Cullen Funds Ad: Be a Long Term Investors

Be a Long Term Investors, a Cullen Funds ad review. Find the fund review of each fund described in this advertisement in Barron’s financial newspaper.

Fund Ad

Source: Barron's

Cullen Funds advertised a half page details about some of their funds. You can find the ads on Page 6 of Barron’s The Dow Jones Business and Financial Weekly on September 9th 2013. They provide diversified selection of funds including large value fund, mid cap fund, and international stock mutual fund. I have provided a review of each fund.

Some of these funds may be suitable for your brokerage account or retirement account. Prudent investment strategy is needed especially for long term investment. Check the fund risk and fund performance below as well.

The ad is as follows:

Cullen Funds

At the end of the day, the message is clear. Be disciplined about price, don’t overreact to headline news and be a long-term investor” Jim Cullen, Chairman & CEO

• Cullen High Dividend Equity Fund (CHDEX)

• Cullen Value Fund (CVLEX)

• Cullen Small Cap Value Fund (CUSIX)

• Cullen International High Dividend Fund (CIHDX)

• Cullen Emerging Markets High Dividend Fund (CEMDX)

Risks: Mutual fund investing involves risk. Principal loss is possible. The funds invests in foreign securities, which involve greater volatility and political, economic and currency risks and differences in accounting methods. The CVLEX, CUSIX invest in small- and medium-capitalization companies, which involve additional risks such as limited liquidity and greater volatility.

Cullen Funds – Value Investment Management

• Low Price/Earnings

• Dividend Yield

• Dividend Growth

To learn more, visit www.CullenFunds.com

Investment Review

Cullen High Dividend Equity Fund (CHDEX) invests mainly in dividend paying stocks of mid- and large-size companies. This retail share doesn’t have a sales load. Its expense ratio is 1.00%, slightly below than average of 1.15%. The fund managers are James P. Cullen and John C. Gould. Its dividend yield is currently 2.36%.

The CHDEX shares price is $15.45. It has a 5 year average return of 6.45%, below its benchmark and peers. Morningstar has ranked it with 4 stars rating. This large value mutual fund has most of its assets in US stocks (74%) and non-US stocks (20.43%). The top 3 stocks are Eli Lilly and Company, ConocoPhillips, and Travelers Companies Inc.

In my opinion, the fund performance has been slightly below average. If you want to invest long term, it might be an ok investment. For better return, you can try to choose an index mutual fund such as Schwab Fundamental U.S. Large Company Index Fund (SFLNX). In term of fees, it does have slightly lower expense fee and there is no front end sales load.

Long Term Investment

Incepted in 2012, Cullen Value Fund (CVLEX) hasn’t been ranked by any financial companies. This new fund has a yield of 0.80%. The top 3 stocks include Novartis AG ADR, Aetna Inc, and Halliburton Company. The top 2 sectors are healthcare, and financial services.

For long term investment, CVLEX fund has an incomplete rating. No one will know whether it will outperform its peers or benchmark. Having low assets of $23 million may create opportunity for the fund managers to invest aggressively. Investor may be able to choose a better long term investment vehicle for their brokerage or retirement account.

Other funds for consideration include Vanguard Equity Income Fund (VEIPX), and T. Rowe Price Value Fund (TRVLX). Both funds have great returns and low fees for investing.

US Stock Fund

Ranked with 2 star rating, Cullen Small Cap Value Fund (CUSIX) seeks to provide long term capital growth. It utilizes its assets to purchase companies with market capitalization below $4 billion. It invests in domestic and foreign stocks including emerging markets. The total net assets are only $8.8 billion. The expense ratio is 1.00% per year.

This US stock fund has returned 23.37% over the past year and 14.54% over the past 3 year. This year return has been better than past 3 year returns. For year-to-date, it has beat 68% of its peers. Top 2 holdings are Alere Inc and ITT Corp.

Investing in this mutual fund may be difficult for small investors. The minimum initial investment is $1 million. Also, the fund returns hasn’t been consistent for the past 3 year. It still needs to perform consistently for long term investment consideration.

Foreign Stock Fund

Cullen International High Dividend Fund (CIHDX) is a 3 star mutual fund. It uses its assets to purchase a portfolio of high dividend paying common stocks of medium- and large-capitalization companies headquartered outside the United States and in American Depositary Receipts (ADRs). It has a high dividend yield of 2.16%.

Managed by James P Cullen and Rahul D. Sharma, this foreign large value mutual fund has returned 10.64% over the past 1 year, and 1.72% over the past 5 year. The fund performance has been inconsistent for the past 3 years. The top 5 stocks are HSBC Holdings PLC, Vodafone Group PLC ADR, Unilever NV ADR, United Overseas Bank Ltd, and Singapore Telecommunications Limited.

Upon review of this fund, I have found it has a higher expense ratio than its peers. The fund performance or return has been inconsistent as well. Last 3 years have been great, but YTD has been lagging significantly.

Cullen Emerging Markets High Dividend Fund (CEMDX) is another new diversified emerging markets mutual fund by Cullen Funds. Its total net assets are only $33.1 million. The portfolio turnover rate is only 37%. The fund managers are similar to previous fund. Its top 2 stocks are Hyundai Motor Co Ltd and Standard Chatered Plc.

In my opinion, this new fund needs additional time before I can make a judgment. The year to date return has been better than its category though.

Bottom Line

• There is no sales load in these mutual funds. This means it will enhance the future returns.
• Some of the funds have low total assets, they are not very popular among investors.