Most of the Kip 25 Stay Out of the Doghouse
Every year, we look back at how our favorite low-fee mutual funds performed.
Every dog may have its day, but in 2019, nearly every major asset class—in stocks and in bonds—had a bang-up year. Until the coronavirus hit. Markets plunged as the contagion spread, erasing gains and ending the bull market. For the 12-month period ending March 13, Standard & Poor’s 500-stock index logged a 1.6% loss—nowhere near the double-digit gain of weeks earlier. Foreign markets suffered the same fate. Through mid March, the MSCI EAFE index was down 18.5%, a far cry from its 12.4% one-year gain weeks before.
Despite the terrible timing for our annual look back at the Kiplinger 25 funds, we had several standouts. Four U.S. stock funds beat the S&P 500. DF Dent Midcap Growth was the best performer, with a 6.1% gain. Last year’s superstars, T. Rowe Price Blue Chip Growth and T. Rowe Price Dividend Growth, came through again this year. And Vanguard Wellington, which holds stocks and bonds, beat the S&P 500, too. Two small-company funds, T. Rowe Price QM U.S. Small-Cap Growth and T. Rowe Price Small-Cap Value, beat the Russell 2000 small-cap index, albeit with losses.
Our foreign funds beat their respective indexes, with one exception. Over the past year, Oakmark International lagged the MSCI EAFE by more than five percentage points. “The coronavirus hit some of our industrial and consumer names quite hard,” says lead manager David Herro.
Coronavirus fears drove investors into safe-haven bonds. Bloomberg Barclays U.S. Aggregate Bond index gained 9.5% over the past 12 months. MetWest Total Return Bond came close to that. Three sector bond funds, Fidelity Intermediate Municipal Income, Vanguard High-Yield Corporate and Vanguard Short-Term Investment-Grade, kept pace with or beat their benchmark indexes over the past 12 months.