It's the end of another year, and as investors begin rebalancing their portfolios, they may also want to consider reallocating their money into mutual funds that have outperformed those they're currently invested in.
Standard and Poor's Equity Research has released a list of the top-performing mutual funds for 2010 to which investors may want to refer. S&P's first-ever list of Mutual Fund Excellence Award winners contains five-star-rated funds that have strong track records, below-average expense ratios, lower-than-average risk among the companies in their portfolios, and good performance generating returns for investors.
"When we rank a fund, it's more than just the track record," says S&P equity analyst Todd Rosenbluth. S&P used 12 different measures to evaluate the funds for its excellence awards, including three-year track record, costs, volatility risk, the management team, and the quality of the holdings in the portfolio. S&P reviewed about 19,000 funds, and the top choices were rated "Gold," "Silver" or "Bronze."
The Gold designation doesn't mean that the fund will have the best total return in the coming years, but will likely outperform its peers in the areas of "consistency of performance, the quality of holdings and less volatility," says Rosenbluth. "That is something we think investors have been and should continue to focus on."
S&P ranked fund selections in 10 categories, selecting 29 funds overall:
Scout International Fund (UMBWX) was the top international entry due to the "minuscule" turnover rate of stocks in its portfolio, its low expense ratio and strong performance – topping its large-cap growth peers on a one-year, three-year, five-year and ten-year total returns basis as of September 2010. For 2010, the fund was up 7.7% as of Nov. 2. The Dodge & Cox International Stock Fund (DODFX), up 10%, and the Oakmark International Fund; I (OAKIX), up 10.4%, were the silver and bronze selections.
Oakmark Global Fund; I (OAKGX) earned top global fund honors, largely thanks to its experienced management team, which consistently selects undervalued stocks that have strong histories of earnings and dividend growth. As of Nov. 2, the fund was up 7.8% for the year. The American Century Global Growth Fund; Investor (TWGGX), up 7.8%, and the Tweedy Browne Value Fund (TWEBX), up 6.3%, were selected silver and bronze.
Jensen Portfolio; J (JENSX) leads the large-cap category based on performance,a below-average expense ratio and a low turnover rate. The fund also includes many stocks with strong earnings and dividend consistency in its portfolio. As of Nov. 2, it was up 5.5% for the year. The Becker Value Equity Fund (BVEFX), up 4.9%, and the Dreyfus Appreciation Fund (DGAGX), up 9.1%, were the silver and bronze contenders.
Domestic Mid Cap
Meridian Growth Fund (MERDX) topped all domestic mid-cap funds, streaking to a 19.3% total return as of Nov. 2, easily beating other mid-cap core funds. S&P credits long-time manager Richard Aster's stock-picking ability for the fund's success. The Vanguard Selected Value Fund; Investor (VASVX), up 11.1%, and the Fidelity Low-Priced Stock Fund (FLPSX), up 12.6%, were selected silver and bronze.
Domestic Small Cap
Janus Triton Fund; T (JATTX) was judged the top small-cap growth fund for topping its peers' total returns in the one-year, three-year and five-year time frames with a modest expense ratio and low turnover rate. For the year, the fund was up 18% as of Nov. 2. The T. Rowe Price Small-Cap Stock Fund (OTCFX), up 17.5%, and T. Rowe Price Diversified Small-Cap Growth Fund (PRDSX), up 18.9%, also received honors in the category.
Global/Domestic Equity – New and Notable
Northern Global Sustainability Index Fund (NSRIX) was tops in this category, which looks at funds that have existed for three years or less. S&P thought it was important to rate newer funds so investors were clear about their volatility, cost and quality of holdings. The Northern Global fund's quality holdings, below-average expense ratio and absence of sales load helped it stand out against other global funds. As of Nov. 2, the fund was up 5.9%. The Dodge & Cox Global Stock Fund (DODWX), up 8.2%, and the T. Rowe Price U.S. Large-Cap Core Fund (TRULX), up 7%, were selected silver and bronze.
Domestic Multi Cap
Mairs & Power Growth Fund (MPGFX) was judged tops in this category, beating its peers' performance over the one-year, three-year, five-year and 10-year time frames with lower received risk. The fund was up 7.3% for the year as of Nov. 2. The Auxier Focus Fund (AUXFX), up 6.4%, and the Nicholas Fund (NICSX), up 7.2%, were also top choices in the category.
Taxable Fixed Income
American Century Government Bond Fund; Investor (CPTNX) led its category, outperforming its peers with total returns of 4.4% for the year as of Nov. 2, due to its selection of high-quality U.S. government securities. The T. Rowe Price New Income Fund (PRCIX), up 5.2%, was the only other selection in this category.
Blended Individual Securities
Vanguard Tax-Managed Balanced Fund; Investor (VTMFX) led this category, largely due to its selection of high-quality fixed-income securities with yields that outperformed other funds, and its extremely low expense ratio. The fund was up 5.1% for the year, as of Nov. 2. The Mairs & Power Balanced Fund (MAPOX), up 7.2%, and the Vanguard Balanced Index Fund; Investor (VBINX), up 7.1%, were the silver and bronze offerings.
Blended Fund of Funds
Vanguard STAR Fund; Investor (VGSTX) led the fund of funds category, based on its performance and its favorable cost and risk profiles. The fund was up 7% for the year, as of Nov. 2. The T. Rowe Price Retirement Income Fund (TRRIX), up 5.7%, and the Vanguard LifeStrategy Conservative Growth Fund; Investor (VSCGX), up 7.1%, are also solid choices in the category.
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