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."

The fund's success over the long term is remarkable given that it has large positions in stocks like T. Rowe Price and 3M and has passed on high-flyers like Apple ( AAPL) and Netflix ( NFLX).

"The most fundamental characteristic that we find within the portfolio is that they have a consistency to their growth, both historically and what we think will take place in the future," Schoenstein explains. "That consistency gives us a greater degree of confidence that they will continue to deliver that kind of performance in the future."

Even though the Jensen Portfolio's returns trail the broad market in the short term, the fund earned a gold award from Standard & Poor's Equity Research in the domestic large-cap equity mutual fund category, the top honor in the S&P's first-ever mutual fund award program. For investors in the fund, Schoenstein says he frequently hears praise for the growth strategy and defensive strategy, which are not mutually exclusive.

"It is a growth fund but it's not an aggressive growth fund, so therein lies the defensive component," Schoenstein says. "It's a growth fund because these businesses have proven that they can grow in any environment year after year after year. At the same time, we're trying to make sure that we're not overpaying for that growth. We want to pay an appropriate price based on our valuation of expectations for the particular company."

Schoenstein offers investors three of the fund's top picks and explains how each fits into the strict screening criteria for the Jensen Portfolio, found on the following pages.

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