The Masters Portfolios
The Alpha Masters Portfolios bring together six master investors who have demonstrated, throughout bull and bear markets, their unique skills in stock selection, sector knowledge, fixed-income expertise, and trading savvy. Alpha monitors, rebalances, and reports quarterly on the latest developments and performance of the portfolios. Portfolios are established at Charles Schwab.
Masters I Portfolio
The Equity Masters
The Masters I Portfolio combines six equity funds, run by five of the top mutual fund managers in the world. These funds include specialties in global value, small-cap value, corporate restructuring, Warren Buffet style investing, long and short thematic trading, and real estate. The portfolio is constructed with the aim of profiting during both bull and bear markets.
Masters II Portfolio
The Conservative Alternative
The Masters II Portfolio is half equity, half fixed-income. Masters I is the equity component. The fixed-income component consists of two funds managed by Bill Gross, three-time winner of the Morningstar Manager of the Year Award, and considered by many to be the best bond manager in the world.
The Masters Portfolios
Managers and Funds
| Manager |
Fund |
% of
Portfolio |
Tenure |
| Jean-Marie Eveillard |
First Eagle Global |
20% |
since 1979, inception |
Eveillard has one of the longest track records in the mutual fund industry. He also has the best winning record. Since 1979 this fund has had just two down years, both minor losses (1990: -1.3%, 1998: -0.25%). His primary objective is not losing money; therefore, he refuses to benchmark his fund to any index. The fund invests worldwide using a deep value, Graham and Dodd philosophy.
|
| Ken Heebner |
CGM Focus
CGM Realty |
10%
10% |
since 1997, inception
since 1997, inception |
Heebner is widely recognized as one of the greatest traders of all time. His Focus Fund has the best three, five, and ten-year record of any U.S. fund. His Realty Fund is at the top of its peer group over the past ten years also. Heebner is a maverick, a loner - placing big bets against the crowd. The Focus Fund may take substantial short positions to profit from declining markets.
|
| Bruce Berkowitz |
Fairholme |
20% |
since 1999, inception |
Berkowitz runs this fund based on Warren Buffet's style of value stock selection. The fund targets companies with solid cash flows, compelling niche businesses, and management teams with substantial company investment. The fund allocates 25% of assets to special situations where valuations are unusually low. The fund went through the 2000-02 bear market with flying colors, losing just 1.6% in 2002, its only losing year since its inception in 1999.
|
| John Keeley |
Keeley Small Cap Value |
20% |
since 1993, inception |
For more than 20 years, John Keeley has focused on corporate restructuring opportunities, including firms emerging from bankruptcy, IPO's, and spin-offs. The fund is very diversified (top holdings rarely exceed 2%) and turnover is low. In the 2000-02 bear market, the fund suffered just one down year (2002: -8.5%), but by the end of 2003 the fund went to new all-time highs.
|
| Charles Royce |
Royce Low-Priced Stock |
20% |
since 1993, inception |
Charles Royce is a legend among value investors. His Pennsylvania Fund, started in 1983, has one of the best long-term records in the U.S. - up 24 out of 27 years, with a return of almost 13% a year. The Low-Priced Stock Fund focuses on stocks selling below $25 a share. These issues are under-owned and under-researched by institutional investors and, Royce believes, present better values. Since its inception, the fund has outperformed the Russell 2000 Small Cap Index by about 2:1.
|
| Bill Gross |
PIMCO Real Return
PIMCO Total Return |
25% (Masters II)
25% (Masters II) |
since 1998
since 1987, inception |
Bill Gross, the founder and president of PIMCO Funds, is widely acknowledged to be one of the best fixed-income managers in the world. Over the past twenty years, Gross has displayed an uncanny ability to detect long-term trends and to exploit them effectively. Gross is also a widely-read economic theorist. The two funds used in the Masters II Portfolio have consistently outperformed their benchmarks over the past ten years. Gross does not actively manage the Real Return Fund, but oversees the team.
|
| Disclosure: The Masters Portfolios are discretionary portfolios and Alpha may add funds or eliminate funds if, in our judgment, such actions serve the best interests of our clients. The Masters Portfolios start in 2000 and the component funds are held continuously. The Masters I Portfolio is rebalanced every twenty-four months, and the Masters II Portfolio is rebalanced every eighteen months. Past performance is not a guarantee of future performance. The Masters Portfolios are models and do not represent the investment experience of Alpha's clients. |
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