Forbes Market Up Rating

Transcription

BY WILLIAM BALDWIN
WWW.F OR B E S N EWS LETTE R S.COM
D
o you want a sizzling fund for a bull market? Check out Fidelity Select Technology (FSPTX). Its collection of
hot stocks, among them Google, Apple and Salesforce.com, has tripled in value since its 2008 low.
If the market stays in bullish territory, this risky portfolio will, in all likelihood, continue to outperform. The catch
is that you don’t know that a bull market lies ahead. If the bears take over, it will cause you great pain.
Most of the funds that do well when times are good do poorly when the market sinks. Fitting its aggressive
personality, Select Technology battered investors in the tech crash at the turn of the century and roughed them up
again in the 2008 crash.
Low-risk funds exhibit the reverse behavior, lagging on the way up but not losing as much on the way down. For
this reason, it’s naive to rate funds by simply comparing raw performance over some fixed period, like five years. Your
notion of who’s good will be warped by the happenstance of whether the market was up or down over the period.
There’s a better way to evaluate performance: Score funds separately in bull and bear markets. The Forbes
fund-rating system does this, comparing equity funds against their peers for results over two full market cycles
stretching back to August 2000.
On our report card, Fidelity Select Technology lands an A for bull markets and an F for bear markets. The
cautious Gabelli ABC Fund (GABCX) is in the opposing camp. Its well-hedged portfolio rates an F in up markets but
an A for down. It’s a good choice for timid stock buyers.
Are there funds that, defying the pattern, excel in both bull and bear markets? Just a few. These are our
Honor Roll funds.
Over the past 12-1/2 years these all-weather winners have beaten 75% of domestic stock funds in up markets and
done the same in down markets. In our grading system, 5% of funds get an A+ and the next 20% a straight A.
To make the list of 12, a fund had to clear other hurdles: The named manager(s) must have been in place for at
least a decade (no anonymous “team management”), the fund must be open to new customers, and it can’t be a
sector fund. There’s one more cutoff. Although sales commissions are not taken into account in our performance
grades, they are in the requirement that an Honor Roll fund must have turned a $10,000 investment in August 2000
into at least $35,000, net of the sales fee.
The Honor Roll is dominated by funds that specialize in small, boring companies, like Sonoco and Idex. This is
not entirely a surprise. Over long periods, market theorists have been telling us for quite a while, “small
capitalization” and “value” are winning themes. Why? It seems that investors are so captivated with big,
fast-growing companies like Google that they overpay for them.
WWW.FORBESNEWSLETTERS.COM
2
Bruce Fund (BRUFX)
Forbes Market Up Rating: A+
Forbes Market Down Rating: A+
Managers: R. Jeffrey Bruce, Robert Bruce
Assets 3/31/13 ($mil): $386
Annual expenses per $100: $0.81
Portfolio turnover: 10%
Investment results: $66,506
Chart source: Yahoo Finance
3
CGM Focus Fund (CGMFX)
Forbes Market Up Rating: A
Manager: Ken Heebner
Assets 3/31/13 ($mil): $1,553
4
Hotchkis & Wiley Small Cap Value-A (HWSAX)
Forbes Market Down Rating: A
Managers: David Green, Jim Miles
Assets 3/31/13 ($mil): $523
Annual expenses per $100: $1.30 1
5
Aegis Value Fund (AVALX)
Manager: Scott Barbee
Assets 3/31/13 ($mil): $227
6
Delafield Fund (DEFIX)
Managers: J. Dennis Delafield, Vincent Sellecchia
Assets 3/31/13 ($mil): $1,568
7
Homestead Small Company Stock (HSCSX)
Managers: Mark Ashton, Peter Morris, Stuart Teach
Assets 3/31/13 ($mil): $511
8
Robeco Boston Partners Small Cap Value II (BPSCX)
Managers: David Dabora, George Gumpert
Assets 3/31/13 ($mil): $153
9
Hotchkis & Wiley Mid-Cap Value (HWMAX)
Managers: George Davis, Stanley Majcher, James Miles
Assets 3/31/13 ($mil): $1,841
10
T. Rowe Price Small-Cap Value (PRSVX)
Manager: Preston Athey
Assets 3/31/13 ($mil): $8,737
11
Guggenheim Mid Cap Value (SEVAX)
Manager: James Schier
Assets 3/31/13 ($mil): $1,759
12
Wells Fargo Advantage Small Cap Value (SSMVX)
Managers: Erik Asteimer, Charles Rinaldi, Michael Schneider
Assets 3/31/13 ($mil): $3,832
13
Stratton Small-Cap Value (STSCX)
Manager: Gerald Van Horn
Assets 3/31/13 ($mil): $956
Assets are for all share classes. Sales charge may be reduced for large purchases or for certain transactions. Investment results for
each listed fund are the value on March 31, 2013 of $10,000 invested August 31, 2000. 1Also 5.25% sales charge. 2Also 4.75% sales
charge. Sources: Lipper; Forbes. Statistical research: Scott DeCarlo
William Baldwin writes about investment strategies. His philosophy is that it is hard, but not
impossible to beat the market, and that it is easy and imperative, to save on taxes and money
management costs. Baldwin has been a journalist for 38 years and was editor of Forbes magazine
from 1999 to 2010. For more investing strategies, visit his home page.
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Forbes Market Up Rating

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