These Eight Funds Beat Up Their Benchmarks - TheStreet

These Eight Funds Beat Up Their Benchmarks

Year after year they've shown an ability to outperform.
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As the mutual-fund world awaits year-end results, many people naturally are watching to see which managers will continue their streaks of consecutive years beating the S&P 500.

But that's not the only type of streak people are watching -- a more effective tool, many experts say, is to compare each fund to its own benchmark index.

The theory goes that different asset classes can enjoy eras of outperformance, leading to distortions. The S&P 500 is a U.S-centric large-cap company index, so when small stocks, foreign stocks or sectors such as energy or financials perform particularly well, there are a lot of those types of funds that beat the S&P 500.

When funds are compared with their own benchmarks -- a small-cap growth-stock fund would, in this case, be measured against a small-cap growth-stock index -- it would be easier to measure the true outperformers in a given fund class.

Last year, 12 funds could boast eight-year streaks -- the longest current active length, going back to 1999 --beating their benchmark indexes; six large-blend funds, five large-growth funds, and one small-growth fund. This year, eight of those 12 funds were ahead of their comparable indexes for the year as of Nov. 30, putting them on track for nine consecutive years of outperformance.

Here's a sneak peek at which funds look likely to retain their membership in this exclusive club, thanks to Morningstar's Mark Komissarouk, who came up with these results as of Nov. 30 using Morningstar data. Of course, there could be changes before the end of the year, particularly given the high volatility of the past few months.

In the large blend category, five funds are still going strong. Two,

(RELEX) - Get Report

Russell LifePoints Equity Growth Strategy and

(PRSGX) - Get Report

T. Rowe Price Spectrum Growth, are funds that invest in other mutual funds.

Three others that invest directly in stocks --

(ANCFX) - Get Report

American Funds Fundamental Investors,

(HIACX) - Get Report

Hartford Capital Appreciation HLS and

(PHGAX)

Target Growth Allocation -- also seem, at least for now, to be in position to keep their streaks alive.

Fundamental Investors' top holdings include

Suncor Energy

(SU) - Get Report

and

Microsoft

(MSFT) - Get Report

; Hartford Capital Appreciation's include

Google

(GOOG) - Get Report

and

Companhia Vale Do Rio Doce

(RIO) - Get Report

; Target Growth Allocation's include

AT&T

(T) - Get Report

and

Cisco

(CSCO) - Get Report

.

However, it looks as though

(CAMOX) - Get Report

Cambiar Opportunity will finish under the Russell 1000 benchmark this year.

The large growth category gets a little interesting. Only two funds from the five remaining are in position to stay up:

(AMAGX) - Get Report

Amana Growth, a fund that complies with the Islamic principles of Sharia; and

(ANEFX) - Get Report

American Funds New Economy.

Amana Growth's top holdings include

Apple

(AAPL) - Get Report

and

Potash

(POT)

; New Economy's include Google and

Schlumberger

(SLB) - Get Report

.

Three funds from that group --

(AGTHX) - Get Report

American Funds Growth Fund of America (a huge fund with more than $200 billion in assets),

(FDCAX) - Get Report

Fidelity Capital Appreciation and

(VMRGX)

Vanguard Morgan Growth -- look to be finishing under the Russell 1000 Growth index this year.

But there's a surprise in the category, too:

(NEFSX) - Get Report

Natixis U.S. Diversified shows up -- but it wasn't there last year.

How did that happen? The fund's investment portfolio changed enough that Morningstar reclassified the fund from "mid-cap growth" to "large-cap growth." It hadn't had the streak beating the Russell Midcap Growth index, but had beaten the Russell 1000 Growth metric.

Natixis U.S. Diversified's top holdings include

Intel

(INTC) - Get Report

and

McDonalds'

(MCD) - Get Report

.

Rounding out the list,

(TMCGX)

Turner Emerging Growth is still hanging in there. The lone non-large-cap fund with a benchmark-beating streak going back to 1999, it actually fits into the small growth category.

The fund's top holdings include

Decker Outdoor

(DECK) - Get Report

and

Oceaneering International

(OII) - Get Report

No value-oriented funds show up on the streaks list until it gets down to a mere three-year streak, which itself is owned by only one value fund:

(EVTMX) - Get Report

Eaton Vance Dividend Builder. That large-cap value fund has beaten the Russell 1000 Value index since 2004.

Dividend Builder's top holdings include

AT&T

(T) - Get Report

and

Constellation Energy

.

(CEG)

.