Quick Facts

(As of 6/30/17)

Ticker
  BUFBX

Inception Date
  August 12, 1994

Total Fund Assets
  $761.4 M

Expense Ratio
  1.01%

Benchmark Index
  S&P 500

MORNINGSTAR RATING

Overall Morningstar™ rating out of 334 Allocation–70% to 85% Equity funds as of 6/30/17 (derived from a weighted average of the fund’s three-, five-, and ten-year risk adjusted return measure).

INVESTMENT STYLE

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.

RISK VS CATEGORY

 

Low High

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 344 funds in the Allocation–-70% to 85% Equity category, as of 6/30/17.

Overview

Investment Strategy

The investment objective of the Buffalo Flexible Income Fund is primarily the generation of high current income and, as a secondary objective, the long-term growth of capital.

To pursue its investment objectives, the Flexible Income Fund invests in both debt and equity securities.

|

Our investment strategy seeks to generate yield for any investor needing monthly income with capital appreciation, and we use many methods to address potential downside risks.

~ John Kornitzer, Portfolio Manager

Read More...

Performance

(As of 6/30/17)3 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
Buffalo Flexible Income Fund0.051.657.072.506.635.447.647.10
S&P 500 Index0.629.3417.909.6114.637.188.349.61
Lipper Mixed-Asset Target Allocation Moderate Funds Index2.296.6210.764.317.854.586.136.96
Morningstar Allocation--50% to 70% Equity2.797.7813.444.209.274.376.597.08
Each Morningstar category average represents a universe of funds with similar objectives.
(As of 6/30/17)3 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
Buffalo Flexible Income Fund0.051.657.072.506.635.447.647.10
S&P 500 Index0.629.3417.909.6114.637.188.349.61
Lipper Mixed-Asset Target Allocation Moderate Funds Index2.296.6210.764.317.854.586.136.96
Morningstar Allocation--50% to 70% Equity2.797.7813.444.209.274.376.597.08
Each Morningstar category average represents a universe of funds with similar objectives.
YearBuffalo Flexible IncomeS&P 500 IndexMorningstar Allocation-50% to 70% Equity
20169.9011.967.34
2015-1.971.38-1.93
20143.5913.696.21
201316.6832.3916.48
201210.3116.0011.72
20119.632.11-0.11
201011.6815.0611.83
200931.0726.4624.13
2008-29.47-37.00-28.00
20079.625.495.99
Each Morningstar category average represents a universe of funds with similar objectives.

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.

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.

Portfolio

(As of 6/30/17)

# of Equity Holdings61
# of Fixed Holdings22
Median Market Cap$54.39 B
Weighted Average Market Cap$132.02 B
3-Yr Annualized Turnover Ratio16.41%
Average Duration1.60 years
Average Maturity4.23 years
30-day SEC Yield1.38%
HoldingTickerSector% of Portfolio
Lions Gate Entmt Cv (1.25% 4/15/2018)--3.89%
MicrosoftMSFTTechnology3.30%
Procter & GamblePGConsumer Staples3.21%
General ElectricGEIndustrials3.06%
AT&TTCommunications3.06%
Bankrate Inc Del 144A (6.125% 8/15/2018)--2.78%
GlaxoSmithKline PLC ADRGSKHealth Care2.64%
IntelINTCTechnology2.62%
Exxon MobilXOMEnergy2.57%
BoeingBAIndustrials2.55%
TOP 10 HOLDINGS TOTAL29.67%
View Full Holdings

As of 3/31/17. 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 6/30/17. 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 6/30/17. Allocation percentages may not equal 100% due to rounding.

CAPITAL MARKET OVERVIEW

Equity markets got off to a strong start in the first quarter of 2017, thanks to an improving economic outlook. In February, small business optimism, as measured by the National Federation of Independent Businesses, was at its highest level in 12 years. In addition, the University of Michigan’s March consumer confidence survey showed that consumers were more confident in the economy than they have been at any time since 2000. Against this backdrop, growth stocks outperformed value stocks, led by technology, health care, and consumer discretionary companies.

The recent strength in infrastructure companies, banks, and high-tax-rate stocks stalled late in the quarter when, following Congress’s failure to agree on a health care reform bill, investors began to question the Trump administration’s ability to enact elements of its pro-growth agenda. Within commodities, the price of West Texas Intermediate (WTI) crude oil fell 6% during the quarter in response to better than expected U.S. oil inventories and production.

The Russell 3000 Index advanced 5.74% in the first quarter and larger cap stocks outperformed smaller cap stocks. The Russell 1000 Index returned 6.03%, followed by the Russell Mid Cap Index return of 5.15%, and the Russell 2000 Index result of 2.47%. The Russell Micro Cap Index advanced just 0.38% in the quarter. The Russell 3000 Growth Index outperformed the Russell 3000 Value Index by 5.64%. Technology was the best performing sector during the quarter while the energy sector was the worst performer, driven by the decline in crude oil.

PERFORMANCE COMMENTARY

The Buffalo Flexible Income Fund produced a returned 1.61% for the quarter. During the same time period, the S&P 500 Index returned 6.07% and the Bank of America Merrill Lynch High Yield Master II Index returned 2.71%. The equity portion of the portfolio, which represented about 80% of the Fund’s total investments at the end of the period, produced a return of 1.47% during the quarter.

The Fund’s equity component is primarily focused on large capitalization companies that are current or potential dividend payers which we also believe possess significant competitive advantages. The primary sectors that led to the underperformance during the period were energy and information technology. The underperformance in energy was primarily driven by sec-tor allocation as the Fund was significantly overweight the worst performing sector of the S&P 500 Index. The underperformance in information technology was due to both sector allocation and security selection. The Fund was underweight in its exposure to technology, which was the best performing sector during the quarter. As it relates to disappointing stock performance in technology, QUALCOMM and Intel were the primary detractors to relative results. QUALCOMM was negatively impacted during the quarter by several lawsuits including one by Apple, Inc. (a large customer) and by regulatory reviews from the U.S. Federal Trade Commission and Korea. Meanwhile Intel’s stock declined due to lower guidance for 2017 on its earnings call during the period. On an absolute basis, the top contributors to the Fund in the quarter were Boeing, Dow Chemical and GlaxoSmithKline while the top detractors were HollyFrontier, Pitney Bowes and ExxonMobil.

The fixed income portion of the Buffalo Flexible Income Fund generated a return of 2.15% for the first quarter and underperformed the Bank of America Merrill Lynch Master II Index which generated a return of 2.71%. The primary sectors detracting from performance were consumer discretionary and energy. The underperformance in the discretionary sector relative to the benchmark reflects both an overweight sector allocation and disappointing security selection. Lions Gate Entertainment, Inc. underperformed due to a mixed fourth quarter earnings report. Meanwhile within energy, the underperformance was due to Approach Resources and Wildhorse Resource Development. Both of these companies were negatively impacted by weaker oil prices during the quarter. The top contributors to the Funds fixed income performance included Medicines Company, Valeant and Nuance Communications while the three top detractors were Lions Gate Entertainment, Approach Resources and Consolidated Communications.

OUTLOOK

We expect the market to experience continued volatility in the coming quarters as the Federal Reserve continues 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 potential 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.

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.

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.

Sign Up for Automatic Updates

Stay up-to-date with the most recent media coverage and press releases about the Buffalo Funds.

FOR FINANCIAL PROFESSIONALS

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

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 Flexible Income Fund received 2 stars among 334 for the three-year, 1 star among 291 for the five-year, and 5 stars among 210 Allocation--70% to 85% Equity funds for the ten-year period ending 6/30/17.

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.

©2017 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.

Bond ratings are grades given to bonds that indicates their credit quality as determined by a private independent rating service such as [Standard & Poor's or Moody’s, etc.]. The firm evaluates a bond issuer's financial strength, or its ability to pay a bond's principal and interest in a timely fashion. Ratings are expressed as letters ranging from 'AAA', which is the highest grade, to 'D', which is the lowest grade. Not Rated category includes holdings that are not rated by any rating agencies.