Oakmark Equity & Income fund (OAKBX) is a well known as an equity & income, moderate risk fund. It is managed by Clyde McGregor, who has been with the fund since 1995. The fund usually seeks current income, preservation and growth of capital. The fund invests primarily in a diversified portfolio of U.S. equity and fixed-income securities (although the fund may invest up to 35% of total assets in securities of non-U.S. issuers).
It invests approximately 40-75% of total assets in common stock, including securities convertible into common stock, and up to 60% of assets in U.S. government securities and debt securities rated within the two highest grades assigned by Moody Investors Service, Inc. or by Standard & Poor.
The fund has annual turn over rate 47%, mostly in the income (bond) side. The following 7 stocks are the fund's largest holdings:
|Company||Symbol||% Assets||Annual Yield (%)|
|CENOVUS ENERGY INC.||(CVE)||3.63||2.26|
|Nestle SA ADR||(OTCPK:NSRGY)||3.41||3.6|
|UnitedHealth Group Incorporated||(UNH)||2.77||1.24|
|General Dynamics Corporation Co||(GD)||2.66||2.69|
|Laboratory Corporation of Ameri||(LH)||2.19||--|
|Philip Morris International Inc||(PM)||2.1||3.98|
Cenovus Energy is a a Canadian oil company which was spun off from EnCana ECA in 2009. The company operates conventional and enhanced recovery oil and gas production in Alberta and Saskatchewan and participates in a 50/50 integrated oil joint venture with Conoco Philips (COP). Its business in oil sands projects has generated steady cash flow for the company. The other energy stock, DEO Petroleum, also has a healthy 3.6% yield. Nestle is a global consumer product company with a strong and steady cash flow. Philip Morris Internationals is the international part of tobacco company, which has the highest yield among the 7 stocks. All the stocks are solid cash flow generators.
The following compares the fund's performance with two diversified income producing ETF portfolios.
Portfolio Performance Comparison (as 1/6/2012)
|Portfolio/Fund Name||1Yr AR||1Yr Sharpe||3Yr AR||3Yr Sharpe||5Yr AR||5Yr Sharpe|
|Retirement Income ETFs Strategic Asset Allocation Risk Profile 0||-3%||-12%||15%||57%||1%||1%|
|Retirement Income ETFs Tactical Asset Allocation Risk Profile 0||-3%||-24%||12%||61%||10%||48%|
Three Year Chart
The fund's 5 year annualized performance is much better than the diversified strategic asset allocation portfolio. This is an indication of solid stock picking skills for a fund that is mostly buy and hold.
Investors seeking income and/or stable stocks can look at these 7 stocks and build their stock portion portfolios. Learning from a great income fund can be a rewarding experience for portfolio building.
Disclaimer: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.