Valley Forge fund has risen to the top of U.S. News's large-value fund ranking
You've probably never heard the name
Over the past 10 years, Valley Forge has returned almost 6 percent on an annualized basis. That lands it in the top 5
percent of all large-cap value funds
during that time period. The
Klawans doesn't believe formal training is necessary to become a mutual fund manager. In fact, he's helped others start funds -- 32 to be exact. "I'm just a good businessman, that's all," he says. "I've got a lot of discipline."
While he was working at General Electric in the '70s and early '80s, Klawans
applied to become a registered investment advisor. He says he was only the 12th person ever to do so in
Klawans' investing style is quite conservative.
He says he only invests in well-known names, such as his former employer GE. If he believes the market is headed south,
he's not afraid to pull money out. At times, Klawans will move upwards of 50 percent of the fund's assets to cash.
When the financial crisis hit in 2008, he virtually abandoned the stock market. "The market stunk, so I got to 64 percent
in cash," he says. "I lost a couple of shareholders that said, 'You're not doing anything,' and I said, 'It's because the
market stinks.' While the average large-cap value fund and the
Klawans says his stock-selection process is simple.
"If you buy them low and sell them high, you make money," he says. "I'm pretty conservative, so I only deal with the big
stocks." Currently, the fund holds 28 stocks, according to
Valley Forge's assets are approaching
In the '70s and '80s, says Rekenthaler, lots of one-man shops sprouted up in the mutual fund industry because average investors wanted to manage their own money. (It was also a lot cheaper to get started back then.) "Most of these other funds, either the performance was poor and they got tired of running the fund and they merged it out of existence, or the guy who founded it passed on," he says.
Klawans' investing style worked well during the last decade.
It paid to be conservative in the 2000s because the returns of the broader stock market were low over that 10-year period. Klawans sticks to well-known, blue-chip companies, and he stays away from some of the more growth-powered names that can be found in sectors like technology. "He looked really old-fashioned in the '90s with huge cash positions and no technology and got left far behind," Rekenthaler says. "The last decade has been something of a redemption for him."
"It's a very grounded fund," Rekenthaler says. "Grounded works both ways. ... When everything is bouncing around, you want to be grounded. On the other hand, it doesn't fly when others fly."
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