When designing our Mid Cap Core Equity fund, we realized that stock investors may find the best long-term return potential from companies overlooked by Wall Street analysts. We believe the mid-cap stock universe doesn’t always receive the broad attention its larger and smaller siblings receive. Nevertheless, these overlooked stocks may represent the market’s “sweet spot,” exhibiting attractive characteristics of large and small companies. For example, mid-cap companies typically have successfully emerged from the small-cap universe with many qualities that rival their large-cap counterparts, including experienced management teams, robust market presence, broad sales and distribution networks, and access to capital markets. At the same time, similar to the benefits driving their small-cap brethren, many mid-cap companies still may benefit from their founding entrepreneurial spirit, which can speed up decision-making and potentially fuel rapid growth. Furthermore, mid-cap companies are often acquisition targets, eyed by larger companies seeking to grow market share, offer new products, or enter new markets.
Cavanal Hill Investment Management has been managing mid-cap stock portfolios for more than 10 years via its Mid Cap Core Quantitative Equity Strategy. Effective December 31, 2016, this strategy became available to mutual fund investors as the Cavanal Hill Mid Cap Core Equity Fund.
Cavanal Hill’s Mid Cap Core Equity Fund employs a quantitative approach that utilizes our best ideas for selecting stocks while also keeping a watchful eye on risk management.
Our data-driven research provides us with guidelines for the investment themes which, we believe have a better chance of success over the long term and which ones work more reliably in a given set of circumstances. This research, combined with constant monitoring of the economic landscape and the sophisticated analytics, gives us the ability to build a portfolio that we believe is suited not only to what the market finds important today, but also to what it may value tomorrow.
This process not only guides us in selecting individual stocks, it is also a key element of managing the funds’ overall risk. Further, it provides a broader view of what’s going on in the market, where we believe the best ideas are coming from now, and where we should be looking in the future. Overall, having a process that can potentially successfully navigate the market’s twists and turns is essential to generating better risk-adjusted outcomes over the long run.
Equity securities (stocks) are more volatile and carry more risk than other forms of investments, including investments in high-grade fixed income securities. The value of the Fund’s investments may decline due to an increase in interest rates. In general, the longer a security’s maturity, the greater the interest rate risk. The Fund’s yield may decrease due to a decline in interest rates. International investing involves increased risk and volatility. Mid- and small-cap companies may be more vulnerable to adverse business or economic developments.
Overall Morningstar rating out of 365 US OE Fund Mid-Cap lend (for the overall period ending 3/31/2020, Institutional Shares)
|Overall Morningstar Rating|
Category: US OE Fund Mid-Cap Blend (as of 3/31/2020)
Rankings are for Institutional Class and are based on total return excluding sales charges, independently calculated and not combined to create an overall ranking. For periods not shown, Morningstar does not provide rankings based on synthetic performance.
Morningstar rankings are based on a fund's average annual total return relative to all funds in the same Morningstar category. Fund performance used within the rankings, reflects certain fee waivers, without which, returns and Morningstar rankings would have been lower. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100.
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Category: Lipper Mid-Cap Core Funds (as of 3/31/2020)
|Class A||Class C||Investor||Institutional|
|Net Asset Value||$10.48||$10.26||$10.42||$10.43|
|Gross Expense Ratio||6.24%||27.23%||5.32%||7.35%|
|Net Expense Ratio||1.06%||1.81%||1.06%||0.81%|
|Total Net Assets||$823,274|
|Number of Holdings||134|
|Trailing 4 Quarters P/E Ratio||16.4x|
|Mean (Average) Market Capitalization||$15.5 bil.|
Currently, contractual fee waivers are in effect from December 26, 2019 through December 31, 2020.