If there were a Grand Slam of Mutual Funds, Ken Heebner would now be holding the trophy.
As of the end of the first half of 2008, the legendary manager's
CGM Focus Fund
led domestic diversified equity mutual funds for the latest 12 months, three years, five years and 10 years. If that isn't impressive enough, the fund also led the pack for the latest three months as well as for calendar 2007.
The only person who comes to mind with a comparable ability for persistently coming out on top of the pack is
. The world's top golfer seems to always end up at or near the top spot despite the fact that some of his hundred or more co-competitors in a given tournament might get incredibly lucky or happen to put together career-best performances.
Heebner has been doing the same, except that he competes against thousands of open-end equity mutual funds, some managed by teams of analysts at firms many times larger than his Capital Growth Management.
The accompanying table profiles the remarkable record of CGMFX relative to the thousands of diversified domestic equity funds tracked by TheSteet.com Ratings. The many single-digit rankings of CGMFX for the various time periods tell the fund's story to perfection.
In case anyone worries that Heebner's fund achieved its many first places by taking extraordinary risks, the bottom of the table ranks his fund by "risk adjusted" performance measures known as Sharpe Ratios -- named after Nobel laureate William Sharpe. The gauge measures a fund's return "per unit of risk," with risk defined as its volatility of returns. Even adjusted for risk, CGMFX placed near the head of the class for periods up to the last 10 years.
Perusal of TheStreet.com Ratings fund database fails to identify a clear challenger to CGMFX's claim to the diversified domestic equity fund performance championship. While the
Leuthold Grizzly Fund
holds the top spot for the latest 12 months and placed second to CGMFX for the year to date, its "inverse" performance will hold it off when the stock market resumes its upward path.
A more serious competitor is the
Pacific Advisors Small Cap Fund
, runner-up by more than 10 percentage points to Heebner's fund over the past five years. PASMX also placed first among 2,779 funds in the group in calendar 2006, when CGMFX ranked 959th with a mediocre return of 14.95%.
PASMX's largest holdings include
Hornbeck Offshore Services
Similarly, using Sharpe ratios as proxies for risk-adjusted returns, the
Ivy Fund-Asset Strategy Fund
topped the group by that measure for the three years ended June 30, a span when Heebner's flagship fund placed a very respectable third. However, when absolute returns are used, CGMFX placed first among the diversified equity funds for the past three years with WASAX capturing the silver medal.
For the past five years, a period when SGMFX placed first for both absolute and risk-adjusted returns, WASAX captured second spot in the risk-adjusted race, only a small fraction of a percentage point behind the CGM fund.
The Ivy Fund-Asset Strategy Fund focuses on broad asset categories with investment positions in index futures and precious metals.
Heebner's fund, on the other hand, has been riding high on the burgeoning worldwide demand for industrial metals. Its major holdings in that area include
United States Steel
Freeport-McMoRan Copper & Gold
Other major holdings of CGMFX include
America Movile ADR
Petroleo Brasileiro S/A ADR (Petrobras)
Potash Corp. of Saskatchewan
Interestingly, U.S. Steel, Petrobras, Freeport McMoRan and Potash of Saskatchewan are also among the top holdings of another fund that can legitimately reside in the same universe as CGMFX. The
Quaker Strategic Growth Fund
placed first among diversified equity funds over the past 10 years in risk-adjusted performance, as measured by its Sharpe Ratio. CGMFX ended in 12th by the Sharpe measure for that period.
Among QUAGX's other major holdings are resource plays
BHP Billiton ADR
Investors attracted to CGMFX, or any of the CGM funds, are -- as with all funds -- cautioned not to ignore the warnings on its filings that "past performance is not necessarily indicative of future results." Also, Heebner's remarkable performance at CGMFX started in the year 2000, meaning his tenure as a superstar manager is not yet nine years old.
While successful fund managers are susceptible to slumps at any time, some hot streaks have lasted well past the decade mark. Bill Miller's remarkable record at the
Legg Mason Value Trust
of annually besting the S&P 500's performance lasted for 14 seasons.
Over a similar number of years, Peter Lynch grew the
Fidelity Magellan Fund
from $18 million in assets in 1977 to $14 billion when he left the helm in 1990. Sir John Templeton,
, achieved lucrative gains in global investments for decades beginning in the mid 1950s.
So while there is always the chance that Heebner's fame might prove ephemeral, the possibility remains that his portfolio management skill might also steer the CGM funds to even further greatness.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.