Dividend Focus Fund
Quick Facts
Investor | Institutional | |
Ticker: | BUFDX | BUIDX |
Daily Pricing: | ||
As of 5/24/2022 | ||
NAV: | $23.84 | $23.85 |
$ Change: | $-0.09 | $-0.08 |
% Change: |
-0.38% | -0.33% |
YTD: |
-8.71% | -8.64% |
Inception Date: | 12/3/2012 | 7/1/2019 |
Expense Ratio: | 0.94% | 0.79% |
Total Net Assets: | $116.83 Million (3/31/22) | |
Morningstar Category: | Large Cap Blend | |
Benchmark Index: | Russell 1000 | |
Dividend Distribution: | Quarterly | |
Related Material: Fund Fact Sheet Q1 2022 PM Commentary Q1 2022 Summary Prospectus |
FUND OBJECTIVE & INVESTMENT PROCESS
The investment objective of the Buffalo Dividend Focus Fund is primarily current income, with long-term growth of capital as a secondary objective.
To pursue its investment objective, the Fund invests in dividend-paying equity securities, consisting of domestic common stocks, preferred stocks, and convertible securities. During normal market conditions, at least 80% of the Fund’s assets will be invested in dividend-paying equity securities, companies that declare and pay cash dividends on at least an annual basis.
While the Fund may invest in securities of companies of any size, the Fund managers expect the majority of common stocks purchased will be of large-cap companies, those with market capitalizations in excess of $10 billion at the time of initial purchase.
We are focused on buying dividend-paying companies that can have sustainable competitive advantages, generate strong return on capital and free cash flow, have conservative balance sheets, and have great management teams.
We seek to buy these companies at reasonable valuations and believe that holding them for the long-term will generate favorable risk adjusted returns.
Paul Dlugosch, Portfolio Manager
CFRA Research and Dividend.com recently hosted a webinar with the topic “Dividend Funds: Do we even need bonds?“. Buffalo Dividend Focus Fund co-portfolio manager Jeff Deardorff, CFA, was a featured presenter on the panel.
To learn more about what was discussed during the webinar and to access a free replay, click here.
Morningstar Rating
Overall Morningstar Rating™ of BUFDX based on risk-adjusted returns among 1,212 Large Blend funds as of 4/30/22.
Performance (%)
As of 4/30/22 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | Since Inception |
---|---|---|---|---|---|---|
BUFFALO DIVIDEND FOCUS FUND - Investor | -4.90 | -6.61 | 1.78 | 13.18 | 11.84 | 13.05 |
BUFFALO DIVIDEND FOCUS FUND - Institutional | -4.90 | -6.57 | 1.94 | 13.35 | 12.00 | 13.22 |
Russell 1000 Index | -8.42 | -13.59 | -2.10 | 13.57 | 13.44 | 14.19 |
Morningstar U.S. Large-Mid Cap Index | -8.56 | -13.84 | -2.07 | 13.55 | 13.49 | 14.18 |
S&P 500 Index | -8.17 | -12.92 | 0.21 | 13.85 | 13.66 | 14.32 |
Morningstar Large Blend Category | -7.65 | -12.61 | -1.68 | 12.17 | 11.99 | 12.05 |
As of 3/31/22 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | Since Inception |
---|---|---|---|---|---|---|
BUFFALO DIVIDEND FOCUS FUND - Investor | -1.24 | -1.24 | 13.39 | 17.06 | 13.34 | 13.85 |
BUFFALO DIVIDEND FOCUS FUND - Institutional | -1.25 | -1.25 | 13.51 | 17.22 | 13.51 | 14.02 |
Russell 1000 Index | -5.47 | -5.47 | 11.76 | 16.79 | 13.81 | 13.32 |
Morningstar U.S. Large-Mid Cap Index | -5.27 | -5.27 | 13.47 | 18.76 | 15.90 | 15.48 |
S&P 500 Index | -4.60 | -4.60 | 15.65 | 18.92 | 15.99 | 15.58 |
Morningstar Large Blend Category | -5.23 | -5.23 | 12.10 | 16.78 | 14.09 | 13.15 |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
---|---|---|---|---|---|---|---|---|---|
BUFFALO DIVIDEND FOCUS FUND - Investor | 23.93 | 20.81 | 0.13 | 12.06 | 18.02 | -5.05 | 27.66 | 16.64 | 20.97 |
BUFFALO DIVIDEND FOCUS FUND - Institutional | 24.12 | 20.98 | 0.28 | 12.23 | 18.20 | -4.91 | 27.85 | 16.83 | 21.15 |
Russell 1000 Index | 33.11 | 13.24 | 0.92 | 12.05 | 21.69 | -4.78 | 31.43 | 20.96 | 26.45 |
Morningstar U.S. Large-Mid Cap Index | 33.20 | 13.32 | 0.92 | 11.59 | 21.71 | -4.52 | 31.61 | 21.11 | 26.44 |
3 Year Risk Metrics
BUFDX vs Russell 1000 Index (As of 3/31/22) | |
---|---|
Upside Capture | 84.13 |
Downside Capture | 90.26 |
Alpha | -0.02 |
Beta | 0.91 |
Sharpe Ratio | 0.97 |
Hypothetical Growth of $10,000
Distributions
Net Investment Income, if any – Record Date (6/17/22); Payment Date (6/20/22)
Net Investment Income, if any – Record Date (9/19/22); Payment Date (9/20/22)
Capital Gains, if any – Record Date (12/2/22); Payment Date (12/5/22)
Net Investment Income, if any – Record Date (12/19/22); Payment Date (12/20/22)
Payable Date | Distribution NAV | Net Investment Income | Short-Term Capital Gains | Long-Term Capital Gains | Distribution Total |
---|---|---|---|---|---|
3/18/22 | $25.56 (Inv) $25.56 (Inst) | $0.05379801 $0.06334236 | - - | - - | $0.05379801 $0.06334236 |
12/20/21 | $25.24 (Inv) $25.24 (Inst) | $0.02757485 $0.03722365 | - - | - - | $0.02757485 $0.03722365 |
12/3/21 | $24.99 (Inv) $24.99 (Inst) | - - | $0.10327 $0.10327 | $0.20964 $0.20964 | $0.31291 $0.31291 |
9/20/21 | $24.79 (Inv) $24.79 (Inst) | $0.03057741 $0.04007525 | - - | - - | $0.03057741 $0.04007525 |
6/18/21 | $24.27 (Inv) $24.26 (Inst) | $0.02933960 $0.03839857 | - - | - - | $0.02933960 $0.03839857 |
3/18/21 | $23.16 (Inv) $23.16 (Inst) | $0.05098388 $0.05942821 | - - | - - | $0.05098388 $0.05942821 |
12/18/20 | $21.72 (Inv) $21.72 (Inst) | $0.00905139 $0.01801390 | - - | - - | $0.00905139 $0.01801390 |
9/18/20 | $19.13 (Inv) $19.13 (Inst) | $0.03170945 $0.03903915 | - - | - - | $0.03170945 $0.03903915 |
6/18/20 | $18.26 (Inv) $18.26 (Inst) | $0.03034499 $0.03590278 | - - | - - | $0.03034499 $0.03590278 |
3/18/20 | $14.07 (Inv) $14.07 (Inst) | $0.03107063 $0.03831320 | - - | - - | $0.03107063 $0.03831320 |
12/18/19 | $18.82 (Inv) $18.82 (Inst) | $0.04196909 $0.04964262 | - - | - - | $0.04196909 $0.04964262 |
9/18/19 | $17.80 (Inv) $17.80 (Inst) | $0.04731858 $0.05327159 | - - | - - | $0.04731858 $0.05327159 |
6/18/19 | $17.20 | $0.06566509 | - | - | $0.06566509 |
3/19/19 | $16.72 | $0.05232873 | - | - | $0.05232873 |
12/18/18 | $15.33 | $0.08791977 | $0.02500 | $0.51339 | $0.62630977 |
9/18/18 | $17.96 | $0.05499230 | - | - | $0.05499230 |
6/19/18 | $16.99 | $0.05791680 | - | - | $0.05791680 |
3/20/18 | $16.72 | $0.04369471 | - | - | $0.04369471 |
12/19/17 | $16.73 | $0.05315489 | $0.15204 | - | $0.20519489 |
9/19/17 | $15.79 | $0.05107348 | - | - | $0.05107348 |
6/20/17 | $15.53 | $0.04405814 | - | - | $0.04405814 |
3/20/17 | $15.37 | $0.04662158 | - | - | $0.04662158 |
12/20/16 | $14.58 | $0.04502534 | $0.06489 | $0.03508 | $0.14499534 |
9/20/16 | $13.78 | $0.04538819 | - | - | $0.04538819 |
6/20/16 | $13.34 | $0.04391608 | - | - | $0.04391608 |
3/18/16 | $13.15 | $0.04845082 | - | - | $0.04845082 |
12/18/15 | $12.88 | $0.04061333 | $0.14263 | $0.11942 | $0.30266333 |
9/18/15 | $12.94 | $0.03816853 | - | - | $0.03816853 |
6/18/15 | $14.29 | $0.04120635 | - | - | $0.04120635 |
3/18/15 | $13.89 | $0.04200730 | - | - | $0.04200730 |
12/18/14 | $13.53 | $0.03066401 | $0.54808 | $0.10086 | $0.67960401 |
9/18/14 | $13.50 | $0.02424009 | - | - | $0.02424009 |
6/18/14 | $13.05 | $0.03496855 | - | - | $0.03496855 |
3/18/14 | $12.11 | $0.03702784 | - | - | $0.03702784 |
12/18/13 | $11.56 | $0.04725764 | $0.38271 | - | $0.42996764 |
9/18/13 | $11.47 | $0.03960545 | - | - | $0.03960545 |
6/18/13 | $11.13 | $0.03967611 | - | - | $0.03967611 |
3/19/13 | $10.36 | $0.01492578 | - | - | $0.01492578 |
Portfolio
Portfolio Characteristics
(As of 3/31/22) | |
---|---|
# of Holdings | 88 |
Median Market Cap | $59.29 B |
Weighted Average Market Cap | $468.42 B |
3-Yr Annualized Turnover Ratio | 18.53% |
% of Holdings with Free Cash Flow | 70.51% |
30-day SEC Yield | 1.06% |
Top 10 Holdings
Holding | Ticker / Maturity | Sector | % of Net Assets |
---|---|---|---|
Microsoft | MSFT | Technology | 5.35% |
Apple | AAPL | Technology | 4.71% |
Viper Energy Partners | VNOM | Energy | 3.09% |
CVS Health | CVS | Health Care | 2.89% |
UnitedHealth Group | UNH | Health Care | 2.40% |
Visa | V | Financial Services | 2.39% |
Horizon Therapeutics | HZNP | Health Care | 2.27% |
Bank of America | BAC | Financial Services | 2.12% |
S&P Global | SPGI | Financial Services | 2.07% |
Elanco Animal Health | ELAT | Health Care | 1.90% |
TOP 10 HOLDINGS TOTAL | 29.19% |
Sector Weighting
Market Capitalization
Management
Commentary
CAPITAL MARKET OVERVIEW
(As of 3/31/22) — The equity market, as measured by the S&P 500 Index, suffered its second quarterly decline since the onset of the COVID-19 pandemic, over two years ago, producing a return of -4.60% during the January–March period. Weak capital market performance can be largely attributed to the Federal Reserve’s decision to raise interest rates and reduce the size of its balance sheet, also known as quantitative tightening. Other headwinds, including the war in Ukraine, significant inflation, and persistent supply chain bottlenecks, only added to the backdrop of uncertainty for domestic and global markets.
The broad-based Russell 3000 Index fell -5.28% in the quarter. Value stocks outperformed growth stocks by a large amount, as the Russell 3000 Value Index returned -0.85% compared to a decline of -9.25% for the Russell 3000 Growth Index. Large cap stocks fell less than smaller cap stocks during the quarter, as the Russell 1000 Index declined -5.13%, followed by a return of -5.68% for the Russell Midcap Index, and -7.53% for the small cap Russell 2000 Index. Energy stocks surged during the period on rising oil prices while the more defensive Utilities and Telecommunication Services sectors were also modestly positive. The Consumer Discretionary and Technology areas of the market were the largest underperformers due to inflation and rising rates.
PERFORMANCE COMMENTARY
(As of 3/31/22) — The Buffalo Dividend Focus Fund (BUFDX) posted a return of -1.24% during the quarter, outperforming the Morningstar U.S. Large-Mid Cap Index return of -5.27% and the Russell 1000 Index return of -4.60%. The portfolio’s Consumer Discretionary, Energy, Health Care, Information Technology, Materials, and Utilities investments contributed to relative performance.
Top Contributors
Specific securities that contributed most positively to performance include Viper Energy Partners LP, Northern Oil and Gas, and Energy Transfer LP. The three companies are involved in the oil and gas industries and benefited from rising commodities prices following increased demand and supply constraints.
Top Detractors
Meanwhile Home Depot, Microsoft Corporation, and Meta Platforms detracted from the Fund’s relative performance. Home Depot fell as rising interest rates and declining gross margins reduced investor sentiment for the company. Microsoft moved lower as rising interest rates have tempered overall valuations for technology companies. Meta Platforms declined on a revenue forecast that was below estimates, combined with stagnating user growth on increasing competition from other social media platforms.
OUTLOOK
(As of 3/31/22) — Measures of inflation have reached levels not seen in decades, as demand has bounced back, while supply chain issues (bottlenecks, chip shortages, lack of workers, etc.) have restrained supplies. Businesses also lost productivity as COVID-19 continued to lead to employee absenteeism. Additionally, inflation and supply chain issues have been impacted by sanctions against Russia following its invasion of Ukraine. As a result, the Federal Reserve (the “Fed”) has adopted a more hawkish approach toward interest rates and a reduction in their balance sheet. As the Fed implements these programs, it will attempt to strike a delicate balance of curbing inflation without causing a recession. Stock market performance is likely to reflect the view of how well the Fed is managing the situation.
Despite the uncertainty, we remain focused on identifying competitively-advantaged, wide-moat companies trading at reasonable valuations. We will be ready to take advantage of opportunities created by stock market volatility using market declines as attractive entry points for long-term investors.
Literature
Buffalo Dividend Focus Fund Documents | Last Updated |
---|---|
Fact Sheet | 3/31/22 |
Quarterly Commentary | 3/31/22 |
Full Fund Holdings | 12/31/21 |
Summary Prospectus | 7/29/21 |
Prospectus | 7/29/21 |
Statement of Additional Information | 7/29/21 |
Annual Report | 3/31/21 |
Semi-Annual Report | 9/30/21 |
Tax Guide - 2021 | 1/3/22 |
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.
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