Some promising ideas for your 2011 watchlist.
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Most new funds are trendy or 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 nine promising ones. While the funds are new, the managers are experienced investors with strong track records at other funds. Thus, you aren't gambling on an unknown. On the downside, because they are new, some of these funds have less-than-great expense ratios, so you'd be buying in hopes that asset growth would drive costs down.
We haven't made any of them Analyst Picks, but certainly some make good investments today. Others have more to prove but are worth watching. I'll run through the nine with those that seem most ready for investment from the start.
DoubleLine Total Return Bond
Manager: Jeffrey Gundlach
In 2009, Jeffrey Gundlach produced great performance at TCW Total Return Bond
PIMCO EqS Pathfinder
Expense Ratio: 1.24%
Managers: Anne Gudefin and Charles Lahr
It's great to see the Mutual Series style available in no-load format once more. Anne Gudefin and Charles Lahr did excellent work at Mutual Series, 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
Expense Ratio: 0.59%
Managers: Thomas Duncan, William Teichner, Amy Minella, Eugene Fox, Robert Kirkpatrick, Eduardo Brea, and Brian Walton
Because Vanguard Explorer
All three subadvisors 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 REIT weighting.
Evermore Global Value
Expense Ratio: 1.6%
Manager: David Marcus
A decade ago, David Marcus was running funds for Mutual Series. Then he left to run a hedge fund and subsequently ran businesses and invested on behalf of a wealthy Swedish family. His investment style has changed a little, emphasizing the quality of management more than is traditional for Mutual Series investors. It's a promising fund, but Evermore needs to lower expenses here before I'll be enticed.