GAM: Tech Exposure Could Mean Short-Term Pain

2025-04-19 11:38:13 ET

Summary

• General American Investors Company is a closed-end fund that has historically outperformed the S&P 500 Index, attracting investors despite being underfollowed and underheld.
• The fund primarily invests in American common equities, which may face downside risk due to capital outflows from the U.S. and overvaluation concerns.
• Despite its value-oriented approach, the fund holds significant positions in richly valued mega-cap technology stocks, potentially dragging down performance amid ongoing capital flight.
• The fund may suffer lower losses than the S&P 500 Index itself, but it probably will struggle to deliver positive overall returns in the current environment.
• Trading at a 12.83% discount to net asset value, the fund's valuation is above its long-term average, and its expense ratio has increased to 1.35%.

General American Investors Company ( GAM ) is a closed-end fund that primarily invests in American common equity securities. This fund has a long history of delivering very good performance, as it is one of the very few closed-end equity funds that have managed to outperform the S&P 500 Index ( SP500TR ) over the past ten years:

In fact, even if we go as far back as May 1995, this fund has outperformed an investment in the S&P 500 Index by quite a lot:

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