6.8 in Large Value
U.S. News evaluated 329 Large Value Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
| Scorecard | |
|---|---|
| Morningstar | 4 / 5 Stars |
| Lipper | 5 3 5 1 1 |
| Zacks Investment Research | 3 (Hold) |
| Standard & Poor's | 4 / 5 Stars |
| TheStreet.com | C+ (Hold) |
Fund Overview
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 April 04, 2012, the fund has assets totaling almost $22.59 million invested in 28 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 4.99 percent over the past year and 20.25 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 4.93 percent over the past five years and 4.81 percent over the past decade.
| Trailing Returns | Updated 03.31.2012 |
|---|---|
| Year to date | 8.3% |
| 1 Year | 5.0% |
| 3 Years (Annualized) | 20.3% |
| 5 Years (Annualized) | 4.9% |
| 10 Years (Annualized) | 4.8% |
Investment Strategy
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.
Management
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.
Performance
The fund has returned 4.99 percent over the past year, 20.25 percent over the past three years, 4.93 percent over the past five years, and 4.81 percent over the past decade.
Hypothetical Growth of $10,000
Updated 03.31.2012
Holdings
The has an unusually large amount of cash, more than quarter of its total assets. This defensive posture is balanced by investing close to 40 percent of its assets in just 10 stocks. The remaining 30 percent consists is split between just 19 names, as of October 1. This gives the fund a balance between an overall defensive cash position and a highly concentrated portfolio of large-cap stocks. The fund is heavily overweight in consumer goods, telecoms, and industrials, and is entirely free of investments in computer technology firms and utilities.
Asset Allocation
| % Long | % Short | % Net | |
|---|---|---|---|
| Cash | 28.52 | 0.0 | 28.52 |
| Stocks | 82.84 | 0.0 | 82.84 |
| Bonds | 0.0 | 0.0 | 0.0 |
| Other | 0.0 | 0.0 | 0.0 |
| Foreign Bonds | 0.0 | 0.0 | 0.0 |
| Foreign Stocks | 0.78 | 12.15 | -11.37 |
| Convertible | 0.0 | 0.0 | 0.0 |
| Preferred | 0.0 | 0.0 | 0.0 |
Updated 01.31.2012
Top Holdings
Performance as of 03.31.2012
Portfolio as of 01.31.2012
| Ticker | YTD Return % | % Net Assets | |
|---|---|---|---|
| ConocoPhillips | COP | 6.39 | 7.53 |
| General Electric Co | GE | 12.73 | 6.61 |
| Molson Coors Brewing Company | TAP | 5.6 | 5.68 |
| American Express Co | AXP | 23.36 | 5.54 |
| Goldman Sachs Group Inc | GS | 38.5 | 4.92 |
Fees
Valley Forge Fund has an expense ratio of 1.56 percent.
Risk
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.
