Litman Gregory created the Litman Gregory Masters Funds with the objective of isolating the stock-picking skills of a group of highly regarded and experienced portfolio managers. To meet this objective, we designed the funds with both risk and return in mind, placing particular emphasis on the following factors:
- Only stock-pickers Litman Gregory believes to be exceptionally skilled are chosen to manage each fund’s sub-portfolios.
- Each stock-picker runs a very focused sub-portfolio of not more than 15 of his or her favorite stocks within each Litman Gregory Masters Fund. We believe that most stock pickers have an unusually high level of conviction in only a small number of stocks and that a portfolio limited to these stocks will, on average, outperform (their) more-diversified portfolios over a market cycle.
- While each individual manager’s portfolio is focused, we achieve broader diversification in several ways. With the Equity and International funds we include managers with differing investment styles and market-cap orientations. With the Smaller Companies Fund, much like Equity and International, the managers use different investment approaches though each focuses on the securities of smaller companies.
- Limiting the asset base of each fund is supportive of the Masters’ concept. Litman Gregory believes that excessive asset growth can result in diminished performance. We have committed to close each Litman Gregory Masters Fund to new shareholders at a level that we believe will preserve the managers’ ability to effectively implement the “select” concept.