Oakmark Fund: Third Quarter 2016

Oakmark is the mutual fund family launched in 1991 by Harris Associates, the Chicago deep-value firm founded in 1976 (about $105bn AUM). Bill Nygren runs the flagship Oakmark Fund and David Herro the Oakmark International Fund, buying businesses at large discounts to intrinsic value and holding them like owners — publishing quarterly fund commentaries, market commentaries and insight articles.

Bill Nygren、David Herro · 1991 · 美国芝加哥Deep value / contrarian long-term

Theme and Background

This section presents the performance and expense data of the Oakmark Fund (Investor Class) as of September 30, 2016, aiming to demonstrate the fund's long-term return capability since its inception in 1991 and serve as a benchmark for investors to evaluate its investment value.

Core Thesis

The author's core investment argument is that the Oakmark Fund has achieved significant excess returns over the long term (25 years since inception) and medium term (5 years), with an expense ratio at the lower end of the industry, indicating sustainable active management capabilities. Counterintuitively, despite a high recent (3-month) return of 8.53%, the author does not emphasize short-term volatility but instead highlights long-term stability.

Key Arguments and Data

Strong Long-Term Performance: Since its inception on August 5, 1991, the annualized total return has reached 12.51%, significantly exceeding the market average over the same period.
Robust Medium-Term Performance: The 5-year annualized return of 16.64% far exceeds the 10-year (8.50%) and 1-year (14.36%) returns, indicating the effectiveness of the investment strategy over the past five years.
Controllable Short-Term Volatility: The 3-month return of 8.53%, while higher than the 1-year average, does not show extreme drawdowns.
Cost Advantage: The gross expense ratio is only 0.85%, lower than the average for comparable actively managed funds (typically 1.0%-1.5%), reducing investor costs.

Time Horizon	Annualized Total Return
Since Inception (1991/08/05)	12.51%
10-Year	8.50%
5-Year	16.64%
1-Year	14.36%
3-Month	8.53%

Companies/Assets Involved

Oakmark Fund (Investor Class): The core fund analyzed in the report, managed by Harris Associates. Key data: annualized return of 12.51% since inception, expense ratio of 0.85%. The author holds a bullish view, believing its long-term performance and low expenses constitute a competitive advantage.

Investment Insights

Long-Term Holding Strategy is Effective: Investors should focus on the fund's annualized return of 12.51% since inception rather than short-term fluctuations, suggesting the fund is suitable as a core allocation.
Expense Sensitivity: The 0.85% expense ratio is below the industry average, and under the long-term compounding effect, it can significantly enhance net returns. It is recommended to prioritize low-cost products in the same category.
Medium-Term Performance Validates Strategy: The 5-year return of 16.64% implies that the fund manager may have captured opportunities in value stocks or specific sectors during the 2011-2016 period. Investors can further study its portfolio style (e.g., value investing).