From the December 2011 issue of Research Magazine • Subscribe!

November 23, 2011

Top Funds for Tough Markets

Performance

The fund research team at S&P Capital IQ says that thanks to a nice market uptick in October, the S&P 500 Index was back in the black on a year-to-date basis through Oct. 28, rising 2.2 percent. The team’s latest report, authored by Todd Rosenbluth, notes that these market gains helped domestic-equity mutual funds.

While many investors have pulled money out of domestic-equity funds in 2011, 57 percent of mutual funds have generated positive returns and, in certain cases, the gains have been more than 10 percent. More than half of the roughly 7,500 fund offerings tracked by S&P Capital IQ, on were up for the year in this period. However, only a small subset of this universe received a five-star ranking from S&P Capital IQ for their relatively strong performance analytics, risk considerations and cost.

S&P Capital IQ analysts say that, in addition to performance, they encourage investors to consider the valuation and risk attributes of a fund’s underlying holdings and relevant cost factors, before making a selection. The 689 mutual funds that earn a domestic equity five-star ranking from S&P and are up for the year have some of these favorable traits.

FBR Gas Utility Index Fund (GASFX) has the best performance in 2011 of equity five-star funds that are open to retail investors and have more than $100 million in assets, according to S&P Capital IQ. The fund had a 22.3 percent gain through Oct. 28 and includes holdings in Oneok and Spectra Energy.

The more diversified Wells Fargo Advantage Growth Fund (SGROX) was up 13.8 percent through Oct. 28, and consists of mainly large-cap information technology, consumer discretionary, health care and energy stocks. Some of its largest holdings are Apple, Alexion Pharmaceuticals and Carmax.

The top-performing small-cap growth offering with a current five-star ranking is Artisan Small Cap Fund, according to the research group. It has improved 11.9 percent this year. The fund’s recent focus has been on information technology, industrial and health-care stocks, such as Informatica and Thomas & Betts. •

 

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