The Case for a Concentrated 1-Star Fund
This fund's comeback from the financial crisis has been balky, but it still has promise.
Clipper Fund's (CFIMX) long comeback from the financial crisis continues in fits and starts, but it does continue. The fund is off to a good start in 2013, but the year is young, and its record since current managers Chris Davis and Ken Feinberg came on board in early 2006 has not been up to the reputation and standard they have set at other funds. The fund was up about 8.4% for the year to date through March 1, 2013, ahead of the S&P 500 and 92% of large-blend funds. Since January 2006, however, the fund has been inconsistent, finishing three calendar years in the category's bottom fourth and posting an anemic 1.9% annualized gain versus 5.2% for the S&P 500 and 4.1% for its average peer through March 1, 2013.
Investment styles and strategies go in and out of favor, and investors who stick with this fund can be rewarded over the long term. Davis and Feinberg still apply a high-conviction, value-leaning, focused brand of investing that has and will continue to produce a portfolio that can look out of step with its benchmark or typical peer from time to time. Nevertheless, it has delivered strong results over the long term at a separate account run in the same style.
Dan Culloton has a position in the following securities mentioned above: SLADX, CFIMX. Find out about Morningstar’s editorial policies.