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Value Pack

This fund thinks portfolio diversity is overrated.
Magazine Contributor
2 min read

This story appears in the March 2003 issue of Entrepreneur. Subscribe »

Don Yacktman has been a fan of value investing for years-and his Yacktman Focus fund (YAFFX) shows it. Through December 13, the fund--with only 25 stocks in its portfolio--was up more than 14 percent, while other mid-cap value funds were underwater by about 16 percent, according to Lipper Analytical Services.

"We buy profitable businesses that have returns on sales, low prices, and management teams that do a good job at capital allocation," says Yacktman, who's managed the fund since its inception in 1997.

What you won't find in this portfolio are highly cyclical businesses, like auto or airline stocks. "We also don't invest in capital goods kinds of companies so that keeps us out of a lot of technology businesses that are shooting stars or Roman candles," he adds.

With a portfolio that has the bulk of its assets invested in a handful of stocks like Henkel, Lancaster Colony, Liberty Media and Tyco, there is more risk than in a fund where assets are spread out. That said, the fund's beta (a measurement of risk) shows less risk than that of the market overall.

Ask Yacktman why the fund's been so successful and he'll say he's found an investment strategy that works, and he sticks to it. Wise advice for all investors.

Dian Vujovich is an author, syndicated columnist and publisher of fund investing site

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