The Oakmark family of seven no-load mutual funds was launched in 1991. All seven funds use a long-term, value-oriented approach to investing to minimize risk and maximize profit potential, and Harris Associates L.P. is the advisor for them. As part of Oakmark's philosophy, each of its funds is invested in a relatively small number of stocks when compared to the typical mutual fund. Each fund holds fewer than 75 stocks, and two of Oakmark's funds are concentrated in portfolios of just 20 securities. Oakmark's research analysts invest in companies where the underlying intrinsic values are substantially higher than the stocks' current prices.
The Oakmark Equity and Income Fund ("OAKBX") is a large-cap blend fund, according to Morningstar's style box, that seeks income preservation and long-term growth of capital by investing in equities and fixed income. OAKBX first opened on Nov. 1, 1995. Clyde McGregor is the long-time portfolio manager who has run the fund since 1995. With a four-star silver rating from Morningstar, the fund holds $16.4 billion in assets. Since inception, it has experienced 17 years of positive performance, with only three years showing negative performance. The worst year for fund performance was 2008, the year when the financial markets collapsed. OAKBX declined by 16.18% in 2008. In contrast, the fund's best year for performance was 2013, when it showed an increase in value of 24.25%.
Minimum initial fund investment for OAKBX is $1,000. The expense ratio is a low 0.75%. As of Dec. 31, 2015, the fund was invested 61.48% in stocks and 15.65% in fixed income. Average annual turnover was 25%. The trailing 12-month dividend yield was 1.17%. OAKBX holds 49 stocks in keeping with Oakmark's philosophy to focus on a small number of stocks with excellent value. The average P/E ratio of the portfolio's stock holdings was a modest 13.89. Year to date, OAKBX lost 0.74% in value as of March 14, 2016. Over the past year, the fund lost 5.89%. However, the trailing three-year, five-year and 10-year performance figures were a positive 5.72, 6.23 and 6.38%, respectively. OAKBX closed at $28.36 on March 14, 2016.
Top Five Holdings
General Motors Company (NYSE: GM) was number one on the top five list, with a portfolio weighting of 4.19%. Year to date through March 14, 2016, GM was down by 7.20%. The company traded at a very low P/E ratio of 5.28, and closed at $31.18 on March 14, 2016. The stock yielded 4.90%.
Bank of America Corporation (NYSE: BAC) was a close second to GM, with a portfolio weighting of 4.10%. The stock was first purchased in 2012. BAC had a P/E ratio of 10.62 and a yield of 1.45%. As of March 14, 2016, It was trading at $13.51, 27% below its high of $18.48 in the preceding 52 weeks.
Oracle Corporation (NYSE: ORCL) held the third spot on the top five list and carried a 3.70% portfolio weight in the OAKBX portfolio. Year to date, through March 14, 2016, the stock was up by 6.35%. The stock yielded 1.54% and traded at a P/E ratio of 18.6. Its price closed at $38.70 on March 14, 2016.
Nestle SA (OTC: NSERGY) was the fourth-largest holding in the OAKBX portfolio, with a weighting of 3.38%. The stock was first acquired in 2003. It had a P/E ratio of 15.81 and yielded a handsome 3.10%. As of March 14, 2016, The stock traded at $72.59, about 10% off its high of $79.99 in 2015. Year to date, the stock had declined by 2.46%.
The fifth-largest holding in OAKBX is TE Connectivity Ltd. (NYSE: TEL). The company, based in Switzerland, operates in three segments: transportation, industrial and communications solutions. It produces and distributes connectivity and sensor systems worldwide. As of March 14, 2016, TEL had a P/E ratio of 21.25 and yielded 2.21%. Year to date, the stock was down by 7.60% and traded at $59.37. TEL carried a 2.81% weighting in the fund.