Large Cap Fund

Large Cap Fund

Quick Facts
InvestorInstitutional
Ticker:BUFEXBUIEX
Inception Date:5/19/19957/1/2019
Expense Ratio:0.95%0.81%
Total Net Assets:$108.80 Million  (3/31/21)
Category:Large Cap Growth
Benchmark:Morningstar U.S. Large Growth
Related Material:
   Fund Fact Sheet Q1 2021
   PM Commentary Q1 2021
   Summary Prospectus
Fund Objective & Investment Process

The investment objective of the Buffalo Large Cap Fund is long-term growth of capital. The Large Cap Fund invests primarily in equity securities, consisting of domestic common and preferred stocks of large capitalization (“large-cap”) companies, that, at time of purchase by the Fund, have a market capitalization greater than $30 billion.

The Fund managers seek to identify companies for the Large Cap Fund’s portfolio that are expected to experience growth based on the identification of long-term, measurable secular trends, and which, as a result, the managers believe may have potential revenue growth in excess of the gross domestic product growth rate.

Companies are screened using in-depth, in-house research to identify those which the managers believe have favorable attributes, including attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.

ESG Integration

Management of the Buffalo Large Cap Fund integrates ESG (Environmental, Social, and Governance) related factors into the investment decision making process. ESG-related factors material to the risk and return of investments are explicitly considered, alongside traditional financial factors, when making investment decisions.

Learn More About ESG Integration

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We don’t manage to our benchmark so we don’t have too much concentration in any one single trend. We also manage based on valuation, trimming positions when they approach their potential upside and adding to them as they get closer to the potential downside.

Ken Laudan, Portfolio Manager

Morningstar Rating

       

Overall Morningstar Rating™ of BUFEX based on risk-adjusted returns among 1,141 Large Growth funds as of 5/31/21.

Investment Style

Performance (%)

As of 5/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO LARGE CAP FUND - Investor8.769.4937.9920.1719.2814.7511.638.4310.85
BUFFALO LARGE CAP FUND - Institutional8.799.5438.2020.3519.4614.9211.808.5911.01
  Morningstar U.S. Large Growth Index5.855.3934.0422.1821.9217.4312.827.89-
  Lipper Large Cap Growth Fund Index6.687.5139.6922.4421.7915.9011.888.299.85
  Morningstar Large Growth Category5.707.0640.2520.9020.4115.2311.738.829.83
As of 3/31/213 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
(5/19/95)
BUFFALO LARGE CAP FUND - Investor3.223.2256.7819.6018.5614.5011.008.6910.67
BUFFALO LARGE CAP FUND - Institutional3.233.2357.0219.7718.7414.6711.178.8510.83
  Morningstar U.S. Large Growth Index-0.73-0.7355.7821.8420.7716.8912.038.19-
  Lipper Large Cap Growth Fund Index1.571.5762.6922.0320.9715.4411.098.509.68
  Morningstar Large Growth Category2.232.2363.5720.4419.4214.7310.969.079.69
For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares.Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower of higher than the performance quoted and can be obtained here. Performance is annualized for periods greater than 1 year. Each Morningstar category average represents a universe of funds with similar objectives.
3 Year Risk Metrics
BUFEX vs Morningstar U.S. Large Growth Index (As of 3/31/21)
Upside Capture86.47
Downside Capture94.02
Alpha-0.11
Beta0.91
Sharpe Ratio1.03
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the inception date of the benchmark index (6/30/97). Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.

Portfolio

Portfolio Characteristics
(As of 3/31/21) 
 
# of Holdings50
Median Market Cap$82.37 B
Weighted Average Market Cap$599.41 B
3-Yr Annualized Turnover Ratio18.57%
% of Holdings with Free Cash Flow80.00%
Active Share65.47%
Top 10 Holdings
Name of HoldingTickerSector% of Net
Assets
MicrosoftMSFTTechnology9.08%
AmazonAMZNConsumer Discretionary7.55%
AppleAAPLTechnology6.43%
Alphabet (A)GOOGLTechnology4.65%
VisaVFinancial Services2.78%
DanaherDHRHealth Care2.52%
PayPalPYPLFinancial Services2.49%
EquinixEQIXReal Estate2.27%
Salesforce.comCRMTechnology2.10%
S&P GlobalSPGIFinancial Services1.98%
TOP 10 HOLDINGS TOTAL41.85%
As of 12/31/20. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting
As of 3/31/21. Security weightings are subject to change and are not recommendations to buy or sell any securities. Sector Allocation may not equal 100% due to rounding.
Market Capitalization
As of 3/31/21. Market Cap percentages may not equal 100% due to rounding.

Management

Ken Laudan
Portfolio Manager

28 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 3/31/21) — Equity markets continued to move higher in the 1st quarter of 2021, with the S&P 500 Index returning 6.17%. The period was marked by outperformance of value stocks as the market rotation that began in the last quarter of 2020 became even more pronounced. The vaccination rollout, combined with prospects for more fiscal stimulus, bolstered optimism towards companies that could benefit from the economy reopening. Additionally, an 80+ basis point move higher in the 10-Year U.S. Treasury yield during the quarter left sentiment towards growth stocks relatively more subdued.

The broad market Russell 3000 Index advanced 6.35% in the quarter. Value outperformed growth for the second straight quarter, with the Russell 3000 Value Index up 11.89% compared to the Russell 3000 Growth Index returning 1.19%. Relative performance was inversely-correlated with market cap size in the quarter, with the Russell Micro Cap Index up 23.89%, the small cap Russell 2000 Index up 12.70%, the Russell Midcap Index up 8.14%, and the large cap Russell 1000 Index returning 5.91%. The more cyclically-sensitive Energy, Financial, and Industrial sectors performed best in the quarter. Consumer Staples, Information Technology, and Utilities were the bottom three performing sectors. All sectors produced positive returns.

PERFORMANCE COMMENTARY

(As of 3/31/21) — The Buffalo Large Cap Fund (BUFEX) gained 3.22% during the 1st quarter, outperforming the Morningstar U.S. Large Growth Index return of -0.73%. Strong stock selection in the Industrials, Health Care, Consumer Discretionary, and Financials sectors were the biggest contributors to outperformance relative to the Index. With the exception of the slight drag on relative results from Telecommunications and Real Estate, all remaining sectors contributed to the outperformance, compared to the Index, but to a lesser degree. Cash averaged just over 3% of Fund assets in the quarter, in-line with our normal cash range. Stocks most leveraged to rising interest rates, a steepening yield curve, and reopening did relatively better while pricey, more crowded beneficiaries of COVID lockdowns and digital transformation experienced some investor rotation away.

TOP CONTRIBUTORS

Alphabet, Inc. was the top contributor to portfolio results in the quarter. The company experienced improving growth in its leading digital advertising businesses following a relatively cautious ad budget environment through most of last year. Alphabet is poised to benefit in 2021 as digital advertising budgets expand alongside improving economic conditions.

Microsoft Corporation was also a top contributor to the Fund during the quarter, as it continued its streak of beating and raising expectations for revenue and earnings per share (EPS). The company is a prime beneficiary of workplace digital transformation and the move from on-premise IT infrastructure to the cloud. As the economy emerges from the pandemic, Microsoft is well positioned to gain share of rising IT budgets.

TOP DETRACTORS

Apple Inc. shares declined modestly in the quarter, after more than doubling in the last nine months of 2020, as news of downwardly revised iPhone build expectations emerged intra-quarter. Weaker consumer demand in China and supply chain component shortages are thought to have led to the lower build expectations. The company remains well positioned to benefit from the 5G handset product cycle and a favorable mix shift to high margin digital services.

Amazon.com, Inc. shares were relatively weak, despite strong results and upward earnings revisions, as investors rotated toward more cyclical reopening beneficiaries. In the near term, some investors worry the pandemic has pulled forward ecommerce adoption contributing to above trend growth rates in 2020 that may moderate going forward. Over the long run, Amazon should continue to disrupt markets and sustain an attractive growth rate as its Amazon Web Services and leadership position in ecommerce capture additional share gains from on-premise computing and off-line commerce.

OUTLOOK

(As of 3/31/21) — The market environment remains constructive for active growth stock investing, in our view. Interest rates and inflation remain relatively low by historical standards, providing a healthy backdrop for corporate earnings growth and investors’ allocation to equities. Meanwhile, global central bankers have pledged to sustain aggressive monetary and fiscal stimulus measures to ward off deflation and spur along continued economic recovery. Recent improvement in vaccine availability has accelerated shots-in-arms and is a much-needed spark that should help ignite economic recovery and a return to normalcy. We are seeing mobility and economic activity levels begin to rebound across many countries and sectors. Consumer and business confidence is rising too as the world has found innovative ways to adapt, progress, and grow despite the one-hundred-year pandemic still in our midst.

We are constructive about continued recovery and believe a rising and strengthening economic tide is likely to materialize in 2021 producing above average gross domestic product (GDP) growth. The market should continue to broaden out as more sectors of the economy recover and as under-appreciated growth and/or operating leverage materialize. Under-appreciated is key. Compared to history, valuations are higher than normal in the early stages of this economic recovery due to the faith placed in the ability of unprecedented fiscal and monetary stimulus to ignite and sustain earnings recovery. Interest rates are lower too in support of higher valuations, and we are likely to embark on a period of rising revenue and earnings expectations on relatively easy growth comparisons, which is fuel for optimism and sustained multiples.

For 2021, we believe there’s ample room for earnings upside in our investable universe and are constructive on the prospects for the portfolio. On a broader level, earnings growth expectations for 2021 S&P 500 Index earnings are reasonable at about $175 per share, 26% higher than 2020’s COVID-impacted earnings but only about 9% higher than pre-pandemic earnings in 2019, implying about 4.5% cumulative annualized growth over the two-year period. 2022 S&P 500 Index earnings expectations at about $201 per share again imply a reasonable 7.8% cumulative annualized growth rate expected over the 2019 to 2022 period.

As we get deeper into recovery and positive estimate revisions slow, the interplay between interest rates and stock market multiples will likely wax more prominently, while concerns about high debt levels and rising tax rates could also begin to affect broader valuation levels. That said, we think under-appreciated growth and operating leverage will be ample and rewarded throughout 2021.

Economic conditions may ebb and flow, but our focus remains constant; we invest in attractively-priced, financially-strong, well-managed companies benefiting from secular growth opportunities, in our opinion. Thank you for your support.

The opinions expressed are those of the Portfolio Manager(s) and are subject to change, are not guaranteed and should not be considered recommendations to buy or sell any security. Earnings growth is not representative of the fund’s future performance.

Literature

General Account
Forms
Investor
Class
Institutional
Class
Both
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  IRA Account Application
  IRA Beneficiary Addition / Change
  IRA Required Minimum Distribution (RMD)
  IRA / Qualified Plan Distribution Request
  IRA Transfer
Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
  Coverdell ESA Distribution Request
  Coverdell ESA Transfer
Retirement Information
  Retirement Savings Options for Individuals

Fundamental Approach

We get to know the companies we invest in and learn how they run their business.

Top-Down & Bottom-Up

We identify Top-Down broad, secular growth trends and search for companies from the Bottom-Up.

Proprietary Philosophy

We construct our portfolios based on our own proprietary investment strategy.

Disciplined Investing

Sticking to our disciplined investment strategy ensures we maintain a consistent, balanced approach.

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The Buffalo Large Cap Fund received 3 stars among 1,141 for the 3-year, 3 stars among 1,028 for the 5-year, and 3 stars among 758 Large Growth funds for the 10-year period ending 5/31/21.

In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated. ©2021 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style Box™ reveals a fund’s investment strategy by showing its investment style and market capitalization based on the fund’s portfolio holdings.

7 Buffalo Funds Named to IBD Best Mutual Funds 2021 List

7 Buffalo Funds Named to IBD Best Mutual Funds 2021 List

Media Coverage

7 Buffalo Funds Named to IBD Best Mutual Funds 2021 List

Overview

The Buffalo Funds recently had seven funds selected for the Investor’s Business Daily 2021 Best Mutual Funds Award Winner list, in the 6th annual ranking by the investment publication.

Best U.S. Diversified

  • Buffalo Early Stage Growth Fund
  • Buffalo Small Cap Fund
  • Buffalo Discovery Fund
  • Buffalo Large Cap Fund
  • Buffalo Growth Fund

Best Large Cap

  • Buffalo Large Cap Fund
  • Buffalo Growth Fund

Best Mid Cap

  • Buffalo Discovery Fund

Best Small Cap

  • Buffalo Early Stage Growth Fund
  • Buffalo Small Cap Fund

Best International

  • Buffalo International Fund

Best U.S. Taxable Bond

  • Buffalo High Yield Fund

Funds named to IBD’s list were chosen because they have outperformed their benchmark index over the past 1, 3, 5, and 10-year periods, as of 12/31/20. In order to make the list, funds must have outperformed in all four time periods. IBD made its selections from 3,368 mutual funds that met the criteria of having at least 10 years of operation.

We’re honored that our funds have been recognized in this way by IBD. These funds exemplify our firm’s goal of consistently delivering strong risk-adjusted performance to our shareholders, said Kent Gasaway, president of the Buffalo Funds.

To view IBD’s complete list and analysis of the Best Mutual Funds 2021, please visit: https://www.investors.com/etfs-and-funds/mutual-funds/best-mutual-funds-beating-sp-500-over-last-1-3-5-10-years/

Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed may be worth more or less than their original value. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained here. Performance data current to the most recent quarter-end may be obtained here. Performance is annualized for periods greater than 1 year.

Opinions expressed are those of the author or Funds and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

References to other mutual funds should not to be considered an offer to buy or sell these securities.

HIGHLIGHT

Seven Buffalo Funds were named to Investor’s Business Daily Best Mutual Funds 2021 list, including the Best U.S. Diversified, Growth, Large Cap, Mid Cap, Small Cap, International, and U.S. Taxable Bond Fund categories.

MEDIA CONTACT

Joel Crampton
Director of Marketing
(913) 647-9881
Email

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U.S. News “Best Mutual Funds in 2016” List Includes Several Buffalo Funds

U.S. News “Best Mutual Funds in 2016” List Includes Several Buffalo Funds

Media Coverage

U.S. News “Best Mutual Funds in 2016” List Includes Several Buffalo Funds

Overview

As of August 31, 2016, U.S. News showed the Buffalo International Fund was ranked #4 of 385 Foreign Large Growth funds, the Buffalo Discovery Fund was ranked #7 of 630 Mid-Cap Growth funds, and the Buffalo Flexible Income Fund was ranked #15 of 380 Allocation–70% to 85% Equity funds. Other Buffalo Funds that ranked within the top 100 in their category include the Buffalo High Yield Fund (#41 of 712 High Yield Bond funds) and the Buffalo Large Cap Fund (#47 of 1,436 Large Growth funds).

For more information and current rankings, visit the U.S. News website here.

The U.S. News Best Mutual Fund Score is determined by the overall equal weightings of ratings from five data sources: Morningstar, Lipper, Zacks, TheStreet.com, and Standard & Poor’s as of 8/31/2016. To learn more about their scoring methodology, click here.

HIGHLIGHT

International Fund #4
Discovery Fund #7
Flexible Income Fund #15

MEDIA CONTACT

Joel Crampton
Director of Marketing
(913) 647-9881
Email


Click here for current ratings of the Buffalo Funds.

The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics.

While the U.S. News Mutual Fund Score combines all five equally weighted category scores to achieve its weighting, Lipper intends its measures to be used as individual assessments of a fund’s ability to meet specific goals, rather than as a cumulative measure of fund quality. Lipper rankings are comprised of five unique measures (Total Return, Consistent Return, Preservation, Expense, and Tax Efficiency), each with a 1-to-5 score, ranking each fund against its peers. The highest 20% of funds in each peer group are named Lipper Leaders, the next 20% receive a rating of 4, the middle 20% are rated 3, the next 20% are rated 2, and the lowest 20% are rated 1. The overall calculation is based on an equal-weighted average of percentile ranks for each measure over three-, five-, and ten-year periods (if applicable). Lipper Ratings for Total Return reflect funds’ historical total return performance relative to peers. Lipper Ratings for Consistent Return reflect funds’ historical risk-adjusted returns, relative to peers. Lipper Ratings for Preservation reflect funds’ historical loss avoidance relative to other funds within the same asset class. Lipper Ratings for Tax Efficiency reflect funds’ historical success in postponing taxable distributions relative to peers. Lipper Ratings for Expense reflect funds’ expense minimization relative to peers with similar load structures.

The Zacks Mutual Fund Rank ranks funds on a scale from 1 to 5, with 1 being a Strong Buy and 5 being a Strong Sell. Each quarter, Zacks updates their Mutual Fund Rank by evaluating the average Zacks Rank for the stocks owned by the fund and blending this with other criteria their studies show is beneficial in finding funds that will outperform in the future. In general, the higher the average Zacks Rank for the stocks in the fund, then the higher the Zacks Mutual Fund Rank.

TheStreet.com Ratings Investment Ratings for Funds condense the available fund performance and risk data into a single composite opinion of each fund’s risk-adjusted performance. “A (Buy) Excellent” rating means the fund has an excellent track record of maximizing performance while minimizing risk, thus delivering the best possible combination of total return on investment and reduced volatility. “B (Buy) Good” rating means the fund has a good track record of balancing performance with risk. “C (Hold) Fair” rating ratings means the fund has a track record which is about average. “D (Sell) Weak” rating means the fund has underperformed the universe of other funds given the level of risk in its underlying investments, resulting in a weak risk-adjusted performance. “E (Sell) Very Weak” rating means the fund has significantly underperformed most other funds given the level of risk in its underlying investments, resulting in a very weak risk-adjusted performance. The plus sign (+) is an indication that the fund is in the top third of its letter grade. The minus sign (-) is an indication that the fund is in the bottom third of its letter grade. “U Unrated” rating means the fund does not have sufficient history to make a reliable assessment of its risk-adjusted performance.

The CFRA Rankings range from five-star (highest) to one-star (lowest) and follow a normalized distribution curve, based upon the fund’s rank in its Category. Top 10% receive five stars, next 20% receive four stars, middle 40% receive three stars, next 20% receive two stars, and the bottom 10% receive one star. Rankings are refreshed on a weekly basis to incorporate the latest inputs from the holdings-based analysis and the latest relative performance review.

Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed may be worth more or less than their original value. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month-end may be obtained here. Performance data current to the most recent quarter-end may be obtained here.

Opinions expressed are those of the author or Funds and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

References to other mutual funds should not to be considered an offer to buy or sell these securities.

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Terms of Use – Email lists are created for use by U.S. investment professionals only and are published strictly for informational purposes. Providing access to the content of these emails does not explicitly or implicitly constitute a solicitation of services or products of the Buffalo Funds, Kornitzer Capital Management, or any of their affiliates. The information contained in the emails is not intended for distribution to, or for use by, investment professionals in a jurisdiction where distribution or purchase is not authorized. The information contained in these emails is not appropriate for use by individual investors. By registering for any of these emails, you agree to Buffalo's terms and conditions and that you are qualified as an institutional investor or otherwise member of a registered broker/dealer, registered investment advisor, or investment consulting firm.

FOR INDIVIDUAL INVESTORS