Someone tell me a good reason to stick with this one
I have a relatively balanced portfolio between Large/Medium/Small cap equities and Growth vs value approaches. I have had a significant position in this fund in a retirement account for 5 years or so. But it seams to be lagging it's category. Can someone make me feel good about keeping this....or give me a better alternative for a small cap fund for the long haul (I won't need the money for another 15 years)
I've owned this fund for almost 15 years. Several times I've considered sellling it but every time, I was later glad that I didn't sell. Odd to read you have only been in this fund for five years as it has been closed to new investors since 1997.
This was a good performer in the bull market. But, it is overweighted in financials . It also has some arcane holdings. Finally, it is really a mid cap. I have found this fund simply too inconsistent. The managers march to their own drum and are lately out of step. Over long periods they seem to do well but a mutual fund should not be this volatile. I don't have a 15 year horizon and sold my position. I don't have a substitute. Gabelli ABC has been a good defender but it may not fit the category.
We sold almost all of this fund this year. We left the minimum investment amount in the fund because the fund was good to us for a long time and it is closed and unlikely to reopen. We replaced it with two funds that track the market segments that we had intended for this part of our portfolio, a small cap (VB) and small cap value (VBR) ETF. Historic performance of these ETF's have been similar to LLSCX but with a lower expense burden.
I believe that Longleaf is using an inappropriate benchmark for the fund. They continue to use the Russell 2000, which is a Small-Cap index while LLSCX is definitely a mid-cap fund. It would be fine to continue to track the R-2000 for the sake of continuity but the S&P MidCap 400 has become a much more appropriate benchmark for this fund. Investors should understand that the reason this fund has had "style creep" is due to its non-diversified charter (they limit investments to their: "20 best ideas") the size of the fund (which is a result of its' success) and the 5% regulatory limit on the stake a fund is allowed to take in any single company.
The last straw for me was the Longleaf Partners Fund involvement in Chesapeake Energy. They failed to discover that the CEO's interests were not aligned with shareholders and he was using his position to enrich himself at the expense of shareholders. When a drop in natural gas prices exposed the problems and the risk and degree of leverage that Chesapeake had used, Mr. Hawkins decided to become an activist shareholder rather than admit their mistake and get out. The move may work for them but it wasn't a distraction that I wanted. Fortunately, the Chesapeake Energy debacle has no direct bearing on LLSCX.