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3 / 5 Stars
#271 in Large Growth
U.S. News evaluated 464 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 24.21 percent over the past year, 11.92 percent over the past three years, 15.61 percent over the past five years, and 9.73 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||6.6%|
|3 Years (Annualized)||11.9%|
|5 Years (Annualized)||15.6%|
|10 Years (Annualized)||9.7%|
The Prudential Jennison 20/20 fund takes a divide-and-conquer approach to stock investing and splits its assets between value- and growth-oriented managers. Each manager runs a portion of the portfolio independently and contributes about 20 picks to the fund, resulting in an overall portfolio designed to weather a variety of market environments.
As of July 03, 2014, the fund has assets totaling almost $2.26 billion invested in 45 different holdings. Its portfolio consists of up to 45 stocks (primarily domestic), roughly divided between the value and growth portfolios that comprise the fund.
Although the fund hit a rough patch in 2008, many of the stocks that faltered in the economic downturn rebounded in 2009, pushing the Jennison 20/20 fund back into the black. Despite 2008's miserable market conditions, the managers stuck to their long-term investment outlooks on individual positions and even increased their stakes in some of the more beaten-down areas of the market, particularly the energy sector, which further boosted performance in 2009.
The biggest recent change in the growth portion of the fund has been a move away from the healthcare sector. According to fund's growth manager Sig Segalas, back in 2008 and 2009 about 30 percent of his picks used to be in healthcare. In 2010, the sector accounted for just 15 percent of Segalas' stocks. The fund still holds some healthcare and pharmaceutical companies, such as Express Scripts and Novartis, but Segalas sold other stocks such as Gilead, a leading provider of HIV medications, in early 2010. In the future, Segalas expects the growth side of the portfolio to remain heavy in tech stocks at about 40 percent of assets, with positions in big names like Apple and data storage company NetApp.
On the value side, fund manager David Kiefer added Viacom to the portfolio in 2010 after the media company started investing more in programming and its ratings started to improve. Kraft also made Kiefer's list after it acquired Cadbury in early 2010. The fund has returned 24.21 percent over the past year and 11.92 percent over the past three years.
Although it has encountered a few bumps along the way, the fund has one of the best long-term records in its category. As of late 2010, the fund's 10-year returns put it in the top 1 percent of the large-growth category. The fund has returned 15.61 percent over the past five years and 9.73 percent over the past decade.
This fund pairs growth and value investing strategies, which, according to its annual report, works to reduce the volatility that might normally result from following a single investment style through changing market conditions. "What we're really trying to do by blending the two strategies in one portfolio is to cover those times when one style is at an extreme so investors get the benefits of both styles," Kiefer says.
The fund can hold as many as 45 stocks, but each manager usually contributes about 20 picks to the portfolio, roughly splitting the fund between value and growth stocks. Overlap between the two portfolios is possible, but rare. "We each think of our own sleeves as a 20-stock portfolio," Kiefer says. "Sig [Segalas] looks at his portfolio as if his was separate and standalone and I do the same thing." But with only 20 stocks to contribute from each camp, each manager doesn't get to put all his favorites in the portfolio. "We're trying to buy the names in which we have the highest conviction," Kiefer says.
Although Segalas says the growth portfolio has a bit more turnover than average, he likes to hold on to some "steady eddies" such as McDonalds, Disney, and Nike for their consistent growth and to keep a lid on volatility. Save for those more consistent growers, which usually see about 10 to 12 percent in earnings growth, Segalas usually looks for "growthier" names that can grow at a higher rate of at least 20 percent.
Role in Portfolio
Morningstar calls this fund a core investment.
Sig Segalas, president, chief investment officer and co-founder of Jennison Associates, has been with the fund since its 1998 inception, and oversees the growth portion of the portfolio. According to Morningstar, Segalas is one of the most experienced growth managers around. Jennison's lead value manager, David Kiefer joined the fund in 2004 and runs the value part of the fund's portfolio.
Prudential Jennison 20/20 Focus has an expense ratio of 1.18 percent.
As with all stock funds, market volatility affects performance and returns. Morningstar notes that the fund's concentrated portfolio of about 40 stocks might increase vulnerability to market fluctuation.