5 / 5 Stars
4 3 5 4 3
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
5 / 5 Stars
#7 in Large Growth
U.S. News evaluated 466 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 30.20 percent over the past year, 19.59 percent over the past three years, 24.50 percent over the past five years, and 8.75 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||3.8%|
|3 Years (Annualized)||19.6%|
|5 Years (Annualized)||24.5%|
|10 Years (Annualized)||8.7%|
The Sequoia Fund has a lengthy track record of picking winners and holding onto them for the long haul.
As of March 05, 2014, the fund has assets totaling almost $8.38 billion invested in 44 different holdings. Its portfolio consists primarily of shares of large- and mid-cap companies.
Earning a spot in Sequoia's portfolio is no small task. According to Morningstar, management usually owns between 10 and 25 stocks at a time (it finished 2010 with 31 names in its portfolio). That makes it one of the more concentrated funds available. The fund scours the market for undervalued companies with strong balance sheets and superior earnings records, and when it finds one it likes, it's loath to get rid of it. One natural consequence of this fund's compact portfolio is that the names at the top account for a large percentage of total assets. For instance, as of the end of 2010, upwards of 10 percent of the fund's portfolio was invested in Warren Buffett's Berkshire Hathaway, down from a 20 percent allocation at the end of 2009. Lately, management has been holding onto a lot of cash. As of the end of 2010, more than a fifth of its assets were tucked away in cash.
To be sure, running a concentrated portfolio has its risks. First and foremost, if any one pick goes sour, the fund is sure to feel the pain. But Sequoia's diligence in picking stocks has traditionally left investors well protected. Another differentiating factor is the fund's hefty position in mid-caps. The fund's average market capitalization is comfortably on the lower end of the large-cap spectrum, and popular mid-cap companies, such as O'Reilly Automotive, occupy prominent spots in its portfolio. Recently, this fund has been crushing the competition. It finished 2010 in the top 7 percent of Morningstar's large blend category, and it has come out of the gate charging in 2011. The fund has returned 30.20 percent over the past year and 19.59 percent over the past three years.
Historically, this fund has done a tremendous job of navigating the market. As of the end of the first quarter of 2011, its trailing 10-year returns landed it in the top 3 percent of Morningstar's large-blend category. Over time, the fund has benefitted from management's disciplined buy-and-hold strategy. For instance, the fund's turnover ratio currently sits at just 23 percent. By comparison, a fund that replenishes its entire portfolio once a year would have a ratio of 100 percent. The fund has returned 24.50 percent over the past five years and 8.75 percent over the past decade.
According to the fund's prospectus: "The Fund's investment objective is long-term growth of capital. In pursuing this objective the Fund focuses principally on common stocks that it believes are undervalued at the time of purchase and have the potential for growth. A guiding principle is the consideration of common stocks as units of ownership of a business and the purchase of them when the price appears low in relation to the value of the total enterprise. No weight is given to technical stock market studies. The balance sheet and earnings history and prospects of each investment are extensively studied to appraise fundamental value."
Role in Portfolio
Morningstar calls the fund a "core" holding.
Robert Goldfarb and David Poppe manage the fund.
Sequoia Fund has an expense ratio of 1.00 percent.
Like all stock funds, this one comes with some risks. Since its portfolio is highly concentrated, if even one pick goes sour, the fund is sure to feel the pain.