Quick Facts
Investor Institutional
Ticker: BUFBX BUIBX
Daily Pricing:  
As of 2/7/2023  
NAV: $18.65 $18.64
$ Change: $0.23 $0.23
% Change:
1.25% 1.25%
YTD:
1.88% 1.84%
Inception Date: 8/12/1994 7/1/2019
Expense Ratio: 1.01% 0.86%
Total Net Assets: $496.23 Million  (12/31/22)
Morningstar Category: Large Value
Benchmark Index: Russell 3000
Dividend Distribution: Monthly
Related Material:
   Fund Fact Sheet Q4 2022
   PM Commentary Q4 2022
   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.

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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

Morningstar Rating

       

Overall Morningstar Rating™ of BUFBX based on risk-adjusted returns among 1,155 Large Value funds as of 12/31/22.

Investment Style

Performance (%)

As of 1/31/233 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO FLEXIBLE INCOME FUND - Investor3.762.265.8911.167.677.807.368.847.57
BUFFALO FLEXIBLE INCOME FUND - Institutional3.802.226.0411.337.827.967.529.007.73
  Russell 3000 Index5.886.89-8.249.519.1212.289.6010.399.98
  Morningstar Moderately Aggressive Target Risk Index11.146.40-5.945.535.137.54---
  Lipper Mixed-Asset Target Allocation Moderate Funds Index7.474.93-6.334.644.566.185.366.436.71
  Morningstar Large Value Category6.985.060.279.747.1910.147.798.90-
As of 12/31/223 MOYTD1 YR3 YR5 YR10 YR15 YR20 YRSince Inception
BUFFALO FLEXIBLE INCOME FUND - Investor13.644.014.019.757.867.976.818.607.51
BUFFALO FLEXIBLE INCOME FUND - Institutional13.754.224.229.938.028.136.978.767.67
  Russell 3000 Index7.18-19.21-19.217.078.7912.138.669.889.75
  Morningstar Moderately Aggressive Target Risk Index9.51-15.48-15.483.044.647.30---
  Lipper Mixed-Asset Target Allocation Moderate Funds Index6.48-13.73-13.732.944.095.974.816.126.55
  Morningstar Large Value Category12.77-5.90-5.906.967.0310.237.108.48-

2013201420152016201720182019202020212022
BUFFALO FLEXIBLE INCOME FUND - Investor16.683.59-1.979.9013.21-7.0018.76-2.2430.004.01
BUFFALO FLEXIBLE INCOME FUND - Institutional16.853.75-1.8310.0713.38-6.8618.87-2.1030.214.22
  Russell 3000 Index33.5512.560.4812.7421.13-5.2431.0220.8925.66-19.21
  Morningstar Moderately Aggressive Target Risk Index20.184.97-2.4010.2118.89-6.7422.9513.5114.04-15.48
For performance prior to 7/1/19 (Inception Date of Institutional Class), performance of the Investor Class shares is used and includes expenses not applicable and lower than those of Investor Class shares.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.
Hypothetical Growth of $10,000
This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the Fund’s inception date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.
Distributions
Record
Date
Payable
Date
Distribution
NAV
Net Investment
Income
Short-Term Capital
Gains
Long-Term Capital
Gains
Distribution
Total
1/17/231/18/23$18.38 (Inv)

$18.38 (Inst)
-

-
-

-
$0.01465833

$0.01685378
$0.01465833

$0.01685378
2023 Distribution Dates:

Net Investment Income, if any – Record Date (2/17/23); Payment Date (2/21/23)

Net Investment Income, if any – Record Date (3/17/23); Payment Date (3/20/23)

Net Investment Income, if any – Record Date (4/17/23); Payment Date (4/18/23)

Net Investment Income, if any – Record Date (5/17/23); Payment Date (5/18/23)

Net Investment Income, if any – Record Date (6/20/23); Payment Date (6/21/23)

Net Investment Income, if any – Record Date (7/17/23); Payment Date (7/18/23)

Net Investment Income, if any – Record Date (8/17/23); Payment Date (8/18/23)

Net Investment Income, if any – Record Date (9/18/23); Payment Date (9/19/23)

Net Investment Income, if any – Record Date (10/17/23); Payment Date (10/18/23)

Net Investment Income, if any – Record Date (11/17/23); Payment Date (11/20/23)

Capital Gains, if any – Record Date (12/4/23); Payment Date (12/5/23)

Net Investment Income, if any – Record Date (12/18/23); Payment Date (12/19/23)
For historical distributions, click here.

Portfolio

Portfolio Characteristics
(As of 12/31/22) 
 
# of Holdings56
Median Market Cap$58.47 B
Weighted Average Market Cap$264.09 B
3-Yr Annualized Turnover Ratio2.49%
30-day SEC Yield1.94%
Top 10 Holdings
HoldingTicker / MaturitySector% of Net
Assets
MicrosoftMSFTTechnology7.35%
ChevronCVXEnergy4.20%
ConocoPhillipsCOPEnergy4.19%
Hess CorpHESEnergy3.95%
Eli Lilly & CoLLYHealth Care3.40%
ExxonMobilXOMEnergy3.37%
Costco WholesaleCOSTConsumer Staples3.31%
APA CorpAPAEnergy3.20%
PepsiCoPEPConsumer Staples3.05%
Arthur J Gallagher & CoAJGFinancial Services3.00%
TOP 10 HOLDINGS TOTAL39.02%
As of 9/30/22. Top 10 Holdings for the quarter are not disclosed until 60 days after quarter end. Fund holdings are subject to change and are not recommendations to buy or sell any securities.
Sector Weighting
As of 12/31/22. 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.
Asset Allocation
As of 12/31/22. Allocation percentages may not equal 100% due to rounding.

Management

John Kornitzer
Portfolio Manager

55 Years of Experience

 View full bio

Paul Dlugosch, CFA
Portfolio Manager

26 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 12/31/22) — Capital markets rallied modestly in the 4th quarter as the S&P 500 Index gained 7.56%, the only positive quarter for 2022. Cooler inflation readings, resilient consumer spending, and better-than-expected corporate earnings buoyed markets during the first two months of the 4th quarter before pulling back in December. Much of the focus remains on the path of future interest rates, recession fears, and the economic and market impact those events may generate in 2023.

Despite the 4th quarter advance, the stock market recorded its worst calendar year since 2008, with a decline of -18.11% for the S&P 500 Index, and a loss of -32.54% for the growth-oriented and technology-heavy Nasdaq Composite Index. Large cap technology stocks and the more interest-rate sensitive assets suffered the most, while value stocks outperformed. In the end, nine of the S&P 500 Index’s 11 economic sectors declined. Energy stocks were the bright spot, recording a gain of 65.72% for the sector while Utilities eked out a gain of 1.57% in 2022.

The damage wasn’t isolated to the stock market as the investment-grade bond indices suffered double-digit losses for the year as well. In fact, a traditional balanced investment portfolio of 60% stocks and 40% bonds suffered the 4th worst drawdown in the past 100 years.

Recapping quarterly results, the broad-based Russell 3000 Index advanced 7.18% in the period. Value stocks significantly outperformed growth stocks to close out 2022, as the Russell 3000 Value Index returned 12.18% versus a return of just 2.31% for the Russell 3000 Growth Index. Relative performance was mixed going down in market cap size as small caps advanced less than large caps in the quarter, while mid cap stocks outperformed both large and small caps. Larger cap stocks returned 7.24%, as measured by the Russell 1000 Index, compared to the smaller cap Russell 2000 Index return of 6.23%, while the Russell Midcap Index produced a return of 9.18% in the quarter.

PERFORMANCE COMMENTARY

(As of 12/31/22) — The Buffalo Flexible Income Fund (BUFBX) returned 13.64% for the quarter compared to a return of 7.18% for the Russell 3000 Index.

The sectors primarily responsible for the Fund’s relative outperformance were Energy, Health Care, and Technology. Energy was the strongest contributor to Fund results during the period due to a significant portfolio overweight to the strongest performing sector of the market during the period. Hess, APA Corporation, Chevron, Exxon Mobil, ConocoPhillips, and Schlumberger were the strongest contributors to portfolio results. Energy companies continued to benefit from higher oil and gas prices relative to prior years.

Health Care was another area of strength for portfolio results due to stock selection and a slight overweight allocation relative to the benchmark. Gilead, Merck, Pfizer, and Eli Lilly were the strongest contributors to Fund results within Health Care. Gilead benefited from a positive earnings release and better than expected guidance due to strong performance across multiple products. Merck also reported good earnings during the quarter driven by its flagship drug Keytruda as well as Gardasil and its animal health segment.

OUTLOOK

(As of 12/31/22) — We believe a lot of bad news has been priced into market valuations, but volatility could remain elevated. The direction of the market will depend on inflation’s trajectory, the Federal Reserve’s actions to tame inflation, and the amount of economic damage caused by higher interest rates. We are seeing a decline in logistics costs, shipping rates, and most commodity prices, however component shortages/supply chain issues continue to persist. The Fed has increased interest rates by 425 basis points since the beginning of 2022, and market expectations forecast another 50 to 75 basis point increase in this tightening cycle. Meanwhile, global economies continue to slow, especially in Europe where energy prices remain high. While many companies have already lowered financial guidance for the year, we could be bracing for an earnings season where companies’ lower guidance for 2023.

Despite the uncertainty, we remain focused on wide moat, large capitalization dividend-paying companies trading at reasonable valuations, in our view. As always, the Fund will continue to emphasize competitively advantaged companies that can be purchased at a fair value. 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.

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. Earnings growth is not representative of the fund’s future performance.

Literature

Buffalo Flexible Income Fund
Documents
Last
Updated
  Fact Sheet12/31/22
  Quarterly Commentary12/31/22
  Full Fund Holdings6/30/22
  Summary Prospectus7/29/22
  Prospectus7/29/22
  Statement of Additional Information7/29/22
  Annual Report3/31/22
  Semi-Annual Report9/30/22
  Tax Guide - 20221/8/23
General Account
Forms
Investor
Class
Institutional
Class
Both
  New Account Application
  New Account Application - Entity
  Change or Add Account Details
  Cost Basis Method Election
  Power of Attorney
Individual Retirement Account (IRA) Forms
  IRA Account Application
  IRA Beneficiary Addition / Change
  IRA Required Minimum Distribution (RMD)
  IRA / Qualified Plan Distribution Request
  IRA Transfer
Coverdell Education Savings Accounts (ESA) Forms
  Coverdell ESA Application
  Coverdell ESA Distribution Request
  Coverdell ESA Transfer
Retirement Information
  Retirement Savings Options for Individuals

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.

The Buffalo Flexible Income Fund (BUFBX) received 5 stars among 1155 for the 3-year, 4 stars among 1099 for the 5-year, and 2 stars among 819 Large Value funds for the 10-year period ending 12/31/22.

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. ©2022 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. 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.

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.