These Eight Funds Beat Up Their Benchmarks

As the mutual-fund world awaits year-end results, many people naturally are watching to see which managers will continue their streaks of consecutive years beating the S&P 500.

But that's not the only type of streak people are watching -- a more effective tool, many experts say, is to compare each fund to its own benchmark index.

The theory goes that different asset classes can enjoy eras of outperformance, leading to distortions. The S&P 500 is a U.S-centric large-cap company index, so when small stocks, foreign stocks or sectors such as energy or financials perform particularly well, there are a lot of those types of funds that beat the S&P 500.

When funds are compared with their own benchmarks -- a small-cap growth-stock fund would, in this case, be measured against a small-cap growth-stock index -- it would be easier to measure the true outperformers in a given fund class. ...