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#4 in Large Blend
U.S. News evaluated 492 Large Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 22.71 percent over the past year, 17.04 percent over the past three years, 23.15 percent over the past five years, and 8.95 percent over the past decade.
|Trailing Returns||Updated 03.31.2014|
|Year to date||1.3%|
|3 Years (Annualized)||17.0%|
|5 Years (Annualized)||23.1%|
|10 Years (Annualized)||8.9%|
Managers Bill Frels and Mark Henneman like to stick close to home with picks for Mairs & Powers Growth fund, preferring Midwest-based companies—ones headquartered in Minnesota in particular—with strong earnings track records and large market shares.
As of April 22, 2014, the fund has assets totaling almost $4.11 billion invested in 50 different holdings. Its portfolio primarily consists of stocks of large-cap U.S. companies.
Like most other funds, Mairs & Powers Growth fund sustained serious losses in 2008, but it came out of the fray of the financial crisis in better shape than most of its peers. Due to management’s long-term outlook and low-turnover approach, the fund lagged a bit in 2009’s stock market rally, but posted healthy gains nonetheless. Last year, the fund outpaced its Morningstar peers and the average for the S&P 500.
In step with its long-term, buy-and-hold strategy, the fund’s portfolio tends to remain fairly static. “Once a stock is added to the fund, it usually stays,” says Morningstar analyst Josh Koeck. “The turnover rate is microscopic.” However, in 2009 management picked up Wells Fargo at a discount after the banking giant announced it was cutting its dividend. “It’s not like we heard that news and said we’ve got to jump with both feet into financials,” Henneman says. “We just look at the individual companies and when there are opportunities to buy them inexpensively.” The fund has returned 22.71 percent over the past year and 17.04 percent over the past three years.
The fund’s long-term returns are top-notch: As of the end of the first quarter, its trailing 10-year returns landed it in the top percentile of its Morningstar category. The fund has returned 23.15 percent over the past five years and 8.95 percent over the past decade.
The hallmark of this fund is its focused, regional approach, which gives preference to companies headquartered in the upper Midwest. According to a recent Morningstar report, about two thirds of the fund’s assets are in Minnesota-based companies, and three quarters are in companies headquartered in the Midwest. “The benefit of proximity is huge,” Henneman says. “We get to know these companies and we build a very complete mosaic.”
The fund isn’t limited by market-cap constraints, and management looks for opportunities across the spectrum of large-, mid-, and small-cap companies. “We’re just as comfortable talking about a very large company like 3M as we are talking about a small company like Stratasys,” he says. “We’re not in a box.”
Management also has a long-term outlook. “When we buy stocks, we expect to hold them for a very long time,” Henneman says. The fund’s turnover rate averages about 10 percent, which translates into a holding period of about 10 to 20 years, whereas the typical mutual fund has an average turnover rate closer to 100 percent.
Role in Portfolio
Morningstar calls this fund a supporting player due to its multi-cap approach, concentrated portfolio and preference for Minnesota-based companies.
Bill Frels, chairman and CEO of Mairs & Power, Inc., succeeded longtime manager George Mairs III in 2004. He has also managed the firm’s Balanced fund since 1999. In 2006, Mark Henneman joined the fund as comanager.
Mairs & Power Growth Fund has an expense ratio of 0.67 percent.
Like all stock funds, this one comes with some risks.