• / Free eNewsletters & Magazine
  • / My Account
Home>Research & Insights>Investment Insights>How 6 of Our Top Core Stock Funds Have Fared

Related Content

  1. Videos
  2. Articles
  1. Give Your Portfolio a Checkup

    Morningstar's Christine Benz shows you how to uncover portfolio strengths and weaknesses, determine the impact of market movements on your asset mix, and more.

  2. How to Make the Most of Your 401(k)

    In this special presentation, get the answers to key questions about the quality of your plan, whether your savings are on track with your goals, how to allocate assets, and what to do with assets when you leave your job.

  3. Top Picks From Morningstar's Strategists

    Morningstar investment experts Russ Kinnel, Matt Coffina, Josh Peters, and Sam Lee answer viewer questions about the current market and the best opportunities in stocks , funds, and ETFs today.

  4. 7 Habits of Successful Investors

    Special presentation: Learn how 'cheaping out,' building in discipline, and other simple steps help successful investors get it done.

How 6 of Our Top Core Stock Funds Have Fared

Our Gold-rated large-blend funds range from focused to super diversified passive funds.

Russel Kinnel, 02/20/2017

This article was originally published in the February 2017 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor here.

Let's get right to the core of a portfolio and examine some of our favorite large-blend funds. I've selected six with Morningstar Analyst Ratings of Gold for performance reviews. (You can see me chat with Christine Benz about four of these funds in this video.) 

Vanguard Dividend Growth VDIGX has been a star performer since we made it a Gold-rated fund in 2011 (when we started rating funds), but now it's in the penalty box. A post-election rally has left the fund in the dust as its bias toward steady high-quality names had it in the wrong place when financials and energy stocks surged. It now actually lags since earning its Gold rating, but we obviously still have faith in the fund.

Oakmark Select OAKLX, on the other hand, remains a winner. Bill Nygren has beaten the Russell 1000 and most peers since November 2011, but also over the past 10 years and all the way back to the fund's inception in 1996. He does own financials and energy, and the fund is going strong. Nygren was early in both cases, as he's a value investor who isn't afraid of controversy--his current portfolio includes American International Group AIG and Chesapeake Energy CHK. He sometimes gets an earful from investors when he owns a prominent flop, but clearly the flops are vastly outnumbered by winners.

As you'd expect from a good index fund, Vanguard Total Stock Market Index VTSAXfinishes third out of our six featured Gold medalists in the trailing one-, three-, and five-year periods. It's the world's biggest mutual fund, and unlike some others that held that title, asset growth isn't slowing it down. It's easy to own, too. Over the past 13 years, it produced top-half performance in every 36-month period and landed in the Morningstar Category's top quartile in 65% of those periods.

One notch ahead of Vanguard Total Stock Market in all those periods since 2011 was Primecap Odyssey Stock POSKX. The fund places a slightly greater emphasis on valuations than the typical Primecap offering. This emphasis is just sufficient to land the fund in blend instead of growth. But like the rest of the Primecap stable, it boasts great returns across the board. You can see the value tilt in greater weightings to value sectors like financials and more modest investments in health­care, though the latter sector still constitutes a fairly robust 22% of assets.

AMG Yacktman YACKX has the worst five-year returns of the group and the best 10-year returns. The fund is on the border between value and blend, so it really sticks out in this group. In addition, Stephen Yacktman and Jason Subotky tend to hold double-digit cash stakes. So a year like 2015 that featured a strong growth rally will leave it well behind. But we're fans of the fund's defensive approach and management's stock-picking skills.

American Funds Fundamental Investors ANCFX is an $80 billion giant that just keeps moving along. The fund aims for strong returns and a yield equal to the S&P 500's. The fund's portfolio is less distinctive than the other active funds on this list, but with low costs and good managers it still produces steady outperformance versus peers and the Russell 1000. It owns about 150 stocks, and its sector weightings are pretty close to the large-blend average.

1

Russel Kinnel is Morningstar's director of mutual fund research. He is also the editor of Morningstar FundInvestor, a monthly newsletter dedicated to helping investors pick great mutual funds, build winning portfolios, and monitor their funds for greater gains. (Click here for a free issue). Mr. Kinnel would like to hear from readers, but no financial-planning questions, please. Follow Russel on Twitter: @russkinnel.

©2017 Morningstar Advisor. All right reserved.