When it comes to investing, Donald, Stephen and Brian Yacktman share a long family tradition. Donald, 78, pioneered a contrarian, deep-value style of investing that focused on unloved corners of the market. He founded Yacktman Asset Management in 1992 after a successful stint as a portfolio manager at Selected American Shares, and launched the Yacktman Fund soon after.

Stephen Yacktman, 49, started as an analyst at his father Donald’s firm in the early 1990s and began co-managing the flagship fund with Donald in the early 2000s. Today, Stephen is the fund’s manager and Yacktman Asset Management’s chief investment officer. Over the years, the $8 billion fund has undergone some changes, moving from its deep-value roots toward a more blended growth and value style mix. Its name was changed to AMG Yacktman Fund after Affiliated Managers Group (AMG) purchased a majority stake in the firm in 2012.

The latest Yacktman to make his mark on the mutual fund world is Donald’s 40-year-old son Brian, who founded YCG Investments in 2007 after working at his father’s firm for a few years. Today, YCG manages some $750 million, with about one-third of that attributable to the YCG Enhanced Fund and the rest to separately managed accounts requiring a $1 million investment minimum. The road to getting there was a long one, though.

When Brian Yacktman left his father’s firm to strike out on his own, he was expecting a friend to deliver $65 million in assets to manage. “But that didn’t come through,” Brian recalls. “The business got started with $1.5 million from a relative. And there really wasn’t a minimum account size because we were willing to take just about anything at that point.”

As part of the deal with AMG, Brian Yacktman cannot attach his family’s name to his business or mutual funds. But he’s keeping family under the firm umbrella nevertheless, and has brought on his brother Michael Yacktman, 32, who serves as senior analyst and lead trader.

Brian takes his firm’s early struggles in stride. In retrospect, starting his business just before the financial market crash in 2008 turned out to be more of a blessing than a curse. “We tend to shine in down markets,” he says. “It gave us an opportunity early on to prove ourselves.” By the firm’s 10th anniversary, YCG had nearly $500 million in assets under management.

He’s also sanguine about the restricted use of the family name. “Having a different name helps eliminate confusion in the marketplace,” he says. “And it shows we can stand on our own two feet.”

The YCG Enhanced Fund, which employs options strategies to reduce risk for its portfolio of around 30 stocks, has been doing that with finesse. It has ranked in the top 3% of performers in Morningstar’s large blend category for the year ending May 31, the top 2% over the last three years, and the top 3% over the last five years.

While Yacktman says he has taken in and appreciates many of the investment lessons his father taught him, the YCG Enhanced Fund goes its own way on a number of fronts. For one thing, the Yacktman Fund may have large chunks of money in cash when its managers think stocks are overvalued. At the end of March 2019, nearly 30% of its assets were there. By contrast, YCG has had less than 1% of its assets in cash for most of its nearly seven-year history. “As long as we can find investments at a price where we can expect an attractive return, we expect to be fully invested in most environments,” he says.

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