2 Great New Mutual Funds for the Kip 25
We turn to offerings from Primecap and T. Rowe Price to tweak our no-load lineup.
Less is more, as architect Ludwig Mies van der Rohe famously said. In that vein, we’re replacing only two funds in the Kiplinger 25 this year.
That compares with three or four in a typical year and is much less than the seven funds we swapped out a year ago.That compares with three or four in a typical year and is much less than the seven funds we swapped out a year ago.
Primecap Odyssey Growth (symbol POGRX) replaces Akre Focus (AKREX). We admire lead manager Chuck Akre, but his fund’s high annual fee of 1.34% has always bothered us. Odyssey Growth charges a below-average 0.66% per year. On top of that, it has an outstanding record. The fund invests in midsize and large companies that are expanding at above-average rates and trade at favorable share prices. Over the past decade, Odyssey Growth lagged Standard & Poor’s 500-stock index in just three calendar years (and one could argue that 2007 was a draw).
The fund has five managers: Theo Kolokotrones, Joel Fried, Alfred Mordecai, M. Mohsin Ansari and James Marchetti. Each has a chunk of his own money invested in the portfolio, and each one manages his own piece of the fund’s assets. They all look for a catalyst—the introduction of a new product, a restructuring or the arrival of new executives, for example—that they think will push a stock higher over the next three to five years. Health care and technology dominate the fund: Biotech firm Seattle Genetics, Eli Lilly and American Airlines are its top three holdings. Over the past year, the fund beat 98% of its peers (funds that invest in large, growing companies) and the S&P 500, with a 29.6% gain.
T. Rowe Price International Discovery (PRIDX) replaces Matthews Asian Growth & Income (MACSX). Asia remains promising, but we think a more diversified approach may better suit the Kiplinger 25 and our readers. So how about investing in a fund that bets on small firms around the world? Enter International Discovery, which holds about 250 small and midsize companies in developed nations (80% of assets) and emerging countries.