More Funds That Are Worth Their Weighty Loads

Now we're finishing up that rundown by turning our focus to load funds in the small, midcap, multicap and international categories. We started with a universe of 3,799 funds in those four groups. We narrowed that list by looking for funds with cheap annual expenses and performance track records that put them in the top 20% of their peer groups over the trailing three- and five-year time periods. After adding in a few more criteria, we were eventually left with 100 finalists.

That's a pretty large list to wrap your head around. So we made it a little easier on readers this week. Below we picked three good funds from each category. They come from well-run fund families, they charge low fees and they have returns that beat the broad market over the long haul. If you don't see your favorite fund on the tables below — and you suspect it fits our criteria — you can also access the expanded list in spreadsheet form by clicking here.

A final reminder on some of our cardinal rules when it comes to investing in a load fund. The first being, obviously, don't pay one if you don't have to. Your financial advisor can usually get around the load if he has a certain amount of money invested with a particular fund company or if he purchases a share class specifically set up for wealth managers that waives the fee. Do-it-yourselfers can take a similar tact. In some cases, fund families will gradually reduce the load costs as you invest more money. The easiest way to avoid loads is to invest through a 401(k) plan. These accounts usually receive a free pass from paying sales charges.

Of course, there are compelling reasons to sometimes pay these initial fees. For example, if a market-beating manager is running a load fund it may be wise to pay up for his expertise. "It's a math problem," says Eric Aanes, president of Titus Wealth Management in San Mateo, Calif. "In my opinion, if you have a manager who can deliver enough value he can pay [back] the sales load pretty quickly." In some cases, that may mean holding onto the fund for more than five years. That's not such a bad idea, though, because it can prevent investors from making knee-jerk reactions due to short-term blips. "We find the holding period with load funds is longer," says Aanes. "They feel beholden to the fund company which, in turn, keeps them with the program."

But if you do favor a particular manager make sure he's working for a firm that has a wide array of offerings. American Funds is the best example of this. But smaller firms like Thornburg have been adding to the lineups, too. The point is you want the option of moving into another fund — and doing it without being charged extra fees — if that manager happens to hit a prolonged rough patch. After all, even the best managers can make bad calls.

One fund to keep an eye on is Keeley Small Cap Value (KSCVX). For the last 15 years, the Keeley family has been running this fund out of Chicago. The management team, made up of John Keeley Jr. and his sons, favors companies that have been spun off from a corporate parent, have gone through some kind of restructuring or are trading at a significant discount. According to Morningstar, two of the fund's top holdings are Walter Industries (WLT) and Alpha Natural Resources (ANR), two natural-resources companies. The fund is in the top 2% of its Morningstar category during the trailing three-year and five-year periods. It's in that same spot during the short term, too, a time when small caps were out of favor. And although one of the fund's share classes does charge a 4.5% load, there's another one that waives that fee.

The Criteria
Our fund screen produced 100 load fund finalists in the small, midcap, multicap and international categories. These funds were open to new money, required a minimum investment under $5,000 and charge an annual expense ratio under 1.5%. The funds also had performance track records that put them in the top 20% of their respective peer groups over the trailing three- and five-year time periods. Out of that group of 100, we list three from each category on the tables below.

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