Five Cool New Funds
The best new funds from the past 12 months.
Fund Spy
One of the side benefits of the bear market was that it put a stop to nearly all the trendy fund launches. No more Internet or genomics funds. No more community intelligence gimmicks. However, the rally of 2003 has led to the creation of some more new funds. For the most part, it's been a rather sober lot of new offerings. A handful of them are even worth putting on a watch list. American Century EmVee
In keeping with the SEC’s naming rule, this fund is 80% invested in EmVees. Just kidding. This is American Century’s latest quantitative mutual fund. It uses an artificial intelligence model developed by James Stowers III to identify stocks with price momentum. It often pays to get into a cutting-edge momentum fund early on before imitators catch on. However, that seems a bit dicey to me, so I’d recommend instead watching this fund to see how it behaves for a little while. I’d also like to see its 1.51% expense ratio come down a bit.
With so many small-cap funds closing, this one is a welcome sight. It spreads assets out among a number of excellent stock-pickers. Bob Rodriguez of FPA Capital , Bill D’Alonzo of Brandywine Fund (BRWIX), and John Rogers Jr. of Ariel Fund (ARGFX) are among the star managers here. I’m intrigued by the fact that fund advisor Litman/Gregory is sticking with its focused format by requiring managers to limit themselves to eight to 15 stocks. That’s quite natural for some of the large-cap managers like Bill Miller who pick stocks for Masters' Select Equity (MSEFX), but it’s unusual in small-cap land, where funds tend to have more holdings. The fund’s 1.45% expense ratio isn’t ideal, but the firm says there’s room for it to come down as assets grow. Calamos Blue Chip
Can the Calamoses translate their success in mid-cap growth and convertibles to a large-blend fund? That’s the question for this fund. I think the chances are pretty good as Calamos Growth (CVGRX) has always had some large-cap stocks. Calamos' emphasis on balance sheets and fundamental analysis--the thing that makes the firm stand out in mid-growth--isn’t all that uncommon in large-blend, however. They’ll be competing with Bill Miller, Chris Davis, and Will Danoff. They’ll also start with a disadvantage in the form of a 1.75% expense ratio. Wasatch Heritage Growth
Fellow fund spy Kunal Kapoor has already filled you in on this one, which is probably my favorite of the five. Allow me to slack off and quote liberally from Kunal’s column: "The firm is billing this offering as an owner of ‘Wasatch Graduates’--companies that the small-cap funds can't invest in because they've grown too large. The fund plans to concentrate on owning companies in the $3 billion to $20 billion market-cap range. As a result, it's likely to land in mid-cap growth territory. "Naturally, given the firm's hot hand, there's likely to be some interest in this offering at its launch. But is it worth investing in? In its favor is that Wasatch is keeping expenses below 1% at the launch by waiving some fees, at least until Jan. 31, 2005. Additionally, we're encouraged that the firm isn't stretching too far beyond its core area of focus; it would be of greater concern if the fund had launched with a pure large-cap focus, for example. Instead, it makes sense to put together a portfolio of stocks largely consisting of firms that the small-cap funds may have owned. And managers Chris Bowen and Ryan Snow say that they'll concentrate their efforts on financials, health-care, and technology firms--areas in which other Wasatch funds have made a successful living."
In keeping with the SEC’s naming rule, this fund is 80% invested in EmVees. Just kidding. This is American Century’s latest quantitative mutual fund. It uses an artificial intelligence model developed by James Stowers III to identify stocks with price momentum. It often pays to get into a cutting-edge momentum fund early on before imitators catch on. However, that seems a bit dicey to me, so I’d recommend instead watching this fund to see how it behaves for a little while. I’d also like to see its 1.51% expense ratio come down a bit.
Vanguard Large Cap Index (VLACX)
Now here’s an expense ratio I can warm up to: 0.20%. This fund will track the MSCI US Prime Market Index, which owns the 750 largest U.S. stocks. It’s not vastly different from the S&P 500. This fund’s average market cap is $32 billion versus $43 billion for Vanguard 500 Index (VFINX). So, it figures to be a useful way to help you dial in a target market cap for your portfolio. If you want to boost your mega-cap exposure, go with Vanguard 500, if you don’t go with this one.
With so many small-cap funds closing, this one is a welcome sight. It spreads assets out among a number of excellent stock-pickers. Bob Rodriguez of FPA Capital , Bill D’Alonzo of Brandywine Fund (BRWIX), and John Rogers Jr. of Ariel Fund (ARGFX) are among the star managers here. I’m intrigued by the fact that fund advisor Litman/Gregory is sticking with its focused format by requiring managers to limit themselves to eight to 15 stocks. That’s quite natural for some of the large-cap managers like Bill Miller who pick stocks for Masters' Select Equity (MSEFX), but it’s unusual in small-cap land, where funds tend to have more holdings. The fund’s 1.45% expense ratio isn’t ideal, but the firm says there’s room for it to come down as assets grow. Calamos Blue Chip
Can the Calamoses translate their success in mid-cap growth and convertibles to a large-blend fund? That’s the question for this fund. I think the chances are pretty good as Calamos Growth (CVGRX) has always had some large-cap stocks. Calamos' emphasis on balance sheets and fundamental analysis--the thing that makes the firm stand out in mid-growth--isn’t all that uncommon in large-blend, however. They’ll be competing with Bill Miller, Chris Davis, and Will Danoff. They’ll also start with a disadvantage in the form of a 1.75% expense ratio. Wasatch Heritage Growth
Fellow fund spy Kunal Kapoor has already filled you in on this one, which is probably my favorite of the five. Allow me to slack off and quote liberally from Kunal’s column: "The firm is billing this offering as an owner of ‘Wasatch Graduates’--companies that the small-cap funds can't invest in because they've grown too large. The fund plans to concentrate on owning companies in the $3 billion to $20 billion market-cap range. As a result, it's likely to land in mid-cap growth territory. "Naturally, given the firm's hot hand, there's likely to be some interest in this offering at its launch. But is it worth investing in? In its favor is that Wasatch is keeping expenses below 1% at the launch by waiving some fees, at least until Jan. 31, 2005. Additionally, we're encouraged that the firm isn't stretching too far beyond its core area of focus; it would be of greater concern if the fund had launched with a pure large-cap focus, for example. Instead, it makes sense to put together a portfolio of stocks largely consisting of firms that the small-cap funds may have owned. And managers Chris Bowen and Ryan Snow say that they'll concentrate their efforts on financials, health-care, and technology firms--areas in which other Wasatch funds have made a successful living."