2 / 5 Stars
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Zacks Investment Research
Standard & Poor's
3 / 5 Stars
U.S. News evaluated 223 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 28.67 percent over the past year, 9.54 percent over the past three years, 20.37 percent over the past five years, and 8.07 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||0.7%|
|3 Years (Annualized)||9.5%|
|5 Years (Annualized)||20.4%|
|10 Years (Annualized)||8.1%|
Westport Select Cap Fund takes much the same approach as its sibling Westport Fund, just with a heavier focus on small-cap companies. Co-managers Ed Nicklin and Andy Knuth generally seek out undervalued companies afflicted by a temporary challenge that they expect will be resolved over time.
As of March 05, 2014, the fund has assets totaling almost $410.03 million invested in 24 different holdings. Its portfolio primarily consists of mid- and small-cap stocks of U.S. companies, with a smaller portion of U.K. stocks.
In general, management favors companies that have strong fundamentals but are facing temporary issues that depress the stock price. The purchase of FEI Corporation, an electron microscope manufacturer, underscores fund manager Ed Nicklin’s investment approach. Historically inconsistent financial results have pushed the company’s stock price down, but if research efforts in the field of nanotechnology heat up over the next few years as Nicklin expects, demand should increase for FEI’s equipment. “Research, whether it’s in electronics or biology, is focusing more and more on the atomic structure and if you’re dealing with trying to create things very small, you need something to see what’s going on,” Nicklin says. “The broader application and greater demand for their product, that’s the reason for the purchase.” The fund has returned 28.67 percent over the past year and 9.54 percent over the past three years.
The fund tends to lag more aggressive rivals in the most heated markets (such as 2003 and 2009) but has performed better than most in market downturns. The fund has returned 20.37 percent over the past five years and 8.07 percent over the past decade.
Nicklin identifies undervalued or out-of-favor businesses that have a perceived catalyst for change which he thinks will eventually close the gap in valuation. “We’re looking for something that is likely to cause the undervaluation to disappear over a reasonable time period,” he says. A fairly patient investor, Nicklin gives his picks about two years to develop. He’ll hold on names even longer if he sees additional value in owning the stock. That longer-term horizon results in lower turnover and more tax-efficiency for investors, Nicklin says. However, if the improvement he expects from a pick doesn’t occur at a reasonable pace, he will exit the position before the two-year window and move the assets elsewhere.
Role in Portfolio
Morningstar calls this fund a “supporting player.”
Andy Knuth and Ed Nicklin manage the fund. Knuth has been with the firm since the 1980s and Nicklin managed Evergreen Growth & Income for a decade before signing on at Westport. Nicklin also manages Westport Fund.
Westport Select Cap Fund has an expense ratio of 1.17 percent.
The fund’s concentrated portfolio might make it more vulnerable to market swings. Also, small-cap companies tend to be more volatile than large-cap companies.