Flexible Income Fund
Quick Facts
| Investor | Institutional | |
| Ticker: | BUFBX | BUIBX |
| Inception Date: | 8/12/1994 | 7/1/2019 |
| Expense Ratio: | 1.01% | 0.86% |
| Total Net Assets: | $428.57 Million (9/30/21) | |
| Morningstar Category: | Large Cap Value | |
| Benchmark Index: | Morningstar Moderately Aggressive Target Risk | |
| Dividend Distribution: | Monthly | |
| Related Material: Fund Fact Sheet Q3 2021 PM Commentary Q3 2021 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.
The Fund maintains a flexible investment policy which allows it to invest in debt securities with varying maturities. However, it is anticipated that the dollar-weighted average maturity of debt securities that the Fund purchases will not exceed 15 years.
Read More ▼John Kornitzer, Portfolio Manager
Morningstar Rating
Overall Morningstar Rating™ of BUFBX based on risk-adjusted returns among 174 Allocation 85%+ Equity funds as of 11/30/21.
Investment Style
Performance (%)
| As of 11/30/21 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 15 YR | 20 YR | Since Inception |
|---|---|---|---|---|---|---|---|---|---|
| BUFFALO FLEXIBLE INCOME FUND - Investor | 3.40 | 22.81 | 26.71 | 9.24 | 9.21 | 8.23 | 6.83 | 7.16 | 7.44 |
| BUFFALO FLEXIBLE INCOME FUND - Institutional | 3.45 | 22.99 | 26.89 | 9.38 | 9.36 | 8.38 | 6.98 | 7.32 | 7.60 |
| Morningstar Moderately Aggressive Target Risk Index | -2.46 | 9.96 | 14.30 | 13.24 | 11.60 | 10.21 | 7.35 | 8.09 | - |
| Lipper Mixed-Asset Target Allocation Moderate Funds Index | -1.22 | 9.42 | 12.85 | 11.63 | 9.57 | 8.49 | 6.11 | 6.28 | 7.30 |
| Morningstar Allocation 85%+ Equity Category | -1.81 | 14.25 | 19.64 | 15.12 | 12.66 | 11.46 | 7.12 | 7.30 | 7.91 |
| As of 9/30/21 | 3 MO | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 15 YR | 20 YR | Since Inception |
|---|---|---|---|---|---|---|---|---|---|
| BUFFALO FLEXIBLE INCOME FUND - Investor | -0.63 | 16.93 | 28.89 | 6.21 | 8.32 | 8.35 | 6.80 | 7.52 | 7.30 |
| BUFFALO FLEXIBLE INCOME FUND - Institutional | -0.54 | 17.14 | 29.15 | 6.37 | 8.48 | 8.52 | 6.96 | 7.68 | 7.46 |
| Morningstar Moderately Aggressive Target Risk Index | -0.94 | 9.17 | 23.81 | 11.23 | 11.36 | 10.89 | 7.70 | 8.53 | - |
| Lipper Mixed-Asset Target Allocation Moderate Funds Index | -0.35 | 7.77 | 18.12 | 9.82 | 9.16 | 8.96 | 6.29 | 6.47 | 7.28 |
| Morningstar Allocation 85%+ Equity Category | -1.05 | 12.25 | 30.00 | 11.68 | 12.18 | 12.37 | 7.45 | 7.69 | 7.87 |
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|
| BUFFALO FLEXIBLE INCOME FUND - Investor | 9.63 | 10.31 | 16.68 | 3.59 | -1.97 | 9.90 | 13.21 | -7.00 | 18.76 | -2.24 |
| BUFFALO FLEXIBLE INCOME FUND - Institutional | 9.79 | 10.47 | 16.85 | 3.75 | -1.83 | 10.07 | 13.38 | -6.86 | 18.87 | -2.10 |
| Morningstar Moderately Aggressive Target Risk Index | -1.93 | 14.33 | 20.18 | 4.97 | -2.40 | 10.21 | 18.89 | -6.74 | 22.95 | 13.51 |
Hypothetical Growth of $10,000
Distributions
— 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 |
|---|---|---|---|---|---|---|
| 12/2/21 | 12/3/21 | $17.51 (Inv) $17.51 (Inst) | - - | $0.05270 $0.05270 | $0.63786 $0.63786 | $0.69056 $0.69056 |
| 11/18/21 | 11/19/21 | $18.59 (Inv) $18.58 (Inst) | $0.03251913 $0.03502901 | - - | - - | $0.03251913 $0.03502901 |
| 10/18/21 | 10/19/21 | $18.08 (Inv) $18.07 (Inst) | $0.00571524 $0.00798681 | - - | - - | $0.00571524 $0.00798681 |
| 9/17/21 | 9/20/21 | $17.05 (Inv) $17.04 (Inst) | $0.03791136 $0.04015465 | - - | - - | $0.03791136 $0.04015465 |
| 8/17/21 | 8/18/21 | $17.28 (Inv) $17.27 (Inst) | $0.03512588 $0.03721368 | - - | - - | $0.03512588 $0.03721368 |
| 7/19/21 | 7/20/21 | $17.09 (Inv) $17.08 (Inst) | $0.00589869 $0.00819299 | - - | - - | $0.00589869 $0.00819299 |
| 6/17/21 | 6/18/21 | $16.99 (Inv) $16.98 (Inst) | $0.03934585 $0.04149178 | - - | - - | $0.03934585 $0.04149178 |
| 5/17/21 | 5/18/21 | $17.19 (Inv) $17.18 (Inst) | $0.02426012 $0.02622444 | - - | - - | $0.02426012 $0.02622444 |
| 4/19/21 | 4/20/21 | $16.65 (Inv) $16.64 (Inst) | $0.00847721 $0.01071978 | - - | - - | $0.00847721 $0.01071978 |
| 3/17/21 | 3/18/21 | $16.01 (Inv) $16.00 (Inst) | $0.03984988 $0.04170871 | - - | - - | $0.03984988 $0.04170871 |
| 2/17/21 | 2/18/21 | $15.82 (Inv) $15.82 (Inst) | $0.03172344 $0.03362171 | - - | - - | $0.03172344 $0.03362171 |
| 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 9/30/21) | |
|---|---|
| # of Holdings | 49 |
| Median Market Cap | $68.31 B |
| Weighted Average Market Cap | $314.92 B |
| 3-Yr Annualized Turnover Ratio | 4.02% |
| 30-day SEC Yield | 1.85% |
Top 10 Holdings
| Holding | Ticker / Maturity | Sector | % of Net Assets |
|---|---|---|---|
| Microsoft | MSFT | Technology | 8.23% |
| Nuance Communications | 11/1/35, 1.500% | Communications | 4.58% |
| Chevron | CVX | Energy | 3.42% |
| Hess Corp | HES | Energy | 3.24% |
| Costco Wholesale | COST | Consumer Staples | 3.12% |
| ConocoPhillips | COP | Energy | 3.00% |
| Qualcomm | QCOM | Technology | 2.89% |
| Digital Realty Trust | DLR | Real Estate | 2.89% |
| Eli Lilly & Co | LLY | Health Care | 2.84% |
| Allstate | ALL | Financial Services | 2.79% |
| TOP 10 HOLDINGS TOTAL | 37.00% | ||
Sector Weighting
Asset Allocation
Management
Commentary
CAPITAL MARKET OVERVIEW
(As of 9/30/21) — Equity market returns were somewhat mixed in the 3rd quarter, but the S&P 500 Index etched out a modestly positive return of 0.58%. The global recovery hit a speed bump during the period as the world dealt with rising COVID-19 Delta variant infections, an energy price spike, and supply chain issues that continued to constrain economic growth. After trading lower earlier in the quarter, interest rates increased later in the period in response to higher-than-expected inflation data and an admission from the Federal Reserve (the “Fed”) that they would need to begin removing monetary stimulus from the economy sometime soon.
The Russell 3000 Index declined -0.10% in the quarter. Growth stocks outperformed Value stocks as the Russell 3000 Growth Index returned 0.69% versus a drop of -0.93% for the Russell 3000 Value Index. Relative performance was correlated with market cap size as large caps outperformed small caps in the quarter. The large cap Russell 1000 Index returned 0.21% compared to the Russell Midcap Index return of -0.93%. Smaller market cap indices were even more negative, with the Russell 2000 Index returning -4.36% and the Russell Microcap Index returning -4.98%. Financials were the top performing sector for the quarter, while Industrials and Materials were lagging sectors.
PERFORMANCE COMMENTARY
(As of 9/30/21) — The Buffalo Flexible Income Fund (BUFBX) returned -0.63% for the 3rd quarter, compared to a return of -0.94% for the Morningstar Moderately Aggressive Target Risk Index.
Top Contributors
The top three contributors to the Fund’s performance during the quarter were Costco, ConocoPhillips, and Microsoft. Costco’s advance reflected good 2nd quarter earnings, which reflected market share gains as well as strong ancillary sales from areas like gas, food court, and optical department. ConocoPhillips share price appreciation reflects improved commodity prices, its acquisition of Shell’s Permian acreage, and higher cash returns to shareholders. Meanwhile, Microsoft reported strong 2nd quarter earnings results, with all segments reporting above the higher end of the prior guidance range.
Top Detractors
The top three detractors were Hess Corporation, Lions Gate Entertainment, and Qualcomm. While Hess reported good 2nd quarter earnings, the company’s stock declined in the period on concerns around a global growth slowdown due to the Delta variant of COVID-19 (and its potential negative impact on oil prices) and uncertainty around OPEC desire to increase production. Lions Gate Entertainment’s decline primarily reflects a slower start to the year for Starz, which reported larger subscriber losses versus expectations on its earnings call. Qualcomm’s decline in the quarter primarily reflects concerns about the company’s content on Apple’s iPhones.
OUTLOOK
(As of 9/30/21) — The stock market continued to advance in June and July reaching record highs, however September traded off and gave up most of the market’s early quarter gains. The rise in the first months of the quarter was due to expectations that the economy would continue to recover from the pandemic. At the time, new COVID-19 infections, hospitalizations, and deaths were declining. However, a late summer surge in cases coincided with severe weather events (hurricanes, flooding, fires, etc.), supply chain delays, key parts shortages, and inflation pressures, all of which led to reduced estimates for economic growth. Investors are also watching politics in Washington as Congress works on the budget, an infrastructure plan, and the debt ceiling. The Federal Reserve continued to indicate that it views elevated levels of inflation as transitory, and not likely to trigger interest rates increases in the near term. However, they did forecast a taper in their bond buying activity, with a modest monthly decline in purchases.
As always, we remain focused on wide moat, large capitalization dividend-paying companies trading at reasonable valuations, in our view. As stock market volatility spikes, we will look for opportunities to find companies that fit our investment criteria, as we continue to follow our process of finding new investment ideas and to be ready when market declines provide better entry points.
Literature
| Buffalo Flexible Income Fund Documents | Last Updated |
|---|---|
| Fact Sheet | 9/30/21 |
| Quarterly Commentary | 9/30/21 |
| Full Fund Holdings | 9/30/21 |
| Summary Prospectus | 7/29/21 |
| Prospectus | 7/29/21 |
| Statement of Additional Information | 7/29/21 |
| Annual Report | 3/31/21 |
| Semi-Annual Report | 9/30/20 |
| Tax Guide - 2020 | 1/10/21 |
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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