4 / 5 Stars
3 3 5 1 2
Zacks Investment Research
Standard & Poor's
3 / 5 Stars
#43 in Mid-Cap Blend
U.S. News evaluated 145 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 17.06 percent over the past year, 10.53 percent over the past three years, and 11.05 percent over the past five years.
|Trailing Returns||Updated 04.30.2013|
|Year to date||7.9%|
|3 Years (Annualized)||10.5%|
|5 Years (Annualized)||11.0%|
|10 Years (Annualized)||N/A|
There's more to Tilson Dividend than its name suggests.
As of May 03, 2013, the fund has assets totaling almost $63.39 million invested in 42 different holdings. Its portfolio consists of shares of companies that span the market capitalization spectrum.
Like most funds that have the word "dividend" in their name, this one focuses on current income. But instead of zeroing in on dividend-paying stocks, Tilson Dividend takes another route. Namely, the fund uses covered calls to achieve its goal of giving investors a steady stream of income. A covered call works like this: The fund enters into a contract with a buyer in which the fund agrees to sell a security if that security reaches a certain price. In exchange for the right to purchase the security at an agreed-upon price, the buyer pays an upfront fee, and this provides investors with current income in much the same way that dividends do.
Since launching in 2005, this fund has built a top-notch track record. Notably, as of the end of March, its trailing five-year returns landed it in the top percentile of Morningstar's mid-cap blend category. In 2008, the fund did a fine job of playing defense. Most mid-cap funds lost more than the broader market that year, but this fund beat the S&P 500 by a whopping 16 percentage points, largely through its prescient avoidance of troubled financial firms. "Most of the traditional dividend-paying stocks are things like banks, REITs, [and] other financial companies. And we felt like as a group, those types of stocks--utilities are another one--were significantly overvalued and high risk," says manager Zeke Ashton. In 2009, the fund skillfully capitalized on the market's heated rally, but also hedged its bets a bit by keeping a sizeable portion of its portfolio in cash. The fund has returned 17.06 percent over the past year, 10.53 percent over the past three years, and 11.05 percent over the past five years.
Management likes to use covered calls to produce income. "Using the covered calls as a way to create income allowed us to avoid many of the pitfalls of the high dividend paying stocks over the last couple of years," says Ashton. In selecting stocks, management pays careful attention to valuations and looks for companies that generate lots of cash and that don't require much leverage. When a stock reaches its full value, management will look to sell it. When opportunities are scarce, management doesn't mind sitting on cash. "We don't feel like we need to be fully invested at all times," says Ashton.
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
Zeke Ashton manages the fund.
Tilson Dividend Fund has an expense ratio of 1.95 percent.
Like all stock funds, this one comes with some risks.