Let's take a minute to celebrate the Steady Eddies.
Usually we look at mutual funds as if investing were a footrace: We focus on those that have had outsize gains over the last few months and ignore those that are further back in the pack. But for many of us, those plodders might be a perfect fit. After all, the leaders' names change year to year because so many of them fall back.
That's why this week The Big Screen keeps it simple. We've sifted for U.S. stock funds that have posted positive returns in each of the last 10 calendar years -- essentially a 10-for-10 record of making money for investors each year in the 1990s. To make the cut, a fund also had to have the same portfolio manager for all those years. Out of 770 U.S. stock funds with a 10-year record, just 16 fit the bill. Here they are, ranked by their year-to-date return.
Before we look at what we've found, keep in mind that while some of these funds, like
GMO Growth, have posted some outsize returns, others are more tame. After all, we've screened for funds that hit for a good average, not necessarily those that swing for the seats. But if you're more concerned with staying above water than having fat returns to boast about, you might find your match.
It's quite an eclectic list, and for a short list it's actually pretty long. So, we'll pick out a few of the more intriguing funds we've turned up. By and large, we're looking at funds with somewhat conservative strategies and low expenses. On average, this group's expense ratio is just a little over 1%, compared with 1.38% for the average U.S. stock fund, according to
At the top we've got two no-load, small-cap growth funds. Neither blindly pays pie-in-the-sky prices for hot stocks, and that's helped them consistently stay in the black while the average small-cap growth fund lost money in 1990 and 1994.
Wasatch Small Cap Growth, run by Jeff Cardon since 1986, has managed to keep pace with the fund's peers while
Meridian, run by Richard Aster Jr. since 1984, has trailed its average competitor over the years.
Perhaps the three most intriguing funds on the list are Spectra,
Investment Company of America and the
High-profile stock picker David Alger has run no-load Spectra, a tech-heavy, large-cap growth fund, since 1974 (co-manager Seilai Khoo joined him in June). Alger is known far and wide as one of the shrewdest tech investors out there, and this fund proves his acumen. Even though he focuses on the volatile sector -- some 60% of the fund was in tech stocks on July 31 -- he made money for his shareholders each year in the 1990s and managed to consistently beat his peers, too.
$55.2 billion, broker-sold Investment Company of America, the third-largest fund in the nation, clearly hasn't let its big asset base hold it back. The fund's management team spreads its assets widely among blue chips and tends to carry a fair amount of cash to keep the fund on an even keel. About 18% of the fund was invested in cash and bonds on June 30. Even with that somewhat defensive style, the large-cap value fund has beaten its peers over the last 10 years.
The no-load Merger fund -- surprise, surprise -- focuses on mergers. When a merger is announced, the stock of the target company typically rises while the acquiring company's stock often falls. Consequently, the fund, run by Bonnie Smith and Frederick Green since 1989, typically buys the stock of the target company and shorts the acquirer's stock. This strategy positions the fund to profit from the merger while the short of the acquirer's stock protects the fund if the deal falls through. The fund has consistently made its investors money. Unfortunately, it's closed to new investors. (So is another fund on the list, the large-cap blend
It's not surprising that
Dodge & Cox Balanced, which blends stock and bond investments, showed up. When stock prices head south, bonds' regular interest payments can keep a fund afloat. The team-managed fund had a third of its assets invested in bonds on June 30, and it steers clear of highflying stocks. That strategy kept it from losing money in 1990 and 1994 when its average peer was in the red.
has two broker-sold funds on the list.
Franklin Growth, run by Jerry Palmieri since 1965, generally invests in industry leaders that look undervalued. Though pricey
was among the fund's top holdings at the end of June, Palmieri's measured approach has generally kept the fund from being overly committed to high-octane stocks and sectors. While that has kept the fund behind 72% of its peers over the past 10 years, it has also kept the fund from losing money.
Franklin DynaTech is cut from a different cloth. Rupert Johnson has run the large-cap growth fund since 1968; co-manager Robert Dean joined him this year. Over the years, Johnson has focused on companies that are improving their productivity. That's led to big technology and health care stakes, but the fund has also typically had a big cash position that's kept it from dipping with those mercurial sectors. The fund, whose cash bulge has consistently kept it behind its peers, had half its assets in cash at the end of May, according to Franklin Templeton's Web site.
Well, there you have it. A list of funds that will keep your assets growing and your blood pressure down.