3 / 5 Stars
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
U.S. News evaluated 330 Large Value Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
Note: Profile written for different share class.
The fund has returned 19.16 percent over the past year, 14.25 percent over the past three years, 15.80 percent over the past five years, and 7.67 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||8.0%|
|3 Years (Annualized)||14.3%|
|5 Years (Annualized)||15.8%|
|10 Years (Annualized)||7.7%|
If you’re enticed by the market’s surplus of cheap stocks but worried of falling into a dreaded value trap, the Cullen High Dividend Equity Retail fund seeks to provide safe, value-oriented exposure. Value stocks fall into their titular category because of their low price relative to their earnings. But by steering clear of the cheapest value stocks and instead opting for those that pay market-beating yields, management has been able to choose holdings that offer downside protection during market corrections.
As of July 03, 2014, the fund has assets totaling almost $2.53 billion invested in 36 different holdings. Its portfolio consists of large-cap, high-dividend stocks.
Rather than focusing on the relative cheapness of a stock by dividing its share price by earnings, book price, sales, or cash flow—methods other value funds use to seek out the cheapest of cheap stocks—management only ensures that its prospects are below the S&P 500 average for those metrics. In practice, this means management isn’t searching out the cheapest values; rather, it focuses on cheap stocks of large companies that fund analysts believe have a likelihood of increasing dividends in the near future. By sticking to higher-quality value stocks, the fund measurably outperformed similar funds during the 2008 market tumult. “Investing in low P/E, high-dividend equities should open investors to the opportunity of price appreciation and portfolio stability going forward in a fairly uncertain economic environment,” says vice president and analyst Brooks Cullen. The fund has returned 19.16 percent over the past year and 14.25 percent over the past three years.
The other tier of the fund’s strategy is its focus on high-dividend stocks. Like most dividend stocks in its portfolio, the fund experiences much less volatility than both similar large-cap value funds and the S&P 500. The fund’s long-term focus on diversifying its holdings among more than 15 industries has shielded it from blow-ups in any one industry. Investors shouldn’t expect this fund to post large market-beating returns, but it tends to outperform its peers in bear markets and posts respectable returns in bull markets. The fund has returned 15.80 percent over the past five years and 7.67 percent over the past decade.
The fund limits its investment universe by first screening for stocks with price-to-earnings, price-to-book, and debt-to-capital ratios lower than the S&P 500 average, and dividend yields higher than the index’s average. “We seek to invest in companies with low historical dividend payout ratios and an earnings catalyst that will increase the likelihood of dividend growth and also contribute to stock price appreciation over a long-term investment horizon,” according to the fund’s website.
Jim Cullen and John Gould have managed the fund jointly since 2007. Before that, Cullen managed the fund alone for the first four years, beginning in 2003. The two managers have a combined 65 years of wealth management experience.
Cullen High Dividend Equity Fund has an expense ratio of 1.25 percent.
The fund could lag the market if either small-cap or growth stocks carry most of the market’s gains.