Originally Posted by gryffindor
The managers have said that the major motivation is that the average age of their investors has increased significantly (not surprisingly) -- and as a result the net cash flow is towards redemptions not purchases. This creates a big problem for the fund.
Clearly not a fund to buy outside of a Roth or tax-deferred account. But a fund closed for 27 years is still pretty intriguing.
Would love for the average expense to be lower.
Riiiight, the redemptions are due to the age
of the shareholders, not the fund's performance. I should've realized that. Heaven forbid Sequoia should have to ditch their losers or do some other sort of tax-managed selling.
It bugs me to hear a fund's cashflow problems being blamed on its shareholders. One would hope that the redemptions are due to just that and not to recent declining performance or management change or style drift or high expenses or any of the usual reasons for shareholder flight.
IIRC Ruane is the guy Buffett steered his investors to when he broke up his first partnership. I would think that if Ruane's staff had the best interests of their shareholders at heart then they'd liquidate the fund or allow existing shareholders to sell at NAV to other wannabe shareholders-- or at least break the shares into their "creation unit" components like an ETF will do for a fee. Existing shareholders could hold onto the result in a brokerage account and sell for a minimal fee whenever they wanted/needed to. But then I guess I'm describing a share of Berkshire Hathaway.
If Sequoia wanted to explore new investments then they could just set up a new fund.
But there's a lot of equity in Sequoia's record/reputation/brand, and clearly someone thinks it's worth cashing in on. I'm just not sure how this benefits the existing shareholders, although "average age" makes a convenient fig leaf.