While the 2008 markets were awful, the year for new fund launches was more middle of the road. There were some gems and lots of dross, just like most years. Here, then, are some of the best and worst funds launched this year. For my standards, it's strong fundamentals, not short-term performance. I looked for funds with good managers, low costs, and sound strategies.
Launched at the end of June, Champlain Mid Cap (CIPMX) has just $28 million in assets, allowing managers Scott Brayman and Van Harissis to be as nimble as they wish in buying and selling stocks. The duo built its reputation at Champlain Small Company (CIPSX), which has consistently trounced the average small-company growth fund since its launch late in 2004. The key question is whether it can translate its success with small-company investing to so-called mid-caps--in its case, companies with stock-market capitalizations of less than $15 billion. The record of other small-cap managers who have made the leap is encouraging but not a slam-dunk. Ron Baron did just fine with larger companies, as did T. Rowe Price's Greg McCrickard. However, the Buffalo and Wasatch fund groups have achieved less-impressive results with midsize companies.
Champlain's disciplined approach--the fund looks for growth at a reasonable price--ought to work well with mid-caps. And I respect the managers for closing Champlain Small Company to new investors before its growing assets made it a victim of its own success. Mid Cap's expense ratio is 1.3%.
American Funds has launched a complement to its EuroPacific Growth. American Funds International Growth & Income (IGAAX) looks to be more value- and dividend-oriented than EuroPacific. Given how well the American team has done with value funds over the years, I'm enthused by the prospects for this new entry. International will initially have three managers. Each is experienced, and two of the three also work on American Funds Income Fund of America (AMECX). No, the managers at this $600 million fund won't have the flexibility that Champlain Mid Cap enjoys with its tiny asset base, and the fund's holdings will no doubt overlap those of other American funds. But that's not a bad thing. In fact, International Growth & Income has the look of a nice portfolio anchor.
If you want to simplify your holdings (or you want to dole out an investment tip at a holiday gathering), consider Vanguard Total World Stock Index (VTWSX). It does probably the best job yet of covering the whole globe with one fund. It invests in the FTSE All-World Index, which has a 55% weighting in companies outside the United States, including a good representation in emerging-markets stocks. Total World Stock Index is available both as a mutual fund ( (VTWSX)) and as an exchange-traded fund ( (VT)). The ETF's expense ratio is a supercheap 0.25%; the mutual fund costs 0.45% per year plus a one-time purchase fee of 0.25%. Either way, World Stock is simple and cheap--and you can buy it and forget about it.
Dodge & Cox Global Stock (DODWX) took a big pratfall when it made its entrance, but I still think that its long-term prospects are bright. Look at the long-term record at Dodge & Cox and you'll see that it has done an outstanding job for investors over the long haul. There's no secret mix for this fund. The firm just glued the portfolio from Dodge & Cox Stock (DODGX) and Dodge & Cox International Stock (DODFX) together to come up with this fund. So, if you own one of those, you don't need this one. The $400 million fund charges 0.87%. With world economies linking up, world-stock funds like this one make a lot of sense. Dodge's experience and time-proven strategy make this a compelling option.
Artisan Opportunistic Growth (ARTRX) is a promising fund from the trio that runs Artisan Mid Cap (ARTMX). This is an all-cap fund with a fairly similar strategy. Rather than defining stocks by cap, the managers call them Garden, Crop, and Harvest. (I'm just glad that no one refers to people that way.) Its initial expense ratio is pricey at 1.50% but that will likely come down when assets grow. Admittedly, assets probably won't grow quickly at any fund launched in this dreadful market.
Speaking of bad timing, I'm often disappointed by Franklin Templeton's willingness to toss off trendy stuff at bad times. They're better than that. This year they launched Franklin India Growth (FIGZX) because India was a hot market that investors wanted to play. Well, you know what happens when everyone rushes into a hot market. You would if you owned Templeton BRIC TABRX, an even trendier fund launched in 2006. I mean, is there any reason to link Brazil, Russia, India, and China other than the catchy acronym and their formerly hot markets? Let's see, what's a catchy name that includes this year's hot investments: shorts and Treasuries ...
At least Franklin Templeton knows its way around India. When a spot in the market gets hot, folks come out of the woodwork to invest there. Hence, Oberweis Asia Opportunities OBAOX. What's a small-cap momentum firm based in Aurora, Ill., doing with an Asia fund? I don't know, but they've capped expenses at a brutal 2.49%. That's a little pricey for a group that figures to have one of the smallest Asia operations of any of the Asia fund managers.
|Morningstar FundInvestor is
a 48-page newsletter dedicated to helping investors pick great mutual funds, build winning portfolios, and monitor their funds for greater
|gains. This one-year subscription consists of 12 monthly issues, a Reader's Guide, and four free investing reports.
|$115.00 for 12 Print Issues||$95.00 for 12 PDF Issues|
Russel Kinnel has a position in the following securities mentioned above: DODFX. Find out about Morningstar's editorial policies.