3 / 5 Stars
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Zacks Investment Research
Standard & Poor's
3 / 5 Stars
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.
The fund has returned 29.01 percent over the past year, 13.52 percent over the past three years, 16.15 percent over the past five years, and 7.78 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||18.8%|
|3 Years (Annualized)||13.5%|
|5 Years (Annualized)||16.2%|
|10 Years (Annualized)||7.8%|
It may just be a historical coincidence that the same site where General George Washington and his Continental Army braved the winter of 1778 also produced one of the top defensive funds around. Regardless, if you’re anxious about a double dip affecting your large-cap equity holdings, the cash-heavy Valley Forge fund offers a defensive disposition with a history of high performance in bad markets.
As of July 03, 2014, the fund has assets totaling almost $21.55 million invested in 14 different holdings. Its portfolio, as of the end of September, consists of nearly 28 percent cash or cash equivalents and 70 percent U.S. large-cap stocks.
The fund’s large move into cash right before the recent recession—selling 30 percent of its stock holdings between 2007 and 2008—allowed the fund to rank in the top 1 percent of large-cap value funds in 2008. While the fund does err on the side of cheaper value stocks, its concentrated portfolio is split evenly among large-cap stocks of both growth and value persuasions. Management follows a buy-and-hold philosophy, selling the average stock after an average of five years. The fund’s portfolio is stocked with well-known corporations like Caterpillar, Coca-Cola, and ConocoPhillips. Management’s most recent decision was to increase its stake in pharmaceutical-maker Baxter International by 45 percent. The fund has returned 29.01 percent over the past year and 13.52 percent over the past three years.
Beside its move to cash in 2008, management has proven its ability to react to changing market conditions. By moving from more highly-priced midcaps in the early part of the last decade to safer large-cap value stocks, the fund also lessened the recession’s blow. By sticking to more stable consumer names, its portfolio also bounced back quickly in 2009, leaving the fund with a return more than 4 percentage points higher than its peers. The fund has returned 16.15 percent over the past five years and 7.78 percent over the past decade.
The fund invests the majority of its assets in U.S. large-cap stocks. Management particularly sticks to nationally-known franchises with solid brands that are cheap compared with their perceived intrinsic value and have recently experienced increased earnings and/or dividends. Stocks are held on average for about six years. The fund is bottom-up, meaning management focuses on company fundamentals rather than market prospects.
Bernard Klawans has managed the fund since its inception in 1972. With nearly 40 years of experience in finance, Klawans also has a background in aerospace engineering and corporate management. Greg Aronhaldt joined Klawans in 2009 as a co-manager and analyst.
Valley Forge Fund has an expense ratio of 1.49 percent.
With such a large part of its portfolio in cash or cash equivalents, the fund offsets much of the risk of its concentrated portfolio that houses nearly 40 percent of its portfolio in its top 10 holdings. Because of the risk of inflation due to the Fed’s quantitative easing policy, a large holding in a falling U.S. dollar would be drag on investor returns. The fund also tends to fall behind its peers during bull markets.