Flexible Income Fund
Quick Facts
| Investor | Institutional | |
| Ticker: | BUFBX | BUIBX |
| Inception Date: | 8/12/1994 | 7/1/2019 |
| Expense Ratio: | 1.02% | 0.87% |
| Total Net Assets: | $414.79 Million (12/31/20) | |
| Category: | Large Cap Value | |
| Benchmark: | Morningstar Moderately Aggressive Target Risk | |
| Dividend Distribution: | Monthly | |
| Related Material: Fund Fact Sheet Q4 2020 PM Commentary Q3 2020 Summary Prospectus | ||
Fund Objective & Investment Process
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.
The allocation of assets invested in each type of security is designed to balance income and long-term capital appreciation with reduced volatility of returns. The Flexible Income Fund expects to change its allocation mix over time based on the Fund managers’ view of economic conditions and underlying security values.
▼John Kornitzer, Portfolio Manager
Morningstar Rating
Overall Morningstar Rating™ of BUFBX based on risk-adjusted returns among 154 Allocation 85%+ Equity funds as of 12/31/20.
Investment Style
Performance (%)
| As of 12/31/20 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 15 YR | 20 YR | Since Inception (8/12/94) |
|---|---|---|---|---|---|---|---|---|---|
| BUFFALO FLEXIBLE INCOME FUND - Investor | 10.23 | -2.24 | -2.24 | 2.59 | 6.08 | 6.77 | 6.42 | 6.09 | 6.88 |
| BUFFALO FLEXIBLE INCOME FUND - Institutional | 10.25 | -2.10 | -2.10 | 2.72 | 6.23 | 6.92 | 6.58 | 6.24 | 7.03 |
| Morningstar Moderately Aggressive Target Risk Index | 13.41 | 13.51 | 13.51 | 9.18 | 11.27 | 8.94 | 7.66 | 7.14 | - |
| Combined Index Morningstar U.S. Large Cap Index (60%) ICE BofAML U.S. High Yield Index (40%) | 9.43 11.40 6.48 | 15.50 21.72 6.17 | 15.50 21.72 6.17 | 11.78 15.70 5.89 | 13.06 16.14 8.43 | 11.28 14.38 6.62 | 9.05 10.18 7.35 | 7.39 7.25 7.61 | 9.15 10.28 7.45 |
| Lipper Mixed-Asset Target Allocation Moderate Funds Index | 9.61 | 12.47 | 12.47 | 8.00 | 8.95 | 7.52 | 6.21 | 5.65 | 7.19 |
| Morningstar Allocation 85%+ Equity Category | 15.58 | 15.41 | 15.41 | 9.41 | 11.03 | 9.68 | 7.10 | 6.02 | 7.63 |
| As of 12/31/20 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 15 YR | 20 YR | Since Inception (8/12/94) |
|---|---|---|---|---|---|---|---|---|---|
| BUFFALO FLEXIBLE INCOME FUND - Investor | 10.23 | -2.24 | -2.24 | 2.59 | 6.08 | 6.77 | 6.42 | 6.09 | 6.88 |
| BUFFALO FLEXIBLE INCOME FUND - Institutional | 10.25 | -2.10 | -2.10 | 2.72 | 6.23 | 6.92 | 6.58 | 6.24 | 7.03 |
| Morningstar Moderately Aggressive Target Risk Index | 13.41 | 13.51 | 13.51 | 9.18 | 11.27 | 8.94 | 7.66 | 7.14 | - |
| Combined Index Morningstar U.S. Large Cap Index (60%) ICE BofAML U.S. High Yield Index (40%) | 9.43 11.40 6.48 | 15.50 21.72 6.17 | 15.50 21.72 6.17 | 11.78 15.70 5.89 | 13.06 16.14 8.43 | 11.28 14.38 6.62 | 9.05 10.18 7.35 | 7.39 7.25 7.61 | 9.15 10.28 7.45 |
| Lipper Mixed-Asset Target Allocation Moderate Funds Index | 9.61 | 12.47 | 12.47 | 8.00 | 8.95 | 7.52 | 6.21 | 5.65 | 7.19 |
| Morningstar Allocation 85%+ Equity Category | 15.58 | 15.41 | 15.41 | 9.41 | 11.03 | 9.68 | 7.10 | 6.02 | 7.63 |
Hypothetical Growth of $10,000
Distributions
— Record Date (2/17/21); Payment Date (2/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (3/17/21); Payment Date (3/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (4/19/21); Payment Date (4/20/21) – Ordinary Income & Capital Gains, if any
— Record Date (5/17/21); Payment Date (5/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (6/17/21); Payment Date (6/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (7/19/21); Payment Date (7/20/21) – Ordinary Income & Capital Gains, if any
— Record Date (8/17/21); Payment Date (8/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (9/17/21); Payment Date (9/20/21) – Ordinary Income & Capital Gains, if any
— Record Date (10/18/21); Payment Date (10/19/21) – Ordinary Income & Capital Gains, if any
— Record Date (11/17/21); Payment Date (11/18/21) – Ordinary Income & Capital Gains, if any
— Record Date (12/2/21); Payment Date (12/3/21) – Capital Gains, if any
— Record Date (12/17/21); Payment Date (12/20/21) – Ordinary Income, if any
| Record Date | Payable Date | Distribution NAV | Net Investment Income | Short-Term Capital Gains | Long-Term Capital Gains | Distribution Total |
|---|---|---|---|---|---|---|
| 1/19/21 | 1/20/21 | $15.71 (Inv) $15.70 (Inst) | $0.01013286 $0.01221186 | - - | - - | $0.01013286 $0.01221186 |
Portfolio
Portfolio Characteristics
| (As of 12/31/20) | |
|---|---|
| # of Equity Holdings | 50 |
| # of Fixed Holdings | 2 |
| Median Market Cap | $57.23 B |
| Weighted Average Market Cap | $250.28 B |
| 3-Yr Annualized Turnover Ratio | 4.12% |
| Average Duration | 0.67 years |
| Average Maturity | 9.90 years |
| 30-day SEC Yield | 2.24% |
Top 10 Holdings
| Holding | Ticker / Maturity | Sector | % of Net Assets |
|---|---|---|---|
| Microsoft | MSFT | Technology | 7.95% |
| Costco Wholesale | COST | Consumer Staples | 3.46% |
| Johnson & Johnson | JNJ | Health Care | 3.45% |
| Intel | INTC | Technology | 3.41% |
| Verizon | VZ | Communications | 3.12% |
| Nuance Communications | 11/1/35, 1.500% | Communications | 3.11% |
| Digital Realty Trust | DLR | Real Estate | 3.05% |
| PepsiCo | PEP | Consumer Staples | 3.04% |
| Waste Management | WM | Industrials | 2.90% |
| Procter & Gamble | PG | Consumer Staples | 2.88% |
| TOP 10 HOLDINGS TOTAL | 36.37% | ||
Sector Weighting
Asset Allocation
Management
Commentary
CAPITAL MARKET OVERVIEW
(As of 9/30/20) — Equity markets sustained their momentum in the 3rd quarter, with the S&P 500 Index returning 8.93%. Macro data continued to improve, and companies broadly reported earnings that proved to be more resilient than expectations. While the U.S. experienced another spike in COVID-19 cases during the quarter and tragically surpassed 200,000 deaths, positive news on vaccines and therapy fronts continued to provide hope for investors.
The Russell 3000 Index increased 9.21% in the quarter. Growth continued to outperform value, as the Russell 3000 Growth Index advanced 12.86%, compared to the Russell 3000 Value Index return of 5.41%. Relative performance was correlated with market cap size in the quarter, with the large cap Russell 1000 Index delivering a return of 9.47%, compared to the Russell Mid Cap Index return of 7.46%, the smaller cap Russell 2000 Index return of 4.93%, and the Russell Micro Cap Index return of 3.69%. More cyclically-exposed Consumer Discretionary, Materials, and Industrial sectors performed best in the quarter. Energy was the sole declining sector, hurt by lingering weakness in oil demand.
PERFORMANCE COMMENTARY
(As of 9/30/20) — The Buffalo Flexible Income Fund (BUFBX) produced a return of 0.16% for the quarter compared to 6.06% for the Morningstar Moderately Aggressive Target Risk Index. The top contributors to Fund performance were Qualcomm, Nuance Communications 1.5% convertible bonds, and Procter & Gamble. Qualcomm increased in value during the quarter due to the favorable settlement of a long-standing legal dispute with Huawei. Nuance benefited from positive earnings and guidance as it showed continued momentum with its cloud transition and incremental positive signs on the adoption of another one its software platforms, Dragon Ambient Experience (DAX). The top detractors from the Fund during the quarter were Chevron, HollyFrontier, and Hess Corporation. All three of these companies are in the Energy sector and have been negatively-impacted by depressed oil and gas prices.
OUTLOOK
Literature
| Buffalo Flexible Income Fund Documents | Last Updated |
|---|---|
| Fact Sheet | 9/30/20 |
| Quarterly Commentary | 9/30/20 |
| Full Fund Holdings | 9/30/20 |
| Summary Prospectus | 7/29/20 |
| Prospectus | 7/29/20 |
| Statement of Additional Information | 7/29/20 |
| Annual Report | 3/31/20 |
| Semi-Annual Report | 9/30/20 |
| Tax Guide - 2019 | 1/10/20 |
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.
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