Robert Bacarella, portfolio manager of the Monetta Young Investor Fund (MYIFX), says gift buyers can teach financial literacy through stocks like Disney and Ford.
Walt Disney (DIS)Holiday Gift Equivalent: The Beauty and the Beast Blu-Ray/DVD combo pack retails for $39.99, which is equal to one share of Disney stock. Bacarella's Take: "Our company has always been proactive toward getting kids involved in the investment process. With Disney, it's no doubt a leader in the entertainment sector. The name is so recognizable to young people. It also pays a moderate dividend, which we look for in more established growth companies. "On a fundamental basis, there is no doubt that Disney can continue to growth at its historical rates. It has a low beta in down markets and, in up markets, it keeps pace. As the economic recovery takes hold, you could get a very nice move in a company like Disney."
Ford (F) Holiday Gift Equivalent: The Power Wheels Ford F-150 retails for $199.99, which is worth about 12 shares of Ford stock. Bacarella's Take: "Ford is our third-largest holding, and we've had that position for a year. It's one of the reasons the fund has performed as well as it has. When you look at the whole group, Ford was the only automobile company that was able to survive on their own without bailout money. They've become a much more efficient company in terms of profitability and margins and handing the debt load they have. "From a fundamental basis, they're the best in the sector right now. We're very excited about the fact that they should see above-average growth over the next three to four years as the economy comes back. With Ford, you're in the second inning of a nine-inning game. There's a long way to go. Ford will be one of the stocks to lead." Bacarella says that while the Monetta Young Investor Fund's key objective is to beat the return of the S&P 500, there is also a financial-literacy component that aims to help younger investors build financial skills. To do that, the fund has based its approach on investment titans Warren Buffett, John Bogle and Peter Lynch, whom Bacarella calls the world's greatest investors. The Monetta Young Investor Fund invests about half of its net assets in funds that track the S&P 500. The remaining net assets are devoted to industry leaders with highly recognizable brands. In addition to Apple and Ford, the fund counts McDonald's (MCD), UPS (UPS) and Google (GOOG) among its holdings. With $13 million in total assets, the Young Investor Fund is also unique in that it allows investors to buy in at a lower initial investment. Like most other mutual funds, the fund has a minimum investment requirement of $1,000. But Monetta will accept a minimum initial investment of only $100 as long as investors establish an automatic investment plan. In terms of performance, the Monetta Young Investor Fund performs as billed. The fund has average annual total returns over one- and three-year periods (21% and 5.6%, respectively) that handily beat the S&P 500 (10% and minus 7.2%, respectively). Since its Dec. 12, 2006 inception, the fund has an average annual total return of 6.5%, compared with a return of minus 3.4% on the S&P 500.
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