Lessons From the Fall: How to Ride Growth Funds Without Getting Bucked
Your growth-overdosed portfolio might be looking like it's ready to ride again after a rough patch, but let's check out a couple of ways to make your trails a tad happier.
Lessons From the Fall series, let's take a look at just how rough a ride you'd get from a portfolio of last year's bestsellers. Then we'll look at a couple of more diversified alternatives that would have posted similar gains, with below-average volatility. Last year the five top-selling funds were all large-cap growth funds: (FDGRX)Fidelity Growth Company, (AGTHX)Growth Fund of America, (JAWWX)Janus Worldwide, (FDEGX)Fidelity Aggressive Growth and (ACEGX)Van Kampen Emerging Growth. This handful took in almost 25 cents of every net dollar invested in stock funds last year, according to Boston fund consultancy Financial Research. On average, they gained 79% in 1999 and are down 26% over the past year, doubling their average peer's returns on the upside and losses on the downside, according to Morningstar. By no coincidence, an evenly weighted portfolio of the five funds has 38% of its money in tech, about double the S&P 500's tech stake.| The Bestseller Portfolio | |
| 20% | (FDGRX)Fidelity Growth Company |
| 20% | (AGTHX)Growth Fund of America |
| 20% | (JAWWX)Janus Worldwide* |
| 20% | (FDEGX)Fidelity Aggressive Growth |
| 20% | (ACEGX)Van Kampen Emerging Growth |
| Source: Financial Research Corp. *Currently closed to new investors. | |
| Bestsellers vs. the Market | ||
| | ||
| Volatility | ||
| Bestseller Portfolio | S&P 500 | |
| Worst Year | -42.1% | -21.6% |
| 5-Year Beta | 1.13 | 1.0 |
| Source: Morningstar. | ||
| The Low Maintenance Stock Fund Portfolio | ||
| 80% | Core U.S. Stock | (VTSMX)Vanguard Total U.S. Stock Market Index |
| 20% | Core Foreign Stock | (TBGVX)Tweedy, Browne Global Value |
| Under the Hood | ||
| Portfolio | S&P 500 | |
| Financials | 19.4% | 17.9% |
| Technology | 18.2 | 19.1 |
| Health | 14.1 | 13.5 |
| Services | 13.9 | 11.9 |
| Industrial Cyclicals | 11.7 | 11.4 |
| Consumer Staples | 8.3 | 6.7 |
| Energy | 4.9 | 7.5 |
| Retail | 4.8 | 6.7 |
| Utilities | 2.5 | 3.5 |
| Consumer Durables | 2.2 | 1.8 |
| Expenses | ||
| Avg. Expense Ratio | 0.44% | 1.38%* |
| Volatility | ||
| Worst Year | -19.1% | -21.6% |
| 5-Year Beta | 0.9 | 1.0 |
| *Average fund's expense ratio. Source: Morningstar. | ||
| Low Maintenance vs. the S&P |
| Source: Morningstar |
| A Fund Junkie's Stock-Fund Portfolio | ||
| 35% | Core U.S. Stock | (VTSMX)Vanguard Total U.S. Stock Market Index |
| 15 | Core Foreign Stock | (TBGVX)Tweedy, Browne Global Value |
| 10 | Growth | (GABGX)Gabelli Growth |
| 5 | Growth | (RPMGX)T Rowe Price Mid-Cap Growth |
| 10 | Value | (LMVTX)Legg Mason Value |
| 5 | Value | (OAKMX)Oakmark |
| 10 | Small-Cap | (MGSEX)Managers Special Equity |
| 10 | Sector | (TVFQX)Firsthand Technology Value |
| (FSPHX)Fidelity Select Health Care | ||
| (FSFSX)Invesco Financial Services | ||
| Under the Hood | ||
| Portfolio | S&P 500 | |
| Financials | 21.5% | 17.9% |
| Technology | 20.4 | 19.1 |
| Services | 16.6 | 11.9 |
| Health | 15.8 | 13.5 |
| Industrial Cyclicals | 9.3 | 11.4 |
| Consumer Staples | 5.4 | 6.7 |
| Retail | 4.9 | 6.7 |
| Energy | 2.8 | 7.5 |
| Consumer Durables | 2.2 | 1.8 |
| Utilities | 1.3 | 3.5 |
| Expenses | ||
| Avg. Expense Ratio | 0.96% | 1.38%* |
| Volatility | ||
| Worst Year | -16.6% | -21.6% |
| Five-Year Beta | 0.94 | 1.0 |
| *Average fund's expense ratio. Source: Morningstar. | ||
| The Junkie vs. the S&P | ||
| A Fund Junkie's Portfolio | S&P 500 | |
| First-Quarter Return | -11% | -11.9% |
| 1-Year Return | -16.6 | -21.6 |
| 3-Year Return | 7 | 3.1 |
| 5-Year Return | 16.1 | 14.2 |
| Source: Morningstar. | ||
TheStreet Premium Services For Personal Service: 877-471-2967
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn MoreETF Profits:
Get money-making ideas from the hottest investment vehicle on the planet. Our experts show you how to play various ETF sectors to help pump-up your portfolio. Learn MoreOptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn MoreReal Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn MoreStocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn MoreTo begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 12,801.23 | 1,342.64 | 2,903.88 | 19.69 |
Oil *
117.67
|
|
DOWN
89.23 |
DOWN
9.31 |
DOWN
23.35 |
DOWN
0.78 |
10 Yr
1.97%
SPDR Gold
167.14
|
|
-0.69%
|
-0.69%
|
-0.80%
|
-3.81%
|
Data delayed 20 minutes |

Connect with TheStreet