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In recent years, fund companies have experimented
with various ways of closing funds. One thing I’ve
seen more often is funds closing their doors halfway.
They close the fund to investors using fund super-
markets but leave them open to those who invest
directly with the fund company.
This really serves two purposes. First, it slows down
the rate of inflows. Second, it leaves more profits
for the fund company because it doesn’t have to pay
a No Transaction Fee plan provider like Schwab
or Fidelity the usual
35
basis points in fees. I don’t
really mind the practice, except that whenever I
write about those funds, some readers complain to
me that the funds are closed because that’s what
it says when you pull up the fund in the
NTF
supermarkets. So to clear the decks, I thought I’d
write about a few of the very best funds in this
camp. If you don’t already have an account with that
firm, you’ve got to decide whether it’s worth the
extra difficulty of having another account.
AMG Yacktman Focused
YAFFX
and AMG
Yacktman
YACKX
The funds have transitioned largely from Donald
Yacktman to his son Stephen Yacktman, but we still
give them Morningstar Analyst Ratings of Silver
and Gold, respectively. They saw a surge in popu-
larity that prompted them to close the funds to
NTF
programs a few years ago. And that’s a good
thing; they run focused portfolios, yet assets
grew to more than
$10
billion in both funds. Since
then, the funds have lost some luster; they’ve
lagged their peers significantly over the trailing
three- and five-year periods. However, I don’t blame
the transition or the asset growth.
Instead, it’s really a matter of style. The managers
are cautious value investors who will build cash
if they can’t find enough attractive investments. It’s
a fine strategy for protecting against the down-
side, but it means the funds will lag in a rally. Maybe
asset size is a bit of a hindrance, but I doubt
it’s playing a major role. In any case, both funds
are now in redemptions.
AMG
Yacktman Focused
saw
$1
.
9
billion in outflows over the past
12
months, and
AMG
Yacktman has had
$1
.
2
billion
go out the door. The difference in their analyst
ratings is because
AMG
Yacktman Focused charges
a full
50
basis points more than
AMG
Yacktman.
Oakmark Global
OAKGX
Managers Clyde McGregor and Rob Taylor ply the
Oakmark strategy across the planet. They want strong
businesses trading for cheap prices. They look to
same-industry buyouts to verify the correct multiples
for companies. The portfolio has mostly classic value
names like
Union Pacific
UNP
and
Credit Suisse
CS
, but there are some growth favorites like Samsung
thrown in to boot. Over time they’ve produced excel-
lent relative performance in bear and bull markets
alike. The fund is still getting a trickle of inflows with
$120
million in inflows over the past
12
months.
Vanguard Wellington
VWELX
This remains one of the great bargains of the fund
world. You can tap Wellington’s great stock and
bond management resources for just
0
.
26%
a year.
It, too, has had very few missteps. Flows have
slowed to
$463
million in the past year, and that’s
a good thing for a
$91
billion fund.
Wasatch Small Cap Growth
WAAEX
Jeff Cardon has built a remarkable record over nearly
30
years at this fund. He looks for financially
healthy companies with strong growth potential,
but he pays attention to valuations, too. My
greatest concern is that Cardon could retire sometime
soon, even though he says he has no plans to do
so. The fund also has a wild card in the form of a
9%
stake in India, which is pretty unusual for a
U.S.
small-cap fund.
œ
Closed, Not Closed
Tracking Morningstar Analyst Ratings
|
Russel Kinnel
What Are Morningstar
Analyst Ratings?
Our ratings are chosen for long-
term success. Analysts assess
a fund’s competitive advantages
by analyzing people, process,
parent, performance, and price.
They do rigorous analysis and
then submit their ratings to a
committee that vets their work
for thoroughness and consistency.