Our Ports vs. Concentrated Mutual Funds
http://www.brickfinancial.com/thethirdpig/archive/2005/05/our_ports_vs_concentrated_mutu.html
Posted by Ben Taylor on May 13, 2005 01:40 PM
From Brick Financial's April 2005 Client Letter:
...Although we just told you that the short term doesn’t matter much, it is interesting to see how other highly concentrated (less than 40 positions) value-oriented portfolios are performing. These types are portfolios are extremely rare in the mutual fund world (they are little more popular among hedge funds). The list below represents nearly all the mutual funds that fit that description. All of these funds and their managers have been able to beat the stock market over any period greater than 5 years. But let’s take look at the one year returns of these funds compared to our portfolios:
Name | Symbol | Capitalization Focus | Number of Holdings | 1 year return as of 4/30/2005 |
Relative Value | n/a | Mid-Cap | 35 | +14.84% |
iShares Russell Midcap Index | IWR | Mid-Cap | Index ETF | +14.04% |
Oakmark Select | OAKLX | Mid-Cap | 27 | +7.03% |
Mairs & Power Growth | MPGFX | Mid-Cap | 41 | +6.83% |
Ariel Appreciation | CAAPX | Mid-Cap | 38 | +6.55% |
Legg Mason Special Interest | LMASX | Mid-Cap | 38 | +3.44% |
iShares S&P 500 Index | IVV | Large Cap | Index ETF | +6.34% |
Clipper | CFIMX | Large Cap | 27 | +5.19% |
Legg Mason Value Trust | LMVTX | Large Cap | 39 | +5.10% |
Longleaf Partners | LLPFX | Large Cap | 29 | +2.05% |
Legg Mason Growth Trust | LMGTX | Large Cap | 27 | -2.74% |
Choice | n/a | Large Cap | 17 | -3.25% |
Sequoia | SEQUX | Large-Cap | 23 | -5.09% |
White Oak Growth | WOGSX | Large Cap | 22 | -12.93% |
source: Foliofn
Take note of a couple of things. First, the range in returns from port to port is very wide (from our port Relative Value at 14.84% to White Oak Growth’s -12.93%). The second thing you should take note of is that none of these outstanding managers are beating their respective indexes (represented by the iShares ETF funds). Does this serve as evidence that each manager has lost his/her investment muster? Doubtful. It is just the economic climate we find ourselves in.