While Warren Buffett may be considered the “world’s greatest living investor,” it’s possible to find mutual funds that employ a similar patient, quality-conscious strategy and do so in a more nimble package, according to a recent Morningstar video.
Two senior manager research analysts for Morningstar Research Services — Alec Lucas and David Kathman — identified three such funds that buy like Buffett.
1. FMI Large Cap Fund
FMI Large Cap‘s long-time manager, Patrick English, helped install the firm’s now committee-based, value-oriented approach that has produced “fantastic results over full market cycles,” according to Lucas.
Lucas explains that their approach is “very value-oriented” because they look for a meaningful discount to a company’s intrinsic value.
While FMI Large Cap’s top holding is Berkshire Hathaway, Lucas says what really makes them like Warren Buffett is in how they invest in terms of looking for good businesses, trading at reasonable if not great prices.
“They are more prone than Buffett, perhaps, to take advantage of Mr. Market’s 1:00 highs and lows and are willing to sell based on valuation,” Lucas explained.
According to Lucas, FMI Large Cap also pays heed to Buffett’s dictum that “size is an anchor to investment performance.”
“They pay close attention to the fund’s capacity and are willing to close it to new investors to protect current shareholders,” Lucas said.
2. BBH Core Select Fund
Kathman says that BBH Core Select has a lot of “Buffett-esque features.”