In the past, we have discussed some options on this board for folks who – for one reason or another, such as constraints imposed by 401K (or 403b or 457b) plans – need to invest in mutual funds or ETFs. One option that Jim has suggested is the ETF QQQE.
What does the board think about Akre Focus Fund?
Yes, it’s an actively managed fund, so the bogleheads are going not going to like it. However, the fund seems to be solid, with 5 year, 10 year, and since inception (2009) returns of 18.36%, 15.86%, and 16.12%, beating the S&P 500 in all three cases. I don’t think most mutual funds have managed anything close to that performance.
https://www.akrefund.com/wp-content/uploads/2022/04/Akre-Foc……
It is noteworthy that they have achieved the above-mentioned performance without investing in any of the FANMAG stocks (which have been the darlings of the market in the last decade, save for the last few months), whereas these stocks have contributed in a big way to the returns of the S&P 500 in the last decade.
In terms of investment strategy, they follow a three-legged stool approach in stock selection, namely returns on capital, management (capability, integrity), and reinvestment opportunities.
Hence, they focus on high quality stocks with a focus on ROIC, quality of management, and ability to reinvest profits (capital allocation). Morningstar gives it 4 (out of 4) stars and a top 1 to 2 percentile rank in in its category of funds.
In one of his talks, Mohnish Pabrai recommended cloning the stocks in the Akre Focus Fund, and at other places, has lauded the general investment approach followed by the Fund (as opposed to, say, finding stocks that are undervalued that are expected to converge to fair value).
It is also true that the founder of the fund (Chuck Akre) has recently retired, but his successors (who have worked with Chuck for several years) are following the same appealing approach/strategy. That said, there may be some execution risk due to the change.
The expense ratio of the fund is 1.3% (retail) and 1.04% (institutional class).
Thoughts (especially of Jim, but others too) are welcome. Thank you in advance for any insights.