Quick Facts
Inception Date:5/19/1995
Total Net Assets:$174.81 Million  (3/31/19)
Expense Ratio:0.91%
Category:Large Cap Growth
Benchmark:Morningstar U.S. Growth
Related Material:
   Fund Fact Sheet Q1 2019
   PM Commentary Q1 2019
   Summary Prospectus
Fund Objective & Investment Process

The investment objective of the Buffalo Growth Fund is long-term growth of capital. The Growth Fund invests in domestic common stocks and other U.S. equity securities, including preferred stock, convertible securities, warrants and rights, with a goal of maintaining at least 75% of the equity weighting of the Fund’s portfolio in companies with market capitalizations greater than $5 billion or the median of the Morningstar U.S. Growth Index, whichever is lower. Capitalization of the Morningstar U.S. Growth Index changes due to market conditions and index composition.

With respect to the remaining 25% of the equity weighting of the Fund’s portfolio, the Fund may invest in companies of any size, including, but not limited to, those with market capitalizations less than the lower of the median of the Morningstar U.S. Growth Index or $5 billion.

The Fund managers seek to identify companies that are expected to experience growth based on the identification of long-term, measurable secular trends, and which, as a result, the managers believe may have potential revenue growth in excess of the gross domestic product growth rate. Companies are screened using in-depth, in-house research to identify those which the managers believe have favorable attributes, including attractive valuation, strong management, conservative debt, free cash flow, scalable business models, and competitive advantages.


We believe that actively investing in a relatively concentrated portfolio of great American companies will lead to superior wealth creation over time.

We look for companies that could benefit from secular market trends, combined with the ability to extend competitive advantages across borders, to serve large, profitable and fast-growing markets abroad.

Dave Carlsen, Portfolio Manager

Morningstar Rating


Overall Morningstar Rating™ based on risk-adjusted returns among 1,229 Large Growth funds as of 5/31/19.

Investment Style

Performance (%)

As of 5/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND2.8215.716.2713.9210.2414.118.9610.11
  Morningstar U.S. Growth Index1.0716.097.1215.8912.4215.809.27-
  Russell 1000 Growth Index0.7013.685.3915.3312.3315.649.519.17
  Lipper Large Cap Growth Fund Index0.4613.915.0715.3211.4814.258.608.17
  Morningstar Large Growth Category0.1213.463.7713.8610.3813.978.728.32
As of 3/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND15.3015.3013.1714.1510.4016.159.0110.16
  Morningstar U.S. Growth Index17.6717.6714.0217.1313.4517.559.37-
  Russell 1000 Growth Index16.1016.1012.7516.5313.5017.529.719.33
  Lipper Large Cap Growth Fund Index16.2116.2112.3116.9912.3316.268.718.32
  Morningstar Large Growth Category15.6715.6710.7115.3511.2615.948.848.47

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 Morningstar U.S. Growth Index has replaced the Russell 1000 Growth Index as the Fund’s primary benchmark. The Advisor believes that the new index is more appropriate given the Fund’s holdings.

3 Year Risk Metrics
vs Morningstar U.S. Growth Index (As of 3/31/19)
Upside Capture82.53
Downside Capture88.78
Sharpe Ratio1.10
Hypothetical Growth of $10,000

This chart illustrates the performance of a hypothetical $10,000 investment made in the Fund on the inception date of the benchmark index (6/30/97). This chart does not imply future performance.


Portfolio Characteristics
(As of 3/31/19) 
# of Holdings57
Median Market Cap$66.98 B
Weighted Average Market Cap$241.08 B
3-Yr Annualized Turnover Ratio22.02%
% of Holdings with Free Cash Flow89.47%
Active Share57.46%
Top 10 Holdings
Name of HoldingTickerSector% of Net
AmazonAMZNConsumer Discretionary5.15%
Abbott LabsABTHealth Care2.56%
The Walt Disney CoDISConsumer Discretionary2.45%
Home DepotHDConsumer Discretionary2.45%
As of 3/31/19. 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 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.

Market Capitalization

As of 3/31/19. Market Cap percentages may not equal 100% due to rounding.


Clay Brethour, CFA
Portfolio Manager

27 Years of Experience

 View full bio

Dave Carlsen, CFA
Portfolio Manager

27 Years of Experience

 View full bio



(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.


(As of 3/31/19) — The Buffalo Growth Fund gained 15.30% during the 1st quarter, trailing the benchmark Morningstar U.S. Growth Index return of 17.67%. Stock selection within Financials, Health Care, and Consumer Discretionary weighed on relative performance during the period. Within Financials, the decrease in market volatility had a negative impact on futures volumes for CME Group and Intercontinental Exchange, two of the Fund’s holdings in the sector. As interest rates trended lower during the quarter, Financials that were beneficiaries to the housing markets rebounded, and this is an area where the Fund is underweight relative to the benchmark. Within Health Care, the Fund’s underweight in the biotechnology industry had a negative impact on relative results, as biotech was one of the strongest performing areas within the benchmark during the period.

Among the top contributors during the fourth quarter was Microsoft, Amazon, and Shopify. Microsoft continued to successfully transition itself from a software company into a cloud provider that can deliver a wide variety of platform-as-a-service and infrastructure-as-a-service solutions at scale. We believe the company has a long runway of double-digit revenue growth opportunities with margin expansion for several years.

Amazon has established itself as the default “go-to” e-commerce website in North America, generating nearly $280 billion of gross merchandise volume (GMV) during 2018. We believe the company’s dominance in e-commerce in the U.S. will continue to grow as it continues to build out its distribution and delivery infrastructure, while also growing its online advertising strategy.

Shopify (SHOP) was one of the best performers on an absolute basis as its shares gained 49.24% during the quarter. The company is a multichannel e-commerce platform that allows businesses or merchants to set up online stores to sell products. We believe the company will continue to be a key enabler of small businesses and entrepreneurs to take on legacy business models.

The biggest detractors in the period were ABIOMED, Inc. and CME Group. ABIOMED was weak following a U.S. Food & Drug Administration (FDA) letter to doctors noting a higher mortality rate for ABIOMED’s Impella RP heart pump in a post-FDA approval study than what was seen in pre-approval studies. The Impella RP product is designed for use in specific clinical situations while the majority of patients in the post-approval study did not meet ABIOMED’s original enrollment criteria for treatment with the device. Both the FDA and ABIOMED suggest the Impella RP device’s efficacy was studied in a high-risk pool for which it was not well suited. The news introduced near-term uncertainty to a stock price that embeds high growth expectations but appears to be an over-reaction in the near term. Impella RP represents less than 5% of total company sales. The device, along with the rest of the ABIOMED product line, is highly efficacious when used as intended. We continue to think the company has a long runway for growth and market share gains within a $30 billion market.

CME Group’s shares were weak after futures volumes in the financial markets were lower than last year. The company benefits with higher volatility in markets, which are typically accommodated with rising interest rates. As the quarter progressed it became increasing unlikely that the Fed was in a position to raise short-term interest rates. While the company’s derivative product offerings are broader than just interest rate derivatives, the halt in the interest rate hikes decreased the volatility across multiple asset classes, negatively impacting the company’s volumes.


(As of 3/31/19) — We believe the current environment is typical of an aged expansionary period and may provide active managers with ample opportunities to capitalize on short-term overreactions, potentially benefiting long-term performance. With that in mind, the Fund continues to invest in high-quality growth stocks with relatively attractive valuations according to our internal analysis, which we believe could be a key driver of above-index risk-adjusted returns over the long term. The market environment appears fertile for active growth stock investing. Interest rates, inflation, and unemployment remain relatively low by historical standards, providing a healthy backdrop for consumers and businesses. We don’t see a recession on the horizon nor a significant collapse in corporate earnings, but valuations are at lofty levels, especially for big secular growers. Earnings growth comparisons also get more difficult as we lap the positive effects of last year’s tax reform.

After a possible 1st quarter earnings reset, we suspect the backup in interest rates, a more dovish Federal Reserve stance toward monetary policy, and a trade deal with China could extend the positive market sentiment. With the significant 1st quarter market movement, we believe a volatile, more discerning market could materialize through 2019. Later in the 2nd half of 2019, market pundits may likely return their focus to the Fed’s interest rate normalization process, which may weigh on market multiples. The volatility may favor judicious growth stock investors where a steady hand and active management with an eye toward quality, improving profit cycle dynamics, and relatively attractive risk-adjusted returns could hold an advantage.

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. Investing in both actively and passively managed mutual funds involves risk and principal loss is possible. 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 Growth Fund received 3 stars among 1229 for the three-year, 3 stars among 1097 for the five-year, and 3 stars among 811 Large Growth funds for the ten-year period ending 5/31/19.

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.