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A Concentrated Global Fund With All-Star Management

Greg Carlson

Greg Carlson: The Morningstar Medalist this week is Oakmark Global Select (OAKWX). The main attraction with this fund is management. Bill Nygren and David Herro run the fund. They are highly accomplished managers. Both have won the Morningstar Fund Manager of the Year award. Also, David Herro was named the Morningstar [International-Stock Fund Manager of the Decade] in 2010.

They essentially split the portfolio in half, each contributing roughly 10 stocks apiece. So, this is a highly concentrated portfolio with about 20 stocks. Nygren runs the U.S. side of the portfolio. He has managed the Gold-rated Oakmark Select Fund (OAKLX) since its 1996 inception and Oakmark Fund (OAKMX) since 2000. Both of those funds have excellent long-term records. Herro has run Oakmark International (OAKIX), also a Gold-rated fund, since 1992 and Oakmark International Small Cap (OAKEX) since 1995.

The weightings can vary. It depends on where the managers are seeing more opportunity. So, recently, for example, the U.S. part of the portfolio was equal to about 60% of assets--a bit higher than the world-stock category average. Because it's so concentrated, it will at times have very small or non-existent weightings in certain sectors and regions.

So, the fund can look quite different from its peers and its benchmark, the MSCI World Index. However, over time, this has been a winning formula. The fund was launched in 2006. It has beaten more than 90% of its peers on a total return basis. And although that 20-stock portfolio can be volatile at times, the fund has beaten more than 90% of its peers on a risk-adjusted basis as well. We think it's an excellent long-term holding, and it's rated Silver.