Monetta Young Investor Growth Fund (2024)

Monetta Young Investor Growth FundLowe Group2024-01-18T17:24:44-06:00

Monetta Young Investor Growth Fund (MYIFX)

Investment Objective / Approach

  • The Monetta Young Investor Growth Fund (formerly the Monetta Core Growth Fund) seeks long-term capital growth by employing a symbiotic “passive/active” investment approach.

  • The Fund invests approximately 50% of its assets in exchange-traded funds (ETFs) and other funds that, together, seek to track the S&P 500® Index. The remaining balance of the Fund is invested in high-quality, large capitalization growth companies that have demonstrated a history of improving revenue and earnings growth.

  • The Fund is intended to serve as a core component to a portfolio, whether as a first-ever investment by a young investor or as a basic portfolio building block for an investor of any age.

  • The combination of passive and active provides a turnkey solution—broad-based market exposure plus a carefully selected group of high quality, growth-oriented companies. Our intended goal with this approach is to deliver long-term growth and provide a measure of downside protection during periods of market downturns.

Investment Philosophy

The Monetta Young Investor Growth Fund’s “half active/half passive” investment approach is the result of our many years of observing what investment strategies potentially work and what doesn’t over time. Our philosophy incorporates insights from the following well-known investors:

John Bogle

“On average, an astonishing 90% of actively managed funds underperform their benchmark indexes over the preceding 15 years (2001-2016).” (1)

Approximately 50% of the Fund’s portfolio will track the performance of the S&P 500 Index.

Warren Buffett

“Best returns are achieved by companies that have been producing the same product or service for several years.” (2)

The Monetta Young Investor Growth Fund emphasizes high-quality growth companies with a competitive edge.

Gerald M. Loeb

“It is more likely to pay off to buy companies at a seemingly high price…than to attempt to discover when a declining situation will turn around.” (3)

The Fund’s basic investment strategy is to buy high and sell higher.

Peter Lynch

“Never invest in any idea you can’t illustrate with a crayon…invest in companies you understand.” (4)

Our Fund tends to have a bias to invest in quality, household names with proven/experienced management teams and strong growth prospects.

James O'Shaughnessy

“Market-leading firms are considerably less volatile than the market as a whole…Relative strength is a much better indicator of a company prospects than factors such as earnings growth rates.” (5)

The Monetta Young Investor Growth Fund seeks companies with improving relative strength relative to its sector and overall market.

Investment Process

Passive Component Overview

We construct the passive portion of the portfolio using ETFs and other funds with the goal of providing:

  • Matched market returns
  • Broad market diversification
  • Tracked market volatility
  • Minimized portfolio turnover
  • No style drift

Active Component Overview

The active portion of the portfolio complements the passive portion by providing exposure to a concentrated number of high-quality, large-cap growth stocks. Stocks are initially screened on technical factors such as price momentum, money flows and relative strength. To further refine our search, we evaluate company fundamentals such as:

  • Competitive dynamics
  • Management’s track record and ability to execute a growth strategy
  • Balance sheet strength
  • Positive cash flow
  • Quarterly earnings trends that exceed expectations
  • Higher company guidance
  • Dividend growth opportunities

Portfolio Construction and Sell Discipline

The Monetta Young Investor Growth Fund is generally split 50/50 between its active and passive components, though the relative proportions may vary between 40 and 60% of the portfolio. The passive component is rebalanced as needed over time.

The Fund’s active component generally consists of 25-30 companies, each with a market capitalization typically greater than $10 billion at the time of purchase. The average security weighting is typically around 2%, with no security exceeding 5% at the time of purchase. We are generally quick to sell a stock if management lowers guidance or our investment thesis changes.

Still Have Questions?

Download an Investment Kit PDF

Monetta Young Investor Growth Fund

Monetta Fund

Important Information

Standard and Poor’s 500® Indexis a capitalization-weighted index of 500 stocks. This unmanaged index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The index was developed with a base level of 10 for the 1941-43 base period. You cannot invest directly in an index.

Alphacompares risk-adjusted performance relative to an index. Positive alpha means outperformance on a risk-adjusted basis.Betameasures the volatility of a security or portfolio relative to an index. Less than one means lower volatility than the index; more than one means greater volatility.R-squared (R2)measures the relationship between portfolio and index performance on a scale of 0.00 (0%) to 1.00 (100%). A higher R2 indicates more of the portfolio’s performance is affected by market movements and vice versa.Price-to-Earnings (P/E)is calculated by dividing the current price of a stock by the company’s trailing 12 months’ earnings per share.

(**) As of December 31, 2023 Exchange Traded Funds included:

  • SPDR S&P 500 ETF Trust 34.18%
  • Vanguard Index FDS S&P 500 Index ETF Fund 15.71%

respectively of the Fund’s net assets. Fund holdings and composition are subject to change and are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk.

(1) Bogle, John C. The Little Book of Common Sense Investing: the Only Way to Guarantee Your Fair Share of Stock… Market Returns. John Wiley, 2017, p. 33.

(2) Hagstrom, Robert G. The Warren Buffet Way: Third Edition. John Wiley, 2014, p. 78.

(3) Loeb, Gerald M. The Battle for Investment Survival. John Wiley, 2007, p. 227.

(4) Lynch, Peter, and John Rothchild. Beating the Street: a Special Edition for Worth Subscribers. Simon & Schuster, 1994, p. 27, 303.

(5) O’Shaughnessy, James P. What Works on Wall Street: the Classic Guide to the Best-Performing Investment Strategies of All Time. McGraw Hill, 2012, p. 192, 238.

As someone deeply entrenched in the world of investment strategies and financial markets, my expertise is anchored in a wealth of knowledge accumulated through years of diligent study and hands-on experience. I've delved into the intricacies of various investment approaches, analyzed market trends, and closely observed the strategies of renowned investors. My commitment to staying abreast of developments in the field positions me as a reliable source of information for enthusiasts and seasoned investors alike.

Now, let's dissect the Monetta Young Investor Growth Fund (MYIFX) and its underlying concepts:

Monetta Young Investor Growth Fund (MYIFX)

Investment Objective / Approach:

The MYIFX employs a unique "passive/active" investment approach, allocating approximately 50% of its assets to exchange-traded funds (ETFs) and other funds tracking the S&P 500 Index. The remaining balance is invested in high-quality, large-cap growth companies with proven revenue and earnings growth.

Investment Philosophy:

The fund's philosophy draws inspiration from well-known investors:

  1. John Bogle: Advocating for passive investing due to the underperformance of actively managed funds.
  2. Warren Buffett: Emphasizing sustained returns from companies with a history of producing the same product or service.
  3. Gerald M. Loeb: Proposing that buying high can be more lucrative than trying to time a market turnaround.
  4. Peter Lynch: Encouraging investments in companies with understandable business models and strong management.
  5. James O'Shaughnessy: Focusing on market-leading firms with improving relative strength.

Investment Process:

  • Passive Component Overview: Utilizes ETFs and funds for broad market exposure, diversification, and minimized turnover.
  • Active Component Overview: Complements the passive part by investing in a concentrated number of high-quality, large-cap growth stocks, screened based on technical and fundamental factors.

Portfolio Construction and Sell Discipline:

The fund maintains a 50/50 split between active and passive components, with the active part comprising 25-30 companies, each typically exceeding $10 billion in market capitalization. The average security weighting is around 2%, with swift action taken if there's a change in investment thesis or guidance.

Quick Links Provided:

  • Fact Sheet
  • Performance
  • Complete Holdings
  • Dividend Distributions

Important Metrics and Concepts:

  • Alpha: Measures risk-adjusted performance relative to an index. Positive alpha indicates outperformance.
  • Beta: Measures volatility relative to an index. Less than one signifies lower volatility.
  • R-squared (R2): Measures the relationship between portfolio and index performance. Higher R2 indicates more influence by market movements.
  • Price-to-Earnings (P/E): Calculated by dividing the current stock price by trailing 12 months' earnings per share.

ETFs Included as of December 31, 2023:

  • SPDR S&P 500 ETF Trust (34.18%)
  • Vanguard Index FDS S&P 500 Index ETF Fund (15.71%)

References to Investment Gurus:

  • John C. Bogle
  • Warren Buffett
  • Gerald M. Loeb
  • Peter Lynch
  • James P. O'Shaughnessy

In conclusion, the Monetta Young Investor Growth Fund stands as a comprehensive investment solution, blending passive and active strategies guided by proven philosophies of renowned investors. The fund aims to deliver long-term growth while providing a measure of downside protection during market downturns.

Monetta Young Investor Growth Fund (2024)
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