They Did it Again! Eight Funds Beat Their Benchmarks

Krantz credits the outperformance in the past several years to "the fact that we've had a mid-cap growth and small-cap core" leaning during times when those areas have done particularly well. Going forward, "the biggest change is the value our managers see in high-quality, blue-chip, established companies," he says. The fund's managers believe "the market may be going back to larger names, feeling those companies have the ability to grow in an uncertain environment."

Amana Growth's fund manager, Nicholas Kaiser, said that "not investing in financial stocks really did help us in 2007." The fund complies with Islamic investing principles, and financial companies are among the forbidden stocks.

Kaiser credits stocks Apple(AAPL Quote - Cramer on AAPL - Stock Picks) and Potash(POT Quote - Cramer on POT - Stock Picks) as two individual holdings that served his fund well. Also, he says the fund's gold investments did well, as did real goods. For 2008, "we're taking a pretty conservative stance in the portfolio, allowing cash to build up," he says.

(TMCGX Quote - Cramer on TMCGX - Stock Picks)Turner Emerging Growth, returning 17.3% compared with the Russell 2000 Growth's 7.1%, was the only non-large-cap fund to last for a ninth straight year.

Frank Sustersic of Turner says the fund looks for companies with "solid double-digit top-line growth rates." He names Bucyrus International(BUCY Quote - Cramer on BUCY - Stock Picks), Deckers Outdoor(DECK Quote - Cramer on DECK - Stock Picks) and Terra Industries(TRA Quote - Cramer on TRA - Stock Picks) as three stocks that have done well for the portfolio.

For 2008, he says, "with the economy slowing down, I'm really focusing on companies and industries that can weather the slowdown." He says his three top sectors are materials/processing, health care and energy.

In addition, Sustersic believes clinical-research organizations have the potential to do well "as pharmaceutical companies continue to move to outsource work." He names Icon(ICLR Quote - Cramer on ICLR - Stock Picks), Parexel International(PRXL Quote - Cramer on PRXL - Stock Picks) and Kendle International(KNDL Quote - Cramer on KNDL - Stock Picks) as stocks to watch in that area.

Chuck Freadhoff, spokesman for Capital Group, which operates the American Funds series, sounds a note of caution about reading too much into the results: "While we are pleased with the long-term record of Fundamental Investors, we caution individuals that this fund, like all funds, will have periods when it does not surpass its benchmark." He continues, "we urge our investors to stay focused on the long term, not just one or two years."

Indeed, past performance is no guarantee of future results, and many fund classes can go on a roll for a number of years before falling out of favor once again. Also, from a pure probability perspective, some funds are likely to beat benchmarks for multiple years in a row, just as it's possible (if unlikely) to flip a coin nine times and have it come out heads each time.

To illustrate the point, there were five funds that had eight-year streaks going into this year, and weren't able to come out ahead this time. Large-blend fund (CAMOX Quote - Cramer on CAMOX - Stock Picks)Cambiar Opportunity Investors met that fate. A number of large-growth funds were done in by the Russell 1000 Growth index's 11.8% return: (AGTHX Quote - Cramer on AGTHX - Stock Picks)American Funds Growth Fund of America, (ANEFX Quote - Cramer on ANEFX - Stock Picks)American Funds New Economy, (FDCAX Quote - Cramer on FDCAX - Stock Picks)Fidelity Capital Appreciation and (VMRGX Quote - Cramer on VMRGX - Stock Picks)Vanguard Morgan Growth.

« Previous Page

1 2 3

Next Page »