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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
The Hennessy Equity and Income Fund focuses on owning high-quality businesses at reasonable prices across both equity and fixed income allocations. In the first half of 2026, U.S. equities rallied 10.2% driven by AI infrastructure spending and better-than-expected earnings, though much of the return came from a narrow set of speculative names. The managers used this environment to add quality companies left behind by the rally at attractive valuations. The portfolio held businesses with 23.0% pre-tax return on invested capital versus 16.1% for the S&P 500, at a slight valuation discount. Key contributors included Entegris, benefiting from AI-driven semiconductor demand, while new positions like Dominion Energy offer regulated utility exposure to data center power demand growth. On fixed income, the U.S.-Iran war reignited inflation, pushing CPI from 2.4% to 4.2%, causing the market to price in potential Fed hikes rather than cuts. The managers extended duration opportunistically as yields backed up, maintaining a neutral 3.78 duration while emphasizing high-quality corporate bonds. Looking ahead, they expect market returns to increasingly depend on fundamentals rather than multiple expansion, favoring their quality-focused positioning.
The fund invests in high-quality companies with durable competitive advantages, strong returns on invested capital, healthy free cash flow, and conservative balance sheets at reasonable valuations, while maintaining a balanced equity and fixed income allocation that emphasizes income generation and capital preservation through market cycles.
The managers expect the current environment of narrow market leadership to not persist indefinitely, with a reversion in the high-beta trade and a broadening of the market as fundamentals begin to matter again. They anticipate more muted returns following the strong run of recent years, with returns increasingly earned through fundamentals rather than multiple expansion. High-quality companies with sustainable cash flows and shareholder-friendly capital returns should do well as this dynamic unfolds. On the fixed income side, the single most important variable is how durable the inflation spike proves to be and how the Fed responds. The managers intend to stay close to neutral on duration and emphasize high-quality income, remaining ready to extend duration or add credit if the data provide a clearer opportunity.
As of Aug 6, 2026
Neil J. Hennessy founded Hennessy Advisors in 1989 and serves as Chairman and CEO, leading the firm's growth to manage $4.24 billion in assets as of September 2025. The fund leverages a sophisticated dual sub-advisory structure with equity management by The London Company of Virginia, founded in 1994 and led by Stephen Goddard, CFA, who serves as founder, chairman and chief investment officer managing $33 billion in total assets. Portfolio managers Peter Greig and Jonathan Moody have managed the equity allocation since 2007, providing long-term continuity and deep fund knowledge. Fixed income management is handled by experienced professionals Mark E. DeVaul, CFA, CPA and Gary B. Cloud, CFA at FCI Advisors, bringing specialized expertise in credit analysis and duration management. The London Company operates as a majority employee-owned firm ensuring alignment of interests, while Hennessy Advisors has been recognized as 'Best Places to Work' for 12 consecutive years.
The Hennessy Equity and Income Fund employs a conservative, actively managed multi-asset strategy designed to provide long-term capital growth and current income while emphasizing downside protection. The fund maintains a balanced portfolio typically allocating up to 70% to large-cap, value-oriented equities selected through fundamental analysis focusing on companies with high return on capital, consistent free cash flow, and attractive valuations. The equity strategy utilizes The London Company's proprietary Balance Sheet Optimization model to determine intrinsic company value based on balance sheet strength rather than earnings forecasting. The remaining allocation targets high-quality, intermediate-term fixed income securities managed by FCI Advisors, focusing on investment-grade bonds with low duration to buffer interest rate sensitivity while capturing yield premiums of 100-120 basis points above Treasuries over market cycles.
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