Financial Funds That Didn't Crash and Burn

FBR Small Cap Financial(FBRSX Quote), Burnham Financial Industries(BURFX Quote) and Mutual Financial Services(TFSIX Quote) have accomplished mission impossible: beat the benchmark S&P 500 index.

The mutual funds steered clear of riskier stocks and held cash. During the 12 months ending May 21, financial funds lost 38.1% of their value, while the S&P 500 dropped 34.4%, according to Morningstar. Financial funds would have slumped even more were it not for the rebound that started in early March. Citigroup(C Quote) shares, for example, quadrupled in a matter of weeks after declining to less than $1. Bank of America(BAC Quote) is trading at around $11 after falling to as low as $2.53 at the end of February.

FBR Small Cap Financial, Burnham Financial Industries and Mutual Financial Services could make interesting choices for investors seeking cautious ways to bet on a revival of financials. ...