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Fund Spy: Morningstar Medalist Edition

These Equity Fund Medalists Have Raised Their Cash Stakes

Are they battening down the hatches?

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It's six years into a bull market--from stocks' trough on March 9, 2009, through March 9, 2015, the S&P 500 rose a cumulative 246%--and some of our favorite funds sport higher cash stakes than usual. Fund managers as a group have not historically called market tops well, and most are focused on individual companies' fundamentals, so rising cash may not be a good indicator of a broadly overvalued market. But the funds below are steered by managers with strong track records and prudent approaches to valuation, so they could hold appeal for risk-conscious investors. Each fund is a Morningstar Medalist in one of the diversified-equity Morningstar Categories, is open to new investors, and recently held a double-digit stake in cash that was also above the norm for the fund during the past several years. Two funds that are closed to most new investors otherwise possess similar characteristics:  IVA International (IVIOX) and  T. Rowe Price Mid-Cap Value (TRMCX).

 American Funds EuroPacific Growth (AEPGX)
Morningstar Analyst Rating: Gold
Cash stake: 13.1%

This gigantic foreign large-growth fund typically holds about 5% to 10% of its assets in cash. That stake has reached double digits a few times in the past when valuations appeared stretched to the fund's managers, but that hadn't been the case in recent years until the end of 2014 when it hit 13.1%--the fund's highest cash weighting since at least mid-2008 (right before the market cratered). The fund's cash hoard during that span bottomed in late 2009 at 4.7%.

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