In six of the past seven full calendar years, the Primecap Odyssey Growth (POGRX) has lagged its benchmark, the S&P 500. We're growing weary of waiting for a return to the fund's fantastic outperformance of years past, but we're not ditching it from the Kiplinger 25, the list of our favorite no-load mutual funds.
The fund isn't an index-hugger, it's clear, but therein lies its value. Because Odyssey Growth has an "unconventional collection of stocks" that hardly resemble the index, as the managers said in its recent annual report, the fund can help boost the overall diversification of your portfolio.
It has little exposure to the stocks of the huge companies known as the Magnificent Seven, for a start. The fund doesn't hold Apple (AAPL). And the remaining six, including Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA), made up just 9% of the fund's assets at last report. For comparison, those six stocks make up a combined 24% share of the S&P 500.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
Another drag came from Odyssey Growth's longstanding tilt toward healthcare stocks. Nearly 30% of the fund's assets are invested in that sector – almost triple that of the S&P 500. But health stocks have trailed the broad-market index over each of the past six years.
Both factors contributed to the fund's performance over the past 12 months. Odyssey Growth, up 19.9% – a spectacular return on an absolute basis – fell short of the 26.4% return in the S&P 500.
The five Odyssey Growth managers divide the fund's assets and run a portion of the portfolio independently. But they all focus on growing companies priced at a discount that have a catalyst – a new product, say, or a restructuring – to drive prices higher. That process leads to a portfolio that's different from the S&P 500 in other ways, too, such as valuation:
The fund's stocks trade at an average price-to-earnings (P/E) ratio of 19 (based on year-ahead estimates), which is far lower than the S&P 500's P/E of 24. Top holdings include Eli Lilly (LLY), Alphabet (GOOGL) and Raymond James Financial (RJF).
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
I'm a Financial Planner: Could Partial Retirement Be the Right Move for You?Many Americans close to retirement are questioning whether they should take the full leap into retirement or continue to work part-time.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
S&P 500 Slips Ahead of Fed Week: Stock Market TodayAll eyes are on the Federal Reserve ahead of next week's critical policy meeting.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can HelpArtificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
