Please note that we have moved our blog. It now is on our website. All future posts will appear at http://www.harvestfinancialpartners.com/blog.
Thanks
Jim and John
Wednesday, October 9, 2013
Thursday, June 20, 2013
Oppenheimer Developing Markets Fund
On May 29, we spoke with a portfolio specialist at
Oppenheimer Funds about their Developing Markets Fund (ODMAX).
Oppenheimer as a firm, and the management team of the
Developing Markets Fund, are research driven and fundamentally focused. Instead
of starting with a broad based macro view about countries and sectors currently
that seem most attractive and then looking for investments in those areas, the
fund’s weightings are the result of their individual stock analysis. The managers seek companies with significant
competitive advantages and the ability to dictate their own strategies. And
they typically avoid capital intensive industries like energy, companies that
are heavily reliant on government, such as Chinese banks and most companies in Russian
(which represents only 5% of the portfolio).
Geographically, Asia comprises the bulk of the portfolio at
around 45%, with China carrying increasing weight. China is going through many
changes, and the country is shifting from an exporter to a more consumer driven
economy, which greatly impacts neighboring countries. The fund believes that as
China focuses on building consumer base and investing in infrastructure, more
attractive companies will arise.
Within Asia, the fund believes that Taiwan and Korea will
suffer from Japan’s quantitative easing and yen weakening policies, therefore,
the fund maintains only a 4-5% weight in those countries. This is well below
the index, which has Korea at a 25% weight.
The fund can invest up to 20% outside of the Emerging
Markets, and currently has 15% in developed Europe. The focus is primarily on
companies that are selling heavily into the emerging markets, such as Prada,
Ferragamo, Richemont, Burrberry, and SAB Miller. For example, Prada, a company
which the fund bought two years ago, earns 40% of its revenue from emerging
markets, mostly from China and its neighboring countries. The fund expects more
growth from luxury consumer brands in these regions as the middle and upper
classes continue their rapid growth.
Latin America accounts for 20% of the portfolio, most in
Brazil, but the fund finds Latin America and Brazil have poor macro outlooks
and stretched valuations. However, true
to their research-driven approach, they found opportunities in Embraer and
Petrobras despite their dim macro view.
The Middle East and Africa represent 4.5% of the portfolio,
with 1% in so-called frontier markets. Management likes the frontier space, in
part due to lower company valuations, but has limited the fund’s exposure due
to liquidity concerns, heavy state ownership and lack of investor protections.
Finally, the fund maintains 5% in cash (it has ranged from
3-6%). The cash is less of a valuation call, but more reflective of the need
for liquidity in case of fund redemptions.
Emerging markets have been underperforming developing
markets – down 1% vs. up 10% in the past year, and management would not be
surprised to see that continue in the near term. Going forward, the fund expects
China to do well but may see volatility due to the nation’s reforms. The fund
thinks India has the potential to become the fastest growing large market in
the region, and will look to focus more of the portfolio in the region.
We have used this fund for a couple of years. We remain very
comfortable with management’s investment approach and we like that they are
more focused on picking stocks than managing to an index. Of course, this
approach can lead to period of relative underperformance. We were also pleased
that Oppenheimer decided to close the fund to new investors. This is a sign
that they are more focused on providing attractive returns for existing
shareholders than trying to make as much money for the fund company.
Assistance on this post was provided by Ethan Xu
(Harvest Financial Partners owns this fund in client portfolios. The
principals of Harvest Financial Partners own this fund in their personal
portfolios. Positions may change at any time)
Tuesday, May 21, 2013
The Lord Abbett Short Duration Bond Fund
On May 7, we spoke with Don Annino, a portfolio specialist at Lord Abbett about the Short Duration Income Fund. The fund attempts to maximize return by investing across all bond market sectors including investment grade and high yield corporates, mortgage, government, and asset backed securities while keeping the fund’s duration (a measure of interest rate sensitivity) within a 1-3 year range. Prior to 2007, the fund could only invest in government backed securities. A mandate change in 2007 gave the portfolio managers the flexibility to invest in these other areas of the bond market. The two lead portfolio managers on the fund, Robert Lee and Andrew O’Brien, have been working together for twelve years.
We have started using this fund relatively recently in some
client portfolios. After our
conversation, we remain very comfortable with managements approach. The fund has
been very successful and has seen a huge inflow of assets recently. Still, the
management team believes they have tremendous capacity as they operate in a
very large and liquid part of the bond market.
Assistance on this post was provided by Ethan Xu
(Harvest Financial Partners owns this fund in client portfolios. The principals of Harvest Financial Partners own this fund in their personal portfolios. Positions may change at any time)
Thursday, April 4, 2013
Getting back in the market
Click the link below for some comments we made on getting back in the market, if you have missed the recent move. Our major takeaway: Take it slowly. Do not rush!
Get off the sidelines
Get off the sidelines
Thursday, November 29, 2012
Interview on the Entrepreneur Podcast Network
We recently were interviewed on the Entrepreneur Podcast Network. We provided some background on our firm and some financial advice for those looking to start a business.
Monday, September 17, 2012
Our Recent Interview With the Wall Street Transcript
HFP WST Interview 2012 -
(Disclosure: As of this date the authors and clients of Harvest Financial Partners own Cisco Systems, Expeditors International and Norfolk Southern. Positions may change at any time. These are NOT recommendations. This blog is for informational purposes only)
Thursday, July 26, 2012
Checking Your Social Security Benefit Estimate Online
The Social Security Administration is now making your
estimated benefits statements available online.
To save money they stopped mailing statements last year, though they
resumed mailing them this year if you are 60 or older. They will also mail a paper statement in the year
you turn 25 with a notice to login online.
Here is a link to the press
release describing the change.
Here is the link to the site to register; you will need to answer a few questions to authenticate your identity. It took me about 5 minutes to complete the registration process and it reminded me how much of one’s life is public knowledge.
We suggest you periodically go to the site to review your
earnings history and make sure it is at least roughly correct. From a planning perspective, it is a very
good idea to know your estimated benefit amount. It will help you and your advisor in making
investment or retirement planning decisions.
But it is a very rough estimate as the Social Security Administration points
out.
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