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Investing Specialists

Top Holdings of Four All-Weather Ultimate Stock-Pickers

While more than one third of these top fund managers are outperforming this year, four of them stand out from the rest given their ability to outperform the market over almost all time periods.

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By Greggory Warren, CFA | Senior Stock Analyst and Carr Lanphier | Associate Analyst

The market has been resilient so far this year, with the S&P 500 TR Index up more than 5% year to date, even with the disruption caused by concerns over emerging and developing markets at the start of the year. Even so, only a little more than one third of our top managers have picked up enough steam to surpass the returns of the benchmark index so far in 2014. As of June 12, eight of the 22 mutual fund managers on our list of Ultimate Stock-Pickers were beating the S&P 500 on a year-to-date basis, with outperformance ranging from 13 basis points for  Oakmark (OAKMX) to 245 basis points for  Fairholme (FAIRX). While more than half of the Ultimate Stock-Pickers that were beating the market so far during 2014 were also outperforming on a one-year basis (with the average level of outperformance being 730 basis points), few of them have done better than the benchmark over the last three- and five-year periods. This is a little surprising to us, given that we've started to roll off of some of the poor five-year investment performance that had been out there due to the 2008-09 financial crisis. That said, nearly all of the eight managers beating the S&P 500 this year have beaten the market over the past 10 years (with the average level of outperformance being 150 basis points). Of these, two different managers-- Vanguard PRIMECAP (VPMCX) and Oakmark--have actually outperformed the benchmark during all time frames. Both  Sound Shore (SSHFX) and  Parnassus Core Equity (PRBLX) came close, but both funds fell a little short on a five-year basis. Meanwhile,  Dodge & Cox Stock (DODGX), which is not beating the index so far this year, deserves some mention as it continues to have one of the better long-term records among our top managers.

The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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