Many mutual funds have their day in the sun, outperforming the
market, and then falter and underperform, just about the time that
you decide to get in on the action.
Here are five mutual funds on hot streaks, having more then doubled
the S&P 500 returns (3%) over the past year, but have also produced
market level or better returns over the past three and five years.
All are no-load, meaning that you pay no sales commissions, and you
don’t have to be a millionaire to get in on the action. All require
$2,500 or lower minimum in initial purchases.
American Century Equity Income (TWEIX): Holds only 65 stocks,
mostly large-cap, value-priced financial, energy, and consumer
U.S.-based firms. Managed by an experienced team, most of them on
the job for more than 15 years, the fund returned 12% over the past
year, and 10% and 11%, on average, annually, over the past three and
five years. Not “buy and hold,” American Century turns over 88% of
its portfolio annually.
Commerce Growth (CFGRX): As the name implies, this fund holds
U.S.-based fast growers in a variety of sectors, with an emphasis on
technology. Biggest holdings include Apple, Alphabet (Google),
Facebook, Amazon, and Verizon Communications. Commerce Growth holds
only 80 stocks, some in the portfolio longer than 10-years. Overall,
it turns over 40% of its portfolio annually. The fund returned 8%
over the past year, and 14% and 13%, on average, annually, over the
past three and five years. Commerce Growth has only two managers,
one since 1994, and the other for only four years.
Madison Investors Y (MINVX): Holds a concentrated portfolio
of only 28 mostly U.S.-based stocks, mainly large-cap. Biggest
holdings include Johnson & Johnson, first added to the portfolio in
1997, and Berkshire Hathaway, which was added in 2003. Overall,
Madison turns over only 33% of its portfolio annually. The fund has
two managers, once since 1986 and the other since 2002. Madison
returned 8% over the past year, and 11% and 12%, on average,
annually, over the past three and five years.
Mairs & Power Growth Fund (MPGFX): Follows an unusual
strategy focusing on stocks headquartered near its Milwaukee,
Wisconsin office. Classic “buy and hold,” M&P Growth holds only 50
stocks, overweighting healthcare and industrials, and underweighting
technology, and only turns 10% of its portfolio annually. Biggest
holdings include Ecolab and US Bancorp, both in the portfolio since
1993, and 3M Company, first added in 2002. The lead manager is a
relative newbie, only on the job since 2013. M&P Growth returned 8%
over the past year, and 11% and 14%, on average, annually, over the
past three and five years.
Parnassus Mid-Cap (PARMX): Holds a blend of 40 value- and
growth-priced U.S.-based mid-sized firms in a variety of sectors,
but overweighting industrials. Annual turnover is 58%. The lead
manager has held that title since 2008. Parnassus returned 8% over
the past year, and 12%, on average, annually, over the past three
and five years.
All performance data courtesy of Morningstar (www.morningstar.com).
As always, past performance doesn’t predict the future. Formerly
successful stock picking strategies can fall flat when market