The ER is high at 1.37. I know Nords has some Global value he is divesting I was wondering how this ranks to the other High Dic funds out there.
A few things bother me about this fund in particular and Tweedy in general.
With a gazillion mutual funds out there, all of whom are running with different expenses and different business models, somehow Tweedy's third fund (their first since 1993) ended up at exactly the same ER as Global Value. What an amazing concidence that it costs exactly the same amount of money to find high-quality dividend stocks as it does to find cheap value stocks.
Compare that statistically surprising result with Powershares International Dividend (PID) ETF's expense ratio of 0.6%. Wisdomtree's International Small-cap Dividend (DLS) ETF's ER is 0.58%, and that's a world of small-caps where presumably the spreads are larger and the volumes are smaller. Yet these guys are doing it for less than half of Tweedy's expenses.
Global Value has been closed for over two years because they can't find stocks selling at a big discount to their intrinsic value. Perhaps dozens of yummy candidate stocks have been evaluated and regrettably discarded because they don't meet Global Value's criteria. Yet some of these discarded stocks, presumably paying dividends, are suddenly deemed worthy of a dividend fund.
Tweedy is able to add their Dividend fund while keeping exactly the same number of researchers & managers as they currently have slaving away looking for value stocks in their Global Value fund. Someone's not going to be spending all their billable hours on the new fund... or the current one.
Let's hypothecate that, with the same size staff and double the number of stocks they're holding now, how much would Tweedy's expenses go up? Would they double? Or would they go up by maybe 20-25% to balance the additional commissions against the savings from economies of scale? So why does adding another fund raise Tweedy's expenses by exactly 100.000%?
A quiet little secret is that Tweedy's customer service sucks when compared to companies like Fidelity. Global Value has been closed since early 2005, yet they kept the same voicemail on their phone line for nearly two years (it's finally been changed). Every IRA account was charged $10 every year, no matter how many separate IRA accounts one held or what their balance was. When their "customer service" VP personally promised to refund the charge for two of our IRA accounts it took four months and another half-dozen phone calls for him to get around to it. Their website doesn't handle redemptions, yet when I called Tweedy on the phone I'd get endless attitude about redemptions and about transferring the cash to our Fidelity brokerage account.
I finally transferred all our Tweedy shares in kind to our Fidelity account, where I can hold them for no charge and sell them for no fee. We sold all our IRA holdings in Tweedy for PID. We still have about 8% of our ER portfolio in Global Value (down from 30% in early 2006) and it's lagged PID's performance by several percent over the last 14 months. We'll keep killing off Tweedy over the next five years in favor of ETFs.
I could be jaundiced by the fact that Tweedy's our only mutual fund, or that ETFs are so much cheaper than mutual funds, or that we don't work with any truly sucky fund companies. Tweedy might be a real gem alongside some of the other turkeys out there, but we're feeling much better off with Fidelity & index ETFs.
Here's an idea. IIRC Tweedy reports their fund holdings every 90 days and their turnover is usually under 15%-- they hold their average stock for over six years. It might be possible to track their top 25 stocks and just buy the ADRs, which I bet is a lot less expensive than 1.37%...
