The Fundamentals First Fund - An ETF with the symbol KNOW
Your money carefully managed
You worked hard and spent much time earning the money you are considering allowing us to invest on your behalf. If you are not willing to work hard and spend time learning how we will invest this money, if you are the type who wants the history of the planet in ninety seconds, then this might be the time to reconsider your attitude, for this is hard earned money.
Abstract
The Fundamentals First Fund, an ETF, is part owner of approximately 100 publicly traded worthy companies, and it owns publicly traded debt. These worldwide companies are vital, important, useful, or just plain nice to have around; and most have been pursuing their business course for decades. We individually select these companies with care and in a manner as to spread our risk so that no single company event can cause more than a bruise. If you are interested in who we are, how we do it, all the official details, and how you might participate, read on
Who will be managing your money
- A respected member of the Boston investment community for going on forty years, Registered as an Investment Advisory firm with the Securities and Exchange Commission for around fifty years.
- How has the ETF done? You will see liberally scattered throughout our web site the word Prospectus in blue. If you click on this word Prospectus, you will be taken directly to our prospectus. We are proud of the document which we encourage you to read for it tells a lot about us. The Prospectus has been approved by the Securities and Exchange Commission. If you peruse it with some care, you will note that on pages 16 and 17 we have a table of some past performance. It is not the past performance of the Fundamental First Fund for the fund did not exist during these few decades.
- The twenty years of past performance to which it refers is to that of the entire Office of Accounts that were managed by Mason Capital Partners who are the managers of Fundamentals First Fund. That’s a big mouthful but it is supported by the fact that the numbers presented in this table on pages 16 and 17 as those representing our Office of Accounts were calculated in a manner that is GIPS compliant. Who is GIPS? GIPS is an acronym for a worldwide organization called Global Investment Performance Standards. “Firms that claim compliance with the GIPS standards must adhere to rules governing not only return calculations but also the way in which returns are displayed in a GIPS Report.” This organization was formed by the investment community because prior to these rules, people were using any which method to brag about performance.
- The starting portfolio of the Fundamentals First Fund is a direct extension of the Office of Accounts portfolio “today”, the portfolio that determined the aforementioned GIPS compliant table. You may access and examine this portfolio by clicking on the word Portfolio which is in blue where ever mentioned on our web site. From time to time should we wish to represent this table in chart form, we will use these GIPS complaint numbers.
- Note: for an Overview of the Global Investment Performance Standard their web site is: https://www.cfainstitute.org /en/ethics/codes/gips-standards/firms
How we achieve this record
- We do all our own research in house. We do not use or even read any brokerage reports. We specialize in making all our own mistakes.
- We only use official company filings and press releases. By this we mean official filings with the Securities and Exchange Commission as well as official Press Releases.
- We always meet face to face with management as part of our research. We meet face to face with 200 to over 300 managements each year and we carefully write up our notes and impressions.
- We keep up to date via released data and more management meetings. By this we mean as many as we think necessary.
- We prune, eliminate or add to positions for reason. By this we mean we do not trade just to trade. Our turnover is very low.
- We have made most every mistake already. By this we mean: we hope so.
- They are vital, or important, or useful, or helpful.
- We have some good idea of what they will look like in five years.
- But we do not feel obligated to own a piece of every industry. For example, we have a portion of our assets invested in infrastructure. Most of these companies are pipelines that carry crude oil, finished product, and chemicals to those who need it, which is essentially everyone. These pipelines also carry natural gas which is needed by everyone and most every industry. We own tens of thousands of miles of pipelines that the United States cannot get by without. In the most part, all the contracts to carry product are very long term with superb credits. Furthermore, the United States government via the agency known as FERC specifically allows most of them to earn 10% on their net investment, known as equity. That is, if they can, and most of our companies have been able to do so. The companies pay a significant dividend and over half increase the dividend each year. We own other companies that while not technically public utilities are close enough. For example, a railroad, companies that own and operate all kinds of ships moving all kinds of everything everywhere; and companies that store and distribute essential products in what is known as tank farms. All these infrastructure companies are providing essential services, get paid fairly for their service, run their businesses well, are good citizens, and distribute to us, their owners, a part of the well-deserved profit. These infrastructure company all of which pay a nice dividend represent, as stated earlier, a significant portion of our equity portfolio. We, in turn, own these companies on your behalf.
- In the same high dividend vein, we have a portion in real estate. Most of this is modestly priced apartments that are not in big cities, well-located free-standing buildings mostly leased to very good retail credits for long periods, or specialty real estate such as outlet centers or large developments that constitute nearly a downtown all by themselves, and some small amount of foreign real estate, Canada and New Zealand. During normal times at least half of these companies increase their dividend each year. Industrials represents around 30% of the real estate owned by our companies. This may seem like a lot, but our industrial tenants are among those who keep the world going, and they can all pay their rent.
- The large number of names can more easily be seen if you look at the entire Portfolio which is part of this site. (Click Portfolio) The main take-away is that we own the best of the best with a bias toward companies that the world cannot readily do without. An example would be a few companies that together process over one-third of the payrolls in the United States. Can we really just dump them? Many of these companies over time have either gravitated away, or perhaps outgrown their pure nuts and bolts background and are now heavily oriented in the technical end of directing the various processes.
- Approximately 7.5% of the Portfolio is in oil and gas with a good part of this companies those that simply develop and exploit on a low-risk basis existing oil pools. These are all fine companies that have been noted for their respect for the environment.
- If a company faulters, we take a bruise, we are not taken down to our knees.
- Every day over a half a million employees of our companies get up in the morning and work on our behalf.
- And the world cannot get along without many if not most of our companies.
- But we do not feel obligated to own a piece of every industry.
- Those companies that we generally refer to as high dividend companies contribute a bit over 40% of our ongoing income, the diversified stock sector contributes approximately one-third of our income and most of the balance from fixed income which is bonds and preferred stock. Of the 111 companies in our Office of Accounts GIPS compliant Portfolio, which the Fundamentals first Fund will copy 80% pay a dividend and of those who do pay a dividend two-thirds have raised their dividend each year by what has been 11%. Of those companies we classify as High Dividend companies, 54% raised their dividend each year an average of 8%. Of those companies we classify as Diversified companies 76% are dividend paying, of which 74% raised their dividend an average of 13%. Please keep in mind that on the day of the creation of the portfolio, there will not be any dividends at that time for they will have to depend on the receipt of such dividends, if any, as they are declared by the respective companies and they are received by the Fund.
- Most of the companies we own pay a dividend and we expect that dividend to increase along with their earnings. Even during hard times a significant portion of the dividend paying companies in our portfolio actually increased their dividends. We believe this confirms our decision making process. We understand that sometimes exogenous events may interfere with a company’s progress, but we expect our companies to have the ability to come out of it whole and to their advantage.
- Our policy regarding lending money is simple. When one buys a bond or buys a preferred stock, one is lending money. We expect our money back at maturity and interest payments on time. We do not trade bonds. We hold until maturity. That way we know when we buy a bond exactly what our yield will be for the entire holding period. Our longest maturity would be ten years so the average maturity would be five years. This would mean that our average yield will be a five year moving average for risks we deem suitable. Presently our average adjusted maturity is around 2.5 years. We generally do all our own bond research and carefully review the portfolio of a bond ETF should we use it. We would like to repeat: we do all our own bond research just as we do all our own equity research. It does not matter what the bond is rated by any agency. The only rating that counts is ours. And, by the way, we do not use any Street research for equities. We do all our own research and specialize in making all our own mistakes, blaming no one but ourselves and learning by our errors.
- Our future depends on our Companies prospering. As long as they prosper and we think the valuations fair, we do not trade for the sake of trading. On average, we expect to add or get rid of but a handful of companies each year, and then for good reason. There is no guarantee, however, that we will succeed in adding good companies that will prosper and get rid of companies whose future is no longer favorable.
- Some people consider managing money a contest. We do not. We recognize and our clients should recognize that as investors in the Fundamentals First Fund their future income, security, and valuation will depend on the ability of the companies we own to grow, remain relevant, and distribute a fair share of their earnings to us. If you want your Portfolio manager to make a living for himself and for you by making hundreds of buy and sell decisions each year and seeking to have them balance out profitably decade after decade, we are not for you.
- Not just the environment, but if a company is fined billions for cheating whomever they can cheat, that pretty much eliminates them, no matter how many trees they plant. Regarding our Portfolio’s respect for the environment and ESG ratings: ESG is the acronym for Environmental, Social, and Governance investing standards for a company’s behavior used by socially conscientious investors to screen potential investments. The applicable ESG website is https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp.
- We believe there is a lot more to being a good citizen than planting a few trees. If a company, as is the case with the large banks for example, is environmentally as pure as statistics can make them (after all how much harm can they do with just pencils and paper), but they have been fined many billions each for cheating whomever they could cheat, we think the latter should be taken into consideration. Many, many of our companies have been singled out and noted as, for example, among the most ethical companies in the world, the best place to work in the world, pay the greatest respect to their employees, and other such awards which we consider important
All Matters of a Legal Nature. (Including Daily Market Feeds)
- All that we are required to make available.
- We especially draw your attention to our Prospectus
How do I become a shareholder.
- Go to your brokerage account and buy via our symbol KNOW.
- You’ve made a good decision.
- Call us if you need some more reassurance (617 228 5190).
If you become a shareholder
- We will love you and take care of you.
- You can call us any time (617 228 5190), get a real person right away, and talk with us about most anything.
- Our goal is that you retire on the dividends alone and never need the principal.
- Email Address: Office@mason-capital.com
- Office Address: Fundamentals First Fund, 50 Federal Street, 9th Floor, Boston, MA 02110
- Click here if you would like to be on our financial mailing list. We will only send you current financial information of interest, we will not harass you, and we will not give your email address away. Contact Form
Daily Required Updates
Inception date January 26, 2024
Total Gross Expense Ratio: 1.10%
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 617-228-5190 or visit our website at www.fundamentalsfirstfund.com
Read the prospectus or summary prospectus carefully before investing. Investments involve risk. Principal loss is possible.
Market Risk The Fund is subject to market risk since securities are priced by public markets. Performance of the Fund is tied to the performance of its underlying investments. Securities held within the Fund may decline in value due to general sentiment, due to poor performance of the underlying companies, or for an unknown number of other reasons.
Small and Medium Capitalization Stock Risk The earnings and prospects of small and medium sized companies are more volatile than larger companies and may experience higher failure rates than larger companies.
Fixed-Income Risk The Fund will be subject to the risks of investing in fixed income securities. The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to perceptions about the creditworthiness of individual issuers.
Foreign Securities Risk The Fund is expected to hold foreign securities which could expand the breadth of macro risks facing the Fund. Foreign issuers are subject to different disclosure requirements than US companies, which could result in less timely disclosures leading to errant analysis.
Emerging Market Securities Risk Emerging market countries may have relatively unstable governments, weaker economies, and less-developed legal systems with fewer security holder rights. Emerging market economies may be based on only a few industries and security issuers may be more susceptible to economic weakness and more likely to default. Emerging market securities also tend to be less liquid.
Limited History of Operations Risk While the Advisor has managed other accounts with the same strategy as the strategy it will implement for the Fund, the Advisor has never previously managed a registered fund. The Fund is a new ETF and has a limited history of operations for investors to evaluate.
The Fundamentals First ETF is distributed by Quasar Distributors LLC. Mason Capital Partners is the investment advisor to the Fund and is not affiliated with Quasar Distributors.
