Many investors still believe in the old fashioned buy and hold philosophy, even in today’s volatile markets and fast-changing world. No one, however, takes the buy and hold strategy more seriously than the Voya Corporate Leaders Trust Fund, currently managed by Voya Financial. The fund bought equal amounts of stock in 30 major U.S. corporations in 1935 and hasn’t bought a single new stock in the intervening 80 years, as first reported by Ross Kerber of Reuters.
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A few of the Voya Trust Fund’s 21 stocks, including DuPont, General Electric, Procter & Gamble and Union Pacific, remain unchanged after eight decades. All of its other current holdings were spun off from or acquired from original components, including Berkshire Hathaway (successor to the Atchison Topeka and Santa Fe Railway); CBS (acquired by Westinghouse Electric and renamed); and Honeywell (which bought Allied Chemical and Dye). Several of the firms hove s imply passed on into history, such as the the Pennsylvania Railroad Co. and American Can.
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With relatively few banks, but heavy on industrials and energy, the fund has outperformed 98% of large value funds over both the past five and ten years, based on data from Morningstar.
“This fund has been around a lot longer than I have, and it’s working,” commented Craig Watkins, 29, an investment analyst for Conover Capital Management. Conover recommends the Voya fund to some 401(k) plans it advises.
Watkins says the Voya fund is offering investors “deep-value”. “It’s deep-value in the sense that all the companies in the portfolio have an amazing tenure,” Watkins noted. He pointed out the fund’s strategy is arguably better than an index fund as it doesn’t beed to change its weightings when the index changes
Voya Trust Fund continues strong performance
This interesting experiment in the long-term value of the buy-and-hold strategy has also been remarkably successful. Over the five year period ended Feb. 24 the fund returned an average of 17.32 percent a year, including fees, 1.03 percentage point better than the S&P 500, said Morningstar. For the 10 years ended Feb. 24 the fund returned an average of 9.40 percent a year, including fees, 1.32 percentage point better than the S&P 500.
The original sponsor of the fund (Corporate Leaders of America) was incorporated in 1931. After several deals dating back to 1971, the fund under the control of Voya, a 2013 spinoff from ING Groep NV. Vanguard Group Inc founder Jack Bogle said he remembers the fund from his days as an undergraduate the early 1950s. “It’s not a bad idea at all,” he quipped.
The stocks in the fund represent many important moments in American corporate history. Foot Locker Inc, for example, is one of its holdings as that is all that’s left of retailer F.W. Woolworth, which bought Foot Locker in 1974.
Of note, the fund originallly bought shares in Standard Oil of New Jersey, Standard Oil of California and Socony-Vacuum Oil Co. as part of All of these firms spun off from Rockefeller’s Standard Oil Co., and are known today as ExxonMobil and Chevron.