George M. Yeager is fond of an old saying by Andrew Carnegie that pretty much sizes up how he runs the U.S. Global Leaders Growth Fund.
The quote, Yeager says, often is incorrectly written: "Put all your eggs in one basket and watch the basket."
The misquote is missing a vital word. "What he actually said was, 'Put all your good eggs in one basket and watch the basket,'" he says.
That, Yeager says, is basically what he does in managing the fund: He picks a handful of nice shiny eggs and lets them incubate. In virtually all cases, those eggs are well-known companies with a popular consumable product, recurring revenues and a global reach. Hence, blue-chip growth companies, such as McDonald's Corp., Coca-Cola Co., Wal-Mart Stores and Gillette Co., are among the fund's mainstays.
Technology companies? With a few exceptions, look elsewhere for those. In the lexicon of Yeager's egg approach, those are of the scrambled, poached and fried variety.
As Yeager puts it, people can be expected to keep buying razor blades, bubble gum and soda over and over again. But he feels the same can't be said for Internet infrastructure, computer chips or software.
"We're looking for companies that provide a service or sell a product that is consumed or needs to be replaced," he says.
Yeager, who has managed separate accounts for wealthy individuals for decades, is trying to market the fund as something that investors can use as a core holding in a diversified portfolio, along with, let's say, an S&P 500 index fund. Indeed, the companies the fund holds are invariably members of that index. That's why the U.S. Global Leaders Growth Fund recently adopted "The Nest Egg Fund" as its official nickname.
"It's saying you're not scrambling these eggs-you're letting these eggs mature," he says.
Simple, straightforward and focused. That's how famous financiers and investors such as Carnegie and Warren Buffett have made their fortunes. Yeager, who loves to quote such personalities when talking about his own investing style, thinks it's a sure-fire key to success-especially during the type of bearish market investors are grappling with now.