This is part II of my article the best value mutual funds. Please reference the first article by clicking here. Below is the chart from the previous article. However, you will not understand the flow of this article without first seeing part I.
|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|
|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|
|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|
|Weitz Funds||WPVLX||6/1/1983||12%||10.30%||3.95%||$600 Million||1.19%||29%||$2,500|
I will go in order of the funds (which are in no particular order). However, I will skip Sequoia and leave it for the end since it is the most interesting.
I most note that all these funds are run by great managers and I do not mean to put down any fund. I am merely trying to pick the “best of the best”.
1. Tweedy Browne- has a long history of successful value investing. The expense fee is a little bit high but not outrageous. The fund minimum purchase is $2,500 which is not too much for most investors. The great thing about Tweedy Browne is they only have $380 assets under management which is a big advantage since they can be more flexible. The ten year record is very good. The big disappointment is their long term record. After taxes with their turnover rate they barely beat the market. However, in a tax free account you would have beaten the market by a decent percentage since the funds’ inception.
2. Third Avenue- has the same expense fee as Tweedy Browne. They also have the same minimum purchase fee. Their 10 yr and long term record are both very impressive. With their very low turnover rate of 5% is very low and this would make the fund great even for a taxable account. The only two negatives are: 1. Marty Whitman has recently scaled back his role in Third Avenue Management; however there are many other capable fund managers there capable of managing the fund. 2. They have $5.4 billion under management which is not too large, but makes it harder to beat the market.
3. Fairholme is an interesting fund. It is the youngest fund of the funds and has a great track record. The expense fee is low and Bruce Berkowitz is young and should be able to manage the fund for many years to come. The high turnover rate would make it better for a tax free account. I have one main concern about the fund. The assets under management are getting very large $11.2 billion. The fund recently upped the minimum purchase fee to $10,000 I believe to thwart the growth of assets. However, Bruce Berkowitz has been very popular lately and I expect people will keep putting money into the fund. However, overall I think it is a good choice.
4. The Olstein Fund is not well known but is an impressive fund. They have a great long term track record, 10 year performance and have a low minimum purchase of $1,000. The fund only has $680 million assets which is another big advantage. In fact 45% of their assets are in mid cap stocks (2-10 billion market cap). The fund has two big negatives. 1. A very large expense fee of 2.33%. 2. A high turnover rate which would make it less than ideal for a taxable account. I could not find the turnover ratio for previous years but it is possible that they had a high turnover rate specifically in 2009 when many stocks doubled and tripled in value.
5. The Bruce Fund is pretty unknown considering how old the fund is. The fund was started in 1983, yet only has $200 million in assets and is probably the least known name on the list. The expense fee of .94% is low. The fund has a spectacular ten year return of 17.01% per annum. It is surprising this did not bring more attention to the fund. The fund has a low minimum purchase of $1,000. The fund since its inception beat the S&P 500 by less than 1%. However, the turnover is low and therefore even after taxes the fund likely beat the S&P over a 27 year period.
6. The Oakmark Fund is another interesting fund. The expense ratio of 1.23% is reasonable and the minimum purchase is only $1,000. The fund had a very impressive ten year track record and a spectacular record since inception. The fund has $3.6 billion. However, this number is deceptive. Oakmark has a select fund, and an equity and income fund which seem to invest in similar stocks to the Oakmark flagship fund. This would bring total assets under management closer to $23 billion. The fund is run by a spectacular investor Bill Nygren; however it gets very tough to beat the market with $23 billion under management.
In the third article in this series I will examine the last five funds and draw a conclusion to which I think are the best funds of the original 11.