After screening for a population of potential growth companies, Schoenstein narrows the list to 30 stocks by examining growth potential, free cash flow potential and current valuation. This concentrated approach combined with the ROE requirement has lead to low turnover in the portfolio. In the fourth quarter, no new positions were added to the portfolio. There weren't any outright sales of positions, either.
That investing style captures most of the upside in the market but not all of it. The Jensen Portfolio lagged not only in the fourth quarter but for all of last year, as the fund's annual return of 11.8% trailed the 15.1% return on the S&P 500.
"Traditionally, when the fund is sitting in an aggressive or high-growth environment -- when things are frothy -- we'll tend to capture a fair share of that return but we won't capture all of it," Schoenstein says. "We tend to capture a lot less of the downside. Capturing a good chunk of the upside and not as much of the downside together over a long enough period of time provides a benchmark-beating return."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV