10-year annualized return: 4.2% (vs. 2.3% for the S&P 500)*
To be considered as an investment by the Jensen Portfolio, a company must have a 10-year track record of at least 15% return on equity (ROE ). Only 150 or so U.S. companies make that cut, says co-manager Rob McIver, and they all "make money for shareholders in good times and bad." That group is then narrowed to the 28 stocks it now owns by searching for growing free cash flow. Today that's leading to companies with significant exposure to fast-growing emerging markets. Examples include scientific tools maker Waters Corp., which boasts a 40% ROE ; industrial conglomerate United Technologies, which McIver calls a "play on global urbanization and infrastructure buildout"; and Nike, which draws 64% of its revenue from outside the U.S.
