4 / 5 Stars
5 4 2 4 3
Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#42 in Mid-Cap Blend
U.S. News evaluated 136 Mid-Cap Blend 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 42.88 percent over the past year, 17.82 percent over the past three years, 23.20 percent over the past five years, and 11.61 percent over the past decade.
|Trailing Returns||Updated 10.31.2013|
|Year to date||36.0%|
|3 Years (Annualized)||17.8%|
|5 Years (Annualized)||23.2%|
|10 Years (Annualized)||11.6%|
A “true” mid-cap fund, according to Morningstar, Aston/Optimum Mid Cap has about 72 percent of its portfolio in mid-cap companies, compared with about 61 percent, on average, among funds in Morningstar's mid-cap blend category. In general, lead manager Thyra Zerhusen searches for niche companies with unique product offerings. She’s also a patient investor, which keeps the fund’s turnover and trading costs low.
As of November 05, 2013, the fund has assets totaling almost $4.89 billion invested in 50 different holdings. Its portfolio primarily consists of stocks of mid-cap companies in the United States.
Zerhusen looks for niche businesses that have the ability to increase their market share over the long run. BorgWarner, an automotive parts supplier that the fund has held since 2002, is a good example of her long-term outlook and emphasis on companies with unique products. BorgWarner produces turbo chargers for diesel and gasoline engines, items that are in high demand among European drivers who need good gas mileage but also crave good acceleration, Zerhusen says. “They’re a very focused company, [they only have] a few products and they’re gaining market share,” she says. The company also makes engine timing chains, which replace the less-durable rubber belts. The patents on those products won’t expire for some time, which Zerhusen says gives BorgWarner a competitive advantage. Lately, the fund has had some mixed results. After a breakout 2009, the fund had a middling 2010 compared to its peers. In the opening months of 2011, the fund's position in Akamai Technologies put a damper on its returns. The fund has returned 42.88 percent over the past year and 17.82 percent over the past three years.
The fund’s five-year trailing returns rank it, as of the end of the first quarter, in the top percentile of Morningstar’s mid-cap blend category, but the concentrated nature of the fund has, in the past, caused it to stumble over the short term. The fund has returned 23.20 percent over the past five years and 11.61 percent over the past decade.
Zerhusen and her team focus on finding companies with unique products, strong fundamentals, and prospects for growth. She’s willing to wait a while for her theories to develop, sometimes holding onto picks for years, which results in a fairly low turnover rate for the fund (usually around 25 percent annually). She also keeps the fund fairly concentrated at around 40 names. According to Morningstar, Zerhusen’s penchant for sector bets might increase the volatility of the fund, but overall her wagers have paid off—the fund has ranked in the top decile of the Morningstar mid-cap blend category four times in the past 10 years.
Role in Portfolio
Morningstar calls this fund a supporting player that provides exposure to a good mix of mid-cap stocks and diversification for a portfolio heavy in large caps.
Lead manager Thyra Zerhusen has managed to fund since July 1999. Longtime analysts on the fund Marie Lorden and Mary Pierson joined as comanagers in March 2009.
Aston/Fairpointe Mid Cap has an expense ratio of 1.11 percent.
The fund’s concentrated portfolio and exposure to small caps might increase volatility.