Tags: Money | Managers | Large | Cap | Stocks

Money Managers Nygren, Yacktman Bullish on Large-Cap Stocks

By Dan Weil   |   Tuesday, 11 Oct 2011 08:05 AM

During the stock market’s strong rally from March 2009 to this July, small-cap stocks outperformed their larger brethren, thanks to investors’ enhanced appetite for risk.

But the recent global economic turmoil dampened that enthusiasm, and in the third quarter large-cap stocks outdid their smaller siblings. Among the beneficiaries are star large-cap mutual fund managers William Nygren and Donald Yacktman.

Small-cap growth stock funds plunged an average 22.1 percent in the third quarter, compared to 15.6 percent for large-cap growth stock funds, The New York Times reports.

The Yacktman Fund ranked in the top 4 percent of large-cap value funds in the third quarter. As of June 30, the fund’s top holdings were News Corp., PepsiCo, Microsoft, and Procter & Gamble.

“On a relative basis, I don’t think I can think of another period of time where so many of these companies were selling at such cheap prices relative to other companies or to U.S. Treasuries,” he tells The Times.

Nygren’s Oakmark Fund ranked in the top 20 percent of similar funds in the year’s first nine months. And he notes that large-cap stocks provide bountiful dividends. “There’s an amazing list of large-cap names where you can get over a 3 percent dividend yield,” he tells The Times.

With dividend stocks having underperformed for so long, many investors expect their newfound success to continue. "What happened over 30 years doesn't reverse over 30 days," Daniel Peris, manager of Federated’s dividend fund, tells The Wall Street Journal.

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