Davis Large Cap Value SMA Portfolio

    Overview

    Investment Strategy

    The goal of the Davis Large Cap Value SMA Portfolio is to provide investors access to attractive investment opportunities among large cap, durable, well-managed businesses. We seek to purchase these businesses at value prices and hold them for the long term. This approach makes the Davis Large Cap Value SMA Portfolio an ideal foundation for an investor’s portfolio.

    Using our signature Davis Investment Discipline, the Portfolio has generated consistent long-term outperformance versus the S&P 500® Index.1 Click here to learn more about our historical record of attractive long-term returns.

    Why Invest in the Davis Large Cap Value SMA Portfolio

    Sixty Years of Experience

    The Davis family has compounded wealth for investors over six decades and three generations.

    Long-Term Investment Results

    The Davis Large Cap Value SMA Portfolio has a unique record of consistent long-term outperformance versus the S&P 500® Index.1  See the illustrations below for additional detail.

    Aligned with Shareholders

    With more than $2 billion invested side by side with fellow shareholders, we experience the same risks and reap the same rewards.2

     

    Performance as of 9/30/19

    1) Compounding Wealth - To be one of the very best over the long term does not mean you have to be number one every year.

    As the chart below illustrates, from 4/1/69–9/30/19 Davis Large Cap Value delivered an average annualized return of 12.3%—remarkably outperforming the S&P 500® Index by an average of 2.2% per year.3

    A hypothetical $100,000 investment in Davis Large Cap Value in 1969 has compounded to $33,472,963, while the S&P 500® Index compounded into only $13,103,568 over that same time period. (Gross of fees. See below for net of fee returns.)

    We have been able to create superior long-term investment results, despite the inevitable and expected fact that other investments may have outperformed the Portfolio in any particular year.

    Year Davis Large Cap
    Value SMA Composite
    (gross of fees)
    S&P 500® Index
    1969 19.9% -7.0%
    1970 -25.3% 4.0%
    1971 29.7% 14.3%
    1972 23.3% 19.0%
    1973 -23.5% -14.7%
    1974 -19.4% -26.5%
    1975 24.5% 37.2%
    1976 22.0% 23.9%
    1977 5.6% -7.2%
    1978 20.6% 6.6%
    1979 40.3% 18.6%
    1980 45.4% 32.5%
    1981 2.2% -4.9%
    1982 26.6% 21.6%
    1983 24.3% 22.6%
    1984 5.9% 6.3%
    1985 38.9% 31.7%
    1986 23.1% 18.7%
    1987 -0.6% 5.3%
    1988 22.5% 16.6%
    1989 35.9% 31.6%
    1990 -2.0% -3.1%
    1991 41.8% 30.4%
    1992 13.1% 7.6%
    1993 15.6% 10.1%
    1994 -1.4% 1.3%
    1995 40.9% 37.5%
    1996 28.4% 22.9%
    1997 35.6% 33.4%
    1998 15.9% 28.6%
    1999 18.9% 21.0%
    2000 10.7% -9.1%
    2001 -10.7% -11.9%
    2002 -16.7% -22.1%
    2003 30.9% 28.7%
    2004 12.6% 10.9%
    2005 10.0% 4.9%
    2006 14.2% 15.8%
    2007 2.9% 5.5%
    2008 -36.1% -37.0%
    2009 27.9% 26.5%
    2010 11.3% 15.1%
    2011 0.3% 2.1%
    2012 12.6% 16.0%
    2013 32.7% 32.4%
    2014 7.9% 13.7%
    2015 2.1% 1.4%
    2016 13.3% 12.0%
    2017 20.9% 21.8%
    2018 -12.9% -4.4%
    9/30/2019 21.7% 20.6%
    Cumulative Total Return 33373% 13004%
    Average Annual Rate of Return 12.3% 10.1%
    Value of a Hypothetical $100,000 Initial Investment $33,472,963 $13,103,568

    Average Annual
    Total Returns
    as of September 30, 2019
    Large Cap Value Portfolio
    YTD* 1
    Year
    3
    Years
    5
    Years
    7
    Years
    10
    Years
    15
    Years
    20
    Years
    25
    Years
    30
    Years
    35
    Years
    40
    Years
    gross 21.67% 1.13% 10.84% 8.95% 11.44% 11.00% 7.70% 6.95% 10.24% 10.64% 12.48% 13.47%
    with a 3% maximum
    wrap fee
    19.02% -1.87% 7.58% 5.74% 8.17% 7.74% 4.71% 4.57% 8.15% 8.77% 10.74% 11.83%

    * YTD is not annualized.

    The performance presented represents past performance and is not a guarantee of future results. Total return assumes reinvestment of dividends and capital gain distributions. Investment return and principal value will vary so that, when redeemed, an investor’s account may be worth more or less than their original cost. Current performance may be higher or lower. Total return updates are available quarterly. Please ask your financial advisor to contact Davis Advisors.

    2) Patience is a Virtue - By steadfastly adhering to our investment discipline through ever-changing market and economic environments, the Davis Large Cap Value Portfolio has generated an uncommon record of consistent long-term outperformance versus the S&P 500® Index.

    The chart below shows the percentage of time since 1970 the Portfolio has outperformed the S&P 500® Index over various time periods.  Patient investors outperformed the S&P500 in 59% of all 5 year periods. As investor holding periods increased, the likelihood of outperforming the index increased.

    This track record covers periods of inflation, deflation, high interest rates, low interest rates, political crisis, wars, and more.


    Percent of Time the Davis Large Cap Value Portfolio Has Outperformed the Market (1/1/70–9/30/19)4

    Source: Thomson Financial, Lipper, Bloomberg, and Davis Advisors. Past performance is not a guarantee of future results.

    Portfolio Characteristics as of 9/30/19

    Portfolio Composition

    Davis Large Cap
    Value Portfolio
    S&P 500®
    Index
    Forecast P/E Ratio 14.5 18.3
    P/B Ratio 2.8 3.7
    Weighted Average Market Cap ($bn) 280.4 242.4
    Beta (3 year) 1.3 1.0
    Standard Deviation (5 year) 14.1 11.0
    Number of Holdings 26 505
    Turnover 9.3 4.8

    Top 10 Holdings

    Alphabet 7.0%
    Berkshire Hathaway 7.0%
    Wells Fargo 7.0%
    Amazon.com, Inc. 6.5%
    Capital One Financial 6.5%
    United Technologies 6.1%
    Applied Materials 5.9%
    JPMorgan Chase 5.6%
    Facebook 5.3%
    New Oriental Education & Technology 4.8%

    Click here for quarter-end holdings  

    Top Industries

    Financials 42.0%
    Consumer Discretionary 16.2%
    Information Technology 15.1%
    Communication Services 12.9%
    Industrials 6.4%
    Energy 4.7%
    Health Care 2.7%

    Literature

    Insights into the Portfolio
    Fact Sheet Download Goals of the Portfolio, top holdings, characteristics and Portfolio attributes.
    Davis Large Cap SMA:
    Attractive Growth.
    Undervalued.
    World Class Businesses.
    Download

    Distinguished by companies with earnings growth significantly higher and P/Es significantly lower than the Index – World-class businesses positioned for opportunities in today’s market †

    A History of Outperformance Download

    Discusses the Davis Large Cap Portfolio's growing success in beating the S&P500® as the holding period increased (ultimately reaching 100%).

    Quarterly Review Book: Davis Large Cap Value SMA Download

    A comprehensive quarterly update on the Portfolio, including commentary on investment strategy, performance and Portfolio statistics, and holdings.

    Davis Large Cap SMA: Selective. Attractive Growth. Undervalued. Download

    Our companies are rigorously researched, offer attractive growth and yet are significantly undervalued versus the benchmark – A powerful combination.

    Portfolio Commentaries
    Portfolio Commentary - Fall Update 2019 Download View

    A quarterly discussion of the market environment, Portfolio performance, major positions, and investment opportunities.

    Insights into Successful Investing
    Fortune Magazine – Warren Buffett: “Why stocks beat gold and bonds” Download Warren Buffett on the real danger of investments commonly thought of as “safe”, and why “productive assets” like equities offer a much better chance of maintaining purchasing power (compounding wealth after taxes and inflation).

    This material may be shared with existing and potential clients to provide information concerning market conditions and the investment strategies and techniques used by Davis Advisors to manage its client accounts. Please refer to Davis Advisors  Form ADV Part 2 for more information regarding investment strategies, risks, fees, and expenses. Clients should also review other relevant material, including a schedule of investments listing securities held in their account.

    The Davis Large Cap Value Portfolio is represented by Davis Advisors’ Large Cap Value SMA Composite. See Performance disclosure for a description of the Composite.


    1Gross of fees. Returns discussed are from the first full year after inception of the Large Cap Value Composite (4/1/69) through 9/30/19. Past performance is not a guarantee of future results.

    2As of June 30, 2019.

    3Gross of fees.

    4The performance shown does not include fees and the percent of time the portfolio has outperformed the market would be lower if fees were included.

    The Attractive Growth and Undervalued reference in this piece relates to underlying characteristics of the portfolio holdings. There is no guarantee that Fund performance will be positive as equity markets are volatile and an investor may lose money.


    Davis Distributors, LLC, 2949 East Elvira Road, Suite 101, Tucson, AZ 85756