Jensen's Nifty Fifty
The Jensen Portfolio
Author: Alexander Vantchev
Last Update: , :
|Bob Millenís team believes there are 50 stocks in the world that are worth buying at any point in time and selects the best 25 out of those. The purpose is to find the most consistent earners of the decade and thus try to guarantee solid returns over the long haul without volatile roller coaster rides. Bob told Ticker how this conservative strategy has helped the fund stay in the top quintile in the multi-cap core category.
||The Jensen Portfolio|
No, we donít manage sectors. What we really do is to try and look at companies and what the opportunities are to invest in what we think has the greatest long-term growth potential and right now we think frankly healthcare is probably as undervalued as any sector in America. We added to healthcare, because it is so cheap right now. But we never had to sell and buy to rebalance. We had such strong cash flow coming into the fund. Like this year we started with $1 billion in the fund and now we are at $1.7 billion. So, we had a 70% growth in the fund just this year.
Q: And you just add with the new inflows? You seldom reduce positions?
Very rarely. The only rule we have is that a company goes to 7.5% of the total portfolio weight, then we will consider trimming back, or if we are still having good cash flow, we just wonít invest in that company.
Q: What would you tell an investor, who is considering putting some money in your fund? What would they get out of it?
What we believe in and what we aim for is we aim to provide investors with good solid returns over the long term that are reflective of growth companies, but are also reflective of more consistent growth companies. Not the ones like in the Internet sector, which tend to be quite volatile. You get consistent growth returns with less risk than the overall market. That is what we strive to achieve, and that is what most people, when they look at our risk-adjusted performance, will see we have achieved.
Q: And what can go wrong with such a portfolio construction? What can hurt you?
In the long term, we donít think there is anything, because we believe our companies have delivered their business performance which will ultimately result in stock market performance. In the short term what can go wrong is we can lag the market like we are this year. If somebody wants to be very close to achieving market returns every quarter of every year, they shouldnít invest in our fund. Because when the market is flying high with momentum and emotion, we are going to lag a little. When the market is more fundamental or when it gets depressed as it inevitably does from time to time, we exceed the market quite handsomely.
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