Shareholder Letter Spring 2016

Why I Invest in the Upgrader Funds

Dear Fellow Shareholders,

In March, I attended the Lipper Fund Awards in New York, where our flagship Upgrader Fund (FUNDX) received the 2016 Lipper Fund Award for best-in-class performance for the mixed-asset target allocation aggressive growth funds category among 39 funds-of-funds for the three years ending November 30, 2015.

At the awards dinner, I heard a comment that floored me: a colleague said that less than half of fund managers invest in their own funds. According to Morningstar1, 47% of U.S. stock fund managers don’t invest a single dollar in the funds they manage, and 61% of foreign stock fund managers don’t eat their own cooking, as the saying goes.

Morningstar2 also reported that funds whose managers invest substantially in their own funds tended to perform better. Funds in which managers invested nothing had the lowest success rate, and those in which a manager had more than $1 million invested had the highest success rate. (The study used manager investment levels from 2009 and was based on the success rate of all funds in the Morningstar universe. According to the study, the success rate is the rate at which funds outperformed their category peers over the 5 year period.)

Now this makes sense. If you truly believe in your investing strategy, then you put your own money on the table, too. That’s what we do here at FundX. All of the Funds’ managers have significant investments in the Funds we manage. I personally have the great majority of my portfolio invested in the Upgrader Funds. If I don’t use the Upgrader funds for my money, how can I ask you to?

We invest in our own Funds because we strongly believe in the Upgrading investment approach. Our interests are aligned with yours. We are not compensated by any of the underlying funds we invest in; as a fee-only advisor, we avoid that conflict of interest. We are compensated only through asset management fees from our clients and shareholders–that’s who we’re working for.

If you have questions or need help thinking about how you might use the Funds to achieve your goals, give us a ring at 1-800-763-8639, and ask to speak with me or one of the Fund managers.

Janet Brown
President, FundX Investment Group

1 “Do Managers Eat Their Own Cooking?” Morningstar FundInvestor, 2008
2 “Why You Should Invest With Managers Who Eat Their Own Cooking”, Morningstar, March, 31, 2015


Past performance does not guarantee future results. A Lipper Fund Award is awarded to one fund in each Lipper classification for achieving the strongest trend of consistent risk-adjusted performance against its classification peers over a three, five or ten-year period. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Lipper Analytical Services, Inc. is an independent mutual fund research and rating service. © 2016, All Rights Reserved.

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