Oakmark Is a Mutual Fund Company, Not a Single Fund

Oakmark is a mutual fund company, not a single mutual fund

Oakmark is the name of an investment company that manages multiple mutual funds. When you hear "Oakmark," you are hearing the brand name of the firm, similar to how Vanguard or Fidelity are brand names. The actual mutual funds you can invest in are called things like Oakmark Fund, Oakmark Select Fund, Oakmark International Fund, and Oakmark Equity and Convertible Fund. Each one is a separate mutual fund with its own holdings, strategy, and performance record.

Oakmark was founded in 1987 and is based in Chicago. The firm is known for a value investing approach — meaning the portfolio managers look for stocks they believe are trading below what they are worth. If you are considering an Oakmark mutual fund, you need to know which specific fund you are looking at, because each one invests differently and carries different costs and risks.

Key Takeaways

• Oakmark is a mutual fund company that manages several different mutual funds, each with its own name, strategy, and holdings.
• The largest and most widely available Oakmark fund is Oakmark Fund, which focuses on U.S. stocks it considers undervalued.
• Oakmark funds charge expense ratios that vary by fund and share class, so you should compare the specific fund's costs before investing.
• You can buy Oakmark mutual funds through most brokerages, retirement accounts, and financial advisors, though some funds have minimum investment amounts.

The main Oakmark mutual funds and what they invest in

Oakmark Fund is the flagship product. It invests primarily in U.S. stocks that the managers believe are trading below intrinsic value. This is a large-cap fund, meaning it focuses on bigger, established companies. The fund has been around since 1987 and is the one most investors encounter first.

Oakmark Select Fund is smaller and more concentrated — it holds fewer stocks than Oakmark Fund, which means bigger bets on individual companies. Oakmark International Fund invests in stocks outside the United States. Oakmark Equity and Convertible Fund blends stocks with convertible bonds (bonds that can be converted into stock). Each fund has a different risk profile and is designed for different investor goals.

Before you invest in any Oakmark fund, look up the specific fund's prospectus or fact sheet. These documents tell you the fund's objective, which stocks or bonds it holds, what it costs, and how it has performed. You can find these on Oakmark's website or through your brokerage.

How Oakmark mutual funds work

When you buy shares of an Oakmark mutual fund, your money goes into a pool with other investors' money. A portfolio manager uses that pool to buy stocks (or bonds, depending on the fund). The manager makes the day-to-day decisions about which securities to buy and sell. You own a proportional slice of everything the fund holds.

Oakmark funds are actively managed, which means a human manager is making choices, not a computer following a preset index. This is different from index funds, which simply track a benchmark like the S&P 500. Active management can lead to higher returns if the manager picks well, but it also means higher costs — Oakmark funds charge expense ratios that are typically higher than index funds.

You can buy Oakmark mutual funds through most brokerages, including Fidelity, Schwab, and Vanguard. You can also hold them in retirement accounts like IRAs and 401(k)s. Some Oakmark funds have minimum investment amounts (often $1,000 or $2,500 for regular accounts, less for IRAs), though this varies by fund and by where you buy.

Oakmark fund share classes and costs

Oakmark mutual funds come in different share classes, usually labeled A, C, and Institutional. The differences are in how you pay. Class A shares charge an upfront sales load (a percentage you pay when you buy), then a lower annual expense ratio. Class C shares have no upfront load but charge a higher annual expense ratio and sometimes a back-end load if you sell within a year. Institutional shares have no load and lower expense ratios, but require a larger minimum investment.

The expense ratio is the annual cost of owning the fund, expressed as a percentage of your investment. For example, if a fund has a 0.75% expense ratio and you own $10,000 of it, you pay $75 per year in fees (though this is deducted automatically from the fund's value). Oakmark's expense ratios vary by fund and share class, typically ranging from around 0.5% to 1.2% for retail share classes. You can find the exact expense ratio for any Oakmark fund on its fact sheet.

Oakmark's investment philosophy and track record

Oakmark follows a value investing strategy. The managers look for companies trading at a discount to what they estimate the company is actually worth. This approach can work well in some market environments and lag in others. When growth stocks are in favor (as they were in much of the 2010s), value funds often underperform. When value stocks bounce back, they can outperform significantly.

Past performance does not predict future results, but it is one piece of information you can use to evaluate a fund. You can compare an Oakmark fund's returns to its benchmark (usually the S&P 500 for U.S. stock funds) and to similar funds over the same time periods. Morningstar and your brokerage both provide these comparisons. Look at performance over 5 and 10 years, not just the last year, because short-term results are often driven by luck rather than skill.

Should you invest in an Oakmark mutual fund

Whether an Oakmark fund makes sense for you depends on your goals, time horizon, and tolerance for risk. If you believe in value investing and are comfortable with a fund that may lag during growth-heavy markets, an Oakmark fund could fit your portfolio. If you prefer lower costs and are happy with market-tracking returns, an index fund might be a better choice.

Consider these questions: Are you building a diversified portfolio, or is this one piece of a larger strategy? Can you afford the higher expense ratios compared to index funds? Are you comfortable with the fund's historical volatility? Do you have a long enough time horizon to ride out periods when value stocks underperform? Honest answers to these questions will help you decide whether Oakmark is right for you.

If you do decide to invest, compare the specific Oakmark fund you are considering to similar funds from other companies. Look at expense ratios, performance, and holdings. A financial advisor can help you think through whether an Oakmark fund fits your overall strategy, though remember that advisors who sell Oakmark funds have an incentive to recommend them.

Frequently Asked Questions

Can I buy Oakmark mutual funds directly from Oakmark?

You can buy directly from Oakmark if you meet the minimum investment, but most investors buy through a brokerage like Fidelity, Schwab, or Vanguard. Buying through a brokerage often gives you more flexibility and may offer lower minimums. Check your brokerage's fund menu to see which Oakmark funds are available.

What is the difference between Oakmark Fund and Oakmark Select Fund?

Oakmark Fund holds more stocks (typically 40 to 60) and is more diversified. Oakmark Select Fund holds fewer stocks (typically 20 to 30) and makes bigger bets on individual companies. Select Fund is more concentrated and can be more volatile. Choose based on your risk tolerance and whether you want broader or narrower diversification.

Do Oakmark funds pay dividends?

Most Oakmark funds do pay dividends, because many of the stocks they hold pay dividends. You can choose to receive the dividends as cash or reinvest them back into the fund. Reinvesting is usually the better choice for long-term investors because it compounds your returns, though you will owe taxes on the dividends either way.

How do Oakmark funds compare to index funds?

Oakmark funds are actively managed and typically cost more than index funds. They may outperform or underperform the market depending on the manager's skill and market conditions. Index funds are cheaper and match market returns by design. The choice depends on whether you believe active managers can beat the market enough to justify higher fees.

Can I hold Oakmark funds in a 401(k) or IRA?

Yes, most Oakmark funds are available in retirement accounts. Check with your 401(k) plan administrator or your IRA custodian to see which Oakmark funds they offer. Holding funds in a retirement account means you do not pay taxes on dividends or gains until you withdraw the money, which can be a significant advantage.