4 / 5 Stars
2 1 5 5 1
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
3 / 5 Stars
#32 in World Allocation
U.S. News evaluated 120 World Allocation 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 14.72 percent over the past year and 9.54 percent over the past three years.
|Trailing Returns||Updated 06.30.2014|
|Year to date||5.4%|
|3 Years (Annualized)||9.5%|
|5 Years (Annualized)||13.0%|
|10 Years (Annualized)||N/A|
Comparing the Appleseed Fund with other mid-cap value funds is like comparing it with oranges. Although the fund holds some smaller companies, in actuality, it's highly diversified among capitalization classes.
As a socially-responsible investing fund, or SRI, the Appleseed Fund has made a name for itself in just a few short years by beating the returns of more established SRI funds in a challenging environment. The fund is committed to “sustainable” companies that balance profits with good labor standards, environmental stewardship, and human rights records, and shuns those that deal in tobacco, alcohol, pornography, gambling, and the weapons industry. Although it launched in December 2006, not long before the market meltdown, the fund demonstrated a defensive posture early on by losing just half of what other mid-cap value funds lost to the market swoon of 2008. The fund turned heads again in 2009 when it returned a hefty 60 percent, compared with an average 34 percent gain among peers.
As of July 03, 2014, the fund has assets totaling almost $311.00 million invested in 53 different holdings. It wields a concentrated portfolio with its top 10 holdings accounting for more than 60 percent of its assets.
Since launching on Dec. 8, 2006, Appleseed has watched its popularity rise outside of the burgeoning SRI community. The fund jumped from $6 million in assets at the end of 2007 to more than $100 million in 2010. The fund has returned 14.72 percent over the past year and 9.54 percent over the past three years.
As of the end of February, about 70 percent of Appleseed’s portfolio is dedicated to equities, half of which are currently U.S. stocks. The fund tends to hold about 10 percent cash and 10 percent or more in fixed income assets. Its portfolio leans heavily toward healthcare companies, especially pharmaceutical companies like Pfizer and Novartis, which account for 10 percent and 4 percent, respectively. More conservative investments round out the portfolio, such as a 6 percent holding in SPDR Gold Shares exchange-traded fund.
Manager Josh Strauss chocked these positions up to the fund’s current outlook. “Right now, our two goals with the fund is that first we’re playing defense. And second, we are very concerned about the long-term effects of inflation."
“The fund’s long-term goal is to beat the market by investing in undervalued, sustainable companies,” Strauss said. The medium- to long-term strategy is to beat what managers expect will be high inflation over the coming decade. Managers prefer companies whose executives are heavily invested in their own firms.
Role in Portfolio
Morningstar recommends this fund for a core role in a portfolio, although its large positions in individual stocks make it vulnerable to volatility.
The fund is run by five managers from Pekin Singer Strauss Asset Management. While the turnover rate was 128 percent in 2008, Strauss said that was incredibly unusual and displays the fund’s resolve in preserving investor’s capital. “We typically turn over our portfolio every three to five years,” Strauss said. “Our rate was closer to 40 percent in 2009. That’s far more typical of us in many ways.”
Appleseed Fund has an expense ratio of 1.29 percent.
While the fund’s strategy is currently defensive, it often takes large positions that could hurt returns if one firm falls out of favor. Investments in small- and micro-cap firms could also raise volatility.