme here like concentration and quality.
Speaker 3: Yeah, it's you know, definitely concentration does work, but I
Speaker 3: actually wrote another note that it doesn't always work. It
Speaker 3: really depends on the manager. If a manager has skill
Speaker 3: and they know what they're doing, and they really pick
Speaker 3: great stocks, concentration can do great things. But if you're
Speaker 3: just concentrating a portfolio just for the sake of it,
Speaker 3: it brings on a lot of risk and a lot
Speaker 3: of loss, and a lot of mutual funds of it
Speaker 3: that are just concentrated and really don't have the best
Speaker 3: teams are really faltering.
Speaker 2: Yeah, Joe, when I said, Earl, you got to be
Speaker 2: cheap or shiny. If you're cheap, it's almost less performance sensitive.
Speaker 2: Like you could be a low cost stock picker who
Speaker 2: charges like DFA or Vantis or JP Morgan who charges
Speaker 2: like twenty five basis points to invest in small cat
Speaker 2: value and just the fee alone, you'll get some interest,
Speaker 2: but if your high fee and high concentration it's not enough,
Speaker 2: you then have to perform. So I think ARC is
Speaker 2: a great example. Some thematic ETFs are good examples of that,
Speaker 2: and this kar is a good example. Also. I think
Speaker 2: that in the small cap space that's an interesting spot
Speaker 2: for active because if you look at the number of
Speaker 2: analysts that cover like certain large cap stocks like Amazon,
Speaker 2: it's in like the fifties, right, And then you get
Speaker 2: down to small caps, some stocks aren't covered at all
Speaker 2: or barely, so there's probably more opportunity for someone to
Speaker 2: find something novel. Right. There's less information on all these
Speaker 2: companies that everybody knows, so I'm not totally surprised that
Speaker 2: this manager found a niche down here. But again, this
Speaker 2: is why David was hired, was to sort of dig
Speaker 2: into all these managers. Again, there's almost double as many
Speaker 2: mutual funds as ETFs, you know, and to find some
Speaker 2: of the diamonds in the rough. And I think this
Speaker 2: is a good example speaking of diamonds in the rough
Speaker 2: and finding exotic species. This last one is a good
Speaker 2: just a great one to end on. When David showed
Speaker 2: me this fund, I never heard of it. I was like, WTF,
Speaker 2: I can't say the whole thing, so let's give the acronym.
Speaker 2: And I never seen anything like this. I'll just introduce
Speaker 2: it as that and say, David, talk to me about.
Speaker 3: Fairholme Film is one of the more interesting funds I've
Speaker 3: ever seen in all the years I've covered mutual funds.
Speaker 3: This fund has a or according to our data, a
Speaker 3: ninety one percent allocation to a real estate company called
Speaker 3: Saint Joe. And so this is just a this is
Speaker 3: extreme concentration. It makes Baron Funds look like a you know,
Speaker 3: portfolio of five hundred stocks. I mean, it's just and
Speaker 3: you know, I originally thought this made it not qualify
Speaker 3: as a regulated investment company just due to tax issues,
Speaker 3: and you know whether they could claim that, but apparently
Speaker 3: the there's a threshold of about twenty five percent that
Speaker 3: you can't go above. But apparently that's during purchases. So
Speaker 3: if your purchase is under the twenty five percent and
Speaker 3: then you let that stock grow continuously, it can go
Speaker 3: up to ninety percent or so, it can go up
Speaker 3: to one hundred percent if you wanted to. It's just
Speaker 3: not very traditional. I'd say it's definitely out of the ordinary.
Speaker 3: But I mean they posted a return of thirty one
Speaker 3: point three percent last month, which is pretty ridiculous, pretty impressive.
Speaker 3: But with a fun like this, you're going to have
Speaker 3: extreme risk as well, and you know they're likely not
Speaker 3: going to perform like that every month. It's going to
Speaker 3: go back and forth. And I think if you own this,
Speaker 3: you really need to not pay attention to it. You
Speaker 3: need to kind of look at it over the long term.
Speaker 3: It kind of just let it sit there, or else
Speaker 3: you're going to have a heart attack. Wait, what is
Speaker 3: that holding though it's well, the main stock right now
Speaker 3: is a real estate company called Saint Joe that's really benefiting,
Speaker 3: you know, due to real estate prices in Florida.
Speaker 2: Hold on, Joel, this is very important. It's not just Florida.
Speaker 2: It's the Panhandle, where as you know, my dad lives
Speaker 2: and I visit all the time and tell you I'm
Speaker 2: going to live someday because it's so beautiful, emerald green water,
Speaker 2: white sands that are so fine to the foot, it's clean,
Speaker 2: there's no taxes, and so this manager, it's almost as
Speaker 2: if he used this stock to buy a bunch of
Speaker 2: land in a place in America. He thinks he's going
Speaker 2: to go up because even the manager's like, I want
Speaker 2: to move there and drive a golf cart around every day.
Speaker 2: And I'm like, oh my god, this guy has the
Speaker 2: same life vision as me, so I can relate to.
Speaker 2: This is just this amazing, long, long game trade to
Speaker 2: own land in Florida through a mutual fund that owns
Speaker 2: one stock. It's just so bizarre.
Speaker 1: We've gone almost five years or so without Eric talking
Speaker 1: his book, and then he finally broke down and talked
Speaker 1: his book.
Speaker 2: So Joel. While the Fair Home Fund, even with everything
Speaker 2: we just said, while it did not beat the QQQ,
Speaker 2: obviously only Baron did that, it was up almost as
Speaker 2: much as the cues over the past five years, and
Speaker 2: obviously beat the S and P by a lot. But
Speaker 2: what's interesting is if you look at this fund in
Speaker 2: its peer group, it's beat nine to nine percent of
Speaker 2: its peers pretty much five to three one year and
Speaker 2: year to date. Again, it's very rare to see a fund,
Speaker 2: you know, register in the high nineties like this, so Joel,
Speaker 2: I think the lesson here in a lot of these
Speaker 2: funds today is if you want to be at the
Speaker 2: top of the heap and be able to charge a
Speaker 2: decent fee. You know, as Prince says, let's go crazy,
Speaker 2: you got to get wild.
Speaker 1: Yeah, sure, I'll take that. David. I got to ask,
Speaker 1: if we've got as much exposure to Florida Panhandle, what
Speaker 1: else does he have in the portfolio?
Speaker 3: Only a few other stocks. Enterprise Products Partners, Commercial Metal
Speaker 3: Company is actually a Fidelity Treasury fund. It's also part
Speaker 3: of the portfolio. But these are all very He's also
Speaker 3: got Treasury bills in there as well, but these are
Speaker 3: all tiny allocations. It's just really long.
Speaker 1: Yeah, long Panhandle. All right, Dave, we got one more
Speaker 1: question for you. It's a it's a it's a great
Speaker 1: finale question. We ask many a guest on Trillions, which is,
Speaker 1: what is your favorite et F ticker? Favorite et F Yeah, ticker.
Speaker 3: Oh that's a good question.
Speaker 1: I know, I know. This is like I'm bringing I'm
Speaker 1: bringing you the heater.
Speaker 3: I would just say vt I because I want to
Speaker 3: grab the whole market.
Speaker 1: Yeah, all right, bullets, Yeah a good, all good, All right, Dave,
Speaker 1: thanks for joining us on Trillions. Well, thanks for having me,
Speaker 1: Thanks for listening to Trillions. Until next time, you can
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Speaker 1: He's at Eric Baltunas. Trillions is produced by Magnus Hendrickson.
Speaker 1: Sage Bauman is the head of Bloomberg podcast Bye.