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This Allocation Fund Is Contrarian but Straightforward

Silver-rated Oakmark Equity & Income has veteran management, a strong long-term record, and a below average risk rating.


Greg Carlson: The Morningstar Medalist this week is Oakmark Equity & Income. This fund resides at Morningstar's allocation--50% to 70% equity category.

The lead manager here is Clyde McGregor. He served at that role since the fund's 1995 inception, and he's amassed an excellent long-term record. Three comanagers were appointed in 2013. One, Matt Logan, recently left the firm, however it remains in veteran hands.

The strategy here is fairly simple. On the equity side, management is seeking out companies that trade at significant discounts to their estimated value. On the fixed-income side, the fund has typically favored U.S. government-backed bonds. However more recently it has boosted its stake in corporate-backed debt as those securities traded down in late 2015 and early 2016.

The fund can look contrarian at times. It recently had a big stake in struggling financials, and General Motors was one of the fund's top holdings. Those positions hurt performance last year and so far this year. However, the fund's long-term record remains strong, and its risk rating is below average over the long haul. It earns a Silver Morningstar Analyst Rating. 

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