Madison Mosaic Investors Fund

Fund Overview

The Madison Mosaic Investors Fund is pretty typical of most large-cap growth funds. It invests in primarily U.S. blue-chip stocks— successful corporations with nationally-known brands—and tends to hold them for long-term appreciation. What’s less typical is its compact portfolio and noticeable attraction to cash-heavy market leaders.

As of April 04, 2012, the fund has assets totaling almost $37.33 million invested in 36 different holdings. Its portfolio consists of about 85 percent U.S. blue-chip stocks with most of the remainder in stocks of large foreign companies.

This fund seeks long-term appreciation. While it does have sizable stakes in more expensive and well-known stocks, like Google and French oil company Schlumberger, its new position in U.S. Bancorp demonstrates management’s belief in growth-at-a-reasonable-price investing, or GARP. The fund has returned 6.90 percent over the past year and 21.45 percent over the past three years.

“Participate and protect. That’s our slogan,” says Larry Tabak, vice president of Madison Mosaic Funds. “We are working to participate in up markets, and we also have an interest in protecting in down markets.” The fund’s focus on cash-rich companies helps protect it in bear markets, because these companies have more than enough savings to withstand a few bad quarters. This helped the fund beat its large-cap growth peers in the 2008 tumult by more than 7 percentage points. The fund has returned 2.11 percent over the past five years and 3.03 percent over the past decade.
 

Investment Strategy

Management chooses a short-term holding strategy, keeping the average position for about a year and a half. The fund’s portfolio is concentrated, which heightens its volatility compared with the S&P 500. Management considers a company’s fundamentals before it makes any decision based on the overall macroeconomic front. Cheap stocks are the secondary criterion after earnings and stability. “We might be in healthcare, not because we think a Republican Congress will overturn the healthcare legislation, but because that sector has gotten beaten up, and it’s pretty cheap,” says Tabak.
 

Role in Portfolio

Morningstar says, “This fund’s blue-chip-heavy portfolio makes it a suitable core offering.”

Management

Management at this fund is differentiated by its long tenure. Since its inception in 1978, the fund has had just six portfolio managers. Currently, they are Jay Sekelsky, a co-manager since 1990, and David Halford, who became a senior portfolio manager April 2010.

Performance

The fund has returned 6.90 percent over the past year, 21.45 percent over the past three years, 2.11 percent over the past five years, and 3.03 percent over the past decade.

Hypothetical Growth of $10,000

Updated 03.31.2012

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Holdings

Management seems to be attracted to healthcare and financial companies but also has a sweet spot for the energy sector.

Asset Allocation

	% Long	% Net
Cash	3.41	3.41
Stocks	89.66	89.66
Bonds	0.0	0.0
Other	0.0	0.0
Foreign Bonds	0.0	0.0
Foreign Stocks	6.93	6.93
Convertible	0.0	0.0
Preferred	0.0	0.0

Updated 02.29.2012

Top Holdings

Performance as of 03.31.2012

Portfolio as of 02.29.2012

	Ticker	YTD Return %	% Net Assets
Target Corp	TGT	14.39	5.14
Google, Inc. A	GOOG	0.16	4.51
Johnson & Johnson	JNJ	1.83	4.47
Microsoft Corporation	MSFT	25.15	4.26
3M Co	MMM	9.9	3.81

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Fees

Madison Mosaic Investors Fund has an expense ratio of 0.99 percent.

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Risk

A smaller portfolio can make the fund more susceptible to heavier volatility. It will mostly likely lag in markets in which small-cap stocks and “pricier growth stocks” dominate, says Morningstar.

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