Thanks To Solid Bear Market Defense, Jensen Quality Growth Fund Inst Surges To The Top

| About: Jensen Quality (JENIX)
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Summary

After a few years of performing in the middle or lower part of its Morningstar category, the fund has outperformed every fund in recent performance ratios except the 1-year ratio.

The Jensen Quality Growth Fund Inst has a decided advantage vs its benchmarks in terms of limiting losses in market downturns.

The fund's downside risk is mitigated by its lack of exposure to mid-cap stocks versus its benchmark and category average.

For the past four years, the Jensen Quality Growth Fund Inst (MUTF:JENIX) fund has been mired in the middle or lower part of the pack. In market upticks, the fund has managed to hold its own, yet was always outpaced by either the S&P 500 or the Morningstar Large Growth Category Average. In 2015, the fund outperformed the S&P 500 by 0.42, yet was only able to duplicate only half of the return by the Morningstar Large Growth Category Average.

Yet, the Jensen Quality Growth Fund Inst has emerged as a top-notch fund to look at during the ferocious attack of the market bears. While Leonardo DiCaprio barely survived in his epic encounter with a grizzly bear in the Oscar-Nominated film "The Revenant", the Jensen Quality Growth Fund Inst has only managed to stand out after meeting the attack of the bears head-on.

This can be seen in the fund's performance that ranges from 1-month to 1-year in the chart below. The fund's sturdiness and outperformance of its benchmarks. Other than the fund's 1-year performance ratio, the fund has handled the bears as well as any other fund in the Morningstar Large Growth Category.

When one look at the comparison between the fund's downside capture ratio and that of its Morningstar category, it is clear that the Jensen Quality Growth Fund Inst is significantly prepared to handle the downside risk in a way that other mutual funds within the Morningstar Large Growth category are not.

One can easily see that the Jensen Quality Growth Fund Inst's downside risk is mitigated due to its vast underexposure in mid-cap stocks in comparison to its benchmark and category average. As you can see in the chart below, you could see that the fund's exposure in mid-cap stocks is at least 12% lower than its benchmarks.

Size

% of Portfolio

Benchmark

Category Average

Giant

50.38

47.32

63.08

Large

43.87

32.68

16.34

Medium

5.76

18.44

18.23

Small

0.00

1.52

2.26

Micro

0.00

0.03

0.09

The sector portfolio weightings for this fund are largely favorable. As you can see below, The Jensen Quality Growth Fund Inst is not nearly as exposed to the financial services sector compared to its category average. The Financial Select Sector SPDR ETF (NYSEARCA:XLF) is the worst performing U.S. sector ETF at the moment.

Sector

% of Portfolio

Benchmark

Category Average

Financial Services

5.10

5.12

10.83

Additionally, the fund is weighted favorably in the consumer staples and consumer discretionary sectors in different respects. While the fund is not as exposed to the consumer discretionary sector, it also enjoys a weighted advantage in the consumer defensive sector. This can be seen below:

Sector

% of Portfolio

Benchmark

Category Average

Consumer Staples

12.21

19.09

18.51

Consumer Discretionary

15.82

11.46

6.89

With regards to the fund's attractiveness, the icing on the cake is the fund's cheap expense ratio. The Jensen Quality Growth Fund Inst is nearly half of the average expense ratio of its Morningstar category.

BOTTOM LINE

The Jensen Quality Growth Fund Inst is a fund that defensive-minded investors should crave for in this bear market. It may not be the best fund for return-minded investors. Yet, every investor need a defensive stalwart in the same manner that a basketball team does. This fund fulfills the task of sturdy defense against the bears due to its strong record of limiting losses over the years.

The lack of mid-cap exposure is greatly helpful in accomplishing such a task. The fund's cheap expense ratio only enhances the attractiveness of this fund right now. This fund is simply the right investment at the right time for the defensive investor.

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.