Inception Date
  December 3, 2012

Total Fund Assets
  $59.38 Million  (3/31/18)

Expense Ratio

Benchmark Index
  S&P 500


Overall Morningstar™ rating out of 1,204 Large Blend funds as of 3/31/18 (derived from the fund’s three- and five-year risk adjusted return measure).


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.




The Morningstar™ Risk vs Category rating is an assessment of the variations in a fund’s monthly returns, with an emphasis on downside variations, in comparison to the 1,204 funds in the Large Blend category, as of 3/31/18.


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Investment Strategy

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. In addition to investments in domestic securities, the Fund may invest up to 20% of its net assets in sponsored or unsponsored ADRs and securities of foreign companies that are traded on U.S. stock exchanges.


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

Performance (%)

As of 3/31/183 MOYTD1 YR3 YR5 YRSince Inception
Buffalo Dividend Focus Fund-2.03-2.038.518.3712.9713.31
  S&P 500 Index-0.76-0.7613.9910.7813.3114.90
  Lipper Equity Income Funds Index-2.63-2.638.987.9510.1411.90
  Morningstar Large Blend-0.98-0.9812.828.8911.7212.85
As of 3/31/183 MOYTD1 YR3 YR5 YRSince Inception
Buffalo Dividend Focus Fund-2.03-2.038.518.3712.9713.31
  S&P 500 Index-0.76-0.7613.9910.7813.3114.90
  Lipper Equity Income Funds Index-2.63-2.638.987.9510.1411.90
  Morningstar Large Blend-0.98-0.9812.828.8911.7212.85
YearBuffalo Dividend FocusS&P 500Morningstar Large Blend Category
* Partial year. Inception to year-end.
(As of 3/31/18)

vs S&P 500
Upside Capture87.29
Downside Capture100.46
Sharpe Ratio0.81

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.

Growth of $10k

This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.


(As of 3/31/18)

# of Holdings89
Median Market Cap$88.16 B
Weighted Average Market Cap$200.64 B
3-Yr Annualized Turnover Ratio37.50%
30-day SEC Yield1.49%
% of Holdings with Free Cash Flow70.93%
Active Share53.66%
HoldingTickerSector% of Net Assets
JPMorgan ChaseJPMFinancial Services2.48%
Bank of AmericaBACFinancial Services2.35%
VisaVFinancial Services2.32%
American Electric PowerAEPUtilities2.08%
BB&TBBTFinancial Services1.82%
Berkshire HathawayBRK/BFinancial Services1.75%
Wells FargoWFCFinancial Services1.66%
View Full Holdings

As of 12/31/17. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Those listed are for the previous quarter. Fund holdings are subject to change and are not recommendations to buy or sell any securities.

Buffalo publishes this listing of securities held as of the most recent calendar-quarter end, with a 30 or 60 day lag depending on the portfolio. Buffalo may exclude any portion of holdings from publication when deemed in the best interest of the portfolio.

The portfolio data and its presentation here may differ from the complete schedules of investments in regulatory filings due to differing accounting and reporting requirements.

As of 3/31/18. 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.

As of 3/31/18. Market Cap percentages may not equal 100% due to rounding.


Commentary for Q1 2018   (As of 3/31/18)


(As of 12/31/17) — Equity markets ended 2017 on a strong note. The 4th quarter saw a continuation of trends that have influenced the market all year. Investor optimism about continued global economic growth and strong corporate earnings led to another quarter of higher stock prices. Strong holiday sales and the passage of tax reform legislation also provided tailwinds to equity markets. The CBOE Volatility Index continued to hover near record lows, and, for the first time since 1958, U.S. equities delivered positive returns in every single month of the year.

The S&P 500 Index produced a total return of 6.64% in the 4th quarter. Growth continued to outperform value, with the Russell 3000 Growth Index up 7.61%, beating the 5.08% return from the Russell 3000 Value. Large companies generally outperformed smaller companies during the quarter. The Russell 1000 returned 6.59%, the Russell Midcap Index returned 6.07%, the Russell 2000 returned 3.34%, and the Russell Microcap Index returned 1.80%. Consumer discretionary and technology were the best performing sectors in the fourth quarter. Utilities, health care, and consumer staples underperformed.


(As of 12/31/17) — The Buffalo Dividend Focus Fund posted a return of 6.47% for the quarter, which slightly underperformed the S&P 500 Index return of 6.64%. The Fund’s underperformance was primarily driven by relative weakness in the energy, consumer discretionary, and utility areas of the portfolio.

The top contributors on an individual security basis were Microsoft, Apple, and Bank of America while General Electric, Edison International, and Merck were the top detractors.

The Fund’s cash position was also a slight drag on performance given the strong quarterly advance for the index.

Within the energy sector, the Fund’s relative underperformance was primarily driven by security selection as Hess Midstream declined by roughly 10%. The fall in Hess Midstream’s shares reflected investor concerns surrounding energy prices and the growth outlook in the Bakken basin. Schlumberger and EQT Midstream were down marginally during the quarter.

The Fund’s relative underperformance in consumer discretionary was driven by security selection. The primary detractor was Hanesbrands which lowered guidance due weakness in its innerwear segment which is facing challenging conditions in the mass merchandise channel.

The underperformance within the utility sector was due to security selection as Edison International was negatively impacted by the recent California wildfires. While it is early in the process, and EIX has not been assigned any blame for the fires, investors are concerned about EIX’s liability due to California’s inverse condemnation policy — CA utilities can be held liable for fires because they socialize the costs via higher future rates.


(As of 12/31/17) — We believe the market could experience more volatility in the coming quarters as the Federal Reserve continues its plan to normalize interest rates, along with a focus on the ability of the Trump administration to enact infrastructure spending, deregulation, and corporate tax reform. Prospective tailwinds for the economy include further job growth, wage increases, lower tax rates, and simply more optimism from both businesses and consumers; all of which could lead to higher Gross Domestic Product (GDP) growth. On the other hand, potential headwinds include strengthening of the U.S. dollar, further increases in interest rates, and valuation metrics that are above historical market averages, leading us to believe that the stock market may have a hard time achieving further multiple expansion.

Despite the expectation of greater volatility, we continue to focus on wide-moat, large-capitalization companies that are trading at reasonable valuations, in our view. As always, the Fund will continue to focus on competitively-advantaged companies that can be purchased at a fair price, in our opinion. As the stock market has continued to climb, it is getting harder to find companies that fit our investment criteria. We continue follow our process of finding new investment ideas and are ready when market declines provide better opportunities.

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. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security. Earnings growth is not representative of the fund’s future performance.

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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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 Dividend Focus Fund received 3 stars among 1204 for the three-year period and 4 stars among 1077 Large Blend funds for the five-year period ending 3/31/18.

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.

©2018 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.