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5 Great Load Funds for 2015

If you can invest in load funds without paying the extra charge, consider these picks from American and Franklin Templeton.


The differences between load funds and no-load funds are disappearing as fewer advisers levy the sales charges that load funds allow them to. Rather, financial advisers are charging clients annual fees based on assets under management. Consequently, you may end up paying the same amount to your adviser no matter which funds you buy. (A similar development is occurring in many 401(k) plans, which are increasingly offering participants load funds without the loads.)

See Also: Our Favorite No-Load Mutual Funds

How should you choose among load funds? To start with, you should never pay a load. Talk to your adviser about having the sales charge waived. From there, pick load funds the same way you pick from among no-load funds. You and your investment adviser should look for low operating costs, a sensible and disciplined investment strategy that includes low turnover, and solid risk-adjusted returns produced by experienced managers.

The fund sponsor's corporate culture is also a major consideration. If the managers have invested heavily in the funds they manage, that's a good sign. So are low expense ratios. My favorite load shop is the American funds, which I sometimes think of as the Vanguard of broker-sold funds—especially if you can buy their lowest-cost, F2 shares. American funds are cheap, conservative and trade relatively infrequently. Plus, analysts and managers typically stay at American for their entire careers. Franklin Templeton lacks a superior corporate culture, in my opinion, but has some first-class management teams. I avoid most other firms.

Below are my five favorites for 2015 in no special order:


In the more than 15 years since famed value manager Michael Price retired from Franklin Templeton Investments, more than a dozen co-managers have come and gone from Franklin Mutual Global Discovery A (symbol TEDIX). But here's the thing: During all that time, Price's successors have been able to successfully implement his investment discipline. It doesn't hurt that Price tutored Peter Langerman, one of the three current co-managers, for many years, supporting my contention that a good manager can teach the next generation how to manage money.

Discovery invests in good companies all over the world when they trade at bargain prices. The fund also invests in distressed debt and merger-arbitrage plays, which are targets of already announced takeover bids. The managers have never been afraid to hold cash, which currently stands at 7.5% of the fund's assets. Some 55% of assets are currently in U.S. stocks—a multiyear high. Over the past 10 years, the fund returned an annualized 8.6%—an average of 1.8 percentage points per year better than the MSCI World index of developed markets, including the U.S. Over that span, the fund was 33% less volatile than the index. The fund did especially well in awful markets, including the 2007-09 bear market and the 2011 correction. The expense ratio, 1.28% annually for the Class A shares, is only so-so. (All returns in this article are through December 26 unless otherwise indicated.)

American Funds New Perspective F2 (ANWFX) is another first-class global fund. Over the past 10 years, it returned an annualized 8.5%—an average of 1.7 percentage points per year better than the MSCI World index. The fund was only slightly less volatile than the index, but, like Discovery, held up particularly well in the 2007-09 down market.

Like all American funds, New Perspective employs an unusual multi-manager approach. Each of the fund's eight managers is responsible for a slice of the portfolio, and his or her compensation is tied to the long-term performance of that slice. Each manager has a slightly different approach, but the resulting fund is chock-full of blue chips. Expenses for this share class are just 0.54% annually.


One of the many things I like about American funds is that it rarely launches new funds, and when it does, it's often during a long drought for that asset class. Exhibit A is Developing World Growth & Income F2 (DWGHX), spawned last February to invest in emerging-markets stocks, which have done terribly since mid 2011. Since its inception, the fund has returned 5.6%, essentially matching the 5.5% return of the MSCI Emerging Markets index. But don't bet against the American funds, especially in foreign markets, where their huge roster of analysts and many decades of experience are big pluses.

The firm's research has found that dividends matter much more in emerging markets than elsewhere. So the fund sticks almost exclusively to dividend-paying stocks. The expense ratio, currently 1.09%, will decline as assets grow.

Templeton Global Total Return (TTRZX) is more than just a global bond fund. Co-manager Michael Hasenstab and his team devote at least as much effort to picking the strongest (and weakest) currencies. Hasenstab is bold and patient, and his record is superb. Since Global Total Return's inception in late 2008, the fund has returned an annualized 10.6%—an average of 5.7 percentage points per year ahead of the average international bond fund. The longer-term record for the fund's near-clone, Templeton Global Bond (TGBAX), is just as impressive. The one negative to Global Total Return: It's much more volatile than most bond funds. Annual expenses are 0.76%.

Hasenstab believes that governments of many emerging nations are in better fiscal shape than those of much of the developed world. Thus the fund's biggest bond holdings are in countries such as South Korea, Mexico and Hungary. And among currencies, the fund has placed big wagers on declines in the euro and the yen.


American Funds Fundamental Investor F2 (FINFX) is the American funds' most aggressive large-company domestic fund. But in truth, it's not all that aggressive. Over the past 10 years, it returned 9.0% annualized—an average of 1.1 percentage points more than Standard & Poor's 500-stock index—and was slightly more volatile than the S&P. It can invest up to 35% overseas; it currently has 11% in foreign stocks, which has hurt recent returns. Annual expenses are a mere 0.41%.

Steve Goldberg is an investment adviser in the Washington, D.C., area.