Fastest-Rising Mutual Funds of 2011

BOSTON (TheStreet) -- Since the start of the year, mutual fund investors' focus has shifted from gold to black gold as oil prices have topped $100 a barrel for the first time in three years.

Investors have piled into ExxonMobil ( XOM), Chevron ( CVX) and Schlumberger ( SLB), companies that were avoided last year before oil's spike this year.

ProFunds UltraSector Oil & Gas Investor ( ENPIX) is leading the mutual fund pack with a 22.5% return this year and a 62% gain over the past year. It's closely followed by a sister fund, ProFunds Oil Equipment Service & Distribution Investor ( OEPIX), which has risen 21.7% and 54%, respectively.

The S&P 500 Index has increased 2.4% this year, while the oil and gas sector, as tracked by Morningstar, is up 10.5%. The broader energy sector has jumped 14%, at least double that of other industries.

The top-performing funds are also chock-a-block with oil-patch stocks as the world's oil supplies are being challenged by Middle East political turmoil. Of the 40 best-performing funds on the list, almost all have "energy" or "oil and gas" in their titles.

Uprisings are spreading across the Middle East after mass protests in Tunisia and Egypt ousted their two, long-serving presidents and are continuing in Libya, Africa's third-largest oil producer.

Protests there are the first to put oil supplies at serious risk as many U.S. oil producers are withdrawing workers from the country and shutting operations, Goldman Sachs said in a research report Tuesday.

ProFunds UltraSector Oil & Gas Investor, managed by a team led by Todd Johnson, has a big bet on ExxonMobil, at 19% of assets. The fund also has two bond holdings in its top five investments as well as shares of Chevron and oil-exploration leader Schlumberger.

The top positions of ProFunds Oil Equipment Service & Distribution Investor aren't much different as it has Schlumberger as its top holding, at 24%, a couple of bonds, and two oil-field-services providers, Halliburton ( HAL) and National Oilwell Varco ( NOV) in its top five holdings.

The following pages highlight some of the top-performing funds and their picks.

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Cambiar Aggressive Value Investor ( CAMAX), managed by Brian Barish, is in third place in terms of returns, at 15.6%.

This $216 million fund has an eclectic portfolio, including a money market fund at 15% of assets, high-tech equipment subcontractor Flextronics International ( FLEX), at 11%, transportation-equipment supplier Bombardier ( BBD.B), flat-screen glass maker Corning ( GLW) and oil-field-services provider Halliburton ( HAL), all at about 10% of the fund.

Flextronics is up 1.3% this year and 13% over the past year.

Flextronics is a one-stop shop for outsourced electronics manufacturing services to many of the largest information technology and electronics firms in the world.

In a scathing research note Jan. 24, Morningstar analyst Stephen Simko said: "Its industry is too competitive and its strategy is too incoherent to allow the firm to earn decent returns on capital over the long run" and so dropped coverage of Flextronics.

"In the past, Flextronics has not been a very well-run company, and poor decisions have destroyed significant shareholder value over the years," he wrote.

But Standard & Poor's analysts give it a "buy" rating with four stars, just shy of its highest rating of five stars. "We forecast revenues to rebound 21% in fiscal 2011 and grow 11% in fiscal 2012," reflecting a cyclical upturn in the industry, it said.

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Fidelity Select Energy ( FSENX), a $2.7 billion industry fund managed by John Dowd, favors all of the oil industry leaders: Exxon Mobil, at 17% of the fund, Occidental Petroleum ( OXY), Schlumberger, Chevron and Marathon Oil ( MRO).

Morningstar gives the fund three out of a possible five-star rating.

Marathon, one of the largest integrated oil companies in the U.S., "plans to split into two entities by spinning off its downstream business in mid-2011," Standard & Poor's reports.

That's likely to be a boon for shareowners, especially in the current investing environment for energy stocks.

Its shares are up 33% this year and 48% in the past three months.

S&P has a "hold" rating on its shares but reassures potential investors by saying: "Our risk assessment reflects our view of the company's diversified and solid business profile in volatile and cyclical segments of the energy industry. We consider Marathon's earnings stability to be good."

For fiscal 2011, analysts estimate that the company will earn $4.72 per share. For fiscal 2012, analysts estimate that its earnings will grow by 13% to $5.35 per share.

Analysts tracked by S&P give it seven "buy" ratings, four "buy/holds" and 11 "holds."

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In a contrarian play to fossil fuels, Guinness Atkinson Alternative Energy Fund ( GAAEX), managed by Edward Guinness and Matthew Page, has risen 12% this year, all by investing in alternative-energy stocks, principally solar energy stocks.

They include LDK Solar ( LDK), JA Solar Holdings ( JASO), Trina Solar ( TSL) and LSB Industries ( LXU).

Its top pick is ReneSola ( SOL), a Chinese maker of crystalline silicon raw material, ingots and solar wafers used by manufacturers of photovoltaic cells for the generation of electricity from sunlight.

Zacks Investment Research rates it "outperform" and says "the company's fortunes look good due to its geographically diversified customer base, ongoing expansion programs, a subsidy program in China, improving operating efficiencies, rising margins and material cost savings through its vertically integrated production structure."

"ReneSola also expanded its presence into solar module original equipment manufacturing services to make modules for others," said Zacks. "We believe ReneSola is set for stronger growth in the first half of 2011. With a cheap valuation."

Its shares are up 21% this year and 84% in the past 12 months. It has a market value of $1 billion.

Morningstar says analysts give it eight "buy" ratings and two "holds."

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A quirky fund with a 10% return this year is the World Commodity Fund ( WCOMX), run by James Llewellyn. It has only $1 million in assets but has some interesting stock picks, including several small, gold and oil-exploration firms.

But its biggest pick is Cliffs Natural Resources ( CLF), the largest producer of iron ore in North America, operating nearly a half of the continent's mine capacity.

Cliff's shares have an admirable track record, gaining 10% this year, 70% in 2010 and 81% in 2009. It has a $12 billion market value.

Morningstar analysts say in their review of the company that "iron ore demand will outstrip supply in the long run, a disconnect that should benefit miners like Cliffs in the form of escalating prices."

Standard & Poor's gives it a four-star "buy" rating, just short of its highest rating. It gives it a $125, 12-month price target versus its current price of $92.

The ratings firm's analysts say "we look for a 33% sales gain in 2011 on another increase in volume and prices along with the inclusion of (the recent acquisition of) INR Energy for a full year. Our forecast rests on several assumptions. First, we look for U.S. (gross domestic product) growth of 3.1% and global GDP growth of 3.5% in 2011. Second, we see higher global steel production. Third, we believe that supplies of iron ore and metallurgical coal were tight going into 2011, which we think will support higher prices."

It also says industry fundamentals are solid. "For 2011, we project a 15% increase in steel consumption, versus 2010's gain of 42%."

For fiscal 2010, analysts estimate the miner will earn $6.21 per share and that that will grow by 73% to $10.73 per share in fiscal 2011.

But analysts are split on their views, giving it three "buy" ratings, three "buy/holds" and three "holds," according to S&P.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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