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Is Oakmark Fund Still a Good Investment?

The fund is having a tougher year than its peers. Here's what Morningstar's analyst thinks.

Oakmark Fund (OAKMX) remains a strong option for long-term investors. It earns a Morningstar Analyst Rating of Gold for all but its priciest share class, which is rated Silver.

Recent personnel changes give a glimpse into what the strategy's future could look like beyond its star manager. Bill Nygren, manager since 2000, remains a driving force, with his decades of experience helping set the tone. Analyst Michael Nicolas’ promotion to comanager in January 2020, coming after seven years of strong contributions as an analyst, hints at the path ahead, though Nygren has not announced any retirement plans. Meanwhile, the firm has continued strengthening its analyst bench via homegrown talent, promoting three associates in the past year even as longtime comanager Kevin Grant retired.

The team isn’t boxed in by traditional value standards like simple price/earnings ratios, instead using rigorous company-level analysis and various valuation lenses to find opportunities. That meant embracing stocks typically more associated with growth investing that sold off heavily in 2022’s first-quarter rout, including Salesforce (CRM), Pinterest (PINS), and Amazon.com (AMZN) (via options), and it added to Netflix (NFLX) after a significant decline.

Oakmark’s willingness to deviate from the crowd is an advantage, though it may not always feel that way. Its adaptable value-driven approach means it leans growthier than the typical large-value Morningstar Category peer, yet a heavy financials stake and light technology exposure put it out of step with its S&P 500 benchmark. As a result, evaluating relative performance isn't a straightforward exercise. It has held up better than category peers while lagging the S&P 500 in growth-led markets, with the opposite typically true when value is in favor. That has meant the investor shares’ 11.4% loss in the volatile year-to-date period through April landed near the bottom of the category while edging the benchmark.

The strategy has shown it can differentiate itself over long periods. It sports a solid track record under Nygren and has proved its worth at various points in the market cycle, including a strong resurgence in 2021. Returns may be lumpy, but those seeking true active management will surely get it here.

Key Proprietary Morningstar Metrics

Morningstar Analyst Rating: Gold
Process Pillar: High
People Pillar: High
Parent Pillar: Average

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Katie Rushkewicz Reichart does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.