Measuring Up to Jensen

 

 

A top investor explains what it would take for utilities to be included in one of the best-performing funds in the U.S.

Passing the standards for inclusion in the $1 billion plus Jensen Portfolio Fund is like being crowned the best-of-the-best in a given industry, analysts say.

That's because only the best-of-the best could support a fund that has managed to beat the S&P 500 in an economic downturn. In fact, the Jensen Fund has generated an impressive 2.25 percent a year over the 36 months to December 2002, against a 14.53 percent annualized decline in the S&P 500. During the recent economic boom, the fund delivered double-digit returns.

But to date, the investment fund has yet to include a utility stock. The fund chooses stocks using one bedrock criterion: Jensen wants companies that have posted a 15 percent or better return-on-equity (ROE) in each of the past 10 years.

Furthermore, Val Jensen, chairman of the fund, says the impact of non-recurring earnings is reviewed on a case-by-case basis to identify long-term performers that may have had a few bad years.