Despite its volatility, investors have enjoyed most of this intriguing fund's outperformance.
MassMutual Select Focused Value MFVSX doesn't have an enormous asset base. It isn't led by a household-name manager, and it's not widely available, either. Despite those apparent disadvantages, it's an intriguing fund nonetheless, one that we'll soon provide analyst coverage for and that lends itself to an illustration of Morningstar's analytical pillars: performance, parent, people, process, and price.
Performance: Rocky but Rewarding
Through Sept. 8, 2011, Select Focused Value ranks in the large-blend category's top decile in all trailing periods of three years or more. (Its one-year return lands in the peer group's 12th percentile.) Based on the fund's similarly strong dollar-weighted returns, which account for money flows into and out its coffers, investors have enjoyed most of its outperformance, too.
That's an indication that shareholders have found the fund easy to use, which isn't always the case with successful funds, particularly those that have been as volatile and vulnerable to market declines as this one.
Historically, performance swings at this concentrated offering--the current lineup includes just 22 names--have been significantly wider than the large-blend norm and those of the S&P 500. What's more, the fund's impressive returns don't owe to effective defense but to strong showings amid rising equity prices. In the trailing 10-year period through Aug. 31, the fund captured 134% of the S&P 500's increases and nearly 114% of its losses.
That said, the fund's limited availability has likely helped investors stay the course. Shareholders have access to the fund primarily through retirement plans, whose assets are generally stickier. That allows management to remain focused on long-term results, which this fund has delivered in spades, rather than worrying about near-term returns or meeting the redemptions of impatient investors.
Parent and People: High Quality With an Asterisk
It comes with a caveat (more about that below), but the caliber of the fund's management is another positive attribute. Subadvised by Oakmark parent Harris Associates, the fund is led on a day-to-day basis by Harris' chairman and CIO Bob Levy, who boasts 35 years of investment experience, 26 of them at Harris. (Michael Mangan, a comanager here, plays a backup role.)
Harris boasts an admirable investing-centric culture. New product launches aren't driven by market trends, for example, but by experienced money managers with decades of experience and outstanding long-term track records. Indeed, Oakmark has launched just one new fund (Oakmark Global Select
The firm's roughly 15 investment analysts are divided into international and domestic teams, with the latter supporting Levy on this fund. Like nearly all the managers of Oakmark branded offerings, Levy invests more than $1 million in his charge, which hews to the same valuation-sensitive strategy that powers his colleagues' portfolios.