July 21, 2015
by Larry Swedroe
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Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More
Mario Gabelli is one of the highest paid executives in America, having earned $88.5 million in 2014 – more than the leaders of all other publicly traded asset-management firms. But have the investors in his mutual funds been as richly compensated when compared to what they would have earned in comparable, passively managed funds?
With this installment of my series on the ability of actively managed fund families to add value through the generation of alpha, I will answer that question. What follows is an in-depth examination of the Gabelli family of funds.
This article was triggered by a recently published article in The New York Times that questioned the fund family’s governance. There’ll be more on that article later.
But first, a little background. The Gabelli family of funds was founded in 1976 by Mario Gabelli. The firm’s website reports that its total assets under management are now more than $49 billion, of which approximately $18 billion is in mutual funds (according to Morningstar as of May 31). It goes on to state: “The driving force of our success has been our intense research-driven culture. The keys to our success are the same today as they were in 1976: a focus on fundamental bottom-up research, a consistent investment process and a commitment to generating superior risk-adjusted returns.”
As is my practice, I will begin my analysis by evaluating the performance of Gabelli’s actively managed equity funds relative to similar offerings from two prominent providers of passively managed funds, Dimensional Fund Advisors (DFA) and Vanguard. (Full disclosure: My firm, Buckingham, recommends DFA funds in constructing client portfolios.)
In an effort to both keep the list to a manageable number of funds and to make sure I examine long-term results through full economic cycles, my analysis will cover the 15-year period from April 2000 through March 2015. Per usual, I’ll use the lowest-cost shares when more than one class of fund is available for the full period. In cases where Gabelli has more than one fund in the asset class, I’ll use the average return of those funds for the purposes of our comparison.
The table below shows the performance of 11 equity mutual funds managed by Gabelli across five asset classes. They include 10 domestic funds and one international fund.
April 2000-March 2015
|Fund||Symbol||Annualized Return (%)||Expense Ratio (%)|
|U.S. Large-Cap Blend|
|Gabelli Value 25||GABVX||6.5||1.38|
|Gabelli Equity Income||GABEX||8.1||1.37|
|TETON Westwood Equity||WESWX||5.8||1.59|
|DFA U.S. Large Company||DFUSX||4.1||0.08|
|Vanguard Institutional Index||VIIIX||4.2||0.02|
|U.S. Large-Cap Growth|
|Vanguard Growth Index||VIGIX||3.2||0.08|
|U.S. Large-Cap Value|
|TETON Westwood Income||WESRX||9.9||2.00|
|Gabelli Dividend Growth||GABBX||4.6||1.89|
|DFA U.S. Large Cap Value III||DFUVX||8.8||0.13|
|Vanguard Value Index||VIVIX||5.7||0.08|
|U.S. Small-Cap Blend|
|Gabelli Small Cap Growth||GABSX||10.7||1.38|
|TETON Westwood Mighty Mites||WEMMX||10.0||1.43|
|TETON Westwood SmallCap Equity||WESCX||2.4||1.50|
|DFA U.S. Small Cap I||DFSTX||9.0||0.37|
|Vanguard Small Cap Index||VSCIX||8.4||0.08|
|International Large-Cap Blend|
|GAMCO International Growth||GIGRX||2.0||2.20|
|DFA Large Cap International||DFALX||3.0||0.28|
|Vanguard Developed Markets Index||VTMGX||3.0||0.09|
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