Three Funds for Worry-Free Investing
These funds have enough stability that you can depend on their being well managed rain or shine.
This article originally appeared in Kiplinger's.
So, you're going to travel the Silk Road for 10 years or hang out on a South Pacific island, and you need to get your portfolio in order before you go. If you could buy only three mutual funds, you'd want ones with enough stability that you could depend on their being well managed while you're away. If I were you, I'd look for firms whose analysts and managers stay their whole careers. I'd also look for low costs and good stewardship--two other things that can work to an investor's advantage year in and year out. Here's where I'd sock my money. (In case you're wondering, I do in fact own all three of these funds, although I don't plan on being out of town for more than a few weeks.)
Primecap Odyssey Aggressive Growth (POAGX)
You might recognize the Primecap name, but probably not Primecap Odyssey Aggressive Growth. It's from the same team that has produced outstanding returns at Vanguard Primecap and Vanguard Capital Opportunity, but this fund isn't offered through Vanguard. I'm a big fan of the Primecap folks--Howard Schow, Theo Kolokotrones, Joel Fried, and Alfred Mordecai--because they really know how to pick growth stocks. They do thorough fundamental research and are stingy about paying a high price for a stock because pricey stocks can fall a long way on just a little bad news. Thus, they often buy in a contrarian fashion after the bad news. What's exciting about this fund is that it looks a lot like Capital Opportunity and Vanguard Primecap did in their youth, before asset growth nudged them into large-company land. Primecap Odyssey Aggressive Growth has about half its assets in small caps, 31% in mid-caps and the rest in large caps. It has a small asset base ($326 million) and modest expenses of 0.99%. This fund oozes potential.
Russel Kinnel has a position in the following securities mentioned above: SLADX, DODFX, POAGX. Find out about Morningstar’s editorial policies.