Oak Ridge Dynamic Small Cap I (ORSIX) — launched in September 2015 — seeks to capitalize...
Try These 4 Funds On for Size
02/15/2013 7:45 am EST
This group of funds bears watching because their diverse strategies could pay benefits in this year's market, writes Russel Kinnel of Morningstar FundInvestor.
The Silver-rated Janus Flexible Bond (JAFIX) has enjoyed strong performance over the long term, landing in the category’s top quintile for the trailing five-, ten-, and 15-year periods.
Managers Gibson Smith and Darrell Watters focus on corporate credit and rotate among corporate debt, US Treasuries, and agency mortgage-backed securities, depending on market conditions. The managers usually keep 10% to 20% of assets in high-yield debt, though they remain cautious by keeping much of this exposure in BB-rated issues.
In light of its peer-beating record, it may be easy to overlook the strategy’s risks. The fund takes on more credit risk than most intermediate-term bond funds. Also, given the fund’s dependence on sector rotation, a mistimed market call could cause performance to tumble. Nonetheless, the fund has skillfully picked securities and moved among sectors with the help of strong research.
Also, we are adding Fidelity OTC (FOCPX). Gavin Baker has managed this Bronze-rated large-growth fund since July 2009. The fund underperformed in 2012 but has outperformed its category peers since Baker took the reins.
This fund tries to beat the Nasdaq Composite Index, so it holds a smaller-cap portfolio with more technology and health-care stocks than other large-growth funds. Baker follows a disciplined stock-picking strategy to find companies with strong growth prospects, and also considers valuations and momentum.
Nonetheless, sector allocation relative to peers has helped more than stock selection since the beginning of Baker’s tenure, particularly as the fund avoided underperforming areas like energy.
Like Fidelity OTC, Bronze-rated FMI Focus (FMIOX) is a worthy fund that hit a performance slump in 2012. Lead manager Rick Lane and his team pick from small and mid-cap stocks that are trading at a discount, have good growth potential, and have a secure position in their respective markets.
The managers will also hold cash if they don’t find compelling investment ideas. The fund’s cash stake, ranging from the mid-teens to high teens, held the fund back in 2012 as the stock market made gains.
Finally, Silver-rated IVA International (IVIOX) is joining the Morningstar 500. Lead manager Charles de Vaulx and Charles de Lardemelle started the fund in 2008, after many years at First Eagle.
IVA International follows the same value-oriented strategy de Vaulx and de Lardemelle used at First Eagle. The managers primarily invest in stocks with a large discount to their estimate of intrinsic value and make no attempt to follow benchmark weightings.
The fund also includes bonds, a stake in gold and gold-mining stocks, and a cash stake in the low teens or higher. The managers’ stock-picking and asset allocation have protected the fund in down markets, such as 2011 and 2008, although the fund doesn’t fully capture up markets like 2012.
Related Articles on FUNDS
One of the areas of the investment world that has been gaining in popularity in the last five years ...
On August 1, Fidelity took direct aim at index fund competitors Vanguard, Blackrock’s iShares ...
Investors often ask me how to build a portfolio that holds its own in down times but hands them soli...