3 / 5 Stars
4 4 5 3 1
Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#59 in Large Value
U.S. News evaluated 326 Large Value 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 32.55 percent over the past year and 15.09 percent over the past three years.
|Trailing Returns||Updated 02.28.2014|
|Year to date||1.0%|
|3 Years (Annualized)||15.1%|
|5 Years (Annualized)||23.5%|
|10 Years (Annualized)||N/A|
This fund is a bit like Diamond Hill's all-star team--and its results do justice to that comparison.
As of March 05, 2014, the fund has assets totaling almost $75.70 million invested in 36 different holdings. Its portfolio consists of shares of companies that span the market-capitalization spectrum.
This fund's managers pick their favorite stocks from the portfolios of three other Diamond Hill funds: Diamond Hill Small Cap, Diamond Hill Large Cap, and Diamond Hill Small-Mid Cap. If a stock isn't in at least one of those three portfolios, the Select fund, which launched in 2005, can't buy it. In that sense, it's a "best ideas" or all-star fund. Another restriction is that the fund can't own more than 40 stocks at a time. "Because it's intended to be a best-ideas fund, we don't want to have [too many] names in there," says co-manager William Dierker. Lately, the managers have favored the healthcare sector. "With the concerns over what was going to come out of healthcare reform, a lot of these healthcare stocks were ... not getting the credit they deserve," says Dierker. Notably, the fund has nearly double the S&P 500's exposure to the sector. Within healthcare, management's favorites include pharmaceutical firm Merck and medical technology company Medtronic.
The fund is also overweight in the energy sector, with names like Apache Corporation and Devon Energy Corporation enjoying prominent spots in its portfolio. In its brief history, the fund has compiled a solid track record. As of the end of the first quarter, the fund's trailing three-year returns landed it in the top 14 percent of Morningstar's large value category. The fund has returned 32.55 percent over the past year and 15.09 percent over the past three years.
Co-manager William Dierker describes the fund's strategy as "classic value investing" with a bit of a twist. Instead of focusing solely on a company's current valuation, management will try to calculate its "intrinsic value," which Dierker defines as what the company will be worth five years in the future. "Generally speaking, we're looking for companies that have an ability to grow that intrinsic value," he says. The fund also favors quality. "We're looking at companies that are ... very good businesses but are out of favor for some reason," says Dierker. "Seldom are we going to be looking to by a crappy company that looks really cheap. We'd rather buy a high-quality company that is at an adequate discount to that intrinsic value."
Role in Portfolio
This fund can lend support to a well-balanced portfolio.
William Dierker, Charles Bath, and Christopher Welch manage the fund.
Diamond Hill Select Fund has an expense ratio of 1.22 percent.
Like all stock funds, this one comes with some risks.