Systematic. Quality. Value.

Barrow Value Opportunity Fund

Fund Objective

The Barrow Value Opportunity Fund is a U.S. all-cap equity strategy that seeks to generate long-term capital appreciation. Barrow believes that systematic investment in diversified portfolios of high-quality companies at pricing with a large Margin of Safety†, or discount to intrinsic value as estimated by Barrow, has the potential to generate above-average returns with below-average risk.

 

Barrow Value Opportunity Fund

Bloomberg

Value Broad Market Funds

Category as of 6/30/17

% Ranking Based on Total Return

Since Inception Top   15%
5 Year Top 028%
3 Year Top 064%
1 Year Top 073%

For the since inception, 5-year, 3-year and 1-year, periods ended June 30, 2017 the Fund’s Institutional Class of shares performance, in-cluding performance for those periods prior to its reorganization into the Fund, placed it 48 (15th percentile) out of 332 Value Broad Market Funds, 116 (28th percentile) out of 419 Value Broad Market Funds, 309 (64th percentile) out of 487 Value Broad Market Funds and 399 (73rd percentile) out of 552 Value Broad Market Funds, respectively. Past performance does not guarantee future results. 

Fund Strategy

The Barrow Value Opportunity Fund seeks to achieve long-term capital appreciation by implementing Barrow Street's proprietary Quality-meets-Value (“QMV”) strategy, which is grounded in Barrow Street's extensive experience with private and public equity investing since 1997. QMV evaluates and ranks the quality and value of companies based on various factors, including, without limitation, market pricing, intrinsic value, return on capital, profitability, cash flow, growth, and debt level.

The Barrow Value Opportunity strategy seeks capital appreciation by:

  • Investing with a Margin of Safety† in companies that Barrow believes are high quality and significantly undervalued
  • Diversifying across companies, market capitalizations, and industry sectors
  • Deploying an investment process that is disciplined, dispassionate and patient

The Fund seeks to invest in the best opportunities in the U.S. stock market on a regular basis. The Fund excludes companies with insufficient data, certain risk factors (e.g. high corporate debt levels), and unattractive industry or business characteristics. The Fund ranks the quality and value of companies based on various factors, including market pricing, intrinsic value, earnings power, return on capital, profitability, cash flow, internal growth, and debt level.

The Fund generally invests in companies with the highest QMV rankings. It also seeks to maintain significant portfolio diversification across companies, three market capitalization segments (e.g. large, mid, small) and multiple industry sectors. Barrow invests for the long term allowing the markets time to reappraise a company's value and price. The Fund typically sells companies that no longer receive adequate QMV rankings for investment.

Portfolio Characteristics

As of 6/30/17
  Barrow Value Opportunity All-Cap Index* Percent Ratio
Operating Metrics
Return on Equity 27.6%  8.5% 327%
Return on Assets 10.8% 1.9% 564%
Leverage Ratio 19.1% 32.7%   59%
Operating Margins 17.3% 9.0% 194%
Y/Y Sales Growth 8.8% 6.3% 141%
Valuation Metrics
EBITDA Multiple 11.4x 14.0x 82%
PE Ratio 21.4x 30.7x 70%
12M Dividend Yield 1.9% 1.7% 110%
30-day SEC Yield Before Waivers: 0.07%
After Waivers: 0.42%
0  
Weighted Average Market Cap ($B) $14.0 $16.1  
Companies 340 970  

* Average of three indices: S&P 500, S&P Mid 400 and Russell 2000. For each portfolio attribute shown (for example, Return on Assets), the Advisor defines the All Cap Index as the average of that attribute’s value as reported by Bloomberg for each of the S&P 500, the S&P 400, and the Russell 2000 indices, with each receiving an equal weight. Past performance does not guarantee future results. 

Sector Allocation
 
Market Cap Allocation
  % of Portfolio Weighted Average Market Cap ($B) Number of Companies
Large Cap 21.2% $51.1 57
Mid Cap 36.5% $7.0 112
Small Cap 42.3% $1.5 171
Top Ten Holdings
Holdings % of Equity
Usana Health Services 1.23%
Medifast Inc. 1.18%
NuSkin Enterprises 1.17%
Sanderson Farms Inc 1.14%
Davita Healthcare Partners 1.11%
HealthSouth Corp 1.11%
Pilgrim's Pride Corp 1.10%
Globus Medical Inc 1.10%
Vector Group Inc 1.09%
AmerisourceBergen Corp 1.06%
Total 11.31%

Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.

* Return on Equity is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Return on Assets is an indicator of how profitable a company is relative to its total assets. Calculated by dividing a company's annual earnings by its total assets. Leverage Ratio is used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. Operating Margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. Y/Y Sales Growth is method of evaluating sales growth over one time period with those from another time period (or series of time periods), on an annualized basis. EBITDA Multiple is a financial ratio that measures a company's return on investment. PE Ratio (price earnings ratio) is a valuation ratio of a company's current share price compared to its per-share earnings. Barrow Funds reports a "trailing PE Ratio" by taking the current share price and dividing by the total EPS over the past 12 months and caps the ratio limit at 100x. 12M Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Performance

As of 6/30/17
    Total Annualized Returns
  YTD 1 Year 3 Year 5 Year Since Inception*
Barrow Value Opportunity Fund 6.56% 13.08% 5.40% 13.23% 14.72%
S&P 500 Index 9.34% 17.90% 9.61% 14.63% 14.75%

Net Expense Ratio after Waivers: 1.16%
Gross Expense Ratio: 1.60%

*12/31/08

 

Performance data quoted represents past performance; past performance does not guarantee future results. The returns of the Fund shown for periods prior to its inception date are the returns of the predecessor of the Barrow Street Fund LP, an unregistered limited partnership managed by the portfolio manager of the Value Opportunity Fund (the "Predecessor Private Fund"). The Predecessor Private Fund was reorganized into the Institutional Class shares on August 30, 2013, the date that the Value Opportunity Fund commenced operations. The Value Opportunity Fund has been managed in the same style and by the same portfolio managers since the Predecessor Private Fund's inception on December 31, 2008. The Value Opportunity Fund's investment goals, policies, guidelines and restrictions are, in all material respects, equivalent to the Predecessor Private Fund's investment goals, policies, guidelines and restrictions. The information shows the Predecessor Private Fund's annual returns and long-term performance reflecting the actual fees and expenses that were charged when the Value Opportunity Fund was a limited partnership. The prior performance is net of management fees and other expenses but does not include the effect of the performance fee which was in place until October 7, 2012. From its inception on December 31, 2008 through the date of this prospectus, the Predecessor Private Fund was not subject to certain investment restrictions, diversification requirements and other restrictions of the Investment Company Act of 1940, as amended (the "1940 Act") or Subchapter M of the Internal Revenue Code of 1986, as amended, which, if they had been applicable, might have adversely affected the Value Opportunity Fund's performance. The information below provides some indications of the risks of investing in the Value Opportunity Fund.The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month-end is available by calling 1-877-767-6633. Barrow Street Advisors LLC (the "Adviser") has contractually agreed, until October 1, 2017, to waive Management Fees and reimburse Other Expenses to the extent necessary to limit total annual fund operating expenses to an amount not exceeding 1.15% of Institutional Class shares, respectively, of average daily net assets. Management Fee waivers and expense reimbursements by the Adviser are subject to repayment by the Value Opportunity Fund for a period of three years after such fees and expenses were incurred, provided that the repayments do not cause Total Annual Fund Operating Expenses to exceed the foregoing expense limitations. Prior to October 1, 2017, this agreement may not be modified or terminated without the approval of the Board of Trustees. This agreement will terminate automatically if the Value Opportunity Fund's investment advisory agreement with the Adviser is terminated.The S&P 500 Index is an unmanaged index of equity prices and is representative of a broader market and range of securities than is found in the Fund's portfolio. 

Risk

Barrow All Cap Core Fund

Barrow seeks to actively mitigate risk and reduce volatility by:

  1. Investing with a wide Margin of Safety†, or large gap between market price and intrinsic value, as determined by Barrow
  2. Diversifying across companies, market capitalizations, and many industry sectors:
    • Large number of positions, (i.e. 150-250 companies)
    • Maximum position size is generally 3%
    • Three market cap segments (large, mid, small)
    • Multiple industry sectors
  3. Avoiding high corporate debt levels
Volatility Summary
From 12/31/08 through 6/30/17
  Downside Deviation Sortino Ratio Standard Deviation Sharpe Ratio
Value Opportunity Fund 7.93% 1.86 13.82% 1.07
S&P 500 Index 8.07% 1.83 13.73% 1.08

Note: The Portfolio Managers believe that Downside Deviation ("DD") and Sortino Ratio (Return/DD) are more relevant measures of volatility than Standard Deviation "SD" and Sharpe Ratio (Return/SD). While Standard Deviation measures all volatility, including upside or "good" volatility, Downside Deviation only measures downside or "bad" volatility.

Capture Ratio: Barrow Value Opportunity Fund vs. S&P 500 Index
From 12/31/08 through 6/30/17
Upside Capture Ratio 98.1%
Downside Capture Ratio 96.5%
Capture Ratio 102%

Intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Click here for a current Prospectus. Please read and consider it carefully before you invest. A free hard-copy may also be obtained by calling 1-877-767-6633. Downside Deviation is a measure of downside risk that focuses on returns that fall below a minimum threshold or minimum acceptable return. Sharpe ratio is a statistical measure that uses standard deviation and excess return to determine reward per unit of risk. A higher Sharpe ratio implies a better historical risk-adjusted performance. Sortino ratio is a variation of the Sharpe ratio, differentiates harmful volatility from volatility in general by using a value for downside deviation. The Sortino ratio is the excess return over the risk-free rate divided by the downside semi-variance, and so it measures the return to "bad" volatility. Standard Deviation shows the degree of variation in the Fund's returns and can serve as a useful measure of the Fund's risk. It is measured using monthly observations, but expresses the result on an annualized basis. Sharpe ratio is a statistical measure that uses standard deviation and excess return to determine reward per unit of risk. A higher Sharpe ratio implies a better historical risk-adjusted performance. Upside and Downside Capture Ratios show you whether a given fund has outperformed--gained more or lost less than a broad market benchmark during periods of market strength and weakness, and if so, by how much.Upside capture ratios for funds are calculated by taking the fund's monthly return during months when the benchmark had a positive return and dividing it by the benchmark return during that same month. Downside capture ratios are calculated by taking the fund's monthly return during the periods of negative benchmark performance and dividing it by the benchmark return.The Barrow Funds are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this web site should be considered a solicitation to buy or an offer to sell shares of the Fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. The Barrow Funds are distributed by Ultimus Fund Distributors, LLC.

Fund Information

As of 6/30/17
Ticker BALIX
CUSIP 90386H602
Minimum Investment $2,500
Gross Expense Ratio 1.60%
Net Expense Ratio 1.16%
Net Assets $36.9M
Fund Inception 8/30/13
Predecessor Private Fund Inception 12/31/08
Primary Benchmark S&P 500 Index
Portfolio Managers Nicholas Chermayeff
Robert F. Greenhill, Jr.

Barrow Street Advisors LLC (the "Adviser") has contractually agreed, until October 1, 2017, to waive Management Fees and reimburse Other Expenses to the extent necessary to limit total annual fund operating expenses (exclusive of brokerage costs, taxes, interest, borrowing costs such as interest and dividend expenses on securities sold short, acquired fund fees and expenses, extraordinary expenses such as litigation and merger or reorganization costs and other expenses not incurred in the ordinary course of the Fund's business, and amounts, if any, payable under a Rule 12b-1 Plan) to an amount not exceeding 1.15% of Institutional Class shares, respectively, of average daily net assets. Management Fee waivers and expense reimbursements by the Adviser are subject to repayment by the Value Opportunity Fund for a period of three years after such fees and expenses were incurred, provided that the repayments do not cause Total Annual Fund Operating Expenses to exceed the foregoing expense limitations. Prior to October 1, 2017, this agreement may not be modified or terminated without the approval of the Board of Trustees. This agreement will terminate automatically if the Value Opportunity Fund's investment advisory agreement with the Adviser is terminated.

† Margin of Safety: Benjamin Graham, considered to be the father of value investing philosophy, wrote "the 'margin of safety' resides in the discount at which the stock is selling below its minimum intrinsic value, as measured by the analyst." Graham, B. and Dodd, D. (1951) Security Analysis. New York, NY: McGraw-Hill.

For more information, please contact us at:

(877) 767-6633 or (203) 391-6100

info@barrowfunds.com

Corporate Office
300 First Stamford Place
3rd Floor East
Stamford, CT 06902