The Most Promising Funds Launched in 2011
These promising funds may belong on your watchlist.
These promising funds may belong on your watchlist.
This article originally appeared in Morningstar FundInvestor.
There were a lot of trendy and unproven fund launches in 2011. For the most part, you can simply tune that news out. However, there are always a few promising names worth adding to your watchlist and occasionally even worth buying. The key is to find funds with proven managers and sound strategies so that there's more to go on than just a few months' returns. I'll save you the time of wading through all the flotsam by highlighting a few of the very best.
Fidelity Municipal Income Funds
As I wrote last year, Fidelity has launched four defined-maturity muni-bond funds. They "mature" in 2015, 2017, 2019, and 2021. The idea is that duration (a measure of interest-rate sensitivity) will decline as the maturity date nears just like with a bond. Soon after the date of maturity (June 30), the funds will liquidate and the balance will be returned to shareholders.
The funds' aim is to produce as high an income stream as possible up until the maturity date while still maintaining principal. Thus, you can dial in the right maturities for your needs. The advantages over an individual bond are that Fidelity can get better prices than you can, can do better credit research, and can build a diversified portfolio to smooth out returns. Expenses are low--around 0.40%--and management is sound.
TCW International Small Cap
This fund has a known commodity in its manager, even though the fund is brand new. Rohit Sah comes from Oppenheimer, where he built a strong record at Oppenheimer International Small Company (OSMAX). His is a bold, high-risk style that requires a long holding period for investors. He builds a focused portfolio with huge regional biases. He hates Europe and loves Asia and Canada. He favors energy and other commodity-producing companies.
To put it another way, don't make this a core holding--it's too volatile for that.
The fund charges 1.44%, but there does seem to be room for that to come down as the management fee is 0.75%.
GoodHaven (GOODX)
I'd categorize this fund as intriguing rather than as one I'd buy right away. Its managers, Keith Trauner and Larry Pitkowsky, were comanagers on Fairholme(FAIRX) and are investing in a focused but cash-heavy style you'll recognize from Fairholme. However, GoodHaven is a new company, so I'd wait and see. We rate it Neutral for the time being.
The managers have so far taken a different tack than did Berkowitz as they've bought some tech stocks such as Microsoft(MSFT), Google (GOOG), and Hewlett-Packard (HPQ), along with some former Fairholme favorites like Berkshire Hathaway (BRK.A).
Ariel Discovery
This fund is run by seasoned value investor David Maley. Maley recently joined Ariel from Maple Hill Capital where he launched this micro-cap-heavy value fund. Maley is a deep-value investor who aims to buy companies at deep discounts to their intrinsic value--occasionally that's even at a discount to liquidation value. He tries to avoid all the value traps inherent in deep-value investing by avoiding companies with big debt loads. He also looks for companies whose bosses own a lot of shares and claim few executive perks. The current portfolio skews heavily to consumer cyclical and tech names while underweighting financials and energy.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals
and individual investors. These products and services are usually sold through
license agreements or subscriptions. Our investment management business generates
asset-based fees, which are calculated as a percentage of assets under management.
We also sell both admissions and sponsorship packages for our investment conferences
and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.