4 / 5 Stars
3 1 5 2 2
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
U.S. News evaluated 221 Mid-Cap Growth Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
Note: Profile written for different share class.
The fund has returned 21.66 percent over the past year, 12.83 percent over the past three years, 18.03 percent over the past five years, and 10.03 percent over the past decade.
|Trailing Returns||Updated 06.30.2014|
|Year to date||0.5%|
|3 Years (Annualized)||12.8%|
|5 Years (Annualized)||18.0%|
|10 Years (Annualized)||10.0%|
Looks can be deceiving. This may not seem like a small-cap stock fund, but it is. Unlike many small-cap funds that sell off positions quickly, the Neuberger Berman Genesis fund holds onto many of its best-performing small-cap stocks well after they’ve grown into mid-caps, keeping some names in the portfolio for more than a decade.
As of July 03, 2014, the fund has assets totaling almost $14.68 billion invested in 142 different holdings. Its portfolio consists of small-cap and mid-cap stocks almost exclusively headquartered in the United States.
This fund doesn’t retire its winners. Management is only allowed to purchase small-cap stocks—those with a market value of less than $1.5 billion. It then holds the best of these picks for the long term. (The fund holds the average stock for six years.) One of its top five holdings, packaging products maker AptarGroup, has just about tripled its market value since the fund bought shares more than a decade ago. Managment seeks fast-growing small-company stocks. This often translates to buying companies with higher valuations. In the third quarter of 2010, the fund trimmed most of its top 25 holdings. The fund has returned 21.66 percent over the past year and 12.83 percent over the past three years.
The fund’s buy-and-hold strategy of nursing small-caps into mid-cap adulthood has made for an enduring long-term record. The fund ranks in the top quartile among similar funds for its five-, 10- and 15-year returns. The fund’s focus on holding stocks for the long term is complimented by management’s extensive experience. Co-managers Judy Vale and Bob D’Alelio have managed the fund a combined 31 years. After the fund’s assets declined in late 2008, the fund reopened to investors after being closed for seven years. In late 2010, the fund’s asset levels, $11 billion, were well above that of the typical small-cap fund. This reality makes the fund a less attractive play for investors looking for exposure only to small caps. But for investors interested in both small- and mid-cap exposure, this fund is worth further study. The fund has returned 18.03 percent over the past five years and 10.03 percent over the past decade.
Management seeks small- and mid-cap companies with steady free cash flow, secular growth that’s not dependent on the economy, and an industry-leading niche. Although the fund’s prospectus designates companies worth less than $2 billion as the fund’s primary targets for investment, more than half of its portfolio consists of mid-cap stocks. That’s because management often holds onto it original small cap investments for more than a decade until they grow into mid-caps.
Role in Portfolio
Morningstar calls this fund a supporting player.
Management is just as long term as the fund’s strategy. The fund has four portfolio managers. Judy Vale and Robert D’Alelio have co-managed the fund for more than 14 years apiece. Michael Bowyer and Brett Reiner, both of whom have been analysts with the fund in years prior, have been associate managers since 2005.
Neuberger Berman Genesis Fund has an expense ratio of 1.38 percent.
Because of its large asset base, the fund may lag other small-cap funds in the short term.