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By Jason Stipp and Russel Kinnel | 09-16-2013 04:00 PM

Kinnel: Four Funds for the Long Term

Morningstar's director of fund research Russ Kinnel makes the case for a group of his longtime favorite mutual fund holdings.

Jason Stipp: I'm Jason Stipp for Morningstar.

Morningstar's fund star ratings can tell you about a fund's performance in the past. Our Fund Analyst Ratings can give you a sense of how a fund might perform in the future. And then there are funds that Morningstar analysts have held for a long time and have been rewarded for doing so. Here with four of his longtime favorite fund holdings is Russ Kinnel, our director of fund research.

Thanks for joining me, Russ.

Russel Kinnel: Good to be here.

Stipp: Morningstar analysts take a long-term view when they're analyzing mutual funds. It sounds like you also practice what you preach in holding funds for the long term as well. You have four of your favorite longtime holdings to share with us today.

The first one is Vanguard Capital Opportunity. This is a Gold-rated large-growth fund, and it recently reopened. Why have you liked this fund over time, and why might an investor who hasn't been able to get into this fund want to consider it now?

Kinnel: It's a great opportunity to get into one of the best growth funds out there. It's got low costs, and it's run by the PRIMECAP team out of Pasadena, Calif. They're a very experienced team that I think does a better job of growth investing than most growth investors out there. And you can look at the track record on this one. You can look at it on Vanguard PRIMECAP, which they've run for even longer, and you can see just how consistently they've done--not that they don't have ups and downs, but whenever you have a really good manager and low costs, usually good things happen.

Stipp: And you also get some smaller caps in this fund as well, right?

Kinnel: That's right. It really started out as kind of a small-mid fund. Now it's mostly large cap, but it's got some small and mid-caps. I actually bought this fund back in '98 when they put the PRIMECAP team on the fund.

Stipp: Your second fund is an interesting one, given some of its troubles in recent times. Save for 2009, this fund, Selected American, has had a string of some below-average years, 2007 through 2012, but it's still a Gold-rated fund. The analyst on that fund, Dan Culloton, says that it's "bruised but not beaten." What have you thought about this fund's recent performance and why do you still like it?

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