TheStreet.com December 10, 2007 - (Page 1) TheStreet.com | RealMoney.com | Street Insight Jim Cramer News & Analysis Personal Finance Markets Video and Audio TheStreet University Subscription Services Monday, December 10, 2007 Mutual Fund Monday 12 Funds on Track for 10 Winning Years By Richard Widows TheStreet.com Ratings Financial Analyst 12/10/2007 6:23 AM EST Last week, I looked at a number of funds gunning for Bill Miller’s record of beating the S&P 500 for 15 straight years (from 1990 through 2005). As remarkable as that record is, Miller’s Legg Mason Value Trust (LVMTX) didn’t actually make money in all 15 years; on several occasions, the fund’s returns slipped into negative territory — just not as far as its benchmark. Perhaps just as remarkably, given the lacing sustained by equities during the bear market from 2000 to 2002, there are a dozen open-end stock and hybrid funds that are poised for 10 consecutive years of positive total returns. With two impressive exceptions, there have been years in the past decade when some of these funds underperformed the S&P 500. But all managed to keep their heads above water, even when the broader market tumbled. As the market races down the home stretch of 2007, the 12 funds on the accompanying table all have reasonable shots at boasting 10 straight up years once 2008 bows in. Two of them, Matthews Asian Growth & Income (MACSX) and the Permanent Portfolio Fund (PRPFX), could survive double-digit setbacks in the year’s final month and still be ahead for the year and the decade. Only three members of this elite group are true stock funds. Two of them have international portfolios: the above-mentioned Matthews fund and the First Eagle Overseas Fund (SGOVX). One, JPMorgan Mid-Cap Value(JAMCX), is a domestic mid-cap. Each member of the trio is more than 75% invested in stocks, and the mid-cap fund is almost totally in equities. JPMorgan Mid-Cap’s top holdings, as of Oct. 31, include Williams Cos. (WMB), Coventry Health Care (CVH), Assurant (AIZ), Synovus Financial (SNV) and Devon Energy (DVN). MACSX and PRPFX also are remarkable in that they populated last week’s list of funds aiming for nine straight years of besting the S&P’s performance. As befits current investment trends, the two non-U.S. equity funds on the list are kept company by a pair of global asset allocation members. Evergreen Asset Allocation (EAAFX) and Russell LifePoints Cons Strat (RCLAX) combine to account for a third of the potential 10-year streakers. The nine domestic-asset allocation funds on the list recently reported investment portfolio percentages in stocks ranging from 10.1% to 70.6%. Four of the domestic-asset allocators have more than 50% in equities, meaning their respective performances are most heavily aligned with the ups and down of the stock market. But an equal number are less than 25% invested in equities, making them highly correlated with the fixed-income universe and less subject to the vagaries of the stock market. The steadiness of the funds with portfolio holdings largely dominated by fixed income investments can be quantified by their low 10-year annualized standard deviations. Standard deviation is a measure of how closely a fund’s monthly total returns vary from its growth trend. It is the annualized range within which 68% of a fund’s monthly returns deviate from its overall growth rate. The standard deviation of each of the 12 funds is less than the S&P 500 index’s total return of 15.08%. The group’s average of 6.44% stands at less than half the degree of annualized monthto-month variance experienced by the S&P. A rough gauge of the regularity of returns achieved by these stars of consistency can be seen by comparing their returns for the first 11 months of 2007 with the corresponding annualized rates for the period from 1998 to 2006. Unless the market undertakes a huge year-end move, several seem destined to fall within a single percentage point of their longer-term trends. Richard Widows is a financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia. 10 Years (Almost) With No Negative Annual Returns NAME, TICKER & TheStreet.com RATINGS GRADE Diversified Inv Short Horizon SAF (DVCSX) - D Evergreen Asset Allocation A (EAAFX) - C First Eagle Overseas Fund A (SGOVX) - C+ ** Gabelli ABC Fund AAA (GABCX) - D JPMorgan Mid Cap Value A (JAMCX) - C- ** Manning & Napier Pro-Blend Con Term (EXDAX) - D+ Matthews Asian Growth & Income Fd (MACSX) - A+ ** Permanent Portfolio Fund (PRPFX) - C+ Principal Inv SAM Flex Inc A (SAUPX) - D Russell LifePoints Cons Strat A (RCLAX) - D T. Rowe Price Cap Appreciation Fd (PRWCX) - D+ Vanguard LifeStrategy Income Fd (VASIX) - C GROUP AVERAGE S&P 500 TOTAL RETURN INDEX * Through 11/30/2007. ** Currently closed to new investors. Source: TheStreet.com Ratings & Bloomberg. INVESTMENT OBJECTIVE Asset Allocation Domestic Asset Allocation Global Non-US Equity Asset Allocation Domestic Mid Cap Asset Allocation Domestic Non-US Equity Asset Allocation Domestic Asset Allocation Domestic Asset Allocation Global Asset Allocation Domestic Asset Allocation Domestic - 2007 TO DATE RET’N (%) * 4.98 7.97 9.49 7.20 3.34 7.00 20.28 11.34 5.77 5.53 5.04 6.71 7.89 6.23 1998 - 2006 ANN’L RET'N (%) 4.60 9.04 17.33 6.62 17.05 6.42 18.70 9.01 6.11 5.15 11.74 6.17 9.83 5.95 PCT. STOCKS 10.1 54.6 80.0 70.6 97.9 28.5 75.2 55.4 24.6 19.8 62.7 24.8 10-YR. ANN’L STD. DEV'N (%) 2.37 7.63 10.84 3.86 N/A 3.16 12.70 7.51 4.15 N/A 8.37 3.77 6.44 15.08 Posted with permission. © 2007 THESTREET.COM, ALL RIGHTS RESERVED. #1-22912823 Managed by The YGS Group, 717.399.1900. To request a quote online visit www.theygsgroup.com. http://TheStreet.com http://RealMoney.com http://TheStreet.com http://TheStreet.com http://TheStreet.com http://TheStreet.com http://www.theygsgroup.com
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