Quick Facts
InvestorInstitutional
Ticker:BUFBXBUIBX
Inception Date:8/12/19947/1/2019
Expense Ratio:1.01%0.86%
Total Net Assets:$581.82 Million  (9/30/19)
Category:Large Cap Value
Benchmark:Morningstar Moderately Aggressive Target Risk
Dividend Distribution:Monthly
Related Material:
   Fund Fact Sheet Q3 2019
   PM Commentary Q3 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™ of BUFBX based on risk-adjusted returns among 304 Allocation 70-85% Equity funds as of 11/30/19.

Investment Style

Performance (%)

As of 11/30/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
BUFFALO FLEXIBLE INCOME FUND - Investor5.0915.325.447.905.248.016.847.15
BUFFALO FLEXIBLE INCOME FUND - Institutional5.2015.485.598.065.408.187.007.31
  Morningstar Moderately Aggressive Target Risk Index6.0519.6513.2110.517.138.997.37-
  Lipper Mixed-Asset Target Allocation Moderate Funds Index3.6616.0511.058.045.557.385.766.94
  Morningstar Allocation 70-85% Equity Category5.2518.5110.748.855.828.456.337.08
As of 9/30/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
(8/12/94)
BUFFALO FLEXIBLE INCOME FUND - Investor1.1113.500.177.634.948.187.007.13
BUFFALO FLEXIBLE INCOME FUND - Institutional1.1413.620.317.795.108.347.167.29
  Morningstar Moderately Aggressive Target Risk Index0.5915.043.918.956.798.807.53-
  Combined Index
    Morningstar U.S. Large Cap Index (60%)
    ICE BofAML U.S. High Yield Index (40%)
1.57
1.81
1.22
16.73
20.22
11.50
5.06
4.23
6.30
10.78
13.92
6.07
8.77
11.05
5.36
11.07
13.21
7.85
8.32
9.03
7.25
8.72
9.56
7.47
  Lipper Mixed-Asset Target Allocation Moderate Funds Index0.9912.924.466.925.487.325.826.87
  Morningstar Allocation 70-85% Equity Category0.5314.331.337.555.668.266.466.98

* 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%)

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 Inception Date. Assumes reinvestment of dividends and capital gains. This chart does not imply future performance.
Distributions
2019 Distribution Dates:

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
11/18/1911/19/19$15.47 (Inv)

$15.46 (Inst)
$0.03471377

$0.03676016
-

-
-

-
$0.03471377

$0.03676016
10/17/1910/18/19$15.12 (Inv)

$15.11 (Inst)
$0.01145893

$0.01334413
-

-
-

-
$0.01145893

$0.01334413
9/17/199/18/19$15.41 (Inv)

$15.40 (Inst)
$0.01890039

$0.02069821
-

-
-

-
$0.01890039

$0.02069821
8/19/198/20/19$14.71 (Inv)

$14.70 (Inst)
$0.04961371

$0.05168269
-

-
-

-
$0.04961371

$0.05168269
7/17/197/18/19$15.27 (Inv)

$15.27 (Inst)
$0.00826352

$0.00940197
-

-
-

-
$0.00826352

$0.00940197
6/17/196/18/19$15.13$0.02141209--$0.02141209
5/17/195/20/19$15.01$0.05121407--$0.05121407
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 9/30/19) 
 
# of Equity Holdings59
# of Fixed Holdings7
Median Market Cap$48.76 B
Weighted Average Market Cap$169.35 B
3-Yr Annualized Turnover Ratio3.81%
Average Duration1.75 years
Average Maturity4.96 years
30-day SEC Yield2.42%
Top 10 Holdings
HoldingTickerSector% of Net
Assets
BoeingBAIndustrials4.58%
MicrosoftMSFTTechnology4.30%
ChevronCVXEnergy3.06%
BB&TBBTFinancials2.94%
Johnson & JohnsonJNJHealth Care2.89%
Procter & GamblePGConsumer Staples2.78%
IntelINTCTechnology2.66%
GlaxoSmithKlineGSKHealth Care2.65%
AllstateALLFinancial Services2.62%
Coca ColaKOConsumer Staples2.57%
TOP 10 HOLDINGS TOTAL31.04%
As of 9/30/19. 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 9/30/19. 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 9/30/19. 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 9/30/19) — The U.S. stock market continued to advance in the 3rd quarter, as expectations for accommodative monetary policy appeared to outweigh concerns of slowing economic growth. The S&P 500 Index returned 1.70% in the period, bringing the year-to-date return to 20.55% through quarter-end. Weak economic data led the Federal Reserve to cut interest rates twice in the quarter, driving rates lower and bond prices higher. U.S. markets outperformed international markets on the strength of the U.S. dollar.

The Russell 3000 Index gained 1.16% in the quarter. Value narrowly outperformed growth, with the Russell 3000 Value Index up 1.23% and the Russell 3000 Growth Index advancing 1.10%. Large caps generally outperformed small caps in the quarter. The Russell 1000 Index returned 1.42%, the Russell Midcap Index returned 0.48%, and the Russell 2000 Index posted a loss of 2.40%. Defensive sectors led the way in the period, with Utilities up 9.34%, Real Estate up 7.69%, and Consumer Staples up 6.12%. Energy was the worst performing sector with a total return of -6.61%. Health Care was also weak, returning -2.25% on increasing political concerns.

PERFORMANCE COMMENTARY

(As of 9/30/19) — The Buffalo Flexible Income Fund produced a return of 1.11% for the quarter, which underperformed the Morningstar Moderately Aggressive Target Risk Index return of 6.05%. The Fund’s peer group index, the Lipper Mixed-Asset Allocation Moderate Funds Index, produced a return of 0.99% for the quarter.

EQUITIES PERFORMANCE

The equity portion of the portfolio returned 1.27%, which trailed the Morningstar Moderately Aggressive Target Risk Index. The relative underperformance was primarily driven by the Energy sector. The underperformance within Energy was primarily due to the sector allocation impact as the Fund was overweight the worst performing sector of the Index. Energy companies have underperformed the broader market due to several reasons including, secular growth fears around fossil fuels, market share losses to renewables, the ability of shale drillers to generate sufficient cash flow to service debt at current price levels, as well as investor acceptance of ESG (environmental, social and governance) standards, which typically avoid investment in fossil fuel securities.

Specific investments that negatively-impacted Fund performance included Pfizer, Schlumberger, and Lions Gate Entertainment. Pfizer shares declined due to the dilutive spin-off of its Upjohn unit (merging with Mylan) as investors re-rated Pfizer based on its new pro-forma margin structure, which will be lower going forward due to the spin off. Meanwhile Schlumberger has been negatively-impacted by the weak macro environment for exploration and production (E&P) which has resulted in declines in drilling activity and eroded fracking pricing. Finally, shares of Lions Gate Entertainment dropped when the company lowered its earnings growth rate from low-to-mid-teens to mid-to-high-single digits. The top three contributors to the Fund’s performance during the quarter were Proctor & Gamble, HollyFrontier, and AT&T.

FIXED INCOME PERFORMANCE

The fixed income portion of the portfolio represented roughly 5% of fund assets during the period. The best performers within the fixed income portion were the Medicines Corp 2.5% convertible bonds and the Everi Payments 7.5% senior notes. The Medicines converts benefited from positive clinical trial data for its cholesterol drug, inclisirin, while Everi Payments benefited from positive underlying fundamentals and news that the company was exploring strategic alternatives including a possible sale.

OUTLOOK

(As of 9/30/19) — Over the first three quarters of the year, the stock market has been primarily driven by expansion in market valuation metrics, as earnings have been relatively flat. Aiding the valuation expansion has been the Federal Reserve’s (the “Fed”) dovish pivot on monetary policy, indicating that future interest rate action will be down. The Fed has become concerned with inflation running below their targeted levels and slowing economic growth. Vagaries regarding trade policy (tariffs and trade agreements), evolving geopolitical risks, and the divided Congress further limit their forecasting abilities. A key driver for further stock market advancement is likely to be impacted by trade and tariff news and how aggressive the Fed cuts rates and how many cuts they ultimately decide to make. As always, we appreciate your confidence in our investment capabilities over the long term.

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

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 2 stars among 304 for the 3-year, 2 stars among 272 for the 5-year, and 3 stars among 192 Allocation 70-85% Equity funds for the 10-year period ending 11/30/19.

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. ©2019 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.