I Own What?! Value Funds That Look Like Banks

Over the past year or so we found out that some growth fund managers loved tech a bit too much. Now, some value fund managers have a dangerous crush of their own on another sector.

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Technology is most growth managers' favorite sector, accounting for some 30% of the average large-cap growth fund. That makes sense because growth managers hunt for shares of companies with fast earnings growth. Similarly, most value types, who typically hunt for bargains, are smitten with cheaper financial stocks that make up about 25% of the average big-cap value fund.

Liking many stocks in a sector is one thing, but stashing half a fund's assets in one sector can lead to more concentration and volatility than you expect or want from a stock fund that doesn't have a sector-fund label. We showed you a gaggle of tech-stuffed growth funds a couple of weeks ago. Now our I Own What?! feature has dug up nine big-cap value funds with more than 40% of their money in financial stocks.

There are some big-name funds on our list. This financial-stock fetish has helped most beat their average peer over the past year.

The $3.9 billion (SEQUX Quote)Sequoia fund, which closed to new investors back in 1982 and has almost all its money in financial stocks, is up 21% over the past year, compared to a 1% loss for its average competitor. Co-managers Robert Goldfarb and William Ruane essentially model themselves on Warren Buffett, a point illustrated by the fund's more than 30% position in Berkshire Hathaway, Buffet's financials-heavy holding company.

The no-load (CFIMX Quote)Clipper fund, whose management team won last year's coveted Morningstar Manager of the Year award and which has 44% of its money in financials, is also riding high, with a 27% gain over the past 12 months. ...