Croft Focus Fund Class I Is In A Race To The Bottom

| About: Croft Focus (CIFVX)

Summary

The Croft Focus Fund Class is 99th in the Large Blend Category with a -13.04% YTD Return.

The fund has had poor showings from its technology, healthcare, and financial services holdings. These are all sectors that have performed poorly based on U.S. sector ETF results.

The fund has a higher expense ratio than its benchmarks and its downside capture ratio is illustrative of a fund that has a hard time limiting losses in down markets.

The Croft Focus Fund Class I (MUTF:CIFVX) has had a brutal year so far.

At the moment, the fund's YTD Return is 99th in the Large Blend Category with a -13.04% YTD Return. On the other hand, the S&P 500 and the Large Blend Category have posted returns of -1.06% and -2.70% returns respectively. The fund's negative performance can be seen across the board in its monthly and 1-year ratios.

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The fund was also in the back of the pack in 2014 and 2015 as evidenced by the graph below.

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Based on market capitalization statistics, the fund has a very significant deficit in terms of portfolio weight in the giant-cap area. Yet, the fund makes up for this with a wide advantage in riskier mid-cap stocks. This can be seen below:

Size

% of Portfolio

Benchmark

Category Avg.

Giant

15.22

44.88

67.65

Large

33.63

33.07

12.04

Medium

42.49

19.78

17.36

Small

8.65

2.22

2.82

Micro

0.00

0.05

0.13

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In terms of portfolio sector weightings, the fund has a sizable advantage in the basic materials sector. The Materials Select Sector SPDR ETF (NYSEARCA:XLB) is the fourth-best performer among U.S sectors with a 3.3% YTD Return. The Basic Materials sector has a pretty sizable advantage over its benchmarks as shown in the chart below:

Size

% of Portfolio

Benchmark

Category Avg.

Basic Materials

10.84

3.15

3.10

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However, the fund's basic materials holdings have not made out very well so far this year.

BASIC MATERIALS HOLDING

PORTFOLIO WEIGHT

YTD RETURN

Weyerhaeuser Co (WY)

3.46%

-8.64

Axalta Coating Systems Ltd (AXTA)

3.37%

-4.77

Alcoa Inc (AA)

3.11%

-7.19

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The fund was also weighed down by the following poor-performing U.S sectors: Financial Services, Technology, and Healthcare. The Technology Select Sector SPDR ETF (NYSEARCA:XLK) has a -2.3% YTD Return while the Health-Care Select Sect SPDR ETF has a -4.3% YTD Return (NYSEARCA:XLV). Also, the Financial Select Sector SPDR ETF (NYSEARCA:XLF) has a -9.0% YTD Return.

The Croft Focus Fund Class I has two healthcare stocks, four technology stocks, and two financial services stocks. As you can see, all of these stocks are in the red for the year and have served to drag down the fund.

SECTOR

HOLDING

PORTFOLIO WEIGHT

YTD RETURN

Technology

Apple Inc. (AAPL)

5.32%

-11.52

Technology

Micron Technology Inc. (MU)

3.97%

-13.63

Technology

Alphabet Inc C. (GOOG) (GOOGL)

3.89%

-11.94

Technology

Microsoft Corp. (MSFT)

3.17%

-11.41

Health-Care

Gilead Sciences Inc. (GILD)

4.89%

-21.78

Health-Care

Endo International PLC (ENDP)

2.46%

-77.64

Financial Services

Synchrony Financial (SYF)

4.05%

-23.18

Financial Services

Morgan Stanley (MS)

3.66%

-24.83

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Other notable laggards in the fund were Delphi Automotive (NYSE:DLPH) with a -30.43% YTD Return, American Airlines Corporation (NASDAQ:AAL) with a -39.86% YTD Return and XPO Logistics (NYSEMKT:XPO) with a -14.50% return. American Airlines Corporation and XPO Logistics are both in the industrial sector.

The Croft Focus Fund Class I has a significant disadvantage in terms of the downside capture ratio. This illustrates the fund's complete inability to limit losses in down markets. Even though the fund has a slight advantage in the upside capture ratio, the deficit in terms of the downside capture ratio vs. its benchmark is vast. Here is the graph below:

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Finally, the fund has the added disadvantage of being more expensive than its benchmarks. As of the fund's last prospectus on 08/01/2015, the fund's last expense ratio was 1.23%. The fund's expense ratio in comparison to its benchmarks can be seen below:

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CONCLUSION

Therefore, the Croft Focus Fund Class I is not a good fit for investors at this time. The fund has a lot of poor-performing holdings in poor-performing sectors such as technology, financial services, and healthcare. The fund's basic material holdings also did not do the fund any favors.

Also, the fund is severely deficient when it comes to limiting losses in down markets. This is the basis for their poor performance at the moment.

In addition, the fund's expense ratio is higher than its benchmarks. This makes the fund less attractive for investors.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.