Best Mutual Funds
With the S&P 500 up 30%, 2013 was a great year for the market. But
investors who picked the right mutual funds did even better.
First I’ll describe four U.S. equity funds that racked up 53% to 65%
returns for the year. Then I’ll give you a longer view by looking at the
best funds based on five-year returns. All of the funds listed are
no-load (no sales charges) funds that are open to new investors. Unless
otherwise noted, none of the funds described follow “buy and hold”
strategies. Instead, they typically turn over their entire portfolios
over a year’s time.
Oberweis Micro-Cap (OBMCX): Up 65% in 2013. Managed by father and
son James D. Oberweis and James W. Oberweis, the fund holds only 75
stocks, mostly very small companies with market capitalizations (value
of shares outstanding) below $250 million (micro-caps). About half are
tech stocks and almost all are based in the U.S. Average annual returns
were 26% over five years and 5% over the past 10 years. Returned 50% in
2009, 17% in 2010, dropped 8% in 2011, and gained 9% in 2012.
Essex Small/Micro Cap Growth Investor (MBRSX): Up 63%. Holds 97
mostly small and microcap growth stocks. Biggest holdings are in
healthcare, followed by technology and then industrials. Average annual
returns were 25% over five years and 9% over 10 years. Returned 31% in
2009, 28% in 2010, dropped 11% in 2011 and gained 12% in 2012.
Biondo Focus Investor (BFONX): Up 56%. Only operating since 2010,
Biondo is managed by another father/son team, Joseph R. Biondo, Sr., and
Joseph P. Biondo, Jr. Besides for owning stocks, Biondo can also take
short positions (profits when shorted stocks drop in value). The fund
currently holds a concentrated portfolio of 19 stocks owned (long) and
six short positions. Stocks can be of any size. The fund lost 24% in
2011 and gained 15% in 2012.
Eventide Gilead N (ETGLX): Up 53%. Holds any size stocks that it
judges to be undervalued. Can hold stocks in any industry, but
overweights healthcare. Currently holds 54 stocks. Started in 2008, the
fund returned 46% in 2009, 18% in 2010, broke even in 2011 and gained
18% in 2012.
Here are the top five funds based on average annual returns over the
Oceanstone Fund (OSFDX): Five-year average annual return 52%,
2013 return 27%. Managed by founder James Wang, Oceanstone only holds
stocks that he considers “undervalued.” Because he has been unable to
find many stocks meeting that requirement, Wang currently holds only
five stocks and has 70% of his portfolio in cash. Oceanstone returned
264% in 2009, 31% in 2010, 1% in 2011 and 22% in 2012. It’s a very small
fund, mainly because its shares cannot be purchased through brokers.
Instead they must be purchased by mail. Details on its website (www.oceanstone.com).
Matthew 25 (MXXVX): Five-year return 35%, 2013 return 39%.
Managed by its founder, Mark Mulholland since its 1995 inception, the
fund typically holds between 12 and 25 value or growth priced stocks of
any size, but could hold as much as 25% of its portfolio in a single
stock. Following a buy and hold strategy, some stocks have been in the
portfolio since 2007. Returned 48% in 2009, 32% in 2010, 10% in 2011 and
32% in 2012.
Huber Capital Small Cap Value (HUSIX): Five-year return 35%, 2013
return 34%. Holds primarily small-cap stocks that manager Joseph Huber
considers undervalued. Huber follows a buy and hold strategy with
several stocks having been in the portfolio since 2008. Returned 86% in
2009, 38% in 2010, lost 3% in 2011 and gained 28% in 2012.
Aegis Value (AVALX): Five-year return 33%, 2013 return 35%.
Managed by Scott Barbee since its 1998 inception, Aegis focuses on
deep-value (low price/book ratio) small-cap high-dividend stocks.
Currently holds 71 mostly small- and micro-cap stocks. Returned 91% in
2009, 29% in 2010, lost 3% in 2011 and gained 25% in 2012.
As always, past performance doesn’t predict the future. Successful stock
picking strategies can fall flat when market conditions change.