The year in stock mutual funds is turning out to be a mostly good one, according to Standard & Poor’s, which reports that the average domestic equity fund gained 12% through Nov. 26, trouncing the healthy 8.2% gains of taxable fixed-income funds.
Focusing on diversified stock funds, S&P mutual fund analyst Todd Rosenbluthin his Marketsope Advisor Trends and Ideasreport cites Morgan Stanley Focus Growth Fund (AMOAX) as a high-achieving large-cap fund, up 24% through Nov. 30, significantly above the 9% average of its peers. The fund outperformed in last year’s market as well, with a 73% return, but did not escape 2008’s carnage, losing 53%. The S&P report offers a word of caution about its concentrated portfolio (just 28 holdings), giving the fund four stars on its five-star scale.
Clearly, though, it was the concentrated portfolio that enabled the fund to stand out so far beyond its peers. And investors know what they’re getting into in a “focus” fund.