The three managers of Akre Focus Retail Class (AKRE) liken their investment process to a “thre...
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.
Related Articles on FUNDS
Essent Group Ltd. (ESNT) is legally domiciled in Bermuda; its sole business is providing private mor...
My Top Pick for conservative investors for 2018 is Templeton Emerging Markets Income Fund (TEI), a c...
For many investors, memories of 2000, when the tech bubble burst, and 2008, when the entire world se...