Oakmark Fund: Second Quarter 2021

Theme and Background

This section presents the performance and fee structure data of the Oakmark Fund (Investor Class) as of June 30, 2021. The report focuses on the fund's long-term return record since its inception in 1991, as well as its recent outstanding gains (1-year and 3-month), while disclosing the expense ratio and the term of the waiver agreement on which it depends.

Core Thesis

The author's core investment argument is that the Oakmark Fund has a long-term track record of steady performance, with recent returns (1-year 65.94%) significantly exceeding long-term averages. However, investors need to be aware of the risk of changes in the fee structure — the current net expense ratio (0.91%) relies on a contractual advisory fee waiver agreement that expires on January 27, 2022, after which actual expenses may rise.

Key Arguments and Data

Long-Term Performance: Since its inception on August 5, 1991, the cumulative annualized return is 13.14%, with 10-year at 14.38% and 5-year at 17.51%, all exceeding common market benchmarks.
Recent Surge: The 1-year return reached 65.94%, far exceeding the 5-year (17.51%) and 10-year (14.38%) averages, indicating excess returns driven by short-term market conditions or concentrated holdings.
Fee Structure:
Gross expense ratio: 0.93%, net expense ratio: 0.91%, with the 0.02% difference covered by a waiver agreement.
The waiver agreement is valid until January 27, 2022. After expiration, the net expense ratio may revert to the gross level (0.93%), causing a small but certain erosion of long-term compounding.

Metric	Value
Annualized Return Since Inception (from 1991.08.05)	13.14%
10-Year Return	14.38%
5-Year Return	17.51%
1-Year Return	65.94%
3-Month Return	8.90%
Gross Expense Ratio	0.93%
Net Expense Ratio (Current)	0.91%
Waiver Agreement Expiration Date	January 27, 2022

Companies/Assets Involved

Oakmark Fund (Investor Class): The core fund analyzed in the report. Its role is to serve as the subject of performance demonstration. Key data: solid long-term returns (13.14%), recent surge (65.94%), low expense ratio but reliant on a temporary waiver. The author holds a neutral-to-slightly-positive view of the fund but warns of fee risk.

Investment Implications

Short-Term Caution on Mean Reversion: The 1-year return of 65.94% is unsustainable. Investors should not use this as a future expectation and need to monitor whether the fund's holdings are overly concentrated in high-volatility sectors.
Fee Risk Must Be Factored into Decisions: After the waiver agreement expires, the net expense ratio will rise to 0.93%. For long-term holders, the 0.02% difference will accumulate into a significant cost under the effect of compounding. It is recommended to reassess the fund's fee competitiveness after January 2022.
Long-Term Holders Should Focus on Performance Persistence: Although historical returns are excellent, the recent surge may mask the cyclical risks of the strategy. It is advisable to compare returns against a benchmark (e.g., the S&P 500) over the same period to determine the source of excess returns.