Investing In A Davis Fund: A Comprehensive Guide

Investing in a Davis Fund can be done in a number of ways, including speaking with a financial advisor or opening an account by mail. The specific fund chosen depends on the investor's goals, with options including the Davis Appreciation & Income Fund, the Davis New York Venture Fund, and the Davis Financial Fund. Each fund has its own investment strategy, with some focusing on long-term capital appreciation, others on a combination of growth and income, and still, others seek to invest in financial companies with strong balance sheets and growth potential.

Davis Investment Discipline

The Davis Investment Discipline is a strategy for long-term wealth accumulation through equity investments. It is based on the idea that stocks represent long-term economic interests in actual businesses.

The Davis Investment Discipline can be broken down into two essential questions:

• What kind of businesses do we want to own?
• How much should we pay for them?

When it comes to identifying the types of businesses they want to own, Davis Advisors looks for companies with characteristics that foster value creation over the long term. These include financially robust business models, sustainable competitive advantages, strong balance sheets, high returns on capital, non-obsolescent products, and experienced management, among others. They also consider the broader, long-term trends that may influence a company's ability to create value.

In terms of valuation, Davis Advisors uses a proprietary methodology to determine the intrinsic value of a business. This involves calculating a company's "owner earnings," which provides a more accurate reflection of its true cash profits. They then compare the Owner Earnings Yield to the risk-free rate and wait for opportunities to buy shares at a discount to their estimate of the company's intrinsic worth. This approach is designed to enhance potential returns while reducing risk.

The Davis Investment Discipline is applied across various Davis Funds, including the New York Venture Fund, Large Cap Value SMA Portfolio, All-Cap SMA Portfolio, and International ADR SMA Portfolio, among others.

Davis NY Venture Fund

The Davis NY Venture Fund is a large-cap blend fund that seeks to provide investors with access to attractive investment opportunities among large-cap, durable, and well-managed businesses, primarily in the US. The fund has a long-term capital appreciation goal, employing the signature Davis Investment Discipline to identify these businesses and purchasing them at value prices for long-term holding.

The fund has a strong performance history, outperforming the S&P 500 Index since its inception in 1969. As of June 30, 2024, a hypothetical $10,000 investment in the fund since its inception would have grown to $4.2 million, compared to $2.6 million for the S&P 500 Index. This performance is attributed to the fund's selective approach, focusing on companies with solid earnings that are selling at low valuations.

The fund's portfolio includes companies with resilient growth, durable earnings power, significant free cash flow, long-lived assets, pricing power, competitive advantage, balance sheet strength, proven management, and attractive valuations. The fund's top holdings as of June 30, 2024, included Meta Platforms, Berkshire Hathaway, Amazon.com, Capital One Financial, and Applied Materials.

Investors can get started with the Davis NY Venture Fund by speaking with their financial advisor or by opening an account through the Davis Funds website. The minimum initial investment for the fund is $1,000.

Davis Large Cap Value SMA Portfolio

The Davis Large Cap Value SMA Portfolio is a fund that aims for long-term capital appreciation. It uses the signature Davis Investment Discipline to identify and invest in large-cap companies that are durable and well-managed. The fund's strategy involves purchasing these businesses at value prices and holding them for the long term.

The Davis Investment Discipline is a strategy employed by the Davis Funds to uncover attractive investment opportunities. This strategy is used across a range of Davis funds, including the Large Cap Value SMA Portfolio, the All-Cap SMA Portfolio, and the International ADR SMA Portfolio.

The Large Cap Value SMA Portfolio specifically targets large-cap companies, which are typically established businesses with a market capitalisation of over $10 billion. These companies are often seen as stable and less risky investments due to their size and established presence in the market. By seeking out well-managed and durable businesses within this category, the fund aims to identify companies that can provide steady, long-term returns.

The fund's strategy of purchasing these companies at value prices involves identifying those that are considered undervalued by the market. This means that the fund's managers believe the companies are worth more than their current market price, and therefore present a good investment opportunity. By holding these investments for the long term, the fund aims to benefit from the potential growth and appreciation of these companies over time.

Investing in the Davis Large Cap Value SMA Portfolio can be done by speaking with a financial advisor or by opening an account directly with Davis Funds. The website provides the necessary applications for individuals, businesses, and retirement accounts. It is important to carefully consider the fund's investment objectives, risks, charges, and expenses before investing.

Davis Global

The Davis Global Fund seeks to provide long-term growth of capital by investing primarily in common stocks of companies headquartered anywhere in the world, including developed and emerging markets. The fund is advised by Davis Selected Advisers, L.P., which employs the signature Davis Investment Discipline to uncover attractive investment opportunities. This involves seeking well-managed businesses with strong fundamentals, purchasing them at value prices, and holding them for the long term.

The fund has a global mandate, allowing it to invest in companies from a diverse range of sectors and industries, regardless of their location. This approach ensures that investors can access the tremendous growth opportunities and diversification benefits offered by international companies.

As of May 2, 2024, the fund had total assets of 791.8 million, with a minimum initial investment requirement of $1,000. The expense ratio is 0.950%, slightly lower than the category average of 0.98%.

Performance

The fund has delivered the following returns:

• 1-year: 9.64%
• 5-year: 6.14%
• 10-year: 6.12%

Over the past year, the fund has returned 20.78%, while over the past three and five years, it has returned -1.21% and 4.37% respectively.

Top Holdings

The fund's top holdings as of January 31, 2024, include:

• Capital One Financial Corp
• Meta Platforms Inc Class A
• Prosus NV Ordinary Shares - Class N
• DBS Group Holdings Ltd
• Ping An Insurance (Group) Co. of China Ltd Class H
• Samsung Electronics Co Ltd
• Julius Baer Gruppe AG

How to Invest

There are several ways to invest in the Davis Global Fund:

• Speak with your financial advisor to discuss if this fund aligns with your investment goals and risk tolerance.
• Open an account by mail: Download the relevant application forms for individuals (joint, trust, custodial, or retirement accounts) or businesses from the Davis Funds website.

It is important to carefully consider the fund's investment objectives, risks, charges, and expenses before investing. The prospectus contains this information and can be obtained from the Davis Funds website or by contacting their support.

Davis Financial Fund

The Davis Financial Fund is a mutual fund that seeks long-term growth of capital by investing primarily in the financial services sector. The fund is known for its signature Davis Investment Discipline, which aims to identify durable, well-managed financial businesses that are trading at value prices.

Investment Strategy

The fund invests at least 80% of its net assets in securities issued by companies principally engaged in the financial services sector. It primarily invests in common stocks, including indirect holdings of common stock through depositary receipts. The fund may also invest a small portion of its assets in companies outside the financial industry.

Performance and Ratings

As of October 16, 2023, Morningstar rated the fund's People and Process pillars as Above Average. The fund's one-day return as of July 23, 2024, was +0.44%, with total assets of 946.0 million and a net expense ratio of 0.95%.

How to Invest

You can invest in the Davis Financial Fund or any other Davis Funds in several ways. You can speak with your financial advisor or open an account by mail by downloading the relevant application forms from the Davis Funds website. The website provides application forms for individuals (joint, trust, or custodial accounts), businesses, and retirement accounts (IRA, Roth IRA, or Simple IRA). You can also invest in the fund through a Coverdell Education Savings Account.

Other Davis Funds

In addition to the Davis Financial Fund, Davis Funds offers a range of other mutual funds and investment options, including the New York Venture Fund, the Balanced Fund, the Government Bond Fund, and the Government Money Market Fund. They also offer Separately Managed Accounts and Variable Account Funds.

Frequently asked questions