Financial market volatility – real or anticipated – is often accompanied by a strong emotional reaction. The simple reason: you’re human.
For some things you buy, if you pay more, you get more. But paying more for a mutual fund may mean you get less. Here’s why.
Small-Company Stock Fund co-manager Mark Ashton was one of four panelists who participated in an Asset TV roundtable on small-cap investing. You can see excerpts from this discussion, videotaped April 13, 2016, where Mark talks about the team’s approach to stock selection and view of opportunities in the small-cap space.
Past performance does not guarantee future results. Share prices of small-capitalization stock funds may be more volatile than those of large-capitalization stock funds. Smaller companies may have limited product lines, markets, financial resources or their management teams may have less depth and expertise compared with large-capitalization companies.
For the second year in a row, Lipper named Homestead’s Small-Company Stock Fund the top fund in the small-cap core category for the 10-year period ending November 2015. Announced annually, this year on March 22, the Lipper awards recognize funds that have delivered consistently strong risk-adjusted three-, five- and 10-year performance relative to their peers, based on Lipper’s proprietary performance-based methodology.
The Lipper Fund Awards are based on the Lipper Leader ratings for Consistent Return; which are calculated using a utility function based on the effective return over multiple non-overlapping periods: three-, five-, and ten-year horizons. The calculations over multiple periods ensure that all periods in which a fund underperforms the average of its peer group are identified. Then Lipper uses a utility function based on behavioral finance theory to penalize periods of under performance against the peer group average, with more significant weightings being given to excess negative returns.In determining the universe of funds considered for an award, Lipper includes those registered for sale in the respective country as of the end of the calendar year that have at least 36 months of performance history. 168 funds were evaluated for this award. The calculation periods end November 30 of the respective evaluation year.
Past performance does not guarantee future results. Share prices of small-capitalization stock funds may be more volatile than those of large-capitalization stock funds. Smaller companies may have limited product lines, markets or financial resources, or their management teams may have less depth and expertise, compared with large-capitalization companies.
Value Fund co-manager Prabha Carpenter talked about the team’s strategy and profiled a few of the current holdings. For this article, editors sought out actively managed funds with relatively concentrated portfolios—typically 50 companies or fewer—and a solid long-term performance track record.
Past performance does not guarantee future results. Equity funds, in general, are subject to style risk, the chance that returns on stocks within the style category in which the fund invests will trail returns of stocks representing other styles or the market overall. Investing in mutual funds involves risk, including the possible loss of principal.
Shareholders voted in support of the board of director’s recommendation to name a new subadvisor for the International Value Fund. Harding Loevner LP assumed responsibility for managing the portfolio on January 15, 2016. As part of that change, the fund has been renamed the International Equity Fund. The fund preserves its original ticker symbol (HISIX).
The January 2016 issue of Kiplinger’s Personal Finance includes a profile of Homestead’s Small-Company Stock Fund, first named to the Kiplinger 25 list in May 2012. Prabha Carpenter, one of the fund’s three co-managers, discussed the team’s diligence in vetting companies considered for investment and willingness to travel far off the beaten path. The article is titled “This Small-Company Stock Fund Finds Gems in Surprising Places” and can be viewed via Kiplinger’s website.
Past performance does not guarantee future results. Investing in small-company stocks poses special risks, such as limited information on which to base investment decisions, and historically greater share-price volatility than larger-cap stocks have experienced. Investing in mutual funds involves risk, including the possible loss of principal.