Longleaf: Keep Investment Focus on the Long Term

The managers of the Longleaf Small-Cap Fund have posted their quarterly letter to shareholders, which includes a reminder about the importance of distinguishing between risk and stock market volatility. 

"Short-term market fluctuations tell nothing about long-term investment outcome or business worth," Mason Hawkins and Staley Cates write in their letter. They note that since 1970 the major stock market indices have recorded declines in more than 20 percent of one-year periods, while rolling 10-year returns have rarely been negative. Extend the holding period to 15 and 20 years and performance has always been positive, they note.

To read their full letter, click here.

For the quarter, the Small-Cap Fund returned 9.9 percent, trailing the 12.4 percent return of the benchmark Russell 2000 Index. The fund has beaten the benchmark return in the past one-, three- and 10-year periods.

Longleaf Small-Cap is a component of the Bradway Strategic Portfolio, which consists primarily of investments with top money managers.