Jensen Fund Manager Asks One Really Important Question When Deciding to Invest

The fund’s “boot camp” style discipline demands that the fund not consider a company if it has not achieved 15% return on equity for 10 consecutive years (you read that right; when they say quality, they mean quality). The small number of companies that meet this criteria means “it’s a limited universe in which to shop,” another reason for the fund’s relatively low turnover.

“We have a bottom-up due diligence process,” Schoenstein said. “It’s a long-term strategy that isn’t about next week, or even next year. Hence the original question; I want to know what their vision is for the company down the road.”

While the portfolio looks to be concentrated, the managers look at it as an advantage, as “they truly have their arms wrapped around each and every position,” thus lowering the risk. Companies in which it invests include PepsiCo, Procter & Gamble, Emerson Electric, Nike and Microsoft. 

“Globally diversified companies are doing well,” he noted. “If they’re domestically domiciled, an emerging-market component is needed. Even if emerging markets are slowing over all, they’re still growing much faster than developed countries. For this reason, emerging markets should be 20% to 25% of the portfolio.”

The firm, which provides separately managed accounts in addition to mutual funds, is located in the decidedly non-financial hub of Lake Oswego, Ore., with total assets under management currently at $5.5 billion. The fund has an annualized 3-year return of 13.66% and a 5-year annualized return of 2%, according to Morningstar. Interestingly, the fund was down 28.97% in 2008, only to rebound with a 28.98% return in 2009, which made Schoenstein’s concluding comment all the more prescient.

“We look for consistency and predictability,” he said. “Only in this way can you smooth volatility and get needed returns with less risk.”