Three Funds That Could Be Tomorrow's Comeback Kids
These interesting offerings are still in turnaround mode.
Managers like David Williams of Columbia Value & Restructuring (UMBIX) and John Keeley of Keeley Small Cap Value (KSCVX) long have prospered finding hidden opportunities among corporate turnarounds and overhauls. Investors also can find overlooked funds among those undergoing management and/or strategy shifts.
Earlier this year my colleague, director of mutual fund research Russel Kinnel, highlighted some funds that are far enough into their turnarounds to declare the coast is clear. Their managers and strategies have been in place for three to five years or more and have made clear breaks with their funds' desultory longer-term pasts. A new day has dawned for funds such as Harbor International Growth (HAIGX) and Morgan Stanley Mid Cap Growth (DGRAX).
There's always another batch of comeback kids, though. Looking out for the next generation can help one locate funds with smaller, more flexible asset bases; managers with something to prove and lots of unrealized losses that could lead to years of tax efficiency. One way to find future most-improved players is to look for funds with lousy long-term track records that have recently been taken over by managers who have amassed experience and success elsewhere. Here are some candidates that still have to prove themselves but are worth watching.
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.