Morningstar - Q1 2021 - 53

Strategies

A Worthy Small-Cap Option
Tributary Small Company's veteran team gives it an edge.

BEST IDEAS: MANAGER

Eric Schultz

Tributary Small Company FOSBX

This article is adapted from the fund's Morningstar Global Fund Report dated
Dec. 22, 2020.

Stats 12/31/2020

An experienced team and straightforward approach earn Tributary Small
Company FOSBX a Morningstar Analyst Rating of Silver for its cheaper share
class. The more expensive share class is rated Bronze.

Morningstar Analyst Rating
„

Morningstar Category
Small Blend

Expense Ratio
0.96%

Fee Level
Average

10-Yr Annlzd Return
9.23%

10-Yr % Rank in Cat
71

Morningstar Pillars 12/31/2020

The strategy benefits from a team of industry veterans. Mark Wynegar has run
it since 1999, with Michael Johnson becoming comanager in 2007 after
joining as an analyst in 2005. Both maintain analyst coverage and draw on
five sector-based analysts who research stocks across the market-cap spectrum.
Team members average 20 years in the industry and nearly 10 at the firm. That
experience is an asset as the team makes investment decisions collectively.

Process
Above Avg

People
Above Avg

Parent
Average

Growth of 10K 12/31/2020

$14K
11.88

Morningstar US Small Core

Execution has been strong over Wynegar's tenure. From his May 1999 start
through November 2020, the strategy's total and risk-adjusted returns
beat those of its average small-blend Morningstar Category peer and the
Russell 2000 Index. Its consistent downside protection is impressive. Over
Wynegar's tenure, the strategy outperformed the category norm and
index in every drawdown (including 2020's first-quarter bear market), often
by several percentage points. Overall, the strategy has beat the index in
79% of rolling 10-year periods since 1999.
This compelling small-cap option is open to new investors, and with $1.5 billion
in total strategy assets, capacity isn't a worry right now. K
Eric Schultz is a manager research analyst with Morningstar Research Services LLC.

11.20

12
10
8

Tributary Small Company
01/2018

01/2019

Style Map 11/30/2020
Micro Small Mid Large Giant

The approach is sound. The managers seek high-quality businesses at
reasonable valuations and have a clear understanding of what they think
constitutes quality. They prefer competitively advantaged firms with
understandable and predictable business models, financial flexibility, growth
prospects, and trustworthy management. Flexible portfolio construction
allows the team to focus on the areas that meet their criteria and exclude
those that don't, such as biotech, where they typically have minimal
exposure. For the few stocks meeting their criteria, they wait to buy at an
attractive price and then hold for the long term, with annual portfolio turnover
averaging 22.4% over the past five years and name turnover even lower.

Deep Core Core Core High
Value Value
Grwth Grwth

6

01/2020
Morningstar Ratings 12/31/2020

Fund Centroid
Mstar
Weighted avg. of Period Return
equity holdings
3-Yr
Below Avg
Zone
5-Yr
Below Avg
75% of fund
equity holdings
10-Yr
Below Avg
Category Avg.
Overall Rating
Index Proxy

Mstar
Risk

Mstar
Rating

Below Avg QQQ
Below Avg QQQ
Below Avg QQQ
QQQ

Top 5 Sectors 11/30/2020

Sectors

■ Fund % 

3-Yr Avg

❙ Category Average %

15.9 17.9

y Financial Services

17.3

p Industrials

19.6
18.4 18.5

14.7 16.8

a Technology

13.8

d Healthcare

12.2

t Consumer Cyclical
0%

17.4

15.4

12.9

12.7

10

morningstar.com/lp/magazine

11.4
20
53
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Morningstar - Q1 2021

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