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This Exceptional Large-Cap Performer Is on Our Radar

Smead Value has outperformed 99% of its category peers during the past five years, but its high fees are a drawback.


Andrew Daniels: Smead Value (SMVLX) has posted exceptional returns in recent years, and is on our radar. The fund is managed by William Smead, Cole Smead, and Tony Scherrer. 

The team is value oriented and looks for firms that meet economic needs and have proven track records, sustainable competitive advantages, and significant free cash flow. The resulting portfolio is concentrated, only holding between 25 and 30 stocks, and turnover is low. 

It currently has about 43% of assets in consumer discretionary stocks, such as H&R Block (HRB) and Home Depot (HD). It also has about 27% of assets in financials stocks such as Berkshire Hathaway (BRK.A) (BRK.B) and JPMorgan Chase (JPM). 

These bets have paid off, as the fund's 14.4% annualized returns over the past five years beat the S&P 500's 10.9% returns and 99% of its large-blend peers. 

One area of concern for the fund is its high fees. The fund charges 1.26% annually, which is higher than nearly all other funds in the large-cap no-load-fee group. Now, the fees have decreased from 1.4% in 2012 and should continue to decrease from now on if the fund sees more asset inflows.

Andrew Daniels does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.