Promising New Funds

04/25/2014 10:00 am EST

Focus: FUNDS

In Kiplinger's Personal Finance Magazine, Carolyn Bigda reviews some favorite new mutual funds, including recently launched offerings from Fidelity, Vanguard, and Artisan, as well as a one from well-known value investor Bill Miller.

Steve Halpern: Joining us today is Carolyn Bigda with Kiplinger’s Personal Finance Magazine. How are you doing today, Carolyn?

Carolyn Bigda: I’m doing well, thank you.

Steve Halpern: Well, thank you for joining us. Your latest article for Kiplinger’s focuses on, what you consider, promising new funds. First, could you tell us what factors you looked at to decide whether or not a new fund was worth considering?

Carolyn Bigda: Sure. We looked at funds that were introduced about mid-2013 or after. We also looked for funds that were no-load, meaning they had no sales fee, and that they also had low, or reasonable, annual fees.

And some other things that we considered were, we were looking for new funds where the manager had had a good track record with previous portfolios, or funds from large investment shops that might be a good compliment to a diversified portfolio.

Steve Halpern: Okay, one of these is run by Bill Miller, who’s a well-known name in the fund industry and you point out that the veteran manager has just launched a new fund that you covered. Could you tell us a little about it?

Carolyn Bigda: Yes, Bill Miller has a very good reputation. He has launched a new fund called the Miller Income Opportunity Trust (US:LMCJX).

He’s co-managing it with his son, William Miller the IV, and this fund is going to invest in multiple assets in search of high income plus appreciation, so it’ll likely hold investments across the board including bonds, stocks, real estate investment trusts, that kind of thing.

You know, Miller obviously built his reputation managing the Legg Mason Value Fund, which beat the S&P 500 (SPX) for 15 straight years during the 90s and early 2000s. That fund ran into a little bit of trouble during the real estate boom and the subsequent debt crisis.

But Miller had had some success with the subsequent fund and now he seems to be trying his hand here, so investors who have liked investing with Bill Miller, or who would like to give him, sort of, another chance, post Legg Mason Value, this might be a good opportunity.

Steve Halpern: Now, another new fund, which was launched in December is from Fidelity and it’s called Event Driven Opportunities (US:FARNX), which focuses on the special situations. What’s the attraction here?

Carolyn Bigda: Sure, so the manager of this fund, Arvind Navaratnam, he’s a new manager. He has a background in private equity.

This will be the first fund that he’s ever managed, but the fund plays to his investing experience, which is that it looks for stocks, like you said, of a company that has gone through an event or a transition such as a spinoff or a merger.


And Fidelity says that these situations—they should correlate less with the overall market—which would provide diversification for an investor’s portfolio, and so far, I mean, it’s a very new fund.

It doesn’t have a long track record, but year-to-date it is beating the S&P 500, so, in a volatile market, this could offer some diversification for your portfolio.

Steve Halpern: Now, aside from Fidelity, Vanguard has also launched a new fund that you’re interested in called the Vanguard Global Minimum Volatility Fund (US:VMVFX). Would you tell us about that?

Carolyn Bigda: Yes, this fund—this one actually uses a quantitative strategy, which really means that the fund is using computer models, so to speak, to find US and international stocks—it’s a global fund, so they’re doing US and international stocks that have below average price swings.

In other words, that have low volatility. The fund is very low-cost. It’s only 0.3%, in terms of expenses annually, and so far this year, it is beating the US/international stock indexes, because it is aiming for those stocks that have smaller price movements.

Steve Halpern: Now, finally, you note that one of the funds that you’re covering is Artisan Global Small-Cap (US:ARTWX), which opened last June. Could you tell us about this small-cap play?

Carolyn Bigda: Sure, so, as you mentioned, it’s a small-cap fund, so it’s investing in small firms, but from around the world that have growth potential. One of the three managers is Mark Yockey and he has a superb record running Artisan’s International Fund.

He’s been at it since 1995, and so now, he’s sort of bringing his expertise to the small-cap area. And again, the fund is—it doesn’t have a long track record, but it is beating its category according to Morningstar year-to-date.

And this is Artisan’s latest fund that has a global or a foreign focus and they have a very good track record of launching new funds, and so, it’ll be interesting to see what they do going forward.

If you’re looking for, sort of, a small-cap compliment to the international piece of your portfolio, this might be a good one to consider.

Steve Halpern: Well, it’s a really interesting group of ideas to consider and we really appreciate you taking the time to talk with us today.

Carolyn Bigda: Thank you for having me.

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