Domestic small and mid-caps had a great month in June, and our fund had a great month along with them.

 

June

Year to Date

Since Inception (Annualized)

Inception Date: 11/1/2010

Motley Fool Great America Fund (TMFGX)

4.56%

9.55%

12.78%

Russell 2500 Growth Index*

2.47%

10.50%

13.60%

For a standardized list of performance for the Great America Fund, please click here. For fund holdings, please click here.

June was a nice month for domestic small and mid-cap stocks. The Great America fund outperformed for the month with a 4.56% gain, compared with a 2.47% gain for the Russell 2500 Growth Index. Year to date, the fund’s 9.55% return trails the benchmark’s 10.50% gain.

Our three largest holdings – LCI Industries, Thor Industries, and XPO Logistics – drove our outperformance in June, with each of those stocks appreciating more than 15% during the month. RV manufacturer Thor reported earnings in early June, with the company’s sales and profits coming in better than expectations. Through May, the Recreation Vehicle Industry Association reported that wholesale RV shipments are up 12.2% from the same period in 2016. That means American consumers continue to buy RVs, and that benefits Thor and LCI Industries, the latter of which is a supplier of parts to RV manufacturers.

The worst-performing stocks in June were Splunk (down 7.1%), AutoZone (down 5.9%), and Access National (down 5.3%). We note that AutoZone has made this list two months in a row, as auto-parts retailers struggle through a weak demand environment.

We made a handful of portfolio changes in June. We sold out of Cabela’s and Level 3 Communications, as these companies are in the process of being acquired and there wasn’t much left to gain by holding on until the deals closed.

We used the proceeds of those sales to bring several new companies into the fund. We added Broadridge Financial Solutions, FactSet Research Systems, GrubHub, Lakeland Financial, McCormick, and SVB Financial. All told, the fund has a little less consumer discretionary exposure and a little more tech exposure after all of these transactions. We have never managed our sector exposures to match the benchmark, but we do want to have diversified ownership of different types of businesses.

* The Great America Fund changed its benchmark from the Russell MidCap Index and the Russell 2000 Index to the Russell 2500 Growth Index on Feb. 28, 2017.

 

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