Quick Facts
Ticker:BUFBX
Inception Date:8/12/1994
Total Net Assets:$625.69 Million  (3/31/19)
Expense Ratio:1.01%
Dividend Distribution:Monthly
Category:Large Cap Value
Benchmark:60% Morningstar U.S. Large Cap

40% ICE BofAML U.S. High Yield
Related Material:
   Fund Fact Sheet Q1 2019
   PM Commentary Q1 2019
   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.

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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™ based on risk-adjusted returns among 326 Allocation–70% to 85% Equity funds as of 3/31/19.

Investment Style

Performance (%)

As of 3/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
BUFFALO FLEXIBLE INCOME FUND11.8411.847.738.765.3810.827.217.22
  Combined Index
    Morningstar U.S. Large Cap Index (60%)
    ICE BofAML U.S. High Yield Index (40%)
10.87
13.18
7.40
10.87
13.18
7.40
8.39
10.02
5.94
11.85
13.95
8.69
8.57
11.15
4.70
13.87
15.63
11.24
8.04
8.57
7.25
8.69
9.50
7.47
  BofA ML Combined Index
    S&P 500 Index (60%)
    ICE BofAML U.S. High Yield Index (40%)
11.15
13.65
7.40
11.15
13.65
7.40
8.08
9.50
5.94
11.58
13.51
8.69
8.43
10.91
4.70
14.05
15.92
11.24
8.04
8.57
7.25
8.84
9.75
7.47
  Lipper Mixed-Asset Target Allocation Moderate Funds Index8.418.413.937.355.129.445.566.84
  Morningstar Allocation--70% to 85% Equity Category10.3310.332.868.385.3211.096.286.98
As of 3/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
BUFFALO FLEXIBLE INCOME FUND11.8411.847.738.765.3810.827.217.22
  Combined Index
    Morningstar U.S. Large Cap Index (60%)
    ICE BofAML U.S. High Yield Index (40%)
10.87
13.18
7.40
10.87
13.18
7.40
8.39
10.02
5.94
11.85
13.95
8.69
8.57
11.15
4.70
13.87
15.63
11.24
8.04
8.57
7.25
8.69
9.50
7.47
  BofA ML Combined Index
    S&P 500 Index (60%)
    ICE BofAML U.S. High Yield Index (40%)
11.15
13.65
7.40
11.15
13.65
7.40
8.08
9.50
5.94
11.58
13.51
8.69
8.43
10.91
4.70
14.05
15.92
11.24
8.04
8.57
7.25
8.84
9.75
7.47
  Lipper Mixed-Asset Target Allocation Moderate Funds Index8.418.413.937.355.129.445.566.84
  Morningstar Allocation--70% to 85% Equity Category10.3310.332.868.385.3211.096.286.98

* Morningstar U.S. Large Cap Index (60%) / ICE BofAML U.S. High Yield Index (40%)
** S&P 500 Index (60%) / ICE BofAML U.S. High Yield Index (40%)

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.

As of July 27, 2018 the 60% Morningstar U.S. Large Cap Index/40% ICE BofAML US High Yield Index has replaced the Bank of America Merrill Combined Index (60% S&P 500 Index/40% ICE BofAML US High Yield Index) as the Fund’s primary benchmark. The Advisor believes that the new index is more appropriate given the Fund’s holdings.

Hypothetical Growth of $10,000

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.

Distributions
2019 Distribution Dates:

Record Date: April 17 | Payable Date: April 18

Record Date: May 17 | Payable Date: May 18

Record Date: June 17 | Payable Date: June 18

Record Date: July 17 | Payable Date: July 18

Record Date: August 19 | Payable Date: August 20

Record Date: September 17 | Payable Date: September 18

Record Date: October 17 | Payable Date: October 18

Record Date: November 18 | Payable Date: November 19

Record Date: December 17 | Payable Date: December 18


Record
Date
Payable
Date
Distribution
NAV
Net Investment
Income
Short-Term Capital
Gains
Long-Term Capital
Gains
Distribution
Total
4/17/194/18/19$15.43$0.01351815--$0.01351815
3/18/193/19/19$15.18$0.03240602--$0.03240602
2/19/192/20/19$15.12$0.01889814--$0.01889814
1/17/191/18/19$14.58$0.02098656--$0.02098656

For historical distributions, click here.

Portfolio

Portfolio Characteristics
(As of 3/31/19) 
 
# of Equity Holdings58
# of Fixed Holdings7
Median Market Cap$52.21 B
Weighted Average Market Cap$168.78 B
3-Yr Annualized Turnover Ratio3.27%
Average Duration2.33 years
Average Maturity5.09 years
30-day SEC Yield2.25%
Top 10 Holdings
HoldingTickerSector% of Net
Assets
BoeingBAIndustrials4.64%
MicrosoftMSFTTechnology4.13%
IntelINTCTechnology3.70%
Verizon CommunicationsVZConsumer Staples3.14%
Johnson & JohnsonJNJHealth Care3.02%
GlaxoSmithKlineGSKHealth Care2.98%
Exxon MobilXOMEnergy2.89%
Waste ManagementWMIndustrials2.86%
Royal Dutch ShellRDS/AEnergy2.84%
AT&TTCommunications2.84%
TOP 10 HOLDINGS TOTAL33.04%
As of 12/31/18. 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 3/31/19. 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 3/31/19. Allocation percentages may not equal 100% due to rounding.

Management

John Kornitzer
Portfolio Manager

51 Years of Experience

 View full bio

Paul Dlugosch, CFA
Portfolio Manager

22 Years of Experience

 View full bio

Commentary

CAPITAL MARKET OVERVIEW

(As of 3/31/19) — Equity markets rebounded sharply to start 2019. The widely followed S&P 500 Index returned 13.65% in the 1st quarter, its best quarterly performance in 10 years. The market advance can be largely attributed to the Federal Reserve’s decision to put quarterly short term interest rate hikes on hold and end its balance sheet runoff. Additionally, prospects for a trade agreement between the U.S. and China appeared to improve, and the U.S. Government reopened after its longest shut down in history.

The Russell 3000 Index advanced 14.04% in the 1st quarter. Growth outperformed value, with the Russell 3000 Growth Index returning 16.18% compared to a return of 11.93% for the Russell 3000 Value. By size, midcaps led the way this quarter with the Russell Midcap Index returning 16.54%, followed by a return of 14.58% for the small cap Russell 2000 Index and 14.00% for the large cap Russell 1000 Index. Technology, Real Estate, and Industrials were the best performing sectors, while Health Care and Financials were relative underperformers.

PERFORMANCE COMMENTARY

(As of 3/31/19) — The Buffalo Flexible Income Fund returned 11.84% for the quarter compared to the Fund’s primary benchmark (60% Morningstar U.S. Large Cap Index / 40% ICE BofAML U.S. High Yield Index) which produced a return of 10.85% during the period. For additional reference, the S&P 500 Index returned 13.65% for the period and the ICE BofAML U.S. High Yield Index returned 7.40%.

EQUITIES PERFORMANCE
For the quarter, the equity portion of the portfolio returned 12.96% vs. 13.65% for the S&P 500 Index. The Fund’s equity allocation is primarily focused on large cap, dividend-paying companies which we believe possess significant competitive advantages.

The primary sectors that led to slight relative underperformance during the period were Information Technology, Consumer Staples, and Consumer Discretionary. Technology was the best performing sector for period, and the Fund was underweight Technology when compared to the S&P 500 Index during the quarter. Security selection within Technology contributed to underperformance as the Fund was underweight Apple and Facebook – both stocks advanced over 20% during the quarter.

Meanwhile the underperformance in Consumer Staples was mostly due to security selection. Specific securities that detracted from performance included Coca-Cola and Clorox. Coca-Cola lowered earnings guidance for 2019 due to sluggish top line growth and higher costs. Clorox advanced during the period but not as much as the sector or the market overall, which negatively impacted relative performance.

The underperformance in the Consumer Discretionary sector was mostly due to security selection. Securities that negatively impacted performance with the sector were Lions Gate Entertainment, Amazon, and Netflix. Lions Gate’s stock price was essentially flat over the period, which negatively impacted relative performance when compared to the sector and broader market. Company management indicated the slate of films to be released in 2019 would be down, but that new releases should accelerate in 2020. In a bright note for the company, Starz continued to exceed expectations.
Overall the top contributors to the equity portfolio’s performance were Boeing, Microsoft, and Exxon Mobil while the top detractors were B&G Foods, Pfizer, and Lions Gate.

FIXED INCOME PERFORMANCE
The fixed income portion of the Buffalo Flexible Income Fund generated a return of 1.18% for the 1st quarter and underperformed the ICE BofAML U.S. High Yield Index return of 7.40%. The underperformance was primarily due to stock selection in the Energy sector. Approach Resources’ bonds declined significantly during the quarter as the company is faced with tight liquidity and potential fears over tripping a debt covenant due to weak underlying financial results.

The top contributors to the Fund’s fixed income portfolio included Nuance Communications 1.5% convertible bonds, Medicines Company, and Everi Payments, while the top detractors were Approach Resources, UTi Worldwide, and Nuance Communications 5.375% senior notes.

OUTLOOK

(As of 3/31/19) — We continue to be diligent in our process of seeking income-producing securities trading at reasonable valuations, by our analysis. Given that we believe the U.S. is in the later stages of the current economic cycle, we continue to find ourselves confronted with relatively low spread and yield levels with the non-investment grade fixed income asset class that we prefer over the long haul. This backdrop has resulted in a bond allocation that remains close to the low end of our range in terms of the Fund’s overall asset mix of stocks, bonds, and cash. Within the fixed income portion of the portfolio, we continue to focus on higher-quality, non-investment grade issuers with defensive business models and manageable credit metrics.

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.

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 received 3 stars among 326 for the three-year, 3 stars among 285 for the five-year, and 3 stars among 195 Allocation--70% to 85% Equity funds for the ten-year period ending 3/31/19.

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. 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.