3 / 5 Stars
2 2 5 4 3
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
4 / 5 Stars
#279 in Large Growth
U.S. News evaluated 465 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 19.71 percent over the past year, 12.69 percent over the past three years, 18.99 percent over the past five years, and 6.82 percent over the past decade.
|Trailing Returns||Updated 03.31.2014|
|Year to date||0.3%|
|3 Years (Annualized)||12.7%|
|5 Years (Annualized)||19.0%|
|10 Years (Annualized)||6.8%|
Rather than succumbing to an identity crisis like other funds during the 2008 market crash, Jensen Portfolio stuck to its long-term, buy-and-hold strategy—a testament to a fund with mature managers and farsighted faith in its decisions.
Of the few large-cap growth funds that have beaten the S&P 500 over the last 10 years, Jensen Portfolio may be among the least concerned with short-term market movements. The fund, which has an unusually low turnover rate of 12 percent—meaning it holds a stock for an average of eight years—invests exclusively in large-cap, U.S. growth stocks.
As of April 22, 2014, the fund has assets totaling almost $5.28 billion invested in 29 different holdings.
The fund targets companies that produce at least a 15 percent return on equity (a measure of how efficient a company is in using its equity to produce profit) in each of the past 10 years. After running that screen, the team usually selects about 30 companies from a group of about 150 companies for the fund. Jensen’s recent large stakes in Abbot Laboratories and Praxair demonstrate a liking for healthcare and basic materials. The fund has returned 19.71 percent over the past year and 12.69 percent over the past three years.
The S&P 500 lost an annualized 1.3 percent over the past 10 years through mid-August 2010. Large-cap growth stocks fared even worse with an average 4.2 percent loss, per year, during that period. Meanwhile, Jensen Portfolio gained an annualized 2.3 percent, besting the vast majority of its peers. While the fund doesn’t generally produce eye-popping returns during market rallies, it rarely falls hard in downmarkets. After losing 29 percent of its value in 2008, a year where its category lost an average of 41 percent, the fund gained 29 percent in 2009—6 percentage points behind its peers. The fund has returned 18.99 percent over the past five years and 6.82 percent over the past decade.
Jensen Portfolio’s objective is to build long-term capital appreciation. It invests in large companies that produce consistent returns and holds them for eight years, on average. Potential investments must have excellent balance sheets and plenty of free cash flow.
Role in Portfolio
Morningstar considers this a core fund, because of its low volatility and low turnover rate.
Like its stocks, its managers stick around for the long term. Co-manager Robert Zagunis has been with the firm since 1993. Manager Robert Millen is set to step down in early 2011. The fund has four co-managers.
Jensen Quality Growth Fund has an expense ratio of 0.90 percent.
The fund invests in a small number of stocks. If just one stock—or the equity market as a whole—takes a dive, Jensen Portfolio may be hit harder than more diversified funds. However, the fund only invests in companies with strong balance sheets, so its holdings are less volatile than most growth stocks.