“Buy and hold” is dead.
That’s what you’ll hear if you listen to CNBC, the top hedge fund managers, or your financial adviser.
They’ll point to the crash of 2008 as evidence. Or they might point out that for the 13 years between 2000 and 2013, the S&P 500 posted no gains.
Of course, you’re smart enough to realize that most investment professionals don’t want you to believe in “buy and hold.” Even those in my industry – the investment research and publishing world – often hype active trading as the solution to achieving better returns.
But the truth is that “buy and hold” can work surprisingly well. For years, I’ve been advocating a simple buy-and-hold strategy. This boring strategy has helped my readers rake in big profits from some of the best-known American companies. These gains include 328% on MasterCard (NYSE: MA), 110% on FedEx (NYSE: FDX) and 106% on Starbucks (NASDAQ: SBUX).
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But don’t take my track record as proof. Instead, consider the performance of one little-known blue chip growth fund. Since 1936, this fund has proven that “buy and hold” can deliver big profits.
It’s called the Voya Corporate Leaders Trust Fund (LEXCX).
Eighty years ago, this mutual fund bought equal amounts of stock in 30 major U.S. corporations. These included some well-known companies, including DuPont (NYSE: DD), General Electric (NYSE: GE) and Procter & Gamble (NYSE: PG). (Click here to discover the best “buy-and-hold” stocks.)
The fund was set up with a strict set of bylaws. In fact, it isn’t allowed to buy any new positions. The only way new positions are added is due to mergers or spinoffs.
For example, Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) is now the No. 2 position in the portfolio. Berkshire wasn’t an original holding of the Voya Corporate Leaders Fund. But when fund was launched, it owned the Atchison & Topeka Railroad Company. That company then merged with the Santa Fe Railway. And when Warren Buffett bought the Burlington Northern Santa Fe Railway, Berkshire Hathaway was added to the portfolio.
As a result of these rules, the portfolio turnover is very low. Similarly, the only way a company can be removed from the portfolio is bankruptcy. Even then, it’s simply removed from the portfolio with no replacement added.
Today, the Voya Corporate Leaders Trust Fund owns 22 well-known American companies. Top holdings include Union Pacific (NYSE: UNP) at 14.4%, Berkshire Hathaway at 10.4% and Exxon Mobil (NYSE: XOM) at 9.2%.
This blue chip growth fund was overlooked for many years. But as index investing and low fees increased in popularity, the fund has been rediscovered. Since 2011, fund inflows have totaled more than $700 million.
The simplicity of the fund’s strategy makes it an attractive investment. Even more impressive are the results. An investment of $10,000 back in 1970 would be worth $1.2 million today. If that same investment were made in the S&P 500, it would be valued at $852,000.
Simple Strategy Beats the Market
Source: Voya Investment Management
Performance data from Morningstar shows similar outperformance versus a large-cap value benchmark since 1935.
Today, the Voya Corporate Leaders Trust Fund has more than $1.7 billion under management. With just 21 American companies in the portfolio, the average market cap stands at $138.5 billion.
The fund’s simple strategy has helped keep expenses low. The net expense ratio of 0.51% is reasonable. That’s roughly 30% below the fees at an average equity mutual fund.
Now, you could buy the Voya Corporate Leaders Trust Fund. Or you could buy a select group of forever stocks.
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The bottom line is that a simple strategy can beat the market. I want to share the findings with you right now. Just click here now for all the details.