Harris | Oakmark is known for its consistent and competitive approach to long-term value investing. Every portfolio manager leverages a disciplined investment process, grounded in bottom-up research, and believes that adherence to the firm's three value tenets can help reduce risk and increase returns over time. The team has been managing equity portfolios this way for over 40 years.
The team's U.S. large cap value strategies can be accessed via a mutual fund, exchange-traded fund (ETF), or separately managed account, allowing flexibility of choice based on your client’s unique needs.
A diversified fund that seeks long-term capital appreciation by generally investing in large-cap U.S. companies and holds approximately 50–60 stocks that managers believe offer the greatest potential for price appreciation.
A focused, actively managed, value ETF that invests in quality companies and holds 30–40 U.S. large cap stocks that are priced at a discount to the team's estimate of intrinsic value.
A focused separately managed account (SMA) of 50–60 large cap stocks that seeks capital appreciation. Portfolio construction is based on the most attractive stocks weighted by risk-adjusted reward potential.
Investment vehicles may not be available to all investors and are subject to eligibility. There are distinct differences between managed accounts and mutual funds, including, but not limited to: fee structure, customization ability, and minimum initial investments. There is no guarantee that the investment objective will be realized or that a strategy will generate a positive or excess return. Please see the Important Disclosures for additional information.
Harris I Oakmark uses a finely tuned research process to find discounted companies they believe will outperform over a long-term time frame. Hear more from the U.S. equity portfolio managers:
NICOLAS: When the Oakmark Fund launched we aimed to establish a brand that would mean something to investors and that would ultimately become synonymous with value investing.
NYGREN: The typical Oakmark portfolio will have about 50 securities in it, it will be diversified across industries, it will be overweight in names that tend to be out of favor because that’s where we find the most attractive values.
NICOLAS: Our fund looks quite a bit different than broader market indices and tends to be much more focused than other diversified mutual funds. We don’t pay much attention to short-term volatility of returns and we don’t manage to an index. Our goal is for the fund to outperform the market over long periods of time and to mitigate the risk of permanent capital impairment.
NYGREN: We’ve always defined value as a stock that’s selling at a significant discount to what a buyer could pay to own the entire business and still earn a good return on their investment. How we calculate that value has had to adapt some over the years. Especially as GAAP accounting has done a poorer job of handling long-term investments that are made through the income statement. So we have more companies in our portfolio today that a quick look at the P/E ratio or price-to-book ratio doesn’t give a clue as to what we believe the long-term business value is.
NYGREN: Everything we do at Oakmark is based on long-term value and we have set up three criteria for our stocks that we believe maximize potential returns and at the same time minimize potential risks.
NICOLAS: The first is we want to invest in businesses that are trading at a substantial discount to our estimate of their intrinsic value. Next we want to see a path to per share value growth over time. And finally we want to invest in management teams that think and act like owners of the business, preferably with a tremendous amount of skin in the game.
NYGREN: When we get all three of those things it gives us the luxury of a very long- term time horizon. So we can think about what we believe the business will be worth five to seven years down the road. By using a time horizon that’s so much longer than most of our competitors use, it allows us to focus on things that are really important to driving business value and to ignore the noise of the very short-term news that most of the industry is focused on.
NYGREN: We’ve structured our research department at Oakmark to have generalist analysts as opposed to industry-specific analysts. We think what our analysts can do really well that most analysts can’t is to make cross-industry comparisons. Our analysts are thinking all the time is this oil stock more attractive than this bank.
NICOLAS: We have a couple of unique attributes that we incorporate into our investment process. We regularly perform devil’s advocate reviews whereby one of our analysts will be tasked with presenting the bear case or the downside case on an existing long position. We do these devil’s advocate reviews in order to make sure that we defeat groupthink amongst the team, and that we’re properly sizing and surfacing all the risks that we can identify for any given business. We then typically debate the merits of these devil’s advocate reviews at our weekly investment committee meetings. And the outcomes of those discussions can ultimately have a tremendous influence on position sizing and our willingness to own a given company.
NYGREN: It’s just so easy on a day-to-day basis to get caught up in how many basis points did you outperform or underperform the S&P 500. And one of the nice things about being able to look back on a 30-year time period is to see the compounding effects that you have not only from investing in equities but also from investing in undervalued equities.
Portfolios are benchmark agnostic and constructed from the bottom up, stock by stock. Sector allocations are not limited and entirely a result of stock selection. The research team:
Founded in 1976, Harris I Oakmark has earned a reputation as a leader in value investing. The U.S. equity portfolio management team firmly believes the intrinsic value of an underlying business will be recognized by the market over time and consistently strives to deliver long-term investment performance for all clients. Learn more about how Harris I Oakmark approaches value investing.
Before investing, consider the fund's investment objectives, risks, charges, and expenses. You may obtain a prospectus or a summary prospectus containing this and other information. Read it carefully.
All investing involves risk, including the risk of loss of principal. For detailed risk information, please click the link for each product.
Investment Risks: All securities are subject to risk, including possible loss of principal. Please read the risks associated with each investment prior to investing. Detailed discussions of each investment’s risks are included in Part 2A of each firm's respective Form ADV. The investments highlighted in this presentation may be subject to certain additional risks. Exchange-traded funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund, and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.
Harris Associates L.P. is the Fund’s investment adviser. The Oakmark ETFs are distributed by Foreside Fund Services, LLC. Harris Associates L.P. and Harris Associates Securities L.P. are not affiliated with Foreside Fund Services, LLC. Natixis Distribution, LLC (member FINRA | SIPC) is a marketing agent for the Oakmark Funds and Oakmark ETF.
The investment management subsidiaries of Natixis Investment Managers conduct any regulated activities only in and from the jurisdictions in which they are licensed or authorized. Their services and the products they manage are not available to all investors in all jurisdictions.
Natixis Distribution, LLC (member FINRA|SIPC) is a marketing agent for the Oakmark Funds, a limited purpose broker-dealer and the distributor of various registered investment companies for which advisory services are provided by affiliates of Natixis Investment Managers.