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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Oakmark Equity Income Fund - OAKBX

I Own This Fund But I Am Concerned By Its Poor Performance, It Has a Large Asset Base, a Weak Bond Manager, I Have BeenThinking About Selling It. It Has a High Beta And Goes Down More Than My Other Funds On a Bad Down Day - Thats What Really Bothers Me, I Am Afraid If We Have a Bad Crash The Fund Will Get Crushed. I Would Appreciate Any & All Opinions -


  • 1.11% yield but calls itself an income fund....never made sense to me.
  • TedTed
    edited April 2016
    @ducrow: (I'm moving this to the top so it doesn't get buried)

    If we have a bad crash the vast majority of funds will get crushed. Having said that, I believe there are better Moderate Allocations Fund choices. For your information I'm linking U.S. News & World Report ranking of Moderate Allocation Funds for you to screen.
  • edited April 2016

    GM is the fund's largest holding (at just over 4%). GM's down nearly 15% over the past year. They've only recently (past 3 years) acquired GM - sensing deep value. Either the bet pays off or it's a classic value-trap. Oakmark is known to dump companies when they feel they've made a mistake - so I suppose that's a third possibility. Lipper places the fund in its "mixed equity" category and gives it a 5 (highest) for category performance, but only a 3 (average) for consistent performance . So much of this ratings game depends on the category one places a fund in. Looks like the fund averaged about 6% over past 3, 5 and 10-year periods.

    Haven't paid much attention to their fixed income holdings lately. The fund has never played much in the junk bond area (where there may still be value). It's just not their game. And (IMHO) the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?) So, most likely, the fund has gone very short on its fixed income component (around 35%) which helps explain the low returns for fixed. To them, in the current environment, fixed income is more of a defensive holding than a way to generate return.

    I've owned OAKBX for close to 15 years* (currently 9-10% of holdings). No plans to do anything - just not my nature. But can understand others' concerns. Am sure you'll find better performers on the chart Ted linked. As for this fund "getting crushed" anytime soon ... don't hold your breath waiting.:)

    *Temporarily moved all of it to their more aggressive OAKGX for 1-2 years starting in early '09.

  • I dumped OAKBX last year after holding it for a decade. I agree with Ted, there are better choices out there; it just depends what your goals and needs are.

    Good luck!
  • @ducrow & MFO Members:: Here's the problem with OAKBX and it's performance: Very long-term 10-15 years excellent, medium term 3-5 years below par, recent term YTD- 1 year horrible.
    Years: Percentile Rank:
    15 2
    10 12
    5 58
    3 35
    1 89
    YTD 91
  • Thanks Ted
    for the link to --
    Of Interest, fpacx is # 31 on their List !!
  • @hank
    You noted: " the investment grade universe today more closely resembles Disneyland than a serious investment option. (Returns on a 10 year Treasury held to maturity should net the owner about 1.5% per year after expenses. Sound attractive?)"
    >>>Held to maturity are the key words.....
    Yes, 1.6 % or so held to maturity and assuming no changes along the 10 year journey is not much of a return. Tis why folks trade bonds, not unlike equity stuff of all flavors.
    Now, not unlike equity(s); the capital appreciation is with the "price", yes?
    Much of the IG bond area is running +3% so far this year................that gain such as heck has nothing to do with yield (if it were static). The longer term IG is +10% and greater.

    Forget the yield with the bond, except as a reference to where the bond(s) price is parked at the moment.
    Bond yield is of value and can have a straight line method of a calculation for the yield only and the money value, in the perfect world of "static". I don't find any static in today's world of money.

    Now if bond fund "x" is on the ball with all of this, they are likely buying bonds based more upon pricing versus yield. That is how the capital appreciation will be had, and won't be reflected with whatever a fund states is the "current yield".

    I would be more concerned with a fund (holding IG bonds) shows a high average yield. With the proper circumstances, perhaps it is time for the fund to sell away some of the bonds, as the price may be eroding.

    Not unlike HY bonds purchased in early 2009 and one stating at a page indicating a yield of 20% or more. Geez, one would like that all day long, eh? But, that yield came from the price being beat to hell in the prior 6 months. I wanted the price appreciation that would evolve from the "bail out" that would help smooth the pain and fear in the markets.

    Nuff said by this"WhatsAMatter U" masters program graduate, in theoretical economics.

    Take care,
  • @catch22: In terms of OAKBX is that a buy, sell, or hold ?
  • OAKBX's great returns -- a drop off after Ed left?

    I have held OAKBX fund for 10+ years, even after Ed's departure because of my respect for the firm.

    At the same time, it's worth noting, their international small cap fund (OAKEX, which I also hold) has been lackluster for much longer than OAKBX. So, maybe I should be paying more attention to that?

    PRWCX gets a lot of props here and in the press. But if I recall correctly (my wife owns it, I do not), it's closed. MAPOX -- kind of a flip side of OAKBX, I seem to recall: great recent numbers, but more lackluster longer term. VBINX has never impressed me and had long periods when it was easily beaten by any number of balanced funds.

  • edited April 2016
    Well, it would help to have a more current print on asset allocation to better understand what is going on. As of 12/31/15, the equity sleeve was rather concentrated in only 46 holdings (and with $17B in AUM suggests big position and a not-so-nimble ability to move on a dime). The fund also showed 20% in cash. With the bonds being so conservative and short in duration, I don't know what kind of yield you'd expect from the fund, beyond what you're getting.

    Unless this fund changes its long-standing modus operandi, I can't envision anything but underperformance for the foreseeable future. The fund just isn't structured for anything else, IMO.
  • @heezsafe: Oakmark's funds are generally always concentrated.
  • Hi @Ted,
    You asked: "In terms of OAKBX is that a buy, sell, or hold ?"
    >>>Not having a stake in OAKBX at any time, I remain the same today. I would not recommend a purchase at this time. For those who currently hold the fund, well; I can't make that call.
    During a period years ago when this fund could have been a consideration, our equity exposure was largely in VPMCX, FCNTX and FDGRX.
    Take care,

  • We have not added to the fund in a long time. We have a lot of clients with huge, unrealized gains, so will continue to hold until we can unwind the gains. Again, comparing this fund is difficult, since the lousy Moderate Allocation category includes all kinds of fund species, very few of which look anything like OAKBX.
  • A few years ago I questioned here my large position in OAKBX and my dissatisfaction with the sudden departure of Mr. Studzinski. I sold out and put the dough into BRUFX and have not regretted the decision.
  • BRUFX vs OAKBX - lower expenses, smaller asset base, much more flexible mandate, able to own small market-cap holdings because of smaller size. Bigger loss in 2007-08, bigger gains 2009-10. Underperformed 2012-2013, outperformed 2014-2015. Just FYI for the board.
  • BobC said:


    Since OAKBX inception... a picture is worth a thousand dollars (minimum investment):
  • All U-Wisconsin guys, like the MAPOX crowd. Investor returns are pretty superior too, despite the comparative volatility.
  • edited April 2016
    @bee - Interesting graphic

    Can't help wondering ...

    How many investors sold BRUFX around 2002 and bought OAKBX based on OAKBX's preceding 5 years' outperformance?

    Than moved back into BRUFX around '07 based on its preceding 5 years' outperformance?

    Than dumped BRUFX again in early '09 in favor of OAKBX, after sensing that their fund's drawdown over the preceding 1-2 years (a period of financial panic) had been much greater peak to trough than that of OAKBX?
  • A nice summary of what I was pondering too, at least the dynamic pattern if not investor decisionmaking, and about the only knock on Bruce ever heard.
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