ASG is a closed-end fund that invests in domestic growth equities.
The fund has outperformed the broader equity markets and employs a unique distribution structure.
We dive into the fund and discuss ASG’s distribution and outlook.
RomoloTavani/iStock via Getty Images The Liberty All-Star Growth Fund (NYSE: ASG ) is an equity oriented closed end fund with an impressive history of market outperformance. The fund is split between three individual sub-managers, each focusing on their market capitalization of expertise. A unique distribution structure makes this fund a long-term winner for investors looking to generate cash flow. What is the Liberty All-Star Growth Fund?
The Liberty All-Star Growth Fund is an unlevered closed end fund managed by All Star Funds. ASG utilizes a portfolio comprised of common stock to drive total return. The fund has provided investors with market like performance over all time frames, but with large quarterly distributions. ASG is a small fund, managing less than $500 million in total assets. The fund is considerably smaller than its brother, the Liberty All-Star Equity Fund ( USA ). Both funds have accumulated impressive histories having operated for more than three decades.
The fund is split between three different managers, each individually focusing on a different market cap. The managers are Weatherbie Capital, Congress Asset Management, and Sustainable Growth Advisers. The fund allocates to each manager on an equal basis creating a truly balanced and diversified growth portfolio. Management describes this approach in greater detail on the fund’s website. “Multi-managed fund that allocates its portfolio assets on an approximately equal basis among several independent investment organizations (currently three in number) having different investment styles and/or strategies recommended and monitored by ALPS Advisors, Inc., the Fund’s investment advisor.” Source: ASG
This multi-management approach provides investors with risk reduction through management diversification as well as less volatile long-term performance. One of the primary benefits of the fund has been the rigorous selection and review of portfolio managers. Each manager selected by ASG has an established performance history and long tenure of internal management, resulting in stability for the fund over various challenging market cycles. For reference, ASG has been operating since IPO in 1990 and sending dividends ever since. Portfolio
ASG’s conservative approach to portfolio management stays within the realm of growth investing. For investors looking for a more diversified equity fund, Liberty offers the All-Star Equity Fund, a similar closed end fund that was launched years earlier. From a capitalization standpoint, the fund allocates across all market caps with an even allocation. The fund is well balanced with 68% of the portfolio in growth sectors and the remainder spread across blend with a limited value component. From a sector allocation standpoint, ASG is consistent with the typical growth strategies. The largest allocations lie in Information Technology (31.7%) followed by Health Care (21.6%). The sector allocations seem consistent with the overall management style of the fund as many growth opportunities lie in these sectors. The fund’s top ten holdings are indicative of the growth focus. Names include recognizable, high performance brands such as Amazon ( AMZN ) and Visa ( V ). However, the largest holdings also include more obscure, but equally well performing names such as SPS Commerce ( SPSC ), Source: ASG
Interestingly, the fund also discloses acquisitions and dispositions on a monthly basis through the monthly update press release . Below are the portfolio updates for the month of November 2021. The fund is well constructed with a nice growth focus. The fund is dominated by some of the economy’s largest names, many of which are industry leaders. The competitive advantages of these firms have carried strong performance over the past decade and maintain a bright outlook. ASG charges a reasonable management fee of 1.20%. Considering the lack of leverage, there are no additional expenses, meaning shareholders are receiving a significant amount of value for an average fee. Let’s see if the portfolio’s performance stacks up to the expenses. Performance & Distribution
ASG has delivered strong performance over all time horizons. The fund has been able to outperform broader equity indexes because of strong performance from underlying managers. Furthermore, performance is supported by the fund’s all cap approach, capitalizing on sector and capitalization rotation throughout cycles.
The fund has dramatically outperformed the Vanguard Total Stock Market ETF ( VTI ) over three year and five year time frames. It is important to note that this outperformance comes with no leverage aside from short term portfolio overallocations. The lack of leverage protects […]