TheStreet.com Ratings: The Top Fund Families

Another quarter has ended, and TheStreet.com Ratings has generated its top-200 list of open-end mutual funds for its quarterly guide, as of Dec. 31, 2006.

The purpose of this list is to suggest fund families that have many good funds to investors who are looking to minimize transaction costs. The families that capture the most spots on the list qualify as "ultra" fund families.

MFS, a unit of Sun Life Financial(SLF Quote), placed the most funds in the top 200 for the third consecutive quarter, with 15 funds. In sole possession of second place is Putnam Funds with 14 funds on the list.

Tied for third place with 12 funds each are Franklin Templeton Investments, a unit of Franklin Resources (BEN Quote), and Alliance Bernstein. Dreyfus, a unit of Mellon Financial (MEL Quote), came in fourth with 10 funds.

Three more fund families tied for fifth place, with nine funds each making the list: AIM Investments, a unit of Amvescap (AVZ Quote), Fidelity, and Gartmore.

TheStreet.com Ratings treats each share class of a fund as a separate fund. But if we eliminate the impact of multiple share classes, two fund families emerge from the pack: Putnam Funds, with seven unique funds, and Franklin Templeton, with five unique funds. Families tied for third place each with four unique funds include Alliance Bernstein, Dimensional Investment Group, Dreyfus, Fidelity, Gartmore, GMO Funds and MFS.

These are not the only fund families to consider if you want to minimize transaction costs while maximizing fund selection, however. In the quarter ending Dec. 31, 2006, 34 fund families had 100 or more funds rated by TheStreet.com Ratings. The list below ranks them by the percentage of their funds that produced risk-adjusted returns in the top 30% of our rankings.

Fund Families With 100 or More Rated Funds
Fund Family Name	# of Funds Rated	Top 30%	Middle 40%	Bottom 30%
American Funds	211	69.70%	25.10%	5.20%
Vanguard	118	53.40%	36.40%	10.20%
Franklin Templeton Institutional Gr	197	51.30%	27.40%	21.30%
Goldman Sachs	129	48.80%	24.80%	26.40%
Allianz Global Investors Fund Manag	117	47.90%	13.70%	38.50%
AIM Investments	161	45.30%	34.20%	20.50%
T. Rowe Price	113	45.10%	42.50%	12.40%
Ameriprise Financial	120	41.70%	29.20%	29.20%
Hartford Funds, The	116	38.80%	40.50%	20.70%
Principal Financial Group	228	37.70%	37.30%	25.00%
Morgan Stanley	184	37.50%	35.30%	27.20%
JPMorgan Funds	238	37.00%	40.80%	22.30%
Dreyfus	265	35.80%	36.20%	27.90%
Pioneer Investments	100	35.00%	24.00%	41.00%
Gartmore	150	34.00%	33.30%	32.70%
American Century Investments	140	33.60%	33.60%	32.90%
Van Kampen	144	32.60%	42.40%	25.00%
Evergreen Investments	102	32.40%	36.30%	31.40%
DWS Scudder	162	30.90%	33.30%	35.80%
Columbia Funds	452	30.30%	52.20%	17.50%
MainStay Funds	110	29.10%	48.20%	22.70%
MFS	312	28.50%	43.30%	28.20%
Wells Fargo Advantage Funds	202	28.20%	46.50%	25.20%
ING Investments, LLC	310	27.70%	39.40%	32.90%
Putnam Funds	388	26.00%	55.90%	18.00%
BlackRock	222	25.20%	42.30%	32.40%
OppenheimerFunds	147	25.20%	32.00%	42.90%
MassMutual Funds	127	23.60%	40.90%	35.40%
Alliance Bernstein	295	23.40%	52.20%	24.40%
Delaware Investments	101	22.80%	38.60%	38.60%
Fidelity Investments	551	21.80%	54.30%	24.00%
Pacific Life Group	102	18.60%	52.90%	28.40%
John Hancock	100	16.00%	33.00%	51.00%
Legg Mason	130	8.50%	44.60%	46.90%
Source: TheStreet.com Ratings

Our risk-adjusted return model awards overall investment grades from A-plus down to B-minus to funds in the top 30% of all open-end stocks funds, grades of C-plus, C and C-minus to the middle 40%, and grades from D-plus down to E-minus for the bottom 30%.

Not every fund in a family is assigned a grade, since we only rate those with a track record of at least three years.

For the second quarter in a row, American Funds topped the chart, with 69.7% of its 211 rated funds in the top 30% of all funds we rate.

Franklin Templeton and Vanguard also maintained the distinction of having more than half of their funds ranked in the top 30%, with Goldman Sachs (GS Quote) slipping just below that level at a respectable 48.8%.

Among fund families with between 40 and 99 rated funds, GMO Funds came out on top, with 57.8% of its funds ranking in the top 30% of all the funds we rate, up from 55.6% in the third quarter. GMO Funds was previously categorized as a medium-sized fund family (those with 10-39 rated funds), but it got bumped up to the large fund family list because we now rate 45 of its funds, up from 36 at the end of September.

GMO pushed Ivy Funds, a unit of Waddell & Reed (WDR Quote), out of the top spot among large fund families, even though it had a higher percentage of its funds ranked in the top 30% in the fourth quarter than in the third quarter: 53.0% vs. 47.1%.

Fund Families With 40-99 Rated Funds
Fund Family Name	# of Funds Rated	Top 30%	Middle 40%	Bottom 30%
GMO Funds	45	57.80%	13.30%	28.90%
Ivy Funds	83	53.00%	33.70%	13.30%
Gabelli Funds	75	36.00%	34.70%	29.30%
Russell Funds	71	33.80%	52.10%	14.10%
STI Classic Funds	54	33.30%	33.30%	33.30%
UBS Global Asset Management	67	31.30%	35.80%	32.80%
Eaton Vance	82	30.50%	46.30%	23.20%
Strategic Partners	76	30.30%	31.60%	38.20%
Allegiant Funds	40	27.50%	25.00%	47.50%
First American	99	27.30%	46.50%	26.30%
SEI Financial Management Corp.	44	25.00%	63.60%	11.40%
GE Investment	49	24.50%	49.00%	26.50%
Credit Suisse Funds	45	24.40%	33.30%	42.20%
Phoenix Funds	82	24.40%	29.30%	46.30%
Lord Abbett	80	23.80%	47.50%	28.80%
Old Mutual Funds	62	22.60%	16.10%	61.30%
Rydex Funds	83	20.50%	24.10%	55.40%
JennisonDryden	80	20.00%	57.50%	22.50%
Waddell & Reed	55	20.00%	30.90%	49.10%
Federated Investors	69	18.80%	49.30%	31.90%
Janus Fund	55	18.20%	49.10%	32.70%
AXA Enterprise Funds	84	17.90%	40.50%	41.70%
BB&T Funds	46	17.40%	56.50%	26.10%
MTB Funds	43	16.30%	18.60%	65.10%
Munder Funds	63	15.90%	55.60%	28.60%
Seligman Group	98	15.30%	55.10%	29.60%
ProFunds	76	14.50%	31.60%	53.90%
Fifth Third Funds	85	14.10%	43.50%	42.40%
SunAmerica	84	13.10%	28.60%	58.30%
PIMCO Funds	80	11.30%	51.30%	37.50%
IDEX Funds	69	8.70%	49.30%	42.00%
IXIS Advisor Funds	40	7.50%	62.50%	30.00%
Source: TheStreet.com Ratings

Investors don't necessarily have to stay within a single fund family to keep transaction costs down, however. Brokerage accounts also provide a lot of flexibility to buy and sell funds, assuming the trading commissions are reasonable. There are 73 fund families that have between 10 and 39 ranked funds; the 20 best are listed below. Jumping from fifth place up to first, Thornburg Funds has 15 of its 17 funds in the top 30% and none in the bottom 30%.

The 20 Best Fund Families With 10-39 Rated Funds
Fund Family Name	# of Funds Rated	Top 30%	Middle 40%	Bottom 30%
Thornburg Funds	17	88.20%	11.80%	0.00%
Dimensional Investment Group	25	80.00%	16.00%	4.00%
Diamond Trusts	11	72.70%	27.30%	0.00%
Lazard Funds	13	69.20%	15.40%	15.40%
Vantagepoint Funds	19	68.40%	26.30%	5.30%
American AAdvantage	25	68.00%	24.00%	8.00%
TIAA-CREF Funds	27	66.70%	25.90%	7.40%
RBB Funds	10	60.00%	20.00%	20.00%
Oakmark	12	58.30%	41.70%	0.00%
Davis Funds	26	57.70%	42.30%	0.00%
Hotchkis & Wiley	14	57.10%	14.30%	28.60%
Harbor Funds	24	54.20%	16.70%	29.20%
Nicholas-Applegate Mutual Funds	20	50.00%	45.00%	5.00%
Nuveen Mutual Funds	24	50.00%	33.30%	16.70%
Forward Funds, Inc.	10	50.00%	30.00%	20.00%
Kinetics Mutual Funds, Inc.	10	50.00%	0.00%	50.00%
Royce Funds	34	47.10%	47.10%	5.90%
First Eagle	15	46.70%	33.30%	20.00%
Barclays Global	11	45.50%	54.50%	0.00%
Optimum Funds	20	45.00%	35.00%	20.00%
Source: TheStreet.com Ratings

Of the 300 fund families that have nine or fewer funds, the Quantitative Group of Funds leads the pack with all seven of its funds that we rate in the top 30%. Third Avenue and Weitz Series each have all four of their four rated funds in the top 30%.