Educated Picks

02/03/2006 12:00 am EST


Leonard Goodall

Co-Editor, No-Load Portfolios

Leonard Goodall has a unique background among advisors; he was the former president of the University of Nevada Las Vegas. The fund expert opts for an equity income position for conservative investors and an international pick for more speculative "market students."

"Investors willing to take a reasonable amount of risk should consider adding Dodge and Cox International Stock Fund (DODFX) to their portfolios. I like this fund for several reasons. First, it is a well managed fund, and its managers know global stock markets well. I recommend the fund also because it is a good way to invest in Japan without making an "all or nothing commitment." I think there is a lot of increase remaining in the Japan stock market, but I would not want to put all my chips on a market that has already experienced a 40%+ price increase.

"This fund has about one-fourth of its investments in Japan, enough to benefit from further gains in that market, but it has an even larger investment in Europe and is well represented in other major world markets. It has a three-year annualized return of 32.5%. Its annual expenses of .77% are unusually low for an international fund. It is a no-load fund and has a very reasonable minimum investment of $2,500. This is a very good way to increase a portfolio's exposure to world markets without significantly increasing portfolio risk.

"The first members of the baby-boomer generation turn 60 in 2006, and this means they are thinking more about retirement and income-oriented investments. A good way for the conservative investor to take advantage of this trend is the T. Rowe Price Equity Income (PRFDX), one of the best of the no-load fund companies, and this fund has a long record of consistent performance.

"Although its total return last year was only 4.3%, its three-year average annualized return is 14.3%, and its ten-year average return is 10.3%. It has income as a primary objective, but as a stock fund it also offers the opportunity for capital gains over time. With annual expenses of just .74% and a minimum investment of $2,500, this is a superior choice for the investor who is looking for income and moderate price gains but wants to accept only lower than average risk."

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