Large Cap for Long Term
Pioneer Oak Ridge Large Cap Growth Fund
Author: Manish Shah
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|There are more than 300 large-cap funds to choose from. Investors have a lot of choices and large-cap fund managers must be unique in their investment approach and deliver investment performance. The Pioneer Oak Ridge Large Cap Growth Fund looks at the largest 1,000 companies and searches for the top companies with consistent earnings growth in the current economic environment.
||Pioneer Oak Ridge Large Cap Growth Fund|
On a thematic basis, we believe that growth in the Hispanic segment remains solid. In light of this trend, we hold companies such as Univision Communications and Banco Popular in our portfolio.
Q: Where do you see interest rates heading and how do you take advantage of this trend?
A: We believe interest rates are going higher, but it’s not clear when. In an improving economy, interest rates may rise, but stock markets and business conditions are also likely to improve. We own Citigroup because we believe it is not a cyclical stock and, even when rates go up, the company is in a position to outperform the market. We also believe that the price to earnings ratio of this stock will expand and an aggressive dividend increase is a prudent use of growing cash flows.
Q: Almost all the recent fraud has been in the large-cap sector. How do you avoid this?
A: When stocks in the news—such as Enron, MCI Worldcom and Tyco—started underperforming the market, we were concerned and, sold these positions for a profit. Our sell discipline ensures that when a stock’s relative strength starts weakening we re-examine the story. While our portfolio turnover is generally low, when we don’t understand why a stock is weakening and when cash flow doesn’t match up with earnings, we generally sell the stock. We believe unresolved issues remain, such as pension liabilities with older companies and stock options expenses with newer companies. We keep abreast of what is going on in the marketplace and watch these issues closely.
Q: Why do you have Microsoft in your portfolio when the stock and the company’s earnings have not improved in the last two years?
A: The stock is in the portfolio because it represents 4% of the Russell 1000 Growth Index—a significant weighting. In fact, we underweight the stock with a 2.5% holding. We also believe that once the company resolves legislative issues and new products are launched there will be a special dividend and a resumption of earnings growth. We distinguish ourselves from other growth funds in that we would like Microsoft to declare a special dividend.
Q: How does the recent acquisition of your fund by Pioneer Investments help you?
A: The Pioneer acquisition helps us with the fund’s distribution. We just hit our 5th anniversary and we managed $9 million in assets in this fund, an insignificant percentage of Oak Ridge’s $1.5 billion of assets under management. We believe that with Pioneer as a partner we can grow a larger base of assets, which would be to the benefit of all fund shareholders. We are very excited about working together with Pioneer to grow the fund.
We look for companies that have strong earnings growth over a 5-year cycle at a rate in excess of the market. As long as you do not pay a significant premium to the market, you are likely to do better than the market.
David M. Klaskin: Chairman & Chief Investment Officer
Oak Ridge Investments, LLC
Co-Founder of Oak Ridge Investments in 1989, Mr. Klaskin leads the firm and its investment team. He has developed and implemented the investment discipline that is applied across all Oak Ridge products. He is co-portfolio manager of the Oak Ridge small/mid capitalization and large capitalization equity products. Additionally, he is portfolio manager of the firm’s mutual funds: the Oak Ridge Small Cap Equity Fund and the Oak Ridge Large Cap Equity Fund. Mr. Klaskin also chairs the firm’s Executive Committee, its Investment Committee and its equity selection team. He has been featured on television, radio, and in numerous publications. Prior to establishing Oak Ridge, Mr. Klaskin worked as an investment executive at Shearson Lehman Hutton for eight years. Mr. Klaskin is a native of Chicago and graduated from Indiana University with a Bachelor of Science degree in Finance.
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