Discipline and Consistency: The Keys to Success for the Hennessy Cornerstone Growth Fund
Hennessy Funds
High-conviction investment strategies matched with an unwavering commitment to always put shareholders first.
In a recent episode of Viewpoints by Hennessy, portfolio manager, L. Joshua Wein, CAIA , shares his perspectives on the investment strategies and principles behind the Hennessy Cornerstone Growth Fund. As the manager of this distinguished fund, recently named to the Wall Street Journal’s Winner’s Circle, Wein provides valuable insights into the disciplined approach and unique framework that have contributed to its long-term success.
Investment Strategy
The Hennessy Cornerstone Growth Fund follows a stringent and disciplined investment strategy. It is an all-cap portfolio consisting of 50 stocks that focuses on:
The fund looks for companies with a market cap of $175 million and higher. A strict valuation framework guides their stock selection, which we believe a balanced approach between growth and value.
Portfolio Construction Process
The portfolio construction process is rules-based and highly disciplined. The fund selects stocks with a market cap of at least $175 million. It uses three primary criteria:?
This structured approach has been consistent since the fund's inception in 1996 and is outlined clearly in the fund's prospectus.
Consistency and Discipline
One of the unique aspects of the Hennessy Cornerstone Growth Fund is its unwavering adherence to its initial framework. Unlike many quant funds that frequently adjust their rules to optimize performance, this fund has maintained its original strategy since 1996. This consistency is one way to see results. By not tinkering with the rules, the fund avoids the pitfalls of over-optimization and market timing, which often lead to suboptimal performance.
Sell Discipline
Interestingly, the fund operates without a traditional sell discipline. The universe of stocks is re-screened and the portfolio is rebalanced annually, generally in the winter.? Whether a stock increases by 100% or decreases by 50%, the fund sticks to its rules, avoiding premature selling based on valuation or price levels. This approach has allowed the fund to fully capture long-term gains without truncating returns.
Current Fund Composition
As of May 2024, the fund comprises 50 stocks with significant exposure to the industrials, energy, and IT sectors, making up about 65% of the portfolio. The market cap range of the holdings varies from $350 million to $90 billion, showcasing its all-cap nature and sector concentration.
领英推荐
Success Factors
We think the fund's success is attributed to its disciplined approach and stringent valuation framework. The fund has achieved stable and consistent returns by avoiding high-flying, speculative stocks and focusing on solid, fundamental metrics (click here for standardized performance*). This approach also steers the fund towards more established industries with lower margins and less competition, ensuring steady performance.
Role in a Diversified Portfolio
The Hennessy Cornerstone Growth Fund is a diversified portfolio completion fund covering a wide range of market caps and sectors. In a landscape dominated by index funds and ETFs, we feel this fund offers a way to add alpha through disciplined stock picking and value investing. Its long track record of nearly 30 years highlights its potential as a valuable component of any investment strategy. Diversification does not ensure a profit nor protect against loss in a declining market.
Performance data quoted represents past performance; past performance does not guarantee future results. 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, call 800.966.4354 or visit hennessyfunds.com.
For more information on the Hennessy Cornerstone Growth Fund, visit hennessyfunds.com.
Current and future holdings are subject to risk. To obtain fund holdings, visit www.hennessyfunds.com.?
Learn more about Hennessy Funds at www.hennessyfunds.com.
For Terms of Use & Disclosures, visit the following links:?
Mutual fund investing involves risk; Principal loss is possible. Small and medium-sized companies may have more limited liquidity and greater price volatility than larger companies. Investments in foreign securities may involve political, economic, and currency risk, greater volatility, and differences in accounting method. Funds concentrated in one or more industry sectors may be subject to a higher degree of market risk. The Fund’s formula-based strategy may cause the fund to buy or sell securities at times when it may not be advantageous.
Quasar Distributors, LLC, Distributor.