The Big Screen: Value Funds, Light Tech, Low-Cap Gains

Today fund investors are facing the twin specters of fat taxable capital-gains distributions and outsize weightings in the sagging tech sector, so we've dug up some funds that could help you skirt both problems.

This week, the Big Screen sifted the large-cap value category looking for funds that beat their average peer over the last one- and three-year periods under the same manager. Then we removed funds with more than 15% of their assets in tech stocks, compared with 30% for the S&P 500, and those whose potential capital gains exposure was higher than the category average. And to make the final cut, funds also had to be beating the S&P 500 so far this year. Of the some 340 big-cap value funds out there, this left us with eight. Here they are, ranked by one-year return.

Safe Returns These big-cap value funds have been long on returns, while also being low on tech and cap gains exposure.
Fund Name	1-Year Total Return	3-Year Total Return	Potential Cap Gains Exposure
(KDHAX)Kemper-Dreman High Return	25.4%	10.8%	6
(FVAAX)Fortis Value	21.7	13	17
(CBBYX)Alliance Growth & Income Adv	16.4	17.3	10
(AMSTX)Ameristock	13	20.5	17
(AMANX)Amana Income	11.3	11.8	7
(HLQVX)One Group Large Cap Value	10.5	12.8	17
(NNGRX)Nuveen Growth & Income Stock	9.4	10.5	9
(HDGYX)Hartford Dividend & Growth	8.3	11.2	16
S&P 500	3.7	17.2	N/A
Source: Morningstar. Annualized performance figures through Nov. 1

The fund that tops our list might be the most recognizable. The broker-sold (KDHAX)Kemper Dreman High Return fund has value veteran David Dreman at the helm. He's a strict value investor eschewing pricey stocks. At the end of June, the fund had no tech holdings and its biggest overweightings in energy, financial and utility stocks. Dreman's approach is contrarian, so it can be way, way out of favor at times, but it has led to solid results. The fund beats its average peer over the last one-, three-, five- and 10-year periods, according to Morningstar.

Another intriguing broker-sold fund on our list is (CBBYX)Alliance Growth & Income, where Paul Rissman has been the skipper since October 1996. He looks for undervalued stocks, but spreads the fund's assets among several industry sectors to give the fund somewhat of an "all-weather" appeal. Over the last three years, the funds 17.3% annualized return beats 95% of its peers.

What about the no-load folks? Well, you've got (AMSTX)Ameristock, where Nicholas Gerber has built a solid track record. Gerber and his colleagues screen the market for big-cap stocks that look cheap and pay a big dividend. The fund beats at least 75% of its peers over the last one-, three- and five-year periods. In fact, the fund's 23.9% five-year annualized return beats a cool 99% of its competitors.

Another no-load fund that looks for cheap big-caps that pay a dividend is (AMANX)Amana Income. But there's more to this fund than meets the eye. Manager Nicholas Kaiser, who's held the reins since 1989, invests according to Islamic tenets. For instance, he steers clear of companies engaged principally in the tobacco or gambling industries. This fund might be an intriguing option, but you should look closely before you leap.

There you have it, a short list of big-cap value funds with modest tech exposure and cap gains. What about small- and mid-cap funds? None met our criteria.

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