Monetta Young Investor FundAs of March 31, 2018
Overall Fund Rating out of 1,213 Large-Growth funds as of 3/31/18 (derived from a weighted average of the fund’s 3-,5-, and 10-year risk adjusted return measure).
Inception Date: 12/12/2006
Fund Assets: $142.7 million
Expense Ratio: 1.20%
Number of Holdings: 32
Turnover (as of 12/31/17): 36.1% (1 year trailing)
Percent Passive Component: 52.94%
Weighted Average Market Cap*: $287.5B
Average Price/Earnings Ratio (as of 12/31/17)*: 24.5
Portfolio Risk Metrics
(Versus S&P 500® Index)
Top Equity Holdings (%)
|Security Description||% of Net Assets|
|Total % of Top Holdings||77.81%|
|Alibaba Group Holding Ltd. - ADR||3.22%|
|MasterCard, Inc. - CL A||3.07%|
|UnitedHealth Group, Inc.||2.55%|
|Alphabet, Inc. - CL C||2.53%|
|Bank of America Corp.||2.10%|
|Costco Wholesale Corp.||1.98%|
|JPMorgan Chase & Co.||1.93%|
|Waste Management, Inc.||1.89%|
*Excludes Passive Component
Monetta Young Investor Fund Overview
The Monetta Young Investor Fund seeks long-term capital growth by employing a symbiotic “passive/active” investment approach.
The Fund invests approximately 50% of its assets in exchange-traded funds (ETFs) and other funds that, together, seek to track the S&P 500® Index. The remaining balance of the Fund is invested in high-quality, large capitalization growth companies that have demonstrated a history of improving revenue and earnings growth.
The Fund is intended to serve as a core component a portfolio, whether as a first-ever investment by a young investor or as a basic portfolio building block for an investor of any age. The combination of passive and active provides a turnkey solution—broad-based market exposure plus a carefully selected group of high quality, growth-oriented companies. Our intended goal with this approach is to deliver long-term growth and provide a measure of downside protection during periods of market downturns.
The Monetta Young Investor Fund’s “half active/half passive” investment approach is the result of our many years of observing what investment strategies potentially work and what doesn’t over time. Our philosophy incorporates insights from the following well-known investors:
• John Bogle: “On average, an astonishing 90% of actively managed funds underperform their benchmark indexes over the preceding 15 years (2001-2016).” (1) Approximately 50% of the Fund’s portfolio will track the performance of the S&P 500 Index.
• Warren Buffett: “Best returns are achieved by companies that have been producing the same product or service for several years.” (2) The Monetta Young Investor Fund emphasizes high-quality growth companies with a competitive edge.
• Gerald M. Loeb: “It is more likely to pay off to buy companies at a seemingly high price…than to attempt to discover when a declining situation will turn around.” (3) The Fund’s basic investment strategy is to buy high and sell higher.
• Peter Lynch: “Never invest in any idea you can’t illustrate with a crayon…invest in companies you understand.” (4) Our Fund tends to have a bias to invest in quality, household names with proven/experienced management teams and strong growth prospects.
• James O’Shaughnessy: “Market-leading firms are considerably less volatile than the market as a whole…Relative strength is a much better indicator of a company prospects than factors such as earnings growth rates.” (5) The Monetta Young Investor Fund seeks companies with improving relative strength relative to its sector and overall market.
We construct the passive portion of the portfolio using ETFs and other funds with the goal of providing:
• Matched market returns
• Broad market diversification
• Tracked market volatility
• Minimized portfolio turnover
• No style drift
The active portion of the portfolio complements the passive portion by providing exposure to a concentrated number of high-quality, large-cap growth stocks.
Stocks are initially screened on technical factors such as price momentum, money flows and relative strength. To further refine our search, we evaluate company fundamentals such as:
• Competitive dynamics
• Management’s track record and ability to execute a growth strategy
• Balance sheet strength
• Positive cash flow
• Quarterly earnings trends that exceed expectations
• Higher company guidance
• Dividend growth opportunities
Portfolio Construction and Sell Discipline
The Monetta Young Investor Fund is generally split 50/50 between its active and passive components, though the relative proportions may vary between 40 and 60% of the portfolio. The passive component is rebalanced as needed over time.
The Fund’s active component generally consists of 25-30 companies, each with a market capitalization typically greater than $10 billion at the time of purchase. The average security weighting is typically around 2%, with no security exceeding 5% at the time of purchase. We are generally quick to sell a stock if management lowers guidance or our investment thesis changes.
Sector Weightings (%)
Monetta Financial Services, Inc. | 1776-A S. Naperville Road, Suite 100, Wheaton, IL 60189 | Phone: 630-462-9800 | Email: email@example.com
Please read the Prospectus carefully before you invest. It contains more complete information about the Monetta Funds, including risks specific to each fund, fees and expenses. A free, hard-copy of the prospectus can be obtained by calling 1-800-241-9772.
Portfolio holdings and composition are subject to change at any time and are not a recommendation to buy or sell any securities.
Mutual fund investing involves risk. Principal loss is possible. The Funds may make short-term investments, without limitation, for defensive purposes, which investments may provide lower returns than other types of investments. The portion of the Monetta Young Investor Fund that invests in underlying ETF’s that track the Index will be subject to certain risks which are unique to tracking the Index. By investing in ETF’s, you will indirectly bear your share of any fees and expenses charged by the underlying funds, in addition to indirectly bearing the principal risks of the funds. Growth-oriented funds may under-perform when growth stocks are out of favor. Please refer to the prospectus for further details. While the funds are no-load, management and other expenses still apply. Concentrated funds may experience greater price volatility.
© 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating™ for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating™ metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. The Monetta Young Investor Fund received 3 stars among 1213 for the three-year, 2 stars among 1099 for the five-year, and 5 stars among 779 Large Growth funds for the ten-year period ending 3/31/18.
Morningstar Risk Rating: An annualized measure of a fund’s downside volatility over a three-, five-, or ten-year period. This is a component of the Morningstar Risk-Adjusted Return. Morningstar Risk is displayed in decimal format. A high number indicates higher risk and low numbers indicate lower risk. In each Morningstar Category, the top 10% of investments earn a High rating, the next 22.5% Above Average, the middle 35% Average, the next 22.5% Below Average, and the bottom 10% Low. Morningstar Return Rating: An annualized measure of a fund’s load-adjusted excess return relative to the return of the 90-day Treasury Bill over a three-, five-, or ten-year period. This is a component of the Morningstar Risk-Adjusted Return. Morningstar Return Rating is derived directly from Morningstar Return. In each Morningstar Category, the top 10% of investments earn a High rating, the next 22.5% Above Average, the middle 35% Average, the next 22.5% Below Average, and the bottom 10% Low. Morningstar Risk and Return Ratings are calculated only for those investments with at least three years of performance history.
Standard and Poor’s 500® Index is a capitalization-weighted index of 500 stocks. This unmanaged index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941-43 base period. You cannot invest directly in an index.
Alpha compares risk-adjusted performance relative to an index. Positive alpha means outperformance on a risk-adjusted basis. Beta measures the volatility of a security or portfolio relative to an index. Less than one means lower volatility than the index; more than one means greater volatility. R-squared (R2) measures the relationship between portfolio and index performance on a scale of 0.00 (0%) to 1.00 (100%). A higher R2 indicates more of the portfolio’s performance is affected by market movements and vice versa. Price-to-Earnings (P/E) is calculated by dividing the current price of a stock by the company’s trailing 12 months’ earnings per share.
(**) As of March 31, 2018 Exchange Traded Funds included:
- iShares Trust Core S&P 500 ETF 13.05%
- SPDR S&P 500 ETF Trust 10.18%
- Vanguard Large-Cap Index Fund 6.47%
- Vanguard S&P 500 Index Fund 6.29%
- Vanguard Growth Index Fund 6.26%
- Vanguard Value Index Fund 5.52%
- Schwab Strategic Trust Large-Cap 5.32%
respectively of the Fund’s net assets. Fund holdings and composition are subject to change and are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk.
(1) Bogle, John C. The Little Book of Common Sense Investing: the Only Way to Guarantee Your Fair Share of Stock… Market Returns. John Wiley, 2017, p. 33.
(2) Hagstrom, Robert G. The Warren Buffet Way: Third Edition. John Wiley, 2014, p. 78.
(3) Loeb, Gerald M. The Battle for Investment Survival. John Wiley, 2007, p. 227.
(4) Lynch, Peter, and John Rothchild. Beating the Street: a Special Edition for Worth Subscribers. Simon & Schuster, 1994, p. 27, 303.
(5) O’Shaughnessy, James P. What Works on Wall Street: the Classic Guide to the Best-Performing Investment Strategies of All Time. McGraw Hill, 2012, p. 192, 238.
The Fund’s website contains links to third-party websites. The Fund and the advisor are not affiliated with, sponsored by, or endorsed by any 3rd party website. Monetta Funds are not responsible for, nor can guarantee the accuracy of, information on 3rd party websites.
Monetta Financial Services, Inc. is the adviser to the Monetta Funds. The Monetta Funds are distributed by Quasar Distributors, LLC.