The mutual fund world> has had its fair share of comeback stories this year. The S&P 500 has increased almost 21% in 2009 through Thursday. The broad market rebound has helped funds that were in the basement of their categories last year rocket to the top of those same groups.
Ariel lost 48.3% last year. This year, the $1.7 billion fund is up 49.4% thanks to stocks like CB Richard Ellis and Nordstrom. Ariel finished in the bottom 13% of its Morningstar category in 2008. It is now in the top 10.
Last week, we told you about 15 funds that were up at least 30% in 2009. This week s screen is a natural extension of that one. We used Morningstar s fund screener tool to search for funds that were in the bottom 20% of their respective categories in 2008 but are now in the top 20% of those same groups this year. We knocked out funds with high fees and those that charge sales loads. We then focused on equity funds that had histories of emerging steadfastly from downturns or were currently run by decent managers. That left us with the 10 funds on the table below.
Investors could argue that these funds are in the midst of a turnaround. We aren t sure that s the case or whether the funds managers would agree with that sentiment. As the third-quarter earnings season ends, the stock market is still showing it can succumb to knee-jerk reactions on any given day. In other words, the performance of these funds could easily cool off. In addition, many of the managers on our list were down in the dumps last year simply because they had held on to stocks they had purchased with conviction instead of selling in a chaotic market. So a better description for what s happening with these funds is that investors are once again enamored with the stocks they favor.
If you take a quick look at the table below, you will see there is a wide array of funds, including international offerings and those that focus on large or small companies. At the moment, the market isn t discriminating: All types of shares are gaining ground. However, through the third quarter, growth funds large, mid and small-cap ones are beating their value cousins. The growth trend is one we have been seeing throughout the year. But a word of caution about those fast growers many market watchers think stocks are due for a cooling off period.
One fund making a return to our list after an absence is Dodge & Cox Stock (DODGX)
The Criteria: The funds on the table were in the bottom 20% of their Morningstar categories in 2008. However, in 2009 they're in the top 20% of those same groups. They are open to new money, require a minimum investment under $5,000 and charge an annual expense ratio less than 1.5%. We favored funds that have histories of doing well in post-recession periods or are run by decent managers. As usual, we did not include load funds.
|Source: Lipper, Morningstar|
Note: Data as of Nov . 5, 2009
|Dodge & Cox Stock||DODGX||38800||25.7||-43.3||-0.28||0.52|
|Fidelity Dividend Growth||FDGFX||7400||41.8||-43.0||0.74||0.62|
|Hartford Capital Appreciation||ITHAX||18000||34.6||-46.1||6.09||1.12|
|T. Rowe Price Growth Stock||PRGFX||19200||34.8||-42.3||1.88||0.71|
|T. Rowe Price New Asia||PRASX||3700||87.4||-61.0||18.27||0.96|