Here are some new investments that those saving for or living in retirement might consider for their...
Top 10 Recently Launched Funds
10/05/2011 9:30 am EST
These are the best new funds launched this year, and it's time for an update on how they are faring in the marketplace, writes Russel Kinnel of Morningstar FundInvestor.
Things are starting to take shape at many of the funds, as it has become clearer what the portfolios look like, though we still don't have a lot of performance to go on.
I've reviewed 19 funds. Below are the top ten that I've listed from most ready to buy to those with more work to do. I'd encourage you to read our analyses on the funds for the full scoop on them. I can't really do them justice in one paragraph, but I think this can help you get some ideas worth pursuing.
Dodge & Cox Global Stock (DODWX)
A fine bet right now. It's an easier choice than most new funds, because it takes two proven strategies and glues them together.
In addition, the fund came out of the box with a cheap expense ratio of 0.69%, whereas other funds tend to launch with high expenses—meaning that the first shareholders bear most of the burden of the launches.
I visited Dodge & Cox the week after the US downgrade and was struck by how calm they were amid the turmoil. The better you know your investments, the less worried you are when the markets get crazy.
PIMCO EqS Pathfinder (PTHDX)
A compelling fund from Mutual Series veterans Anne Gudefin and Chuck Lahr. They are excellent value investors, as proven by their track records at Mutual Series.
One surprise for me is that the two have kept their cash stake pretty low so far. It looks like that's partly because they've tapped into PIMCO's expertise at hedging risk, and so don't need as much as they might have at Mutual Series. This fund has 13% in cash now.
Interestingly, they have built a small analyst staff of three, plus a large trading desk of ten. Besides the hedging support, they are also able to tap merger arbitrage, macroeconomic, and currency analytics at PIMCO that wouldn't have been at their disposal at Mutual Series.
DoubleLine Total Return Bond (DBLTX)
This fund can finally put its fight with TCW behind it. The jury awarded Jeffrey Gundlach about $60 million in back pay, though one matter was left to the judge to decide. That one outstanding matter isn't likely to add up to a huge amount of damages, though. Thus, the worry that DoubleLine could suffer a crippling blow is gone.
Amid all the tumult, Gundlach and team have continued to produce impressive performance that few managers have matched. He has done so by cobbling together less-liquid higher-risk mortgage securities that collectively have worked well but do make it a pretty aggressive fund.
American Funds International Growth and Income (IGAAX)
A similar story to Dodge & Cox Global. Dividends and foreign investing have long been staples of American's strategies, but this is the first time they are together in an all-equity format. You have experienced managers and low costs, too.
The fund aims for a 3.5% yield. That's potentially a challenge, but yields are higher overseas than in the United States.
Hotchkis and Wiley High Yield (HWHAX)
A nice little boutique. You have two former PIMCO managers running a good fund with around $300 million in assets.
High yield is a little like stocks in that issue selection is critical, and a small asset base can mean greater flexibility. Ray Kennedy and Mark Hudoff are off to a strong start by combining cautious and aggressive positions.
PIMCO Global Advantage Strategy Bond (PSAIX)
This fund was founded on the smart idea that weighting a global bond fund or index based on gross domestic product is better than market-weighting.
That way, your exposure is related to a company’s economic footprint; the traditional market weight means you are leaning on the most indebted nations. As a result, the fund has a fair amount in emerging markets and foreign currency risk, but that doesn't sound so bad either.
So far, it's off to a fine start. This fund's Institutional shares are a better deal even if you have to pay a fee to get in. They charge 0.7% in expenses, while the retail D and A shares charge 1.1%.
Vanguard Explorer Value (VEVFX)
It doesn't boast household-name fund managers, but it does have promise.
The fund brings together three well-established separate account managers to run this small-cap portfolio. The fund charges a mere 0.56%, so you're getting that exposure cheaply.
This fund has a mere $116 million in assets, so it doesn't feel bloated the way that Vanguard Explorer (VEXPX) does.
Vanguard Total World Stock Index (VTWSX)
This, as well as Vanguard FTSE All-World ex-US Small Cap Index (VFSVX) are two nice broad index funds that won't disappoint you.
However, with expense ratios of 0.45% and 0.55%, they aren't the cheapest at Vanguard. You could build comparable exposure a little more cheaply.
The small-cap index oddly has 14% of assets in Canada, so be sure to delve into both funds' quirks before you buy.
Artisan Growth Opportunities (ARTRX)
Outstanding managers, but it has work to do on the expense front.
Andrew Stephens, James Hamel, Matthew Kamm, and Jason White have produced great results at now-closed small- and mid-cap funds. I feel very good about them, but the fund is charging 1.5%, and even that is with a fee waiver that expires next February.
Champlain Mid Cap (CIPMX)
A similar story to Artisan Growth. You have good managers moving up in cap, although here they charge ten basis points less.
The fund has outperformed since its 2008 launch. More important, you get Scott Brayman applying the same moderate growth strategy that worked so well at Champlain Small Company (CIPSX).
Brayman is willing to close funds before assets grow too big, a good trait to find in a mid-cap manager.
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