Two of the three Dow mutual funds have -- or soon will have -- an actively managed component, allowing their managers to give greater weight to their favorite stocks in the index. Here's a look at the stocks those managers like now.
ASM Index 30
just took over the $25.6 million
ASM Index 30 fund as temporary adviser this month, and the firm has big plans. If shareholders vote to make the deal permanent, Orbitex would like to add some active management to enhance the index.
Orbitex's chief stock picker, Courtney Smith, uses a proprietary screening process to find stocks with good growth potential. Among his favorite Dow components:
- AT&T (T) - Get Report. "The new chief executive officer, Armstrong, is the anti-Robert Allen," says Smith. "Everything that Allen did wrong, Michael Armstrong is doing right."
General Electric (GE) - Get Report. "As someone once said: 'GE is really a hedge fund in drag,'" says Smith. "It's dominated by a heavy weighting toward financials. The fundamentals for financials are bullish."
Exxon (XON) - Get Report. "There's been a turnaround in raw materials," says Smith. "I think the bottom is in."
Wal-Mart (WMT) - Get Report. "Wal-Mart walks on water," says Smith, adding that he thinks it's "the best retailer in the world and getting better."
Strong Dow 30 Value
Richard Maroney already adds some active management to the
Strong Dow 30 Value fund. Half of the $30.9 million portfolio is indexed to the Dow, while the other half is invested in his favorite Dow value plays or the Dow stocks that "everyone loves to hate," says Maroney. Those value plays include:
- Citigroup (C) - Get Report. It "still offers an excellent value," says Maroney. "I think
Citigroup's earnings will surprise."
General Motors (GM) - Get Report. "The company has taken a lot of action to indicate they are serious about unlocking shareholder value in that stock," says Maroney, but the stock "has further to go."
Boeing (BA) - Get Report. "Boeing scores very well in the value parameters though the yield is low," says Maroney. "There's a lot of upside potential there."