Here are some new investments that those saving for or living in retirement might consider for their...
The Best New Funds of 2010
11/15/2010 12:00 pm EST
Russel Kinnel, director of fund research and editor of Morningstar FundInvestor, singles out several veteran managers who are off to a great start with new ventures.
Most new funds are a forgettable mix of the trendy and the poorly managed. To make matters worse, many start with a big price tag that suggests one should pay a premium for less proven investments. Yet every class has a few keepers. Searching through this year’s new funds, I found [several] promising ones.
DoubleLine Total Return Bond (DBLTX)
Manager: Jeffrey Gundlach
Expense ratio: 0.49%
In 2009, Jeffrey Gundlach produced great performance at TCW Total Return Bond (TGLMX), but he was fired in December. Gundlach launched his own firm and resumed his [successful fixed-income] strategy at this fund in April, and he has continued his remarkable stretch of uncanny returns. In between, he sparred with TCW in a painful divorce that must have scared away potential investors from both firms. There’s no doubting Gundlach’s skill, but you certainly are taking a risk on whether he has a flawed management style that one day might harm performance. On the plus side, it hasn’t dented performance, and it might well never be a problem for shareholders.
PIMCO EqS Pathfinder (PTHDX)
Managers: Anne Gudefin, Charles Lahr
Expense ratio: 1.24%
It’s great to see the Mutual Series [value investing] style available in no-load format once more. Anne Gudefin and Charles Lahr did excellent work at Mutual, and they ought to do well here. They’ve started to build up a small analyst staff to help them, and they also are tapping PIMCO’s macroeconomic expertise to give them a leg up. Lahr said PIMCO helped keep him from jumping into Greek equities too soon when a debt panic threw the country into crisis. Their cautious approach is welcome in this time of turmoil, but their moves into cash mean they aren’t likely to get a big pop when stocks rally.
Vanguard Explorer Value (VEVFX)
Managers: Thomas Duncan, William Teichner, Amy Minella, Eugene Fox, Robert Kirkpatrick, Eduardo Brea, and Brian Walton
Expense ratio: 0.59%
Because Vanguard Explorer (VEXPX) has a mild growth tilt, Vanguard rolled out a small-cap fund with a value tilt. This fund has the Russell 2500 Value Index as its benchmark. That means that small- and mid-cap stocks in the value and blend boxes are fair game.
The fund is split among three subadvisors: Frontier, Cardinal, and Sterling Capital Management, [which all] ply relative value strategies that emphasize strong cash flow, low valuations, and solid management. As you might expect from three subadvisors, the fund has a diverse portfolio of 175 stocks, none of which accounts for more than 2% of the fund’s assets. The two things that stand out about the portfolio are that it is purely invested in the United States, and it has a significant real-estate investment trust weighting.
The only relevant fund track records are Sterling’s at BB&T Mid Cap Value (OVEAX) and Cardinal’s at Brown Cardinal Small Companies (BIACX). Both funds have modestly outperformed their benchmarks under current management.
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