Thomas G. Plumb, CFA
Lead Fund Portfolio Manager
President, CEO, Chairman
For the Plumb Balanced Fund (PLBBX) for the 2nd quarter ending June 30th, 2021, finished up 6.53% and beating our blended benchmark by a sizable total of 107 basis points. We feel confident in our positive progress after a poor relative first quarter. The Plumb Funds outperformance was due mainly to our overweight in our usual technology allocation effect (1 of 11 market sectors) and selection effect (picking good individual stocks). The top attribution contributors were Nvidia, Domo, Adobe, Pagseguro, PayPal. The bottom attribution contributors were FleetCor, Intuitive Surgical, Guardant Health, Constellation Brands, and JPMorgan Chase. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-987-7888.
The Plumb Equity Fund (PLBEX) for the 2nd quarter ending June 30th, 2021, finished up 10.09% and beating our blended benchmark by 276 basis points. The outperformance was also due to both allocation effect and selection effect. The top attribution contributors were Copart, Domo, Red Cat, Apple, and Adyen. The bottom attribution contributors were Constellation Brands, Coupa Software, Nvidia, Exact Sciences, and FleetCor. Red Cat, which is not as widely known as our other holdings, was one of our opportunistic small micro-cap companies in the emerging drone industry. This in contrast to being labeled as a Fund with a large cap technology focus by the rating agencies.
Overall, the Plumb Funds philosophy is to focus on growth companies with secular macroeconomic drivers. Currently, we are directing our efforts on Software as a Service or SaaS (aka Application Software), payment processing, e-commerce, and increasingly faster graphic semiconductor chips. We believe we are in the early stages of a technological renaissance that Klaus Schwab named the 4th industrial revolution in 2016. The Fourth Industrial Revolution is a way of describing the blurring of boundaries between the physical, digital, and biological worlds.
Currently, the Plumb Funds feel that productivity gains will likely remain the primary focus of most publicly traded companies as they battle through labor shortages, supply chain issues, climate change, China’s increasing anti-foreign posturing, and Delta variant of the Coronavirus spreading like wildfire throughout the world. Even as we closely monitor these and a litany of other issues, we remain steadfast plotting our investment course knowing that we believe a good investment is usually a sustainable growth company that ultimately benefits humankind.
It is not possible to invest directly in an index.
The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained on www.plumbfunds.com or by calling 1- 866-987-7888. Read it carefully before investing.
Past performance does not guarantee future results.
Opinions expressed are those of the author as of June 30, 2021, and are subject to change, are not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Earnings growth is the annual rate of growth of earnings from investments. Mutual fund investing involves risk. Principal loss is possible.
The fund may invest in small and mid-sized companies which involve additional risks such as limited liquidity and greater volatility. The funds invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods. Because the funds may invest in ETFs, they are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a discount to its net asset value (“NAV”), an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a fund’s ability to sell its shares. The fund may also use options and future contracts, which have the risks of unlimited losses of the underlying holdings due to unanticipated market movements and failure to correctly predict the direction of securities prices, interest rates and currency exchange rates. The investment in options is not suitable for all investors. The Plumb Balanced Fund will invest in debt securities, which typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.
Fund holdings are subject to change at any time and should not be considered a recommendation to buy or sell any security.
Diversification does not assure a profit nor protect against loss in a declining market. Plumb Funds are distributed by Quasar Distributors, LLC, distributor.
A basis point is one hundredth of a percent or equivalently one percent of one percent or one ten thousandth.
Top ten holdings of the Plumb Equity Fund: NVIDIA CORPATION 5.25%, PAYPAL HLDGS INC 5.05%, VISA INC 4.54%, MERCADOLIBRE INC 4.09%, MASTERCARD INCORPORATED 4.07%,
ALPHABET INC 3.85%, COPART INC 3.81%, ADYEN N V 3.74%, AUTODESK 3.64% AND AMAZON COM INC 3.61%.
Top ten holdings of the Plumb Balanced Fund: NVIDIA CORPORATION 3.78%, PAYPAL HOLDINGS INC 3.29%, MASTERCARD INCORPORATED 3.27%, VISA INC 3.23%, MICROSOFT CORP 3.15%, AUTODESK INC 2.76%, JPMORGAN CHASE & C0 2.72%, MERCADOLIBRE INC 2.61%, ADOBE SYSTEMS INCORPORATED 2.56% and LOCKHEED MARTIN CORP 2.55%.
Investment risk can be defined as the probability or likelihood or occurrence of losses relative to the expected return on any particular investment.
The Plumb Balanced Fund benchmark: Return on equity is a measure of a corporation’s profitability; it represents average return on equity on the securities in the portfolio, not the actual return on equity on the portfolio. Return on invested capital is a measure of a company’s efficiency on allocating the capital under its control to profitable investments. S&P 500 Index is an unmanaged market capitalization-weighted index based on the average weighted performance of 500 widely held common stocks. Barclays Capital Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. MSCI EAFE Index in an index intended to reflect the performance of major developed countries’ international equity markets, besides the United States and Canada. Blended Benchmark is made up of 55% S&P 500 index, 35% Barclays capital intermediate government/credit bond index and 10% MSCI EAFE index. You cannot invest directly in an index. References to other mutual funds should not be interpreted as an offer of these securities.
The Plumb Equity Fund benchmark: Return on equity is a measure of a corporation’s profitability; it represents average return on equity on the securities in the portfolio, not the actual return on equity on the portfolio. Return on invested capital is a measure of a company’s efficiency on allocating the capital under its control to profitable investments. S&P 500 Index is an unmanaged market capitalization-weighted index based on the average weighted performance of 500 widely held common stocks. MSCI EAFE Index in an index intended to reflect the performance of major developed countries’ international equity markets, besides the United States and Canada. Blended Benchmark is made up of 90% S&P 500 index and 10% MSCI EAFE index. One cannot invest directly in an index. References to other mutual funds should not be interpreted as an offer of these securities.