The Internet home of:
FortuneMoneyBusiness2.0FSB
Main Companies Economy World Business Newsmakers Fun Money Corrections Main Portfolio News Indexes Pre-Market After-Hours Bonds Commodities Currencies Actives Gainers Losers Earnings Hot Stocks Sivy on Stocks Investor Research Center Main Personal Tech Sectors & Stocks Fortune 500 Tech Top Tech Companies B2Day Blog Game Over Main Economic Calendar Fed Focus Your Job 2006 Employment Rates Cost of Living Tool Find a Job Main Retirement Mutual Funds ETF Center Five Tips Sivy on Stocks College Insurance Taxes Portfolio Money 101 10 Resolutions Main New Cars Used Cars Financing Reviews Tips & Advice Main Best Places to Live Calculators Latest home prices Money 101 Mortgage Rates Real Estate Tips Main Hot Startups Best Bosses Garage Inventors Guidebook Fastest-Growing Companies Main Fortune 500 Global 500 Best places to live Best companies to work for Boom towns Sivy's 70 Top Stocks MONEY's Ultimate Funds Best Places to Retire Fastest-Growing Companies 10 Resolutions 7 Star Funds 101 Dumbest Moments
Mutual Funds
    SAVE   |   EMAIL   |   PRINT   |   RSS  
7 star funds
These managers have proved their mettle in booms, busts and everything in between.
December 15, 2005: 7:14 AM EST
By Yuval Rosenberg, FORTUNE

NEW YORK (FORTUNE) - One thing you can count on is that the stock market almost never does what you expect it to.

And while the outlook always seems uncertain, this is a particularly dicey time, with questions about war and oil added to the usual clashing chorus of bullish and bearish indicators. If you'd prefer not to navigate these tricky waters yourself, there are plenty of mutual fund managers who would be happy to do the steering for you. Below, we profile seven outstanding candidates.

We set out to find veteran managers who have excelled in a variety of market environments over a long period of time. But we also wanted managers who outperformed their peers, a sign that they have succeeded not just because market conditions favored their style but because their investing discipline and stock-picking prowess helped them blow past the competition.

We started by asking Morningstar, the fund research firm, to screen for funds that have beaten their category averages by the widest margins over the past 15 years, a period that includes an extreme boom, an extreme bust, and most everything in between. We pared down this list of long-term winners by excluding funds that are closed to new investors and those narrowly focused on one sector. We also eliminated funds with high minimum investments or excessive expenses. Finally, we avoided any funds implicated in the scandals of recent years.

The funds that passed our test include two large-cap portfolios and two mid-cap offerings as well as one small-cap specialist, a world fund, and a so-called moderate allocation fund that combines stocks and bonds. You may recognize a number of the names here: Calamos, Dreman, Muhlenkamp. Others, such as Bruce, are more obscure.

These funds share certain traits that helped them outshine their rivals. First, all the managers you'll meet here are veteran performers. In fact, only William Frels of Mairs & Power Growth has a managerial tenure of fewer than ten years. (And as you'll see, Frels, 66, isn't exactly a neophyte.) Second, no matter how Morningstar categorizes them, most of these funds allow their managers some leeway -- the flexibility to think outside the style-box, as it were, which allows them to pursue their best ideas aggressively and hold on to their winners. That freedom, in the hands of managers such as these, produces exceptional results.  Top of page

Leaders of the pack
These seven funds, which have towered over their rivals for the past 15 years, proved their mettle in booms and busts, and everything in between. Click on a fund name for FORTUNE analysis.
Fund (ticker) YTD return Net assets Exp. ratio Why we like it
Bruce (BRUFX) 4.6% $110 million 1.0% The father and son manager team have carte blanche to invest wherever they see potential gains.
Calamos Growth A (CVGRX) 6.3% $12.9 billion 1.2% Factors in economic conditions to manage risk rigorously while searching for high-growth stocks.
Mairs & Power Growth (MPGFX) 1.3% $2.5 billion 0.7% Gets a critical edge from investing predominantly in companies based near its St. Paul headquarters.
Muhlenkamp (MUHLX) 3.4% $3.1 billion 1.1% To limit losses, manager Ron Muhlenkamp looks for stocks with solid underpinnings.
Oppenheimer Global Opportunities A (OPGIX) 7.5% $2.3 billion 1.2% Invests in stocks that can benefit from breakthrough concepts and economic shifts.
Scudder Dreman High Return Eq A (KDHAX) 3.2% $4.9 billion 1.1% Likes to scoop up scandal-scarred and controversial stocks that others shun.
T. Rowe Price New Horizons (PRNHX) 6.0% $6.6 billion 0.9% Finds stocks with market valuations of less than $2 billion, and sticks with them as they grow.
Data as of: January 26, 2006 Source: Morningstar
 
YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?