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Principal Blue Chip Fund (PBLAX)

When CEOs have a vested interest, you invest in their passion to succeed. Explore a bolder alternative to index investing.

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Blue Chip Fund Overview

  • ~80% active share, whereas most large-cap funds stick closer to the index 1
  • Seeks to provide downside protection by offering:
    - Owner-operators with aligned incentives and long-term view
    - High-quality companies that trade at a discount to their intrinsic value
    - Focus on reducing risk at every step of the process
  • A portfolio of high-quality companies and best ideas
  • Tickers: PBLAX (Class A), PBLCX (Class C), PBCKX (Class I)
  • Available in SMA format

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Add an owner-operator advantage to portfolios

Principal Blue Chip Fund is invested with the belief that CEOs with considerable stock ownership produce better results over time because their interests are aligned with shareholders.

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It's personal

  • These CEOs have ownership that makes their compensation relatively meaningless
  • Studies find they spend nearly 39.6% less on themselves than other CEOs2
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Bigger picture

  • High-ownership CEOs are in the job longer (avg. tenure of 13.9 years vs 5.7 years for other CEOs)3
  • Long-term view and aligned incentives can lead to better capital allocation decisions and lower risk.
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Proof of performance

  • High-ownership CEOs outperformed low-ownership CEOs by +4% annually2
  • Founder-led companies outperformed by 3.1x4
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1 Source: FactSet, three years as of March 31, 2018.

2 Journal of Finance, 2014; Annual returns from 1988-2010.

3 The Link between the Acquisitions Market and the Market for CEOs, John C. Coates IV and Reiner H. Kraakman, January, 2011.

4 Research published by Bain & Company in 2016 found that founder-led companies have consistenly outperformed other S&P 500 companies from 1990 to 2014.

The Morningstar RatingTM for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar ratings do not reflect the inclusion of sales charges. If sales charges were reflected, ratings could be lower. © 2018 Morningstar, Inc. All rights reserved. Part of the mutual fund data contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

Morningstar ratings for the other time periods as of 6/30/2018 are as follows: Class A, 3-year (4 stars/1265 funds), 5-year (3 stars/1141 funds).

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