5 / 5 Stars
5 5 3 5 5
Zacks Investment Research
Standard & Poor's
4 / 5 Stars
#7 in Small Blend
U.S. News evaluated 215 Small 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 36.68 percent over the past year, 20.27 percent over the past three years, 22.82 percent over the past five years, and 12.14 percent over the past decade.
|Trailing Returns||Updated 10.31.2013|
|Year to date||28.5%|
|3 Years (Annualized)||20.3%|
|5 Years (Annualized)||22.8%|
|10 Years (Annualized)||12.1%|
The Homestead Small Company Stock Fund marches to the beat of its own drum, and lately it's found a great rhythm.
As of November 05, 2013, the fund has assets totaling almost $764.09 million invested in 57 different holdings. Its portfolio consists of shares of small and midsized companies.
Not much about the fund is typical. Despite its name, nearly half of its portfolio is in midsized companies. Meanwhile, as of the end of December, the fund had about 7 percent of its portfolio in cash, about twice the average for Morningstar's small value category. And lately, the fund has been making a sizeable bet on the American consumer, as reflected in the large overweights it sports to the consumer goods and consumer services sectors. For instance, Nordstrom, United Natural Foods, and J.M. Smucker all enjoy prominent spots in its portfolio. The fund's unique strategy has been paying off. After gaining more than 45 percent in 2009, the fund has finished among the top 6 percent of the funds in its category. The fund has returned 36.68 percent over the past year and 20.27 percent over the past three years.
Historically, the fund has had its fair share of off years. Notably, in 2003, 2004, and 2008, the fund finished in the bottom third of its Morningstar category. Still, as of the end of March, its 10-year trailing returns beat those of its category by 2 percentage points. Over time, management's buy-and-hold discipline has come in handy. Currently, the fund's turnover ratio is just 4 percent. By comparison, a fund that replenishes its entire portfolio once a year would have a ratio of 100 percent. The fund's rock-bottom turnover, combined with its sizeable cash stake, point to a management team that puts a premium on patient investing. The fund has returned 22.82 percent over the past five years and 12.14 percent over the past decade.
Management looks for stocks that or "overlooked ... or generally out of favor with the market," says co-manager Peter Morris. "Basically what we're looking for are companies that are selling below what we think their intrinsic values are." According to the fund's prospectus: "To determine whether a stock is undervalued, [management] considers, among other factors, earnings valuations, debt ratios and any competitive advantages a company may have." Management has a strong buy-and-hold philosophy and likes to keep its picks for at least five years. "Selling stocks ... is always harder than buying stocks," says Morris.
Role in Portfolio
This fund could lend support to a well-balanced portfolio.
Peter Morris, Stuart Teach, and Mark Ashton manage the fund.
Homestead Small Company Stock Fund has an expense ratio of 1.00 percent.
Like all stock funds, this one comes with some risks.