Quick Facts
Inception Date:5/19/1995
Total Net Assets:$165.15 Million  (12/31/18)
Expense Ratio:0.91%
Category:Large Cap Growth
Benchmark:Morningstar U.S. Growth
Related Material:
   Fund Fact Sheet Q4 2018
   PM Commentary Q4 2018
   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 1,252 Large Growth funds as of 1/31/19.

Investment Style

Performance (%)

As of 1/31/193 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND2.627.811.3713.679.7015.558.519.92
  Morningstar U.S. Growth Index2.7310.262.3516.8112.6217.058.79-
  Russell 1000 Growth Index0.688.990.2416.6012.9716.869.169.11
  Lipper Large Cap Growth Fund Index2.019.330.4816.1511.4815.728.228.10
  Morningstar Large Growth Category1.409.10-0.6214.9510.6515.358.408.26
As of 12/31/183 MOYTD1 YR3 YR5 YR10 YR15 YRSince Inception
BUFFALO GROWTH FUND-14.710.510.518.987.6613.678.269.61
  Morningstar U.S. Growth Index-16.390.780.7810.439.8715.508.23-
  Russell 1000 Growth Index-15.89-1.51-1.5111.1510.4015.298.688.74
  Lipper Large Cap Growth Fund Index-15.19-0.47-0.479.688.9814.097.717.73
  Morningstar Large Growth Category-15.43-2.09-2.098.988.1613.747.917.90

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 12/31/18)
Upside Capture80.97
Downside Capture83.75
Sharpe Ratio0.69
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.


Portfolio Characteristics
(As of 12/31/18) 
# of Holdings57
Median Market Cap$60.44 B
Weighted Average Market Cap$186.42 B
3-Yr Annualized Turnover Ratio26.43%
% of Holdings with Free Cash Flow87.72%
Active Share58.68%
Top 10 Holdings
Name of HoldingTickerSector% of Net
AmazonAMZNConsumer Discretionary7.16%
Align TechnologyALGNHealth Care2.31%
Home DepotHDConsumer Discretionary2.25%
Abbott LabsABTHealth Care2.17%
As of 9/30/18. 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 12/31/18. 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 12/31/18. 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 12/31/18) — The 4th quarter of 2018 was a rough period for equity markets, with steep declines dragging full year returns into negative territory. The S&P 500 Index declined -13.52% during the quarter, driven by fears of tightening monetary policy, escalating trade tensions, slowing global economic growth, and margin pressure from higher labor and freight costs. Investors sought safety in government bonds, driving the yield on the 10-year Treasury down from 3.06% at the end of the 3rd quarter to 2.68% at the end of the 4th quarter.

In a reversal of the year-to-date trend, value outperformed growth in the period, as the Russell 3000 Value Index declined -12.24% compared to a -16.33% drop in the Russell 3000 Growth Index. Large companies held up better than smaller companies during the quarter, as the Russell 1000 Index fell -13.82%, the Russell Midcap Index was down -15.37%, and the small cap Russell 2000 Index was down -20.20%. The only sector to post a positive return in the 4th quarter was Utilities. Real Estate, Consumer Staples, and Health Care were down but outperformed the market. Energy was the worst performing sector, driven by steep declines in crude oil. Technology, Industrials, and Consumer Discretionary also underperformed the broad market.


(As of 12/31/18) — The Buffalo Growth Fund declined -14.71% during the 4th quarter but outperformed the Morningstar U.S. Growth Index, which declined -16.39%. Positive stock selection within the Technology, Financials, and Consumer Discretionary sectors, and holding no investments in the Energy sector, were contributing factors to relative outperformance during the period. Results in the aforementioned sectors offset weaker stock selection within the Health Care and Industrials sectors. Heightened market skittishness in the quarter dramatically increased volatility in stocks of companies that gave the perception of a change in status quo and uncertainty regarding future results.

This environment is typical of an aged expansionary period and may provide active managers with ample opportunities to capitalize on short-term overreactions, that could potentially benefit 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 Fund’s top contributor during the quarter was Red Hat, whose shares jumped higher when the company announced it has agreed to be acquired by IBM for a substantial premium.

Starbucks guided weak trends in June, but reported a much-better outlook in November than investors were anticipating. The stock continued to rebound from its July lows and was one of our top contributors in the quarter.

Amazon briefly topped $1 trillion in market capitalization and was the top contributor to the Fund during the 3rd quarter, but pulled back in the 4th quarter, delivering one of its worst periods of performance since The Great Recession of 2008. While we believe the company continues to have a long runway of top-line growth, investors were surprised by the conservative guidance of revenue growth of only 10-20% year-over-year, a range the company has rarely experienced.

Shares of Align Technology sold off after issuing lower-than-expected 4th quarter 2018 guidance, which was driven by a near-term product mix shift to less complex case volumes and promotional activity that resulted in a lower average selling price (ASP). The lower ASP during the quarter raised concerns that competitive pressures were starting to make inroads to the company’s business. We believe continued robust growth is sustainable over the intermediate to long term, as Align has expanded its products to address nearly 70% of the orthodontic market, and while less than 15% of the orthodontic market has converted from metal braces to clear aligners.


(As of 12/31/18) — The market environment appears fertile for active growth stock investing. Interest rates, inflation, and unemployment remain relatively low by historical standards, which provides a healthy environment for both consumers and businesses. Meanwhile, rising interest rates and quantitative tightening measures are gradually rescinding the extraordinary monetary easing and volatility-dampening measures deployed during and after The Great Recession. The effects of lower taxes and regulation, which are broadly positive for the stock market, are starting to wane, leaving global trade negotiations as a key driver of near term event-risk.

Taking all of this together, we believe a more discerning market is ahead of us, which could benefit selective growth stock investors, where a steady hand and active management with an eye toward quality, profit cycle dynamics and relatively attractive risk-adjusted returns could hold advantage, in our opinion. While economic conditions may ebb and flow, our focus for the Growth Fund is to invest in secular trend stars — attractively-priced, financially-strong, well-managed companies across all market cap segments, which we believe are favorably positioned to harvest the lion’s share of big secular growth trends.

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 1252 for the three-year, 3 stars among 1110 for the five-year, and 3 stars among 802 Large Growth funds for the ten-year period ending 1/31/19.

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.