Golden Oldie Funds Keep on Truckin'

They've outlasted Watergate and the Arab oil embargo, the 1987 market crash, the bursting of the tech bubble, the financial crisis, and countless bull and bear cycles in between, yet they're still going strong. Although many of their competitors have come and gone, some mutual funds have stood the test of time and continue to serve investors who may be attracted, in part, to their longevity and the stability it implies.

Out of more than 7,000 U.S. open-end mutual funds in Morningstar's database only about 140 (2%) have been around since at least 1970, and roughly half of those are U.S. large-cap stock funds. In fact, the very first U.S. open-end mutual fund,  MFS Massachusetts Investors Trust (MITTX), which was created in 1924, is still going strong today, with more than $4 billion in assets and a Bronze Morningstar Analyst Rating.

However, just because a fund has been around at least since the days of flower-power and psychedelic rock doesn't necessarily mean it's worth adding to your portfolio in the year 2013. For example, a fund may have earned a great reputation under a superstar manager who since has left--a case in point being  Fidelity Magellan (FMAGX), which was born in 1963 and which soared to great heights under manager Peter Lynch in the 1980s, but has been among the worst performers in the large-growth category during the past decade. Another consideration when thinking about buying a fund with a long track record is whether its strategy suits your needs and is right for today's market environment. A process that has proved successful in the past might be less effective during periods of volatility, such as what we've seen in recent years. Even for funds that have been around for several decades, caveat emptor applies. Before diving in, take into account the current fund manager's skill and experience, the fund's current process, and fees.

To find funds that have stood the test of time and that Morningstar's fund analysts say are still among the best available in their categories, we turned to the
 Premium Fund Screener tool. Our screen was a simple one: funds incepted in 1970 or earlier with Morningstar Analyst Ratings of Gold. We applied the distinct portfolio screen to eliminate multiple share classes and limited ourselves to funds that are open to new investors. Premium Members can see the full screen  here. Three funds on the list are named below, and just for fun we've included where the Dow Jones Industrial Average--currently hovering around 14,000--stood when these funds opened for business.

 Vanguard Wellington (VWELX)    
Inception Date: July 1, 1929 | Dow Closing Price on First Trading Day: 335.22   
This moderate-allocation fund, launched just before the start of the Great Depression, is a favorite among Morningstar.com users and has been a solid performer for many years. Since focusing its process on a 60%-70%/30%-40% stock/bond mix in 1978, the fund has returned an average of 11.6% annually (through 2012), beating its peers by 2 percentage points on average during that time. The fund's managers seek out large, dividend-paying companies able to increase earnings and dividends or poised to do so. The fixed-income part of the portfolio focuses on investment-grade corporate bonds, but its current average effective duration (a measure of interest-rate sensitivity) of 6.6 years is nearly two years longer than the moderate-allocation category average and bears watching because of the rate sensitivity. The fund's 0.25% expense ratio is among the lowest for an actively managed fund in its category.

 American Funds American Mutual (AMRMX)    
Inception Date: Feb. 21, 1950 | Dow Closing Price on First Trading Day: 203.35   
This conservative large-value load fund keeps its yield (currently 2.15%) above the S&P 500 by focusing on industry-leading, financially stable firms with a history of paying dividends. The fund is divided into seven separately run sleeves, and managers invest with a three- to five-year time horizon, which keeps turnover (22%) low. The fund's managers will hold assets in cash and/or bonds if they don't see opportunities in the market, an approach that has helped the fund outperform in bear markets but which can cause it to underperform during rallies. The fund lost 30% in 2008, but that was 7 points better than the category average. Telecom and utilities firms often have an overweighting here, while the fund is underweight in financials. Annual expenses (0.63%) are low for a large-cap front-load fund.

 Dodge & Cox Stock (DODGX)     
Inception Date: Jan. 4, 1965 | Dow Closing Price on First Trading Day: 869.78    
The veteran management team behind this large-value fund seeks out companies with good management, competitive advantages, and growth potential, but that are experiencing near-term problems. This contrarian approach courts volatility--the fund carries an above-average Morningstar Risk rating--but the fund's managers have the courage of their convictions; turnover is a low 16%. As of the end of 2012 the fund's portfolio had large overweightings in technology (21%) and health care (19%). The fund performed poorly in 2008 and 2011, in part because of its bets on financial-services stocks, but it still sports 10-year and 15-year trailing returns that land it in the top 27th and 2nd percentile of the respective categories (through Feb. 4). Annual expenses of 0.52% are low for a large-cap no-load fund.