Equity Fund
Litman Gregory Masters Equity Fund MSEFX, MSENX
Overview
Litman Gregory Masters Equity Fund seeks superior long-term growth relative to the overall U.S. stock market. Each of the seven managers separately runs a portion of the fund's portfolio, and each represents a different stock-picking style or market cap segment. Working independently, each manager runs a portfolio composed of no fewer than 5 or more than 15 of his most compelling stock picks. Because of the mix of managers, we expect 50% to 85% of the fund's portfolio, in normal conditions, to be invested in mid- and large-cap stocks. The fund is primarily invested in the U.S. market, although the managers have limited flexibility to invest in the stocks of foreign companies. We expect typical overseas exposure to be less than 15% of total assets. The multimanager structure results in a broadly diversified portfolio in terms of styles, industries, and stocks. Typically, the fund holds between 75 and 105 stocks.
This fund is appropriate for investors who:
- Want a core equity investment with exposure to a broad slice of the market
- Seek strong market-cycle performance but are less concerned about short-term returns
- Understand the short-term risks associated with the stock market
Davis Selected Advisors
Christopher
Davis
Target Manager Allocation:15%
Size of Company: Mostly large companies
Stock-Picking Style: Blend
Davis Advisors manages equity funds using the "Davis Investment Discipline." Davis Advisors conducts extensive research to try to identify businesses that possess characteristics it believes foster the creation of long-term value, such as proven management, a durable franchise and business model, and sustainable competitive advantages. Davis Advisors aims to invest in such businesses when they are trading at a discount to their intrinsic worth. Davis Advisors emphasizes individual stock selection and believes that the ability to evaluate management is critical. Davis Advisors routinely visits management teams at their places of business in order to gain insight into the relative value of different businesses. Such research, however rigorous, involves predictions and forecasts that are inherently uncertain.
Over the years, Davis Advisors has developed a list of characteristics that it believes help companies to create shareholder value over the long term and manage risk.
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Fiduciary Management Inc.
Pat
English
Andrew
Ramer
Target Manager Allocation: 15%
Size of Company: All sizes
Stock-Picking Style: Blend
Fiduciary Management Inc. ("FMI") was founded in 1980 and is an independent money management firm based in Milwaukee, Wis. The firm runs several public mutual funds including FMI Large Cap which is run by the same team that runs the Litman Gregory Masters Equity Fund portfolio.
FMI seeks to buy companies that have durable franchises (franchises that can survive difficult times) and whose common stock is trading below FMI's estimated intrinsic value of the company. Their investment process has always focused on evaluating three attributes of a company: the quality of the business model, the valuation, and the quality of management.
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Harris Associates
Clyde
McGregor
Target Manager Allocation: 15%
Size of Company: All sizes, but mostly large- and mid-sized
Stock-Picking Style: Value
McGregor employs Harris' value investment philosophy and process. This investment philosophy is based upon the belief that, over time, a company's stock price converges with the company's intrinsic or true business value. By "true business value," Harris means an estimate of the price a knowledgeable buyer would pay to acquire the entire business. In making its investment decisions, Harris uses a "bottom-up" approach focused on individual companies, rather than focusing on specific economic factors or specific industries.
The chief consideration in the selection of stocks is the size of the discount of a company's stock price compared to the company's perceived true business value. In addition, Harris looks for companies with the following characteristics, although not all companies will have all of these attributes: free cash flows and intelligent investment of excess cash, earnings that are growing and are reasonably predictable, and a high level of management ownership in the company.
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Harris Associates
Bill
Nygren
Target Manager Allocation: 15%
Size of Company: Mostly large and mid-sized companies
Stock-Picking Style: Value
Approximately 15% of the Equity Fund's assets are managed by Nygren, who employs Harris' value investment philosophy and process. This investment philosophy is based upon the belief that, over time, a company's stock price converges with the company's intrinsic or true business value. By "true business value," Harris means an estimate of the price a knowledgeable buyer would pay to acquire the entire business. In making its investment decisions, Harris uses a "bottom-up" approach focused on individual companies, rather than focusing on specific economic factors or specific industries.
The chief consideration in the selection of stocks is the size of the discount of a company's stock price compared to the company's perceived true business value.
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Nuance Investments
Scott
Moore
Target Manager Allocation: 10%
Size of Company: All sizes
Stock-Picking Style: Value
Approximately 10% of the Equity fund's assets are managed by Moore. Moore's investment philosophy is founded on the belief that investing in leading business franchises selling at a discount to fair value has the potential to generate excess returns over time. Moore seeks to generate strong risk-adjusted returns by investing in leading and growing businesses that, due to transitory reasons, are temporarily under-earning and, consequently, are undervalued in the marketplace. Thus, Moore attempts to capitalize on investors' shorter-term fears or overreactions to provide investment opportunities.
To achieve his goal, Moore attempts to minimize uncertainty and increase the odds of a favorable investment outcome.
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Sands Capital Management
Frank
Sands Jr.
Michael
Sramek
Target Manager Allocation: 17%
Size of Company: All sizes, but mostly large- and mid-sized
Stock-Picking Style: Growth
The team believes that over longer periods of time, stock prices track earnings growth. The investment goal is to identify companies that can sustain above-average earnings growth relative to the broader market, typically over the next three to five years. The team believes great investment ideas are rare and runs a concentrated portfolio of high-quality, seasoned, growing businesses across an array of attractive and growing business spaces. Grassroots research—bottom-up and company focused—is the cornerstone of the team's investment process. All research analyses and conclusions are internally generated using a variety of internal and external data sources.
The team seeks to identify the potential leaders in attractive business spaces. To identify such companies, the team evaluates six key factors:
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Wells Capital Management
Dick
Weiss
Target Manager Allocation: 13%
Size of Company: All sizes, but mostly small and mid-sized companies
Stock-Picking Style: Blend
Weiss invests in stocks of small- and mid-sized companies that are undervalued either because they are not broadly recognized, are in transition, or are out of favor based on short-term factors. Weiss also has the flexibility to invest in the stocks of larger companies if in his opinion they offer the potential for better returns. In seeking attractively valued companies, Weiss focuses on companies with above-average growth potential that also exhibit some or all of the following: low institutional investor ownership and low analyst coverage, high-quality management, sustainable competitive advantage.
Weiss evaluates the degree of undervaluation relative to his estimate of each company's private market value. This private market value approach is based on an assessment of what a private buyer would be willing to pay for the future cash flow stream of the target company. Based on his experience, Weiss believes that, except for technology and other high-growth stocks, most stocks trade at between 50% and 80% of the private market value.
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Monthly Performance as of 07/31/2018
| Average Annual Total Return | |||||||
|---|---|---|---|---|---|---|---|
| Monthly Performance as of 07/31/2018 | One Month | Year to Date | 12 Month Total Return | 3 Year Average | 5 Year Average | 10 Year Average | Since Inception |
Litman Gregory Masters Equity Fund
|
2.91% | 5.71% | 15.21% | 11.43% | 12.42% | 9.27% | 8.47% |
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Russell 3000 Index
|
3.32% | 6.64% | 16.39% | 12.18% | 12.83% | 10.68% | 8.54% |
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Morningstar Large Blend Category Average1
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3.53% | 5.26% | 14.64% | 10.26% | 10.93% | 8.93% | 7.01% |
Litman Gregory Masters Equity Fund
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2.85% | 5.53% | 14.91% | 11.17% | 12.21% | n/a | 14.60% |
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Russell 3000 Index
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3.32% | 6.64% | 16.39% | 12.18% | 12.83% | n/a | 15.97% |
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Morningstar Large Blend Category Average1
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3.53% | 5.26% | 14.64% | 10.26% | 10.93% | n/a | 13.93% |
1 Although Morningstar categorizes the Equity Fund as Large Growth, we believe it is better categorized as Large Blend.
Quarterly Performance as of 06/30/2018
| Average Annual Total Return | |||||||
|---|---|---|---|---|---|---|---|
|
Quarterly Performance as of 06/30/2018 |
One Month | Year to Date | 12 Month Total Return | 3 Year Average | 5 Year Average | 10 Year Average | Since Inception |
Litman Gregory Masters Equity Fund
|
-0.05% | 2.72% | 15.37% | 10.75% | 13.23% | 8.50% | 8.36% |
|
Russell 3000 Index
|
0.65% | 3.22% | 14.78% | 11.58% | 13.29% | 10.23% | 8.41% |
|
Morningstar Large Blend Category Average1
|
0.42% | 1.67% | 12.77% | 9.55% | 11.28% | 8.39% | 6.87% |
Litman Gregory Masters Equity Fund
|
-0.05% | 2.60% | 15.12% | 10.50% | 13.02% | n/a | 14.39% |
|
Russell 3000 Index
|
0.65% | 3.22% | 14.78% | 11.58% | 13.29% | n/a | 15.72% |
|
Morningstar Large Blend Category Average1
|
0.42% | 1.67% | 12.77% | 9.55% | 11.28% | n/a | 13.63% |
1 Although Morningstar categorizes the Equity Fund as Large Growth, we believe it is better categorized as Large Blend.
Expense Ratios*
| Gross Expense Ratio | Net Expense Ratio | |
|---|---|---|
| Litman Gregory Masters Equity Fund (Institutional Class) | 1.27% | 1.15% |
| Litman Gregory Masters Equity Fund (Investor Class) | 1.52% | 1.40% |
* The gross and net expense ratios can be found in the most recent Summary Prospectus (4/30/2018). There are contractual fee waivers in effect through 4/30/2019.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
Prior to April 30, 2009, the fund's Institutional Class was an unnamed share class. The fund's Investor Class commenced operations on April 30, 2009. Because the fees and expenses vary between classes, performance will vary with respect to each class.
Indexes are unmanaged, do not incur fees, and cannot be invested in directly. Click here for index definitions.
Calendar Year Performance
| 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | |
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| Litman Gregory Masters Equity Fund (Institutional Class) |
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| Russell 3000 Index |
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| Morningstar Large Blend Category Average | 28.36% | 22.36% | 19.96% | -6.82% | -13.81% | -22.49% | 27.07% | 10.05% | 5.86% | 14.00% | 6.02% |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
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| Litman Gregory Masters Equity Fund (Institutional Class) |
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| Russell 3000 Index |
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| Morningstar Large Blend Category Average | -37.88% | 28.16% | 14.17% | -1.40% | 14.84% | 31.32% | 10.72% | -1.47% | 10.07% |
Best/Worst Rolling Return Periods as of 6/30/2018
| Performance Period | MSEFX | Russell 3000 | Number of Periods |
|---|---|---|---|
| Best Rolling 12-Mo. Period | 68.3% | 56.0% | 247 |
| Worst Rolling 12-Mo. Period | -49.6% | -43.5% | 247 |
| Best Rolling 36-Mo. Period | 113.0% | 105.0% | 223 |
| Worst Rolling 36-Mo. Period | -48.6% | -40.4% | 223 |
| Best Rolling 60-Mo. Period | 204.0% | 191.5% | 199 |
| Worst Rolling 60-Mo. Period | -40.1% | -28.1% | 199 |
| Percent Negative 12-Mo. Rolling | 25.5% | 23.1% | 247 |
| Percent Negative 36-Mo. Rolling | 20.6% | 25.1% | 223 |
| Percent Negative 60-Mo. Rolling | 18.6% | 20.6% | 199 |
| Percent Beat Benchmark 12-Mo. | 50.6% | N/A | 247 |
| Percent Beat Benchmark 36-Mo. | 36.8% | N/A | 223 |
| Percent Beat Benchmark 60-Mo. | 35.7% | N/A | 199 |
The first rolling 12 month-period is reached 12 months after each fund's inception (based on month-end dates). The starting and ending periods then "roll" forward one month at a time to comprise a new 12-month period. The first rolling three-year period is reached 36 months after each fund's inception (based on month-end dates). The starting and ending periods then "roll" forward one month at a time to comprise a new 36-month period. The first rolling five-year period is reached 60 months after each fund's inception (based on month-end dates). The starting and ending periods then "roll" forward one month at a time to comprise a new 60-month period.
Fund Facts
| Inception Date: | December 31, 1996 |
| Cusip Number: | 53700T 108 |
| Ticker Symbol: | MSEFX |
| Minimum Investment: | $100,000 ($5,000 retirement accounts) |
| Annual Expenses: | 1.27% gross; 1.15% net (as of 4/30/2018)* |
| Sales Loads: | None |
| 12B-1 Fees: | None |
| Phone: | (800) 960-0188 |
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While the fund is no-load, management and other expenses still apply. |
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* The gross and net expense ratios can be found in the most recent Summary Prospectus (4/30/2018). There are contractual fee waivers in effect through 4/30/2019.
Portfolio Holdings
- To view our most recent portfolio holdings, please click here.
Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security.
Portfolio Composition (as of 6.30.18) |
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Sector Allocation vs. Russell 3000 Index (as of 6.30.18) |
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Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security.
Litman Gregory Masters Equity Fund Commentary, 2nd Quarter 2018
The fund underperformed for the quarter but remains ahead of its benchmark and peer group for the year to date. Stock picking in technology was the primary driver of the underperformance, with gains in Visa being offset by declines in other holdings. ›› Read More
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the funds may be lower or higher than the performance quoted. To obtain the performance of the funds as of the most recently completed calendar month, please click www.mastersfunds.com. Indexes are unmanaged, do not incur fees, and cannot be invested in directly.