“Buy-and-hold” investing really works.
A fund that hasn’t changed its stock picks since 1935 is outperforming its peers.
“It’s deep-value in the sense that all the companies in the portfolio have an amazing tenure,” the Voya fund’s strategy can be better than an index fund because it doesn’t have to change its weightings when the index changes
The flows to the fund come as low-cost index funds have pulled away money from poorly-performing stockpickers and prompted a debate around the value of active management.
According to Lipper, passive stock mutual funds pulled in $153.2 billion in 2014 and exchange-traded funds took in another $181.3 billion, while actively-managed stock mutual funds had net flows of just $39 million, compared with assets of $5.5 trillion at year-end. The figures for the active group includes the Voya fund, whose success with its hands-off approach illustrate the issues.
To be sure, investors could buy any of the fund’s stocks directly without having to pay the fee of 52 basis points. There are few capital gains-tax consequences of owning the fund, because of its low turnover
Its unique nature has often drawn attention including from Vanguard Group Inc founder Jack Bogle, who said he remembers the fund from his days as an undergraduate around 1950. “It’s not a bad idea at all,” he said.