Warren Buffett Fan? Check Out This Promising Value Fund

Berkshire Hathaway Shareholders, Omaha, USA - 03 May 2019
Nati Harnik / AP / Shutterstock.com

If you’re a fan of the Oracle of Omaha’s measured and patient investing style, you might want to take notice of this value fund, which employs a “Buffett-like style of seeking high-quality value stocks… not just the cheapest ones, but those with strong businesses that can weather a storm,” according to Barron’s.

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The Homestead Value Fund (with $1 billion in assets under management) follows a strategy that seemingly works. Per Barron’s, over the past five years, the fund has beaten 83% of its peers in Morningstar’s Large Value category, with a 13.3% annualized return versus the category’s 11.2%, according to Barron’s. Over the past decade, it has beaten 89% of its peers — and the fund’s 0.65% expense ratio is less than the category’s 0.82% average.

The fund’s top 10 holdings include Alphabet, Microsoft, JPMorgan Chase, Abbott Laboratories, Honeywell International, Avery Dennison, Parker-Hannifin, Pfizer, Bank of America and Goldman Sachs, according to the fund’s prospectus.

This value fund may be an appropriate investment if your goal is to grow your savings over the next several years by backing U.S. companies with relatively inexpensive stock prices, according to the prospectus. The Homestead Value Fund may also be a strong portfolio addition if you’re comfortable with temporary — yet sometimes dramatic — fluctuations in your account balance based on the performance of the underlying stocks.

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Barron’s reported that one thing which differentiates the Homestead Value Fund is it invests like an institutional pension plan fund, with a focus on long-term investing. The Homestead Value Fund usually holds individual stocks for at least five years, maybe adding two or three positions annually to its portfolio of about 50 stocks.

Prabha Carpenter, senior equity portfolio manager, told Barron’s that “we look at things over a longer time period than many managers, and we feel that thoughtfulness, thoroughness, and disciplined process leads to superior returns over time.”

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Homestead Funds is a mutual fund manager with roots in rural America, formed in 1990 to invest on behalf of community electric cooperatives and their members. The National Rural Electric Cooperative Association (NRECA) created Homestead Funds to provide co-ops and their employees with sensible options for saving and investing their money, according to the company’s website.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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