Of all the funds in the value-orientated fund universe, one of last year’s best performers was the John Hancock Classic Value fund, which reported performance of 40.5% during 2013. Year to date performance has slowed with the fund only reporting net asset value growth of 7.89%, underperforming the S&P 500 by 0.93%. Sign Up For Our Free Newsletter Classic Value fund performance Nevertheless, the Classic Value fund seeks long-term growth of capital, investing in good businesses that are trading at temporarily depressed prices, a strategy which has yielded results. Indeed, over the past five-years the fund’s Class A stock has returned an average 18.20% per annum, excluding the initial sales charge. Since launch 1996 the fund has returned an average of 8.36% per annum, marginally underperforming its benchmark, the Shares Russell 1000 Value Index ETF NYSEARCA:IWD over the same period, which returned 9.04% the S&P 500 produced an annualized return of 8.27%. However, if you include certain sales and management charges, the Classic Value fund has only returned 8.05% p.a. over its life, although if you factor in a 1% p.a. management fee for a Russell 1000 Value Index ETF, or tracker, performance would be about similar. The Classic Value Fund has an expense ratio of 1.22% p.a. on its Class A stock and 0.95% on Class I stock. It’s obvious that the Classic Value fund is well run, so what’s the fund looking at right now?
Classic Value fund’s top holdings
Well, in what is becoming a fashionable trend amongst value investors, the Classic Value fund has taken interest in financials. Bank of America Corp ( BAC) , American International Group Inc ( AIG) , State Street Corporation ( STT) and Citigroup Inc ( C) all have a place in the fund’s top ten holdings. These financials make up around 12% of the fund. In an interview with CNBC at the beginning of this month, Rich Pzena, founder of Pzena Investment Management and manager of the Classic Value fund, stated that in his belief, the most compelling risk-reward in the whole market came from such names as Goldman Sachs Group Inc ( GS) , JPMorgan Chase & Co. ( JPM) , Bank of America Corp ( BAC) and Citigroup Inc ( C). This thesis was based on the sector’s return to attractive ROE levels as well as a more disciplined regulatory structure and capital cushion. Further, Pzena sees catalysts ahead, including a recovery in trading volume, settlement of litigation expenses and interest rate normalization. If these three factors combine, Citigroup in particular could see earnings per share hit $8. Classic Value fund’s holdings in British oil and gas majors