Large-Company Funds
When Will Danoff's Fidelity Contrafund (symbol FCNTX) reopened to new investors, we quickly added it to the Kiplinger 25 roster.
When Will Danoff's Fidelity Contrafund (symbol FCNTX) reopened to new investors, we quickly added it to the Kiplinger 25 roster. Since taking over Contrafund in September 1990, Danoff has piloted this large-company growth fund to an annualized return of 11%, beating Standard & Poor's 500-stock index by an impressive average of five percentage points per year.
Danoff searches for innovative market leaders with high returns on capital. He'll pay "a fair price for a great company," he says, especially when that company is gaining share of a market in which barriers to entry are high. Recently, Danoff has gravitated toward defensive stocks, such as Coca-Cola and Johnson & Johnson.
When Brian Rogers is taking on more risk, it's time to pay attention. Rogers, manager of T. Rowe Price Equity Income (PRFDX) and chairman of the Baltimore-based fund house, is as steady and sober as they come. Since Price launched Equity Income in 1985 with Rogers at the helm, the fund has done as well as the S&P 500, returning 8% a year but with lower volatility than the index. That is no small feat.

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.
Rogers has been trimming his holdings of consumer stocks, such as Procter & Gamble and General Mills, while snapping up shares in more economically sensitive companies, including Boeing, Deere and Nucor. "When prices of good-quality companies are down 50% or more, it makes sense to invest in controversial sectors," says Rogers.
Mason Hawkins, the crusty bargain-hunting veteran who co-manages Longleaf Partners (LLPFX), is excited. He says stocks of the best businesses in the world are the cheapest they've been in 75 years. "The market is voting fearfully today because no one knows when the global economy will stabilize," he says.
One of Hawkins's favorite measures is free-cash-flow yield (a company's free cash flow divided by its market capitalization) relative to the yield on Treasuries. On that basis, many of Longleaf's large holdings, such as Dell, Disney and DirecTV, yield more than 10%, compared with the 3% yield of ten-year Treasury notes. Share prices, he says, reflect a huge amount of fear, "giving you the opportunity you want as a long-term shareholder."
As the third-generation member of his family to manage money, Chris Davis takes the long view in his role running Selected American Shares (SLASX). He offers the case of Johnson & Johnson, a stock he holds that has fallen by 23% over the past year. "Do I think J&J is much riskier, the earnings prospects worse, or its competitive advantage lower? No, I don't think so."
J&J and Procter & Gamble are global stalwarts, one category of holdings in Selected, which Davis manages with Ken Feinberg. A second category is cash-rich companies, such as Berkshire Hathaway, that can make savvy acquisitions and play a bit of offense in these chaotic capital markets. Another Davis strategy is to invest in beneficiaries of the growing global middle class. The last bucket is in stocks with "headline risk." These days, that mostly means financials.
The six men who run Vanguard Primecap Core (VPCCX) don't speak to the press. Instead, they let the results of their fine fund do the talking. They focus on growing companies but are value-oriented in their stock picking. Moreover, their portfolio turnover rate is exceptionally low for a growth fund. Primecap steered clear of the debacle in financials and instead loaded up on health-care stocks, such as Eli Lilly and Amgen, and technology companies, such as Oracle.
It's interesting that both growth- and value-oriented funds are loading up on health-care stocks. Dodge & Cox Stock (DODGX), on the value end of the spectrum, has 28% of its portfolio in the sector, double the S&P 500's weight. Charles Pohl, one of nine co-managers, says that health-care stocks are unusually cheap, given the potential for growth both at home and abroad and the opportunity for drug makers, in particular, to boost profitability by becoming more efficient.
Commodity Funds
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.
Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.
-
Baby Boomers vs Gen X: Who Spends More?
Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic Dream
Here's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
Stock Market Today: Good Feelings and Solid Data Lift Stocks
Resilience and de-escalation defined another generally positive day for financial markets.
-
Stock Market Today: Tesla Drags on Stocks Amid Musk-Trump Feud
Sentiment has soured between President Trump and his once-loyal ally, Tesla CEO Elon Musk.
-
Stock Market Today: Stocks Brush Off Weak Jobs Data
The yields on the 2-year and 10-year Treasury notes fell sharply after a pair of weak economic reports.
-
Stock Market Today: Rally Extends on Good-Enough Expectations
Fiscal policy still has markets' attention, but taxes rather than tariffs and deficits rather than inflation are participants' primary focus.
-
Stock Market Today: Markets Move With Fresh Trade War Winds
The new uncertainty is the same as the old uncertainty, which is fine with investors, traders and speculators.
-
Stock Market Today: Stocks Bounce as US-China Tensions Escalate
Stocks were volatile to end the week and the month amid concerns a trade truce between the U.S. and China is splintering.
-
Stock Market Today: Stocks Chop as Judges Block Then Reinstate Tariffs
The Trump administration has asked for and received a stay in a case that seems headed for the Supreme Court.
-
Stock Market Today: Stocks Struggle Ahead of Nvidia Earnings
The three main indexes closed lower as Wall Street awaited the AI bellwether's quarterly results.