2 / 5 Stars
3 2 5 1 2
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
#339 in Large Growth
U.S. News evaluated 468 Large Growth 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 21.28 percent over the past year, 13.12 percent over the past three years, 19.71 percent over the past five years, and 6.41 percent over the past decade.
|Trailing Returns||Updated 01.31.2014|
|Year to date||-3.3%|
|3 Years (Annualized)||13.1%|
|5 Years (Annualized)||19.7%|
|10 Years (Annualized)||6.4%|
While capital appreciation remains the core objective for the Lou Holland Growth fund, management diverges a bit from similar funds in how it achieves that goal. "We take a very conservative approach," says fund manager Monica Walker. "We care about valuation." Management also looks for companies with strong cash flows, niche products and services, and significant inside ownership.
As of February 05, 2014, the fund has assets totaling almost $91.87 million invested in 49 different holdings. Its portfolio primarily consists of medium- to giant-cap domestic stocks, with a smaller portion of international stocks.
Management took advantage of the 2008 bear market and picked up some consistent growers, including Nike, which were selling at bargain-basement prices. In addition to the attractive valuation, Nike's potential for earnings growth coupled with solid cash flow and an expanding international presence made it a good fit for the fund when it was added to the portfolio in October 2008, Walker says. "We bought [Nike] because it had growing exposure to emerging markets, which currently represent about 40 percent of their profits," she says. "Over the next five years it should grow to about 50 percent of profits."
Walker expects another purchase, Yum! Brands (owner of KFC, Pizza Hut, Taco Bell and Long John Silver's), to grow along with consumer demand in emerging markets. Like Nike, Walker says Yum! Brands benefits from increasing demand for consumer discretionary products as the middle class grows in countries including China, India and Brazil. The fund has returned 21.28 percent over the past year and 13.12 percent over the past three years.
Walker says the fund's strategy is most appropriate for long-term investors who want higher returns without taking on too much risk. In step with a more conservative tack, the fund tends to do fairly well when growth stocks are rallying, but it won't have the "explosive performance" more aggressive growth funds might have. On the flip side, when growth investing is out of favor, the fund tends to have better relative performance due to management's attention to stock valuation. As of late 2010, the fund's 10-year returns put it in the top 18 percent of the large-growth category. Its primary benchmark is the Russell 1000 Growth Index. The fund has returned 19.71 percent over the past five years and 6.41 percent over the past decade.
Management looks for companies expected to generate double-digit earnings growth and although the fund is billed as large growth by Morningstar, stock valuation plays a big role in determining the fund's holdings, Walker says. She also looks for solid balance sheets, cash flow, and companies with significant inside ownership. Walker says sometimes it's difficult to find companies with that inside ownership in the large-cap category, but finding companies where management has some vested interest is a priority for the fund.
The fund has a three- to five-year investment horizon, which keeps turnover and extra trading costs low. "We're not trying to make a buck today," Walker says. "We want to be able to hold a company over a longer period of time."
Role in Portfolio
Morningstar has not assigned a role to this fund.
Monica Walker, founding partner and CEO of Holland Capital, has managed the fund since its 1996 inception and is responsible for the execution of the firm’s large-cap growth and mid-cap growth equity strategies. Carl Bhathena co-manages the fund with Walker and oversees equity research and trading. He also manages the fund's fundamental research and valuation analysis. They are supported by a team of analysts.
American Beacon Holland Large Cap Growth Fund has an expense ratio of 1.38 percent.
As with all stock funds, market volatility affects performance and returns.