These Managers Pick Stocks Once a Year. Here’s What Keeps Them Busy
For the annual rebalance of Hennessy Cornerstone Mid Cap Fund, its overseers turn to a formula. The strategy has outpaced the S&P 500 for more than two decades.
Josh Wein, left, and Ryan Kelley of Hennessy Advisors.
Photographer: Kate Medley for Bloomberg Markets
Once a year the managers of the Hennessy Cornerstone Mid Cap 30 Fund rebalance their portfolio. They use a formula to select 30 stocks, equal-weighting each at 3.3% of the fund. Then they let the stocks run until the next rebalance, a year later.
For a seemingly hands-off strategy, it’s racked up an impressive track record. The $1.9 billion mutual fund gained 34% last year, beating the S&P 500 index’s 25% return. From its inception in 2003 through Feb. 12, its average annualized return topped the benchmark by a hefty 1.58 percentage points. Indeed, charting the fund’s performance over its lifetime shows it’s been ahead of the S&P for most of the past 20 years—with a couple of exceptions, such as a plunge in 2020, early in the pandemic.