A Good Year for Most of the Kip 25 Funds
More winners than losers among our favorite low-cost mutual funds.
Almost every major investment category, from bonds to shares in U.S. and foreign companies, had a bang-up year in 2019. How did our Kiplinger 25 funds do? On average, our bond and international stock choices shone; the group’s U.S. stock funds were a mixed bag (all returns are through December 31).
Falling interest rates helped bond funds (when rates fall, bond prices rise). The Kip 25’s seven selections averaged a 9.4% return in 2019, led by a 15.8% jump in Vanguard High-Yield Corporate. The group beat the benchmark Bloomberg Barclays U.S. Aggregate Bond index (up 8.7%). The worst performer was DoubleLine Total Return Bond. The fund lagged the Agg index largely because the fund avoided corporate debt, a key driver of the index’s returns in 2019.
The Kip 25’s foreign-stock funds finished 2019 solidly. Three of them—AMG TimesSquare International Small Cap, Fidelity International Growth and Oakmark International—outpaced the MSCI EAFE index in 2019. Baron Emerging Markets edged past the MSCI Emerging Markets index.
Our U.S. stock funds struggled to beat the broad-market benchmark in a banner year. Standard & Poor’s 500-stock index gained 31.5%, its best year since 2013. Two Kiplinger 25 funds beat the bogey: DF Dent Midcap Growth, with a 40.1% return, and T. Rowe Price QM U.S. Small-Cap Growth Equity, up 32.8%. T. Rowe Price Dividend Growth and Blue Chip Growth came close to the index return.
The other eight U.S. stock funds lagged the S&P 500. Large-company stock funds fared better than those that invest in smaller firms, and growth-oriented funds beat value-focused ones. Dodge & Cox Stock and T. Rowe Price Value each trailed the S&P 500 by more than five percentage points, but they did better than Wasatch Small Cap Value, which focuses on small-company stocks trading at bargain prices.
Keep in mind that one-year returns are a blip in a long-term investment. Primecap Odyssey Growth, for instance, lags the S&P 500 on a one-year basis, but the fund’s three-, five- and 10-year records still beat it.