I have been asked recently by several readers and friends what is a good value mutual fund. These people know that value investing is the best way to invest but don’t have the time to research individual stocks. Instead of looking at many funds, and deciding which the best fund is, I decided to compile a chart and examine what would be the best fund.
There is no such thing as “the best fund”, and it is hard to compare different funds since they have different investment strategies even inside the value investing world. Right away I decided to focus on a core fund. I looked for funds that were either all cap or large cap funds. I excluded international funds and small cap funds since it is unfair and inaccurate comparison (hopefully I will be able to write an article on the best small cap or international funds in the future).
Below is a chart of 11 value funds that I believe are among the best funds out there. Some great funds might have intentionally or unintentionally been left out. I would prefer not to say which funds I intentionally left out since I do not want to get political. However I must note that I could not include any of David Dreman’s current large cap funds since their record is too short, although they might be worth a look. He had the #1 fund for something like 20 years in a row I believe, so he definitely is a great money manager.
The criteria I looked at were funds that are value oriented. Many of these funds might define value investing differently but they all have their roots in value philosophy. I looked at funds that have at least a ten year track record. I think you need at least a ten year record to show you are capable of beating the market. These ten years were fantastic for evaluating a fund as they included two huge bear markets (a valuation bubble and credit bubble) and two bull markets 2003-2007, and the bull market from March 2009 until present. The S&P performance over the past ten years has been -0.81% per annum.
In addition, the longer the fund has been around the better. I also looked at minimum purchase fees since I am looking at funds that are accessible to the average small investor (obviously I did not include any funds closed to new investors). In addition, I did not include any value hedge funds since ordinary investors do not have access to them. However, there are many great value hedge funds. Two of the best value investors ever Joel Greenblatt and Seth Klarman run hedge funds.
I also looked at assets under management. This is very important for me that many investors overlook. A fund could have the best manager in the world but if they have too much assets to manage it becomes increasingly difficult to run the fund. I also looked at expenses. Finally, I looked turnover for tax purposes, although if you are investing in a tax free fund it should not make a difference, (however transaction fees could be higher).
I did not look at beta or any measure of volatility in the funds since I ignore these factors in making decisions about mutual funds or stocks. I know some readers will be disappointed by this, but I think most value investors think these measurements are just a product of EMT, and mostly irrelevant. As Warren Buffett stated As “ one company might make Barbie dolls and the other pet rocks; if they have the same beta, then CAPM says that one is as good as the other.”
One last note, all the date is from Morningstar, the fund websites or yahoo finance. Where the data was not available i.e. performance since inception I estimated to the best of my knowledge.
In the next article I will dissect the 12 funds in the chart one by one.
There is no such thing as “the best fund”, and it is hard to compare different funds since they have different investment strategies even inside the value investing world. Right away I decided to focus on a core fund. I looked for funds that were either all cap or large cap funds. I excluded international funds and small cap funds since it is unfair and inaccurate comparison (hopefully I will be able to write an article on the best small cap or international funds in the future).
Below is a chart of 11 value funds that I believe are among the best funds out there. Some great funds might have intentionally or unintentionally been left out. I would prefer not to say which funds I intentionally left out since I do not want to get political. However I must note that I could not include any of David Dreman’s current large cap funds since their record is too short, although they might be worth a look. He had the #1 fund for something like 20 years in a row I believe, so he definitely is a great money manager.
| Fund Name | Fund Symbol | Inception date | perf. since incep | S&P perf. Since incep | 10 yr perf. | assets under management | expense ratio | turnover rate | minimum purch |
| sequoia Fund | SEQUX | 7/15/1970 | 14.14% | 10.43% | 5.37% | 2.95B | 1.01% | 15% | $5,000 |
| Tweedy Browne | TWEBX | 12/8/1993 | 8.41% | 7.62% | 4.91% | 380 Million | 1.42% | 37% | $2,500 |
| Third Avenue Fund | TAVFX | 11/1/1990 | 12.90% | 8.90% | 7.30% | 5.4B | 1.42% | 5% | $2,500 |
| Fairholme Fund | FAIRX | 12/29/1999 | 13.43% | -0.57% | 13.21% | 11.2B | 1.02% | 71% | 10,000 |
| Olstein Fund | OFALX | 9/21/1995 | 9.68% | 6.39% | 3.87% | $600 Million | 2.33% | 103% | $1,000 |
| Bruce Fund | BRUFX | 10/17/1983 | 11.12% | 10.30% | 17.01% | $200 Million | 0.94% | 16% | $1,000 |
| The Oakmark Fund | OAKMX | 8/5/1991 | 12.50% | 8.06% | 7.77% | $3.6B | 1.23% | 32% | $1,000 |
| Dodge & Cox | DODGX | 3/31/1965 | 11.11% | 9.20% | 6.53% | $43B | 0.52% | 31% | 2,500 |
| Longleaf | LLPFX | 4/8/1987 | 11.11% | 10.84% | 6.82% | $8B | 0.91% | 30% | $10,000 |
| Weitz Funds | WPVLX | 6/1/1983 | 12% | 10.30% | 3.95% | $600 Million | 1.19% | 29% | $2,500 |
| Yacktman Fund | YACKX | 7/6/1992 | 9.95% | 7.82% | 13.69% | $2B | 0.93% | 33% | $2,500 |
The criteria I looked at were funds that are value oriented. Many of these funds might define value investing differently but they all have their roots in value philosophy. I looked at funds that have at least a ten year track record. I think you need at least a ten year record to show you are capable of beating the market. These ten years were fantastic for evaluating a fund as they included two huge bear markets (a valuation bubble and credit bubble) and two bull markets 2003-2007, and the bull market from March 2009 until present. The S&P performance over the past ten years has been -0.81% per annum.
In addition, the longer the fund has been around the better. I also looked at minimum purchase fees since I am looking at funds that are accessible to the average small investor (obviously I did not include any funds closed to new investors). In addition, I did not include any value hedge funds since ordinary investors do not have access to them. However, there are many great value hedge funds. Two of the best value investors ever Joel Greenblatt and Seth Klarman run hedge funds.
I also looked at assets under management. This is very important for me that many investors overlook. A fund could have the best manager in the world but if they have too much assets to manage it becomes increasingly difficult to run the fund. I also looked at expenses. Finally, I looked turnover for tax purposes, although if you are investing in a tax free fund it should not make a difference, (however transaction fees could be higher).
I did not look at beta or any measure of volatility in the funds since I ignore these factors in making decisions about mutual funds or stocks. I know some readers will be disappointed by this, but I think most value investors think these measurements are just a product of EMT, and mostly irrelevant. As Warren Buffett stated As “ one company might make Barbie dolls and the other pet rocks; if they have the same beta, then CAPM says that one is as good as the other.”
One last note, all the date is from Morningstar, the fund websites or yahoo finance. Where the data was not available i.e. performance since inception I estimated to the best of my knowledge.
In the next article I will dissect the 12 funds in the chart one by one.
