The Daily Screen: Top Financial Sector Funds - TheStreet

Today the Daily Screen zeroes in on funds that fish in the financial-stock pool.

Riding a boost from a string of mergers and stable interest rates, financial sector funds have come back to life after sagging returns in the past couple of years. As tech stocks have cooled, investors have feasted on the financial stocks, which typically are slower growers, but also sell at more modest prices. So far this year, the average financial sector fund is up 12.6%, some 18 percentage points ahead of the

S&P 500

index, according to

Morningstar

.

As usual, we've screened the category for funds that beat the category average over the last one- and three-year periods. The first chart lists the top-10 financial funds, ranked by one-year return.

Then we took our screen a step further, looking at the stocks that have propelled these leading funds. The second table lists the 10 most popular stocks held by the sector's best-performing funds. At the top of the list you'll find behemoths like

Citigroup

(C) - Get Report

,

Morgan Stanley Dean Witter

(MWD)

and

American Express

(AXP) - Get Report

. You'll also find railroad concern

Kansas City Southern

(KSU) - Get Report

, which many funds held as a bet on its former subsidiary, top-selling fund shop

Janus

.

No doubt some of these funds also own shares of

Stilwell Financial

(SV)

, the railroad company's recent spinoff, which bundled Janus,

Berger Funds

and record-keeper

DST Systems

.