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QVP vs. Morningstar’s 2014 Top Funds

This week Morningstar announced their Fund Managers of the Year for 2014. Morningstar heralded the team from Primecap as the Domestic Stock Fund Managers of the Year, trumpeting the Primecap Odyssey Aggressive Growth (POAGX) strategy in particular as number one on its list. We at Kruse Asset Management wondered how our signature Quantitative Value Portfolio (QVP) strategy, which utilizes a contrarian value strategy to outperform the market, fared in comparison.

Our analysis confirms that our QVP outperformed POAGX in 2014, rendering our performance above that of Morningstar’s number one pick. The QVP returned 16.83%, compared to POAGX’s 16.49% (gross of fees), doing especially well against the Primecap fund in March and April and outperforming the fund by over 550 basis points both months. In other words, if the QVP was structured as a mutual fund instead of a separately managed account, it would now lead Morningstar’s performance list.

Given our QVP’s outperformance of Morningstar’s 2014 top domestic stock fund, we decided to measure its performance longer-term against Morningstar previous winners. Specifically, we engaged an extended seven year analysis. Our results confirmed that in addition to outperforming the POAGX fund in 2014, the QVP outperformed the other three Morningstar award-winning funds in 2011 (when Scott Satterwhite, James Kieffer, and George Sertl won for their Artisan Value (ARTLX) fund) and 2012 (when Bill Frels and Mark Henneman were top pick for their Mairs and Power Growth (MPGFX) fund).

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Furthermore, the QVP had the second highest total return over that seven-year period with 107.77 percent, compared to the 76.17 percent for Morningstar’s 2013 winner (Dennis Lynch and his team for their Morgan Stanley Institutional Growth (MSEQX) fund), the 85.39 percent return of the 2012 winner (MPGFX), and the 49.19 percent return for the 2011 winner (ARTLX).

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KAM’s QVP not only competes with, but surpasses, the majority of the most prestigious and best-performing domestic stock funds in the United States. We expect our quantitative strategy to continue outperforming the market and producing excellent returns for our clients heading further into 2015 and beyond.

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