Another quarter has ended, and TheStreet.com Ratings has generated its top-200 list of open-end mutual funds for its quarterly guide, as of Dec. 31, 2006.

The purpose of this list is to suggest fund families that have many good funds to investors who are looking to minimize transaction costs. The families that capture the most spots on the list qualify as "ultra" fund families.

MFS, a unit of Sun Life Financial ( SLF), placed the most funds in the top 200 for the third consecutive quarter, with 15 funds. In sole possession of second place is Putnam Funds with 14 funds on the list.

Tied for third place with 12 funds each are Franklin Templeton Investments, a unit of Franklin Resources ( BEN), and Alliance Bernstein. Dreyfus, a unit of Mellon Financial ( MEL), came in fourth with 10 funds.

Three more fund families tied for fifth place, with nine funds each making the list: AIM Investments, a unit of Amvescap ( AVZ), Fidelity, and Gartmore.

TheStreet.com Ratings treats each share class of a fund as a separate fund. But if we eliminate the impact of multiple share classes, two fund families emerge from the pack: Putnam Funds, with seven unique funds, and Franklin Templeton, with five unique funds. Families tied for third place each with four unique funds include Alliance Bernstein, Dimensional Investment Group, Dreyfus, Fidelity, Gartmore, GMO Funds and MFS.

These are not the only fund families to consider if you want to minimize transaction costs while maximizing fund selection, however. In the quarter ending Dec. 31, 2006, 34 fund families had 100 or more funds rated by TheStreet.com Ratings. The list below ranks them by the percentage of their funds that produced risk-adjusted returns in the top 30% of our rankings.


Fund Families With 100 or More Rated Funds
Fund Family Name # of Funds Rated Top 30% Middle 40% Bottom 30%
American Funds 211 69.70% 25.10% 5.20%
Vanguard 118 53.40% 36.40% 10.20%
Franklin Templeton Institutional Gr 197 51.30% 27.40% 21.30%
Goldman Sachs 129 48.80% 24.80% 26.40%
Allianz Global Investors Fund Manag 117 47.90% 13.70% 38.50%
AIM Investments 161 45.30% 34.20% 20.50%
T. Rowe Price 113 45.10% 42.50% 12.40%
Ameriprise Financial 120 41.70% 29.20% 29.20%
Hartford Funds, The 116 38.80% 40.50% 20.70%
Principal Financial Group 228 37.70% 37.30% 25.00%
Morgan Stanley 184 37.50% 35.30% 27.20%
JPMorgan Funds 238 37.00% 40.80% 22.30%
Dreyfus 265 35.80% 36.20% 27.90%
Pioneer Investments 100 35.00% 24.00% 41.00%
Gartmore 150 34.00% 33.30% 32.70%
American Century Investments 140 33.60% 33.60% 32.90%
Van Kampen 144 32.60% 42.40% 25.00%
Evergreen Investments 102 32.40% 36.30% 31.40%
DWS Scudder 162 30.90% 33.30% 35.80%
Columbia Funds 452 30.30% 52.20% 17.50%
MainStay Funds 110 29.10% 48.20% 22.70%
MFS 312 28.50% 43.30% 28.20%
Wells Fargo Advantage Funds 202 28.20% 46.50% 25.20%
ING Investments, LLC 310 27.70% 39.40% 32.90%
Putnam Funds 388 26.00% 55.90% 18.00%
BlackRock 222 25.20% 42.30% 32.40%
OppenheimerFunds 147 25.20% 32.00% 42.90%
MassMutual Funds 127 23.60% 40.90% 35.40%
Alliance Bernstein 295 23.40% 52.20% 24.40%
Delaware Investments 101 22.80% 38.60% 38.60%
Fidelity Investments 551 21.80% 54.30% 24.00%
Pacific Life Group 102 18.60% 52.90% 28.40%
John Hancock 100 16.00% 33.00% 51.00%
Legg Mason 130 8.50% 44.60% 46.90%
Source: TheStreet.com Ratings

Our risk-adjusted return model awards overall investment grades from A-plus down to B-minus to funds in the top 30% of all open-end stocks funds, grades of C-plus, C and C-minus to the middle 40%, and grades from D-plus down to E-minus for the bottom 30%.

Not every fund in a family is assigned a grade, since we only rate those with a track record of at least three years.

For the second quarter in a row, American Funds topped the chart, with 69.7% of its 211 rated funds in the top 30% of all funds we rate.

Franklin Templeton and Vanguard also maintained the distinction of having more than half of their funds ranked in the top 30%, with Goldman Sachs ( GS) slipping just below that level at a respectable 48.8%.

Among fund families with between 40 and 99 rated funds, GMO Funds came out on top, with 57.8% of its funds ranking in the top 30% of all the funds we rate, up from 55.6% in the third quarter. GMO Funds was previously categorized as a medium-sized fund family (those with 10-39 rated funds), but it got bumped up to the large fund family list because we now rate 45 of its funds, up from 36 at the end of September.

GMO pushed Ivy Funds, a unit of Waddell & Reed ( WDR), out of the top spot among large fund families, even though it had a higher percentage of its funds ranked in the top 30% in the fourth quarter than in the third quarter: 53.0% vs. 47.1%.

Fund Families With 40-99 Rated Funds
Fund Family Name # of Funds Rated Top 30% Middle 40% Bottom 30%
GMO Funds 45 57.80% 13.30% 28.90%
Ivy Funds 83 53.00% 33.70% 13.30%
Gabelli Funds 75 36.00% 34.70% 29.30%
Russell Funds 71 33.80% 52.10% 14.10%
STI Classic Funds 54 33.30% 33.30% 33.30%
UBS Global Asset Management 67 31.30% 35.80% 32.80%
Eaton Vance 82 30.50% 46.30% 23.20%
Strategic Partners 76 30.30% 31.60% 38.20%
Allegiant Funds 40 27.50% 25.00% 47.50%
First American 99 27.30% 46.50% 26.30%
SEI Financial Management Corp. 44 25.00% 63.60% 11.40%
GE Investment 49 24.50% 49.00% 26.50%
Credit Suisse Funds 45 24.40% 33.30% 42.20%
Phoenix Funds 82 24.40% 29.30% 46.30%
Lord Abbett 80 23.80% 47.50% 28.80%
Old Mutual Funds 62 22.60% 16.10% 61.30%
Rydex Funds 83 20.50% 24.10% 55.40%
JennisonDryden 80 20.00% 57.50% 22.50%
Waddell & Reed 55 20.00% 30.90% 49.10%
Federated Investors 69 18.80% 49.30% 31.90%
Janus Fund 55 18.20% 49.10% 32.70%
AXA Enterprise Funds 84 17.90% 40.50% 41.70%
BB&T Funds 46 17.40% 56.50% 26.10%
MTB Funds 43 16.30% 18.60% 65.10%
Munder Funds 63 15.90% 55.60% 28.60%
Seligman Group 98 15.30% 55.10% 29.60%
ProFunds 76 14.50% 31.60% 53.90%
Fifth Third Funds 85 14.10% 43.50% 42.40%
SunAmerica 84 13.10% 28.60% 58.30%
PIMCO Funds 80 11.30% 51.30% 37.50%
IDEX Funds 69 8.70% 49.30% 42.00%
IXIS Advisor Funds 40 7.50% 62.50% 30.00%
Source: TheStreet.com Ratings

Investors don't necessarily have to stay within a single fund family to keep transaction costs down, however. Brokerage accounts also provide a lot of flexibility to buy and sell funds, assuming the trading commissions are reasonable. There are 73 fund families that have between 10 and 39 ranked funds; the 20 best are listed below. Jumping from fifth place up to first, Thornburg Funds has 15 of its 17 funds in the top 30% and none in the bottom 30%.

The 20 Best Fund Families With 10-39 Rated Funds
Fund Family Name # of Funds Rated Top 30% Middle 40% Bottom 30%
Thornburg Funds 17 88.20% 11.80% 0.00%
Dimensional Investment Group 25 80.00% 16.00% 4.00%
Diamond Trusts 11 72.70% 27.30% 0.00%
Lazard Funds 13 69.20% 15.40% 15.40%
Vantagepoint Funds 19 68.40% 26.30% 5.30%
American AAdvantage 25 68.00% 24.00% 8.00%
TIAA-CREF Funds 27 66.70% 25.90% 7.40%
RBB Funds 10 60.00% 20.00% 20.00%
Oakmark 12 58.30% 41.70% 0.00%
Davis Funds 26 57.70% 42.30% 0.00%
Hotchkis & Wiley 14 57.10% 14.30% 28.60%
Harbor Funds 24 54.20% 16.70% 29.20%
Nicholas-Applegate Mutual Funds 20 50.00% 45.00% 5.00%
Nuveen Mutual Funds 24 50.00% 33.30% 16.70%
Forward Funds, Inc. 10 50.00% 30.00% 20.00%
Kinetics Mutual Funds, Inc. 10 50.00% 0.00% 50.00%
Royce Funds 34 47.10% 47.10% 5.90%
First Eagle 15 46.70% 33.30% 20.00%
Barclays Global 11 45.50% 54.50% 0.00%
Optimum Funds 20 45.00% 35.00% 20.00%
Source: TheStreet.com Ratings

Of the 300 fund families that have nine or fewer funds, the Quantitative Group of Funds leads the pack with all seven of its funds that we rate in the top 30%. Third Avenue and Weitz Series each have all four of their four rated funds in the top 30%.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

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