performing large-cap fund in the last 12 months, according to Kiplinger. It's also still in the top 4% in the past five years, according to Morningstar.
Ironically, companies can see their profit margins suffer because of the innovations they worked to develop, Yacktman said. Since technology is a deflationary force, it can drive down prices and even profitability. Makers of TV sets can confirm this, asdespite dramatic quality improvements. To resist this dynamic, firms need to have pricing power.
Companies that fit this description were described by the fund managers as"toll collectors" on global wealth. Just like the stations that periodically charge drivers for their use of a highway, these firms can consistently collect fees from their customers with little to no resistance. Many growth-minded investors have learned the hard way in recent years that paying for growth at any cost is a mistake. Those who don't look at a company's price-to-earnings ratio, examine a discounted cash flow model, or consider its forward rate of return relative to peers may regret it.
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