The Ave Maria Bond Fund comes in two classes, I and R. The ticker symbols are AVEFX, and AVEHX. Except for the initial minimum investment required, fund capitalization and return, the two funds are quite similar in scope, objective and investment and are considered the same mutual fund. Moreover, the Ave Maria Bond Fund is a socially conscious, low risk mutual fund that was initiated in 2003 and has since provided yearly positive returns for its investors.
In so far as mutual funds go, the Ave Maria Bond Fund is relatively small with $45.9 million in assets according to its 2009, Q1 report. The AVEFX fund has a minimum initial investment of $1,000.00, is strongly advised by Schwartz Investment Counsel, Inc. and only invests in companies that promote Catholic principles and/or beliefs. Investments held by the Ave Maria Bond Fund include companies such as Kellog, United Tech Corp. and Treasury Inflation Protected Securities (TIPS). (AVEFX Q1 Summary)
The largest amount of the Ave Maria Bond Fund portfolio’s bond investments are in A rated bonds with the remainder in higher rated bonds except for a limited percentage in BBB rated bonds. A significant cash position is held in the fund along with common stock and investment in U.S. Agencies. The fund has a small dividend
AVE MARIA BOND FUND PERFORMANCE:
This fund is relatively safe, low risk, liquid and provides a small return after inflation and the .7 percent expense ratio is calculated in. The funds value per share has ranged approximately between $9-10.50 since the fund’s inception and at the time this article was written in 2009. Additionally, the fund is no load and as mentioned has never produced a negative average annual return to date.
MorningStar rates the Ave Maria Bond Fund with 3 out of 5 stars whereas Lipper rates the fund with its highest score for performance in several categories including tax efficiency, expense management, total return, preservation of capital and consistent returns. (lipperweb.com). The fund also won the 2009 Lipper award.
A point of note regarding the Ave Maria Bond Fund is its low turnover ratio in comparison to the category of mutual funds in which it operates. This and other qualities of sound management appear to be what the Lipper ratings system looks for whereas the MorningStar ratings may place more emphasis on total returns in comparison to other mutual funds in the same category.
COMPETITIVE POSITIONING OF THE AVA MARIA BOND FUND:
Despite the Ave Maria Bond Fund’s high marks from Lipper, the fund’s returns leave more to be desired as evident with the funds ranking against similar funds within the same category and in comparison to the applicable bond index. Moreover, there are currently 1180 similar or competing funds, approximately 33 percent of which have higher returns both at present and historically. (finance.yahoo.com) However, the 67th percentile ranking given to the fund is also its second highest in its history from a low of 27 percent. This is also in accordance with the MorningStar 3 star ranking which places the fund between the 32.5th-67.5th percentile of which the Ave Maria Fund scores close to a 4 star rating. Although the fund has consistently provided a positive return, it has also consistently performed below, until recently, the Barclays Capital Intermediate Gov/Credit Index according to the Ave Maria Bond Fund Q1 2009 report. (avemariafund.com)
SUMMARY:
The Ave Maria Bond Fund AVEFX and AVEHX is an average performing, low risk, minimal expense mutual fund. The fund advocates Catholic values and socially conscience investing and is heavily invested in U.S. Government financial instruments, such as bonds and treasury inflation protected securities. Other positions the portfolio takes are corporate bonds, and corporate equity. There are some differences between the two classes of Ave Maria Bond Funds including a .29 percent difference in five year return, a $9,000.00 difference in minimum initial investment and a few hundred million dollars in capitalization.
The fund appears to be well managed, and both fiscally and socially responsible. In light of this and the fund’s low risk nature, this fund may be a better place to store money than under a mattress. It has consistently returned more than inflation and the expense costs of managing the fund. However, the Ave Maria Bond Fund’s performance is low compared to top performing financial instruments in its class and other potential investments. For those seeking more responsible investing and low risk with fair return, the Ava Maria Bond Fund may be worth considering.
Date of record: June 2009
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Sources:
(1) http://www.avemariafund.com/home.htm
(2) http://finance.yahoo.com/q/pr?s=AVEFX
(3) http://www.avemariafund.com/home.htm