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Fund Spy

These Funds Are Cruising With Auto Exposure

Outsized exposure to the auto industry has driven these fund's fortunes.

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The upcoming initial public offering of General Motors is generating a lot of buzz. GM's survival was in doubt two years ago in the wake of the financial crisis, and its future was cloudy even after the federal government saved the company in early 2009 by taking a majority stake and shepherding it through a prepackaged bankruptcy. While plenty of questions remain, auto sales have picked up in the past year, and things have been looking a lot better lately at the slimmed-down GM and for the U.S. auto industry in general. On Nov. 10, GM reported its third consecutive quarterly profit ahead of the IPO, which Morningstar's David Whiston recently analyzed.

It remains to be seen how successful GM's IPO will be, but other auto-related stocks have been on a roll lately. Ford, which avoided bankruptcy but still benefited indirectly from the government's support of GM and Chrysler (which is now part of Fiat), has seen its shares roughly double over the past year and is up more than tenfold from the lows it hit in early 2009. Suppliers have also benefited from the rejuvenation of the U.S. automakers. Auto-parts stocks have been one of the best-performing industries in 2010, with such prominent names as  Magna International (MGA),  BorgWarner (BWA), and  TRW Automotive Holdings (TRW) all up more than 75% for the year to date.

The stocks of the Detroit automakers used to be core holdings in many investment portfolios, but now they're much more speculative. Back in November 2008, near the depths of the financial crisis, we looked at mutual funds with the biggest stakes in GM and  Ford (F) and found that most of these funds were suffering. Two years later, with the domestic auto industry on the rebound and GM about to be publicly traded again, it's time to revisit the issue. The first table below shows the mutual funds with the biggest percentage of their portfolio in Ford, not including clone funds or those with less than $100 million in assets. The second table shows funds with the biggest percentage in the auto-parts industry. For both groups we show each fund's percentile ranking in its category over the past month and the past year.

David Kathman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.