Oakmark Select Fund

Scorecard
4 / 5 Stars
Lipper
5 4 4 3 2
Zacks Investment Research
4 (Sell)
Standard & Poor's
5 / 5 Stars
TheStreet.com
A+ (Buy)

#48 in Large Blend

U.S. News evaluated 481 Large Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 32.55 percent over the past year, 20.15 percent over the past three years, 22.55 percent over the past five years, and 8.75 percent over the past decade.  

Trailing Returns Updated 06.30.2014
Year to date 11.1%
1 Year 32.5%
3 Years (Annualized) 20.2%
5 Years (Annualized) 22.6%
10 Years (Annualized) 8.8%

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Summary

Oakmark Select's big bets have traditionally paid off quite handsomely. 

As of July 03, 2014, the fund has assets totaling almost $5.65 billion invested in 21 different holdings. Its portfolio consists primarily of shares of large companies. 

After rocketing to a 52 percent return in 2009, the fund slowed down quite a bit last year, underperforming both the S&P 500 and Morningstar's large-blend category. Still, the fund's stellar 2009, combined with some good defense in 2008, translated into top-notch trailing three-year returns as of the end of last year. One factor that distinguishes this fund is its highly concentrated approach. Notably, management only owns shares of about 20 companies. On the bright side, this means the fund is loaded with management's favorite, highest-conviction picks. As a result, in good years, the fund will often charge to the front of the pack. But in rough market cycles, if even one of the fund's companies struggles, investors are sure to feel the pain. In many respects, this fund is a concentrated version of the firm's flagship Oakmark Fund. One of the bigger exceptions is Oakmark Select's huge position in Discovery Communications. As of the end of 2010, the company represented a whopping 8 percent of the Select fund. By comparison, it was one of the smallest positions in the Oakmark Fund. Other significant holdings in the Select fund include Tyco Electronics and Texas Instruments. While the Select fund's portfolio consists primarily of large companies, it also has rather hefty exposure to mid-cap names, which comprise a sizeable minority (28 percent) of the fund's portfolio. The fund has returned 32.55 percent over the past year and 20.15 percent over the past three years.  

Despite the occasional off year, this fund's long-term numbers are hard to argue with. As of the end of March, the fund's trailing 10-year returns landed it in the top 11 percent of Morningstar's large-blend category. Over the same period, the fund beat the S&P 500 by upwards of 2 percentage points per year.  The fund has returned 22.55 percent over the past five years and 8.75 percent over the past decade.

Investment Strategy

According to the fund's prospectus: "The Fund invests primarily in common stocks of U.S. companies. The Fund is non-diversified, which means that it is not limited to a percentage of assets that it may invest in any one issuer. The Fund could own as few as 12 securities, but generally will have approximately 20 securities in its portfolio. The Fund uses a value investment philosophy in selecting equity securities. This investment philosophy is based upon the belief that, over time, a company's stock price converges with the company's intrinsic or true business value. By 'true business value,' we mean an estimate of the price a knowledgeable buyer would pay to acquire the entire business. We believe that investing in securities priced significantly below their true business value presents the best opportunity to achieve the Fund's investment objective."

Role in Portfolio

Morningstar calls this a "core" holding.

Management

William Nygren and Henry Berghoef manage the fund.

Fees

Oakmark Select Fund has an expense ratio of 1.01 percent.  

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Risk

Like all stock funds, this one comes with some risks. 

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