Kiplinger 25 Funds Run Up with the Bull Market
Our favorite no-load, stock mutual funds give a stellar performance in the two years since the market's bottom in March 2009.
Notwithstanding the stock market's 2.7% drop on February 22 and February 23, share prices have, on average, doubled since hitting their nadir in March 2009. So we decided this would be a good time to ask how the funds in the Kiplinger 25 have performed during this barnburner of a bull market. The answer: Quite nicely, thank you.
As the accompanying table shows (see How the Kip 25 Funds Have Performed in the 2009-2011 Bull Market), all but three of the 17 stock funds on the Kip 25, the list of our favorite no-load funds, achieved triple-digit total returns between March 9, 2009, and February 18, 2011 (the record of one fund, Akre Focus, does not go back to the start of the current surge). The returns (which are cumulative, not annualized) range from 157.0% for T. Rowe Price Emerging Markets Stock (PRMSX) to 61.9% for FPA Crescent (FPACX). Over that period, Standard & Poor’s 500-stock index returned 106.7%, and the MSCI EAFE index, which tracks stocks in developed foreign markets, gained 104.4%.
If nothing else, the bull-market performance of our picks underscores the point that the harder a fund falls, the more energetic is its recovery. Price Emerging Markets, for example, was the worst performer on our list during the bear market that preceded the current charge; it plunged 66.8% from October 9, 2007, through March 9, 2009. During that period, the EAFE index sank 59.2%. Dodge & Cox Stock (DODGX) was the worst-performing domestic fund among the Kip 25 during the market meltdown, plummeting 62.4%, compared with a 55.3% decline for the S&P 500. Since the bottom, Dodge & Cox has advanced 128.1%. The best domestic bull-market performer -- T. Rowe Price Small-Cap Value (PRSVX), with a gain of 143.0% -- lost 54.9% during the downturn.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The numbers work in reverse, too. Funds that have earned the least during the climb lost the least during the bear market: Fidelity Contrafund (FCNTX), down 48.2% during the bear market, gained 93.4% during the upturn; Vanguard Dividend Growth (VDIGX), off 42.3%, then up 77.9%; and FPA Crescent, down 27.9%, then up 61.9%. That Crescent would have held up better in the bear market and lagged during the bull run was entirely predictable, given that the fund normally has only about two-thirds of its assets in stocks and the rest in bonds and cash (the fund can also sell stocks short, a bet on falling share prices).
Which fund produced the best combination of protection as the market swooned and participation as it roared? That honor goes to Meridian Growth (MERDX), run since 1984 by Rick Aster. Aster, who invests in reasonably priced, fast-growing, midsize companies, kept Meridian’s losses to 45.9% during the bear market and gained 132.1% since.
A note about Merger Fund (MERFX), which falls into the specialized category. Even though it invests in stocks, the fund and its strategy -- it buys stocks of companies that are being acquired after the deal is announced -- are so unusual that it is unfair to compare it with other stock funds. Its numbers -- a 5.0% bear-market loss, followed by a bond-fund-like 12.8% gain during the bull market --reinforce the point.
The most important point about all of these numbers is that they show that nearly all funds are hostage, in varying degrees, to the performance of the markets in which they operate. So, just as you shouldn’t have accused the managers of your funds for being idiots as they were helping to erode your wealth during the bear market, you shouldn’t confuse their astonishing gains during the current bull market with genius.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
-
Stock Market Today: Nasdaq Nabs New High After Jobs Data
The S&P 500 also closed at its highest level ever, while the Dow Jones Industrial Average was pressured by another down day for UnitedHealth stock.
By Karee Venema Published
-
Rebound in Jobs Growth Keeps Fed on Track: What the Experts Are Saying
Jobs Report No nasty surprises in the November payrolls data leaves a quarter-point cut in play.
By Dan Burrows Published
-
The Kiplinger 25: Our Favorite No-Load Mutual Funds
The Kiplinger 25 The Kiplinger 25 is a list of our top no-load mutual funds that have proven capable of weathering any storm.
By Nellie S. Huang Last updated
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune Last updated
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson Published
-
Best Bond Funds to Buy
Investing for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolio.
By Jeff Reeves Last updated
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang Published