The name may have changed to FAM Dividend Focus Fund, but the proven research process and high-conviction dividend growth strategy have not.
Conventional wisdom holds that portfolio concentration increases risk. At FAM Funds, our 45 years of experience tells us something different. We try to reduce risk by combining a disciplined, independent, and in-person research process with the freedom to find dividend growth stocks across a wide range of industries.
Dividend Growth Leads Us to High-Quality Businesses
At FAM Dividend Focus Fund, we’re searching for dividend growers, not simply high dividend payers. These businesses tend to be stronger, with solid growth prospects, balance sheets, and cash flows. High-quality businesses with these characteristics can deliver growing dividend income, along with equity gains, and provide stability during periods of market volatility.
95% Active Share*
Our approach means we are unconstrained and able to pick what we estimate to be the best stocks that meet our dividend growth criteria, regardless of industry. As a result, shareholders can benefit from major growth themes such as Internet of Things, big data, cloud computing, automation, and robotics.
*As of 6/30/19 versus Russell Midcap Index (source: Morningstar Direct)
For decades, our Investment Research Analysts have journeyed to Omaha for this distinct gathering that Warren Buffett and Charlie Munger host. It’s an opportunity to hear astute insights and, as usual, this year’s event did not disappoint.
Here are some highlights from our perspective:
- Berkshire is repurchasing its own shares and they think the stock is selling below its intrinsic value.
- Mr. Buffett and Mr. Munger believe that their insurance business is one of the most valuable in the world. For example:
- The growth and success of GEICO were highlighted.*
- Berkshire’s insurance operations are unmatched in financial strength.
- The company has an immense cash supply that gives them the flexibility to make a large acquisition or buy back more stock.
This annual trek always reaffirms our passion for what we do and why we do it.
When FAM Funds assesses investments, we don’t make macroeconomic predictions. We adhere to a rigorous, systematic, disciplined investment approach. Our team identifies quality businesses that we believe are positioned to increase their intrinsic value over time and then purchases shares in them at what we deem to be discounted prices.
Charlie Munger stated this at a previous meeting, “Microeconomics is what we do, macro is what we have to put up with.” We think this quote exemplifies our process very well. While we are acutely aware of macro events, we take a business-first, bottom-up approach to investing.
*Past performance does not indicate future results.
The Fund focuses on mid-cap companies that pay dividends and seeks dividend growth, not simply high current dividends.
Morningstar, an independent investment research firm, currently follows 379 mutual funds in its Mid-Cap Blend Category. The Morningstar RatingTM is a quantitative assessment of a fund’s past performance — both return and risk — as measured from 1 to 5 stars. It uses focused comparison groups to better measure fund manager skill. As always, the Morningstar RatingTM is intended for use as the first step in the fund evaluation process. A high rating alone is not a sufficient basis for investment decisions.
The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
The FAM Equity-Income Fund received a 5-Star Overall Morningstar RatingTM for the 3-Year, 5-Star Overall Morningstar RatingTM for the 5-Year, and 4-Star Overall Morningstar RatingTM for the 10-Year periods ending 4/30/2019 among 379, 334, and 233 Mid-Cap Blend funds, respectively.
© 2019 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Please consider a fund’s investment objectives, risks, charges and expenses carefully before investing. For informational purposes only and not otherwise intended as an offer to sell, or the solicitation of an offer to purchase. The FAM Funds prospectus or summary prospectus contains this and other important information about the FAM Equity-Income Fund and should be read carefully before you invest or send money. To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information on the FAM Equity-Income Fund, please go to famfunds.com or call (800) 932-3271.
“The university’s storied history centers around coaching legend John Wooden who won 10 championships, including a remarkable seven in a row. Mr. Wooden has a library of timeless quotes. One quote epitomizes the extensive research we conduct on your behalf, ‘You can’t have confidence unless you are prepared. Failure to prepare is preparing to fail.’ Our fieldwork equips us to make purchases even during times of adversity.” Letter from Cobleskill Spring 2019