Oakmark Funds is one of the most rock-solid fund families in the world of mutual funds. Its very best performers have absolutely crushed their benchmarks and their peers, putting up consistent market-beating returns by buying and holding great stocks for the long haul.
Here are 3 Oakmark funds that have proven their mettle as top funds over their histories.
1. Oakmark Fund (OAKMX)
As the oldest fund, launched in 1991, the Oakmark Fund is the third-largest of its mutual funds. Led by Bill Nygren, the fund has never swayed from its basic approach of buying great stocks and holding them for the long haul.
It's done very well for its investors, beating the S&P 500 over 3-, 5-, 10-, and 15-year periods, even after expenses of 0.84% per year. This record has made it the best-performing fund in Morningstar's large cap fund category over the most-recent 15-year period, an impressive achievement.
The Oakmark Fund does not follow any particular style per se. Fund managers frequently deviate from their benchmark (the S&P 500), and do so wildly. The fund recently reported that its portfolio was financials-heavy, carrying twice as much financial stock exposure as the S&P 500 index. For what it's worth, deviating from the "norm" has proven to be a remarkably good decision, with the fund beating the S&P 500 by more than 3 percentage points annually since inception.
2. Oakmark Select (OAKLX)
Where the Oakmark Fund is generally diversified between 50 and 60 stocks, Oakmark Select invests only in Nygren's very best ideas. The fund typically holds a concentrated assortment of 20 stocks, with its 10 largest investments making up nearly 60% of its assets under management.
I've included this fund in the list because it truly proves Nygren's stock-picking skill. Since the fund's inception, it has blown out the returns of the more-diversified Oakmark Fund, despite a heavier annual expense ratio of 0.95% per year.
What $10,000 invested in Oakmark's funds in 1996 would be worth today
If betting on a top manager is your goal, then Select would be a better holding than Oakmark Fund based on the history of its management team and the fact it doesn't diversify beyond its manager's 20 favorite stocks.
Oakmark Select's performance is inherently more volatile than that of most funds, and certainly more volatile than Oakmark Fund. In addition, with only 20 stocks one can expect its returns over the short-term to differ broadly from those of the market at large. But those who have owned it would say that's a very small price to pay for its incredible 19-year run.
3. Oakmark Global (OAKGX)
Launched in 1999, the Oakmark Global fund has beaten its MSCI World Index benchmark by about 7 percentage points per year. Like other Oakmark products, the Oakmark Global fund also has a history of investing in its best ideas, never closely following its benchmark, and holding roughly 40 stocks on average.
Oakmark Global is ranked as No. 1 in its Morningstar category for its 15-year performance, and in the upper-quartile for less lengthy periods. Investors should take comfort in the fact that its managers frequently close the fund to new investors. New investments are only accepted via direct purchases through Oakmark, a move meant to tamper inflows and keep the fund at the top of its category despite its $3.5 billion size.
And while the fund may appear pricey with an expense ratio of 1.11% per year, it's less costly than the average actively managed global fund, only helping its case as a fund that can outperform for some time to come.
Historical performance is no guarantee of future results. And even the best managers won't beat the market every single year. But Oakmark Funds' products have many of the traits that underlie great stock-pickers: long-term managers, longer-than-average holding periods, concentrated portfolios, and below-average expenses. That bodes well for the ability of these funds to continue to beat the market.
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