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How the 15 Largest Mutual Funds Are Faring in 2010

It's been a good year for PIMCO but an off year for many American Funds.

Russel Kinnel, 11/23/2010

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As 2010 begins winding down, I thought I'd take a look at how the largest mutual funds have done this year. It's been a pretty good year and really kind of quiet when you compare it with the extremes of 2008 and 2009. A little quiet is probably a good thing and I hope more investors will be coaxed out of their shell and back into stocks again.

I'm focusing on this year's returns because it's helpful to understand how they got here and many investors will be sitting down with their 401(k) statements to review the year. But when evaluating a fund's overall merits, keep in mind that the long term is what really matters, along with other fundamentals, such as management and costs.

Here, then is a review of the 15 largest funds along, with their total assets, returns, and relative performance ranking.

PIMCO Total Return PTTRX ($256 billion) 9.6% return, top 24%
Chalk up another strong year to Bill Gross and company. In bondland this feels like the calm before the storm. Interest rates, credit quality, and inflation are comfortably muted, but there's the potential for inflation to surge and interest rates to spike. If they do, PIMCO Total Return will probably manage to limit the losses, though they are bound to stay within shouting distance of the Barclays Aggregate. Senior bond analyst Eric Jacobson points out that PIMCO Unconstrained Bond PFIUX has greater flexibility to seek protection from those risks, so it's a tough call on which fund to buy.

American Funds Growth Fund of America AGTHX ($156 billion) 5.49%, top 72%
Some big tech giants, such as Google GOOG, Microsoft MSFT, and Cisco CSCO, have held the fund back this year. When you run a $150 billion growth-stock fund, you have to own a bunch of the biggest growth stocks, and that's what they've done. However, the fund recently boosted its flexibility somewhat by raising its foreign-stock limit from 15% to 25%.

Vanguard Total Stock Market VTSMX ($145 billion) 8.8%, top 16%
It's been a great year for shareholders in this fund and I'm not referring to performance. Vanguard is giving most of the shareholders in the investor share class a fee cut by lowering the minimum investment for Admiral shares on index funds to $10,000. In this case, the investor's bill is being cut by more than half, from 0.18% to 0.07%. Over time, that edge adds up.

American Funds EuroPacific Growth A AEPGX ($107 billion) 5.1%, top 49%
A quiet year with middling performance. This fund's eight managers have had some nifty winners, including Novo Nordisk NVO (up 73%) and Daimler DDAIF (up 30%) but laggards such as Banko Santander (negative 22%) and Telefonica TEF (negative 3%) have limited the upside.PAGEBREAK

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