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The Individual Investor's Guide to The Top Mutual Funds 2010

The Individual Investor's Guide To The Top Mutual Funds 2010 Splash image

Although exchange-traded funds have stolen the limelight of late, mutual funds have not lost their relevancy to individual investors.

Mutual funds offer a cost-effective way to construct a diversified portfolio across a wide range of asset types. Mutual funds are liquid investments managed by professionals. Investors can opt to select funds that mirror index funds or actively managed funds that require a manager to make specific investment decisions.

Traditional open-ended mutual funds still have an important place in many investors’ portfolios, and the need for quality information to judge and track these funds is ongoing. Many Web sites now provide current and historical performance data on funds, but it’s rare to find a source where you can easily compare similar funds on various criteria. AAII’s annual “Individual Investor’s Guide to the Top Mutual Funds” does just that in the following pages.

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The 29th edition of the Guide to the Top Mutual Funds covers over 700 no-load and low-load funds. The funds are classified into useful categories of similar funds to make comparison of fund alternatives more efficient and effective. This will allow you to dedicate more time to evaluating the better fund opportunities.

How to Use This Guide

Selecting a mutual fund, while less time-consuming than investing in individual securities, does require some homework. No one should put money into an investment that is not understood. This does not require a detailed investigation of the fund’s investments, but it does require an understanding of the fund’s investment objective, strategy, risks and performance history.

Individuals new to mutual fund investing can find explanatory articles in the Mutual Funds area of AAII.com .

Performance tables appear on pages 6 through 9. Table 1 summarizes the average performance and risk of fund categories and common index benchmarks. Table 2 lists the 50 best-performing funds of 2009, and Table 3 lists the 50 worst-performing funds of 2009. Table 4 allows you to compare the performance of the 50 most widely held funds (funds with the highest total assets). While past performance is no indication of future performance, it may attest to the quality and consistency of fund management.

Funds are grouped by category and listed alphabetically within each category; the ticker symbol is indicated after each fund name. The listings provide information on a variety of return and risk data, portfolio composition, and fees and expenses. Index funds are indicated by the letter “I” before the fund name, and funds that are closed to new investors are indicated by the letter “C.”

If you would like to request a copy of a fund prospectus and annual report, telephone numbers and Web addresses of the fund families are provided on pages 38 through 40. Make sure you read the prospectus carefully before investing in any mutual fund.


Which Funds Were Included

The funds that appear in the Guide were selected from the universe of open-ended funds tracked through NASDAQ. The following are the various screens we used to arrive at the final selection.

Historical Record

Generally, only those funds with three full years of data are included in the Guide so that there is a performance record of significant length and all performance measures can be calculated. Index funds with less than three full years may be included, as well as specialty funds of great interest to our members.

Size

Funds must appear in the NASDAQ mutual fund listings and are generally required to have at least $50 million in assets to qualify for inclusion in the Guide. A small number of funds with assets below $50 million are included in the state-specific municipal bond category and some of the new categories tracked in this Guide.

Loads

The decision as to what constitutes a significant load is difficult, but we took this approach in the Guide:

Funds with front-end loads, back-end loads, or redemption fees of 3% or less are included if the fund does not also have a 12b-1 charge. Funds with redemption fees that disappear after six months that also have 12b-1 charges appear in this Guide.

Funds with 12b-1 plans and no front- or back-end loads are included in the Guide; we note, however, if the fund has a 12b-1 fee and what the charge is per year. A 12b-1 fee of greater than 0.25% is considered to be high and excluded the fund from the Guide. Investors should carefully assess these plans individually.

Funds that imposed a load that exceeded 3% or increased an existing load above 3% have been dropped from the Guide.

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Expenses

Funds with significantly higher expense ratios than the average for their category are not included in this Guide. We have bolded the expense ratio of funds whose ratios are in the lower 25% of their category.

Performance

Funds that significantly underperformed the average performance of their category are not included in this Guide.

Interest and Availability

Only those funds that are of general interest to mutual fund investors and available for investment by individual investors directly from the fund, without restrictions, are included in this Guide. Unlike previous editions, funds closed to new investors are now included. Such funds are designated by the letter C to the left of their name.

Funds Not Included

AAII members who would like performance figures for no-load and low-load mutual funds that do not appear in this Guide can access this information on our Web site at www.aaii.com/guides/mfguide (covers 1,476 funds).


A Key to Terms and Statistics

Most of the information shown in the listing is provided by Morningstar Inc., but some may come from mutual fund reports (the prospectus and annual and quarterly reports) and solicitation of information directly from the fund. Any data source has the potential for error, however, and before investing in any mutual fund, you should read the prospectus and the annual report.

When a dash appears in the performance tables or in a mutual fund listing, it indicates that the number was not available or does not apply in that particular instance. For example, the 10-year annual return figure would not be available for funds that have been operating for less than 10 years. We do not compile the bull and bear ratings for mutual funds not operating during the entire bull or bear market period. All numbers are truncated rather than rounded when necessary, unless noted otherwise in the following descriptions.

In the fund list, return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface. When risk and expense ratios are in the lowest 25% for the category, these numbers are also bolded. Fund data in the state-specific municipal bond category are not bolded because meaningful comparisons cannot be made across various state categories.

The following provides an explanation of the terms we have used in the performance tables and mutual fund listings. The explanations are listed in the order in which the data and information appear in the listing.

Index Fund: The letter I before a fund’s name indicates that the fund is designed to follow a stock index, such as the S&P 500; the amounts invested in each stock are proportional to the firm’s representation in the index that the fund tracks. Because index funds are unmanaged, they make no research efforts to select particular stocks or bonds, nor do they make timing decisions. They are always 100% invested. This passive management approach means that the expenses and the cost of managing an index fund are extremely low.

Closed: The letter C before the fund’s name indicates that the fund is not accepting purchases from new investors. Some closed funds may also suspend additional investments from existing shareholders.

Fund Name: The funds are presented alphabetically by fund name within each category.

Ticker: The ticker symbol for each fund is given in parentheses for those investors who may want to access data with their computer or touch-tone phone. The ticker is four letters and is usually followed by an “X,” indicating that it is a mutual fund. For example, the large-cap Brandywine Blue fund ticker symbol is BLUEX.

Style—Growth and Value: Indicates fund investment style. G = growth investing focus, V = value investing focus. For more on what these classifications mean, see the online version of this Guide at www.aaii.com/guides/mfguide.

Annual Total Return (%): Return percentages for each of the last five years. Returns that are in the top 25% of all funds within the investment category are shown in boldface.

Bull Market Return (%)—Fund and Cat +/-: Reflects the fund’s performance in the most recent bull market, starting March 1, 2009, and continuing through December 31, 2009; and the difference in fund total return for the period from the average return for the period for all funds in the same category. Return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface.

Bear Market Return (%)—Fund and Cat +/-: Reflects the fund’s performance in the most recent bear market, from November 1, 2007, through February 28, 2009; and the difference in fund total return for the period from the average return for the period for all funds in the same category. Return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface.

3-Year Return (%)—Fund and Cat +/-: Assuming an investment on January 1, 2007, the annual total compound return if held through December 31, 2009; and the difference in fund total return for the period from the average return for the period for all funds in the same category. When the difference from category is negative, the fund underperformed the average fund in its investment category for the period by the percent indicated. Return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface.

5-Year Return (%)—Fund and Cat +/-: Assuming an investment on January 1, 2005, the annual total compound return if held through December 31, 2009; and the difference in fund total return for the period from the average return for the period for all funds in the same category. Return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface.

10-Year Return (%)—Fund and Cat +/-: Assuming an investment on January 1, 2000, the annual total compound return if held through December 31, 2009; and the difference in fund total return for the period from the average return for the period for all funds in the same category. Return and difference from category numbers that are in the top 25% of all funds within the investment category are shown in boldface.

Yield (%): The per share annual income distribution made by the fund divided by the sum of the year-ending net asset value plus any capital gains distributions made during the year. This ratio is similar to a dividend yield and would be higher for income-oriented funds and lower for growth-oriented funds. The figure only reflects income; it is not a total return. For some funds, the yield may be distorted if the fund reports short-term capital gains as income.

Tax-Cost Ratio (%): Measures how much a fund’s annualized return is reduced by the taxes paid on distributions, assuming the maximum marginal tax rate. A tax-cost ratio of 0.0% indicates that the fund did not pay any taxable income or make capital gains distributions. If a fund had a 3.0% tax-cost ratio, it means that on average each year, investors lost 3.0% of their assets to taxes. The lower the ratio, the more tax-efficient the fund. The ratio is calculated using the last five years of data.

Risk Index—Category and Total: The Category Risk Index is the standard deviation of a fund’s return divided by the standard deviation of return for the average fund in the category. The Total Risk Index is the standard deviation of a fund’s return divided by the average standard deviation of return for all funds. Standard deviation is a measure of return volatility and is computed using monthly returns for the last three years. A value of 1.00 denotes average risk. Values above 1.00 indicate greater risk than average while values below 1.00 indicate less risk than average. Risk numbers that are in the lowest 25% of all funds within the investment category are shown in boldface.

Total Assets ($ Mil): Aggregate fund value in millions of dollars at the end of the calendar year.

Portfolio (%)—Stock/Bond/Other/Cash: The portfolio composition columns classify investments by type and give the percentage of the total portfolio invested in each. Some funds are “funds of funds” and their portfolio holdings may be denoted by “100% other.” Due to rounding of the percentages and the practice of leverage (borrowing) to buy securities, the portfolio total percentage may not equal 100%.

Percent of Port in Foreign Issues: The percentage of the fund’s assets that is invested in foreign stocks and bonds.

Portfolio Turnover Ratio (%): A measure of the trading activity of the fund, which is computed by dividing the lesser of purchases or sales for the year by the monthly average value of the securities owned by the fund during the year. Securities with maturities of less than one year are excluded from the calculation. The result is expressed as a percentage, with 100% implying a complete turnover within one year.

Number of Holdings: The total number of individual securities held by the fund. These can include stocks, bonds, currencies, futures contracts and option contracts. This figure is meant to be a measure of portfolio risk: The lower the number, the more concentrated the fund is in a few issues.

Percent of Portfolio in Top 10 Holdings: Investments, expressed as a percentage of the total portfolio assets, in the fund’s top 10 portfolio holdings. The higher the percentage, the more concentrated the fund is in a few companies or issues, and the more the fund is susceptible to market fluctuations in these few holdings. Used in combination with number of holdings, the percent of portfolio in top 10 investments figure can indicate how concentrated a fund is.

Expense Ratio (%): The sum of administrative fees plus adviser management fees and 12b-1 fees divided by the average net asset value of the fund, stated as a percentage. Brokerage costs incurred by the fund are not included in the expense ratio but are instead reflected directly in net asset value. Front-end loads, back-end loads, redemption fees, and account activity charges are not included in this ratio. Some funds are “funds of funds” and their expense ratios will not reflect the expenses of all funds held by the fund. Expense ratios that are in the lowest 25% of all funds within the investment category are shown in boldface.

Max Load (%): Percentage maximum fee. The letter next to the fee indicates the load type: F = a front-end load (a sales charge incurred upon purchase), and R = a redemption fee that is incurred at the time of sale. A — = no loads or charges. Returns are not adjusted for loads, redemption fees or charges.

12b-1 Fee (%): If a fund has a 12b-1 fee, the percentage that the fund charges is given. A — = no 12b-1 fee is charged.


Performance Tables

Table 1. Performance of Category Averages and Index Benchmarks

 

Category   Annual Total Return (%) Total
Return (%)
Annual
Total Return (%)
Yield
(%)
Total
Risk
Index
Exp
Ratio
2009 2008 2007 2006 2005 Bull Bear 3-Yr 5-Yr 10-Yr (%)
Stk-LC Large-Cap Stock 32 -38.6 8.4 12.9 6.5 57.4 -50.7 -4.7 0.8 0.5 1 1.09 0.98
Stk-MC Mid-Cap Stock 36 -40 9.9 13.4 10.2 59.7 -51.3 -4.1 1.8 3.5 0.5 1.19 1.13
Stk-SC Small-Cap Stock 36.1 -38.8 2.4 14.4 7.1 66.7 -53.3 -5.6 0.7 5.2 0.2 1.29 1.39
LS Long-Short 3.5 -12.4 9.1 9.6 4.5 6.9 -14.7 -1 2.4 3.6 0.8 0.56 1.91
Contra Contra Market -34.7 30.7 -5.6 -8.1 -2.4 -45.2 72.1 -10.2 -6.3 -2.9 0.2 1.46 1.72
Sec-E Energy/Resources Sector 52.8 -53.5 42.9 13.7 41 72.8 -57.9 -0.9 10.3 12 0.7 1.81 1.18
Sec-F Financial/Banking Sector 22.8 -45.9 -10.1 15.1 6.7 67.9 -62.9 -16.7 -7.6 2 1.3 1.45 1.15
Sec-G Gold Sector 59.1 -37.4 23.7 33.1 33.3 61.6 -43.6 6.2 16.1 17.8 1 2.38 1.31
Sec-H Health Sector 28.5 -26 11.3 3.5 14.2 44 -35.6 1.5 4.3 6.6 0.4 1 1
Sec-R Real Estate Sector 35.8 -44.2 -13.2 32.2 12.2 96.8 -66.3 -13.8 -1.2 10.7 2.8 1.91 1.09
Sec-T Technology Sector 62.4 -46.3 16.1 9.9 6 76.3 -54.4 0.2 3.2 -6.8 0 1.34 1.44
Sec-TC Telecommunications Sector 44.5 -44.2 13.4 23 6.8 59.7 -53.7 -3.6 3 -1 1.1 1.32 1.18
Sec-U Utilities Sector 15.2 -32.9 15.6 25.9 12.8 34.6 -43.2 -3.8 4.7 2.1 4 0.95 1.1
Sec-M Miscellaneous Sector 40.7 -37.5 8.6 15.4 5.9 74.9 -52.2 -2.9 2.2 4.6 0.8 1.38 1.14
IntS-Glb Global Stock 33.9 -40.6 12.8 20 13.1 57.4 -51.8 -4 3.4 3.5 0.8 1.15 1.41
IntS-F Foreign Stock 38 -45.9 12.5 25.9 18.3 67.5 -58.6 -5.9 4.4 2.4 1.8 1.32 1.18
IntS-R/C Regional/Country Stock 56.5 -50 26.8 26.7 28.2 89.4 -61.5 -2.4 7.4 4.9 1.2 1.62 1.35
IntS-E Emerging Stock 80 -59.5 40.3 33.8 34.7 112.5 -67.5 -1 13.4 9.5 0.6 1.86 1.57
Bal Balanced: Domestic 22.1 -23.4 7 11 5.6 35 -32 -0.2 3 4 2 0.68 0.95
Bal-Glb Balanced: Global 24.6 -27.4 9.1 11.5 7 40.6 -37 -0.6 2.9 2.8 3.4 0.85 1
TD2000 Target Date: 2000-2014 18.4 -19.3 6.6 9.3 4.5 28 -26.9 0.9 3.4 3.1 2.7 0.52 0.51
TD2015 Target Date: 2015-2029 25.7 -29.1 7 12.5 6.4 42.3 -39.6 -1.6 2.7 0.6 2 0.81 0.67
TD2030 Target Date: 2030+ 31.4 -36 7.6 14.8 7.9 53.6 -48.1 -3.3 2.3 0.8 1.5 1.02 0.67
B-CHY Corp High-Yield Bond 39.6 -20.8 2.5 9.6 2.2 37 -20.4 4 4.6 5.2 6.9 0.68 0.97
B-Cnvt Convertible Bond 38 -29.3 8.9 13.2 4.9 45.7 -34.1 1.3 4.3 3.9 3.4 0.85 1.07
B-MB Mortgage-Backed Bond 6.8 1.2 5.9 4.2 2.4 6.5 3.4 4.5 4 5.1 4.5 0.18 0.7
B-GvST Gov’t: Short-Term Bond 1.6 4.9 6.3 3.8 1.6 1.8 6.5 4.2 3.5 4.3 2 0.1 0.56
B-GvIT Gov’t: Interm-Term Bond 1 9.6 7.8 3.4 2.1 2.6 10.7 6 4.7 5.8 3.3 0.24 0.6
B-GvLT Gov’t: Long-Term Bond -18 30.7 10.4 -0.3 8.5 -6.6 20 5.5 4.4 7.4 3.2 0.86 0.83
B-IP Inflation-Protected Bond 11 -2.5 10.7 0 2.3 12.1 0 6.2 4.2 7.3 1.2 0.45 0.52
B-GenST General Bond: Short 10.2 -5.6 4.2 4.6 2 10 -4.7 2.5 2.7 4.2 4 0.21 0.64
B-GenIT General Bond: Interm 13.4 -2.4 5 4.6 2.1 14.2 -2 5 4.3 5.8 4.5 0.27 0.66
B-GenLT General Bond: Long 15.5 -2.8 4.6 4.1 1.5 18.7 -4.7 5.2 4.2 6.9 5.1 0.44 0.86
B-MNST Muni Nat’l: Short-Term 4.5 1.3 3.6 3.3 1.6 2.9 3.6 3 2.8 3.5 2.5 0.1 0.56
B-MNIT Muni Nat’l: Interm-Term 11 -1.6 3.2 3.7 1.9 7.3 2.5 4 3.5 4.7 3.6 0.25 0.61
B-MNLT Muni Nat’l: Long-Term 14.9 -5.4 2.3 4.7 3.4 9.8 -0.5 3.5 3.7 5.3 4.2 0.33 0.57
B-MHY Muni Nat’l: High-Yield 27.4 -20.5 -1 6.9 5.5 18.8 -16 0 2.4 4.5 5.3 0.53 0.65
IntB-Gen Int’l Bond: General 12.4 -0.4 7.3 5.5 -3.3 17.8 -3.9 6.1 4 5.9 4.1 0.42 0.9
IntB-E Int’l Bond: Emerging 32.1 -16.7 6 11.4 12.8 34.6 -19.1 5.2 7.9 11.7 5.8 0.73 1.05
IntB-C Int’l Bond: Currency 1.7 -3.9 8.4 6.9 6.5 -5.8 1.7 0.1 0.6 1.5
Index Benchmarks
  DJ Industrial Average 22.7 -31.9 8.9 19.1 1.7 51.3 -47.1 -3.1 2 1.3 0.94
  S&P 500 26.5 -37 5.5 15.8 4.9 54.5 -50.9 -5.6 0.4 -1 1.01
  S&P MidCap 400 37.5 -36.5 7.7 10 12.3 64.2 -49.5 -2 3.1 6.1 1.21
  S&P SmallCap 600 25.6 -31.1 -0.3 15.1 7.7 63.4 -51.3 -4.8 1.4 6.4 1.27
  MSCI EAFE 32.5 -43.1 11.6 26.9 14 63.5 -56.3 -5.6 4 1.6 1.22
  MSCI Europe 36.8 -46.1 14.4 34.4 9.9 71 -58.9 -5.5 4.5 2.4 1.31
  MSCI Far East 12.8 -32.3 0.3 8.9 24.2 36.2 -47 -8.5 0.7 -2.6 1.01
  MSCI Pacific 24.3 -36.2 5.6 12.5 23 50 -50.6 -5.7 3 -0.3 1.09
  ML US Corp Bond 19.8 -6.8 4.7 4.4 2 21.3 -7.2 5.3 4.5 6.6 0.45
  ML High Yield Bond 56.3 -26.2 2.2 11.6 2.8 53.6 -26.2 5.6 6.2 6.8 0.86
  BarCap GNMA 5.4 7.9 7 4.6 3.2 4.8 10.7 6.7 5.6 6.3 0.17
  BarCap US Gov’t 1-3 Yr 1.4 6.7 7.1 4.1 1.7 1.6 8.4 5 4.2 4.7 0.09
  BarCap US Gov’t Interm -0.3 10.4 8.5 3.8 1.7 1.1 11.8 6.1 4.7 5.7 0.19
  BarCap US Gov’t Long -12.2 22.7 9.7 2.1 6.6 -3.2 16 5.7 5.2 7.7 0.64
  BarCap US Bond Market 5.9 5.2 7 4.3 2.4 7.2 6 6 5 6.3 0.21
  BarCap Municipal Bond  12.9 -2.5 3.4 4.8 3.5 8.3 2.5 4.4 4.3 5.8 0.3
  Treasury Bills 0.2 1.4 4.4 4.9 3.3 0.1 1.9 2 2.8 2.7 0.03

 



Table 2. Top 50 Performers for 2009

 

Closed Category Fund (Ticker) Annual Total Return (%) Total
Return (%)
Annual
Total Return (%)
Total
Risk
Index
 
Exp
Bull Bear Ratio
2009 2008 2007 2006 2005 Mrkt Mrkt 3-Yr 5-Yr 10-Yr (%)
  IntS-R/C T. Rowe Price Em EurMedi (TREMX) 125.1 -75.9 27.9 34.7 59 167.2 -78.4 -11.4 8.3 ? 2.26 1.98
  Sec-M Fidelity Sel Automotive (FSAVX) 122.2 -61.3 0 13.3 -1.8 213.8 -77.4 -4.9 -0.9 4.6 2.61 1.15
  IntS-R/C T. Rowe Price Latin Amer (PRLAX) 114.3 -55.8 48.9 51.2 60 133.1 -61.6 12.2 27.9 18.4 1.92 1.22
  IntS-R/C T. Rowe Price New Asia (PRASX) 102.7 -61 66.3 36.1 26.4 128.7 -67.5 9.5 17.7 8.8 1.98 0.96
  IntS-R/C Metzler/Payden EuroEmMkts (MPYMX) 101.3 -66.6 28.4 46.2 37.9 164.3 -75 -4.7 11.8 2.13 1.48
  IntS-R/C Matthews India (MINDX) 97.2 -62.4 64.1 36.4 140.6 -66.2 6.8 2.16 1.29
  IntS-R/C Guinness Atkinson Chin&HK (ICHKX) 92.7 -54.5 65 39.6 6.6 121 -66.7 13.1 16.6 9.5 1.91 1.53
  IntS-R/C Fidelity Latin America (FLATX) 91.5 -54.7 43.7 44.3 55.1 103.8 -59.6 7.7 22.8 14.9 1.83 1.07
  Sec-T Fidelity Sel Technology (FSPTX) 90.2 -51.1 19.7 7.5 4.9 103.3 -59.2 3.6 4.6 -5.4 1.58 0.9
  IntS-E Bernstein Emerging Mkts (SNEMX) 87.4 -56.6 34 28.8 28.7 112.4 -64.7 2.9 12.6 12.3 1.7 1.51
  Sec-G Tocqueville Gold (TGLDX) 86.5 -35 12.4 39.2 30 74.8 -37.6 10.9 19.8 21.7 2.17 1.44
  IntS-E T. Rowe Price Emg Mkt St (PRMSX) 85 -60.6 42.9 32 38.7 117 -68.1 1.4 13.8 9.3 1.88 1.24
  Sec-T Fidelity Sel Electronics (FSELX) 84.9 -49.9 4.6 0.3 15.7 98.2 -57.1 -1 2.4 -4.9 1.53 0.89
  Sec-T Fidelity Sel Computers (FDCPX) 83.1 -48.6 22.4 9.4 2.6 94.4 -55.6 4.9 5.3 -4.9 1.45 0.92
C Stk-LC Vanguard Capital Value (VCVLX) 81.4 -48.9 -7.7 18.9 4.2 118.1 -62.7 -5 1.2 1.56 0.52
  Sec-TC Fidelity Sel Comm Equip (FSDCX) 80.6 -48.5 9.7 2.2 3.5 94.1 -58.4 0.7 1.5 -6.7 1.63 0.95
  Sec-T T. Rowe Price Glob Tech (PRGTX) 80.2 -44.1 13.4 10 10.9 93.9 -52.9 4.6 6.9 1.4 1.32
  Sec-E Fidelity Sel Materials (FSDPX) 78.6 -47.6 29.2 19.4 14.3 96.7 -53.7 6.5 10.5 11.2 1.56 0.9
  IntS-R/C Matthews China (MCHFX) 78.3 -49 70.1 64.8 6.9 98 -60 15.7 22.2 17.1 1.74 1.23
  IntS-F Janus Overseas J (JAOSX) 78.1 -52.8 27.7 47.2 32.3 91.5 -58.7 2.4 15.9 4.9 1.62 0.9
  Sec-G Vanguard Prec Mtls Mining (VGPMX) 76.4 -56.1 36.1 34.3 43.7 102.7 -64 1.8 15.3 17.7 2.1 0.39
  IntS-E Fidelity Emerging Market (FEMKX) 76 -60.9 45 33.3 44.3 103.7 -68.1 0 13.9 7.9 1.81 1.16
  IntS-E Vanguard Em Mkt Idx (VEIEX) 75.9 -52.9 38.9 29.3 32 104 -62.7 4.8 14.5 9.8 1.69 0.39
  IntS-R/C Matthews Pacific Tiger (MAPTX) 75.3 -46.2 33.6 27.2 22.5 108.3 -58 8.1 14.5 11.5 1.63 1.12
  IntS-F Wasatch International Opp (WAIOX) 75 -54.8 15.1 31.5 102.8 -65.4 -3.1 1.54 2.25
  IntS-E Northern Mlt-Mgr EmgMktEq (NMMEX) 75 102.2 1.48 1.5
  IntS-E USAA Emerging Markets (USEMX) 74.8 -51.7 33.6 29.3 25.5 100.3 -60.3 4.1 12.9 7.9 1.61 1.79
  IntS-E Northern Emerging Mkts Eq (NOEMX) 72.8 -53.1 36.5 99.6 -62.8 3.4 1.66 0.76
  B-CHY Fidelity Capital & Inc (FAGIX) 72.1 -31.9 3.7 13 5 71.5 -33.2 6.7 7.6 6.8 0.92 0.75
  IntS-E SSgA Emerg Markets Instl (SSEMX) 70.2 -56.4 40.9 33.4 37.2 95.9 -65.5 1.5 13.9 9.4 1.7 1.23
  IntS-E Driehaus Emerg Mkts Grth (DREGX) 70 -54.5 42.3 41.2 38.9 94.9 -62.3 3.3 16.7 12 1.58 1.77
C IntS-E Lazard Emrg Mkt Eq Open (LZOEX) 69.1 -48.1 32.7 29.9 41.3 97.1 -57.2 5.2 16.4 11.2 1.57 1.54
  Sec-TC T. Rowe Price Med & Tele (PRMTX) 68.5 -46.5 21.8 28.5 18.1 83.8 -53.9 3.2 10.7 5 1.39 0.9
  Sec-E US Global Inv Glob Res (PSPFX) 68.2 -62.2 39.9 22.1 48.9 77 -65.2 -3.8 10.1 16.8 1.87 1.51
  Sec-T T. Rowe Price SciTech (PRSCX) 67.8 -43.8 11.8 7.1 2.4 76.9 -51.6 1.8 2.9 -8.6 1.36 1
  IntS-F Oakmark Intl Small Cap I (OAKEX) 67.4 -45.8 -8.4 34.9 21.2 99.2 -60 -5.9 6.3 10.1 1.48 1.41
  Stk-MC Aston/Optimum Mid Cap N (CHTTX) 66.1 -42.9 12.9 20.9 1.3 96.6 -54.4 2.3 5.6 10.3 1.41 1.16
  IntS-R/C Fidelity China Region (FHKCX) 65.5 -44.9 46.2 29.6 14.4 83.9 -57.1 10.1 14.6 7.2 1.61 1.12
  Sec-M Fidelity Sel Chemicals (FSCHX) 65.3 -43.4 28.4 16.8 1.1 78.7 -48.6 6.3 7.2 10.3 1.38 0.91
  Stk-SC Dreyfus Small Co Value (DSCVX) 64.3 -32 4.9 5 7.1 87.4 -44 5.4 5.7 8.2 1.36 1.38
  B-Cnvt Fidelity Convertible Sec (FCVSX) 64.1 -47.8 16.2 15.1 5.9 78.9 -54.1 -0.2 3.9 4.7 1.38 0.78
  Stk-MC Ariel (ARGFX) 63.4 -48.3 -1.7 10.3 0.9 120.3 -64.3 -6 -1.6 7.2 1.73 1.07
  IntS-E Harding Loevner Emrg Mkt (HLEMX) 63.4 -52.4 35.9 28.7 38.6 90.9 -61.2 1.9 13.5 11.7 1.59 1.64
  Sec-E Guinness Atkinson Glbl Enrgy (GAGEX) 63.2 -48.6 37.2 9.8 63.9 83.5 -52.9 4.8 15.7 1.74 1.31
  Stk-MC Ariel Appreciation (CAAPX) 62.9 -40.8 -1.4 10.9 2.9 100.2 -55.1 -1.7 1.6 7.1 1.45 1.19
  Stk-LC Yacktman Focused (YAFFX) 62.7 -23.5 3.4 16.1 -1.9 97.4 -38.3 8.8 8 11.8 1.22 1.25
  Stk-SC Fidelity Small Cap Stock (FSLCX) 62.6 -43 7.7 12.3 8 98 -55.9 0 3.9 7.3 1.45 0.96
  Sec-G USAA Prec Metals&Min (USAGX) 62.4 -24.6 27.6 43.1 39.2 63 -30.5 16 25.5 24.4 2.4 1.31
  Stk-LC Fidelity OTC (FOCPX) 62.2 -46 26.1 9.4 8.9 75.4 -53.5 3.4 5.6 -1.9 1.32 1.13
  Stk-SC Royce Opportunity Invt (RYPNX) 62.1 -45.8 -2 18.7 4.7 109.5 -61.8 -4.9 1.4 9.7 1.68 1.23

 

 



Table 3. Bottom 50 Performers for 2009

 

Closed Category Fund (Ticker) Annual Total Return (%) Total
Return (%)
Annual
Total Return (%)
Total
Risk
Index
 
Exp
Bull Bear Ratio
2009 2008 2007 2006 2005 Mrkt Mrkt 3-Yr 5-Yr 10-Yr (%)
  Contra ProFunds UltraSh Emkt Inv (UVPIX) -77.2 13.6 -61.4 -79.3 36.4 -53.6 2.46 1.73
  Contra ProFunds UltraSh NSDQ-100 Inv (USPIX) -67 80.7 -27.7 -8 -1.2 -69.6 122.6 -24.4 -17.1 -16.9 2.22 1.67
  Contra ProFunds Short RealEst Inv (SRPIX) -51.9 -5.3 23.7 -22 -63.9 44.3 -17.4 2 1.68
  Contra Rydex InvS&P500 2xStrgyH (RYTPX) -50.6 66.1 -4 -17.5 -4.6 -64.6 156.3 -7.6 -9.1 1.85 1.73
  Contra Grizzly Short (GRZZX) -47.2 73.6 6.6 -12.2 -3.3 -55 123.8 -0.8 -3.7 1.55 3.24
  Contra ProFunds Shrt NSDQ-100 Iv (SOPIX) -40.6 45.3 -11.7 -1.3 1.2 -43.8 65.2 -8.7 -5.3 1.16 1.73
  Contra ProFunds Short Sm Cp Inv (SHPIX) -33 23.7 5 -11.7 -2.6 -45.5 63.9 -4.5 -5.6 1.25 1.73
  Contra ProFunds Bear Inv (BRPIX) -28 39.7 0.8 -7.2 -1.2 -39.5 76.1 0.5 -1.4 0.2 0.96 1.68
  Contra Rydex Inv S&P 500 Str Inv (RYURX) -27.3 40.9 1.2 -7 -0.7 -39.2 78.5 1.2 -0.9 0.9 0.97 1.43
  Contra ProFunds Short OilGas Inv (SNPIX) -25.9 12.1 -23.9 -16.5 -33.8 21.9 -14.2 1.1 1.73
  B-GvLT Wasatch-Hoisington US Tr (WHOSX) -22.6 37.7 10 -0.2 10.4 -9.5 24.2 5.4 5.2 7.8 0.95 0.74
  B-GvLT AmCent Target 2025 Inv (BTTRX) -22.3 26.7 9.7 -1.4 14.6 -7.8 12.3 2.6 4.1 8.4 1.02 0.57
  LS James Market Neutral (JAMNX) -17.8 -5.1 6.6 -0.5 7.9 -14.5 -6.6 -6 -2.2 1.8 0.41 2.28
  IntB-C Rydex Str Dollr 2xStrH (RYSBX) -16.3 7.2 -10.9 -10.5 -27.2 24.6 -7.2 1.06 1.69
  Contra PIMCO StocksPLUS Sh D (PSSDX) -14.4 47.7 5.9 -28.2 90.2 10.2 4.6 0.88 1.09
  B-GvLT Fid Spt L/T Tr Bd Ix Inv (FLBIX) -13.5 24.1 9.5 1.7 -3.8 16.3 5.5 0.66 0.2
  B-GvLT Dreyfus US Try L/T (DRGBX) -13.2 21.5 10.3 1.2 5.6 -3.8 14.6 5.2 4.5 6.1 0.65 0.65
  B-GvLT Vanguard Long-Tm US Try (VUSTX) -12.1 22.5 9.2 1.7 6.6 -2.9 15.5 5.5 5 7.4 0.64 0.25
  B-GvLT T. Rowe Price US Try L/T (PRULX) -10.9 23.2 9.9 1 5.4 -2.2 17.2 6.5 5.1 7 0.64 0.55
  LS Nakoma Absolute Return (NARFX) -9.2 -4.4 15.1 -8.6 -3.2 0 0.33 1.89
  B-GvIT Fid Spt Int Tr Bd Ix Inv (FIBIX) -5.1 16.3 10 2.6 -1 15.8 6.7 0.38 0.2
  LS Rydex/SGI Mgd Ftrs Str H (RYMFX) -4.3 8.5 -4.6 12.6 0.51 2.17
  LS Caldwell & Orkin Mkt Opp (COAGX) -3.4 -4.7 33 7.4 -0.2 -2.9 -1 7 5.6 4.3 0.49 1.21
  B-GvIT Vanguard Int-Tm Treas (VFITX) -1.7 13.3 9.9 3.1 2.3 1.3 14 7 5.2 6.7 0.32 0.25
  B-GvIT AmCent Target 2015 Inv (BTFTX) -1.6 12.7 10 2 4.9 2.1 12.9 6.9 5.5 8.6 0.43 0.57
  B-GvIT T. Rowe Price US Try Int (PRTIX) -1.4 14.1 9.9 2.5 1.5 1 15.6 7.3 5.1 6 0.31 0.52
  IntB-Gen Northern Global Fix Inc (NOIFX) -0.3 10.9 9.3 4.7 -8 7.5 5.1 6.5 3.1 5.2 0.44 1.15
  B-GvST Fid Spt S/T Tr Bd Ix Inv (FSBIX) -0.2 8.7 7.8 3.5 0.8 10.2 5.4 0.14 0.2
  B-GvST AmCent Target 2010 Inv (BTTNX) 0 6.9 8.3 2.8 1.3 0.6 9.1 5 3.8 6.9 0.14 0.57
  IntB-C Merk Asian Currency Inv (MEAFX) 0.5 2 0.16 1.3
  B-GvIT Fidelity Interm Govt Inc (FSTGX) 0.8 10 7.8 3.6 1.4 1.7 11.9 6.2 4.7 5.6 0.18 0.45
  B-GvST Northern Sh-Int US Govt (NSIUX) 0.9 7.5 5.4 3.9 0.6 1.6 8.8 4.6 3.6 4.3 0.14 0.9
  B-GvIT Fidelity Government Inc (FGOVX) 1.2 11 7.8 3.5 2.4 2.6 12.5 6.6 5.1 6.1 0.22 0.45
  B-GvST Vanguard Short-Tm Trs (VFISX) 1.4 6.6 7.8 3.7 1.7 1.5 9.1 5.3 4.2 4.9 0.12 0.22
  B-MS-CA Schwab CATxFr YieldPlus (SWYCX) 1.7 -8.2 1.2 3.3 1.7 0.8 -7 -1.8 -0.1 0.17 0.49
  B-GenLT Vanguard LongTm Bd Idx (VBLTX) 1.7 8.6 6.5 2.6 5.3 10.4 2.2 5.6 4.9 7.7 0.6 0.22
  B-GvST AmCent S/T Gov Inv (TWUSX) 2.6 4.7 6.3 3.9 1.6 2.4 6.7 4.5 3.8 4 0.09 0.57
  B-GvST Vanguard ShtTm Fed (VSGBX) 2.7 7 7.4 4.3 1.8 2.6 9.5 5.7 4.6 5.1 0.12 0.22
  B-GvST Payden U.S. Government (PYUSX) 2.8 7.5 7 4 1 2.9 9.8 5.8 4.4 5 0.12 0.61
  B-MNST Vanguard Sht-Tm TE (VWSTX) 3 3.7 4.1 3.2 1.6 2.1 5.6 3.6 3.1 3.1 0.05 0.2
  B-GvIT AmCent Govt Bd Inv (CPTNX) 3 9.5 7.8 3.9 2.4 3.3 12.3 6.7 5.3 6 0.2 0.49
  B-MNST Alpine UltrSh TaxOpt Inc (ATOIX) 3.2 3.5 4.1 4 2.1 2.6 5 3.6 3.4 0.02 0.7
  IntB-C ProFunds Fall US Doll Inv (FDPIX) 3.2 -5.7 11.5 10 11.7 -12.4 2.7 0.51 1.73
  B-MS-CA Bernstein Short Dur CA Muni (SDCMX) 3.5 3 3.5 2.7 1.1 2.5 4.7 3.3 2.8 2.8 0.07 0.69
  B-GvIT WF Adv Govt Secs Inv (STVSX) 3.5 7.5 6.9 3.5 2.1 4.3 9 6 4.7 5.9 0.19 0.95
  B-MS-NY Bernstein Short Dur NY Muni (SDNYX) 3.6 2.8 3.6 2.7 1.5 2.7 4.5 3.3 2.8 2.9 0.06 0.67
  B-MS-MD T. Rowe Price MD S/T T/F (PRMDX) 3.7 3.3 3.7 2.8 0.8 2.3 5.7 3.6 2.9 3.2 0.09 0.58
  B-GenST Vanguard Sh-Tm Bd Idx (VBISX) 4.2 5.4 7.2 4 1.3 4.4 7.4 5.6 4.4 5 0.13 0.22
  B-GenIT Schwab Total Bd Mkt (SWLBX) 4.4 -4.5 4.7 4.5 2.6 6.9 -6 1.5 2.3 4.8 0.24 0.55
  LS Hussman Strategic Growth (HSGFX) 4.6 -9.1 4.1 3.5 5.7 2.2 -6.1 -0.3 1.6 0.43 1.09

 



Table 4. Performance of the 50 Most Widely Held Funds

 


Closed Category Fund (Ticker) Total
Assets
($ Mil)
Annual Total Return (%) Total
Return (%)
Annual
Total Return (%)
 
Total
Bull Bear Risk
2009 2008 2007 2006 2005 Mrkt Mrkt 3-Yr 5-Yr 10-Yr Index
  Stk-LC Vanguard Tot Stk (VTSMX) 58,004 28.7 -37.1 5.4 15.5 5.9 56.6 -50.8 -5.1 0.9 -0.3 1.04
  Stk-LC Fidelity Contrafund (FCNTX) 57,153 29.2 -37.2 19.7 11.5 16.2 47.7 -46.3 -1 4.7 3.1 0.94
  Stk-LC Vanguard 500 Idx Inv (VFINX) 48,313 26.4 -37.1 5.3 15.6 4.7 54.5 -50.9 -5.7 0.3 -1.1 1.01
  Stk-LC Dodge & Cox Stock (DODGX) 39,986 31.2 -43.4 0.1 18.5 9.3 67.8 -57.9 -9.4 -0.7 5.6 1.21
  IntS-F Dodge & Cox Intl Stock (DODFX) 36,758 47.4 -46.7 11.7 28 16.7 87.8 -59.9 -4.3 5.5 1.44
  IntS-F Fidelity Diversified Int (FDIVX) 32,049 31.7 -45.3 16 22.5 17.2 60.6 -57.5 -5.8 3.7 3.9 1.28
  Bal Vanguard Wellington (VWELX) 28,290 22.2 -22.3 8.3 14.9 6.8 38.1 -32.5 0.9 4.7 6.1 0.69
C Stk-LC Fidelity Growth Company (FDGRX) 28,159 41.1 -41 19.8 9.5 13.5 58.1 -50.2 0 4.4 -0.9 1.12
  IntS-F Vanguard Total Intl Stk Idx (VGTSX) 26,044 36.7 -44.1 15.5 26.6 15.5 71.7 -58.5 -4.1 5.2 2.2 1.32
  Stk-MC Fidelity Low-Priced Stk (FLPSX) 24,672 39 -36.2 3.1 17.7 8.6 63.6 -48.8 -2.9 3.2 11 1.17
  Stk-LC Fidelity Magellan (FMAGX) 22,610 41.1 -49.5 18.8 7.2 6.4 65.1 -58.2 -5.4 -0.7 -2.3 1.34
  Stk-LC Vanguard Windsor II (VWNFX) 22,005 27 -36.8 2.2 18.2 7 58.5 -52.8 -6.4 0.7 4.1 1.05
  TD2015 Fidelity Freedom 2020 (FFFDX) 20,182 28.8 -32.2 8.5 11.6 7.7 46 -42.3 -1.8 2.6 1.7 0.85
  B-GenIT Vanguard Total Bd Idx (VBMFX) 19,555 5.9 5 6.9 4.2 2.4 7.1 6 5.9 4.9 6 0.21
  B-GenIT Dodge & Cox Income (DODIX) 19,240 16 -0.3 4.6 5.3 1.9 16.9 -0.3 6.6 5.4 6.8 0.29
C Stk-LC Vanguard PRIMECAP (VPMCX) 19,056 34.4 -32.5 11.4 12.3 8.4 57 -44.3 0.4 4.3 3.2 1
  Bal Fidelity Balanced (FBALX) 18,108 28 -31.4 8.9 11.6 10.6 42.4 -40.4 -1.4 3.4 5.2 0.81
  B-MB Vanguard GNMA (VFIIX) 17,777 5.2 7.2 7 4.3 3.3 4.8 10 6.5 5.4 6.2 0.17
  Stk-LC T. Rowe Price Gr Stk (PRGFX) 17,737 43.2 -42.3 10.3 14 6.5 55.2 -49.1 -3 2.1 1.1 1.06
  Bal Fidelity Puritan (FPURX) 16,792 26.6 -29.2 6.1 14.7 4.6 40.4 -37.8 -1.6 2.7 4.1 0.73
  Stk-LC Fidelity Equity-Inc (FEQIX) 16,556 29.5 -41.7 1.4 19.8 5.7 65.1 -57 -8.5 -0.6 1.8 1.16
  Bal Oakmark Equity & Inc I (OAKBX) 15,609 19.8 -16.2 11.9 10.8 8.6 31.6 -24.7 3.9 6.2 9.8 0.58
  Bal Dodge & Cox Balanced (DODBX) 15,468 28.3 -33.6 1.7 13.8 6.5 52.1 -45.7 -4.7 1 6.2 0.94
  Stk-LC T. Rowe Price Eq Inc (PRFDX) 15,231 25.6 -35.8 3.3 19.1 4.2 62.2 -52.5 -5.9 0.7 4.1 1.09
  B-GenST Vanguard Sht-Tm Inv-Grade (VFSTX) 14,722 14 -4.8 5.8 4.9 2.2 12.3 -2.1 4.7 4.2 4.9 0.21
  B-GenIT PIMCO Total Ret D (PTTDX) 14,490 13.5 4.4 8.7 3.6 2.5 13.8 7 8.8 6.5 7.3 0.25
  TD2030 Fidelity Freedom 2030 (FFFEX) 14,111 30.5 -37 9.2 12.9 8.8 52 -48.3 -3.5 2 0.8 0.97
  Stk-MC T. Rowe Price Mid Gr (RPMGX) 13,862 45.4 -39.7 17.6 6.7 14.8 62.1 -48.2 1 4.8 5.6 1.19
  B-IP Vanguard Infl-Prot Secs (VIPSX) 12,946 10.8 -2.9 11.5 0.4 2.5 11.5 0.1 6.3 4.3 0.45
  Bal Vanguard STAR (VGSTX) 12,684 24.8 -25.2 6.5 11.6 7.4 40.7 -35.6 -0.2 3.6 5.1 0.73
  Sec-H Vanguard Health Care (VGHCX) 11,755 20.9 -18.5 4.4 10.8 15.4 41.2 -31.8 0.9 5.6 9.2 0.87
  B-GenIT Fidelity Total Bond (FTBFX) 11,443 19.7 -5.6 4.1 5.1 2.4 18.6 -3.3 5.6 4.8 0.29
  B-CHY Fidelity Capital & Inc (FAGIX) 11,342 72.1 -31.9 3.7 13 5 71.5 -33.2 6.7 7.6 6.8 0.92
  IntS-F Vanguard Intl Gr Inv (VWIGX) 11,309 41.6 -45 15.9 25.9 15 71.7 -56.9 -3.3 5.5 2.4 1.31
  TD2000 Fidelity Freedom 2010 (FFFCX) 11,252 24.8 -25.4 7.4 9.4 5.9 37.7 -34 0 3 2.7 0.68
  Stk-LC Fairholme (FAIRX) 11,208 39 -29.8 12.3 16.7 13.7 75.2 -47.8 3.1 7.8 13.2 1.29
  Stk-LC Fidelity Blue Chip Grth (FBGRX) 11,107 44.9 -38.6 11.8 5.5 4 66.8 -48.8 -0.2 1.7 -2.2 1.1
  Stk-LC T. Rowe Price Eq Idx 500 (PREIX) 11,082 26.3 -37.1 5.1 15.4 4.6 54.4 -51 -5.8 0.1 -1.2 1.01
  TD2015 Vanguard Target Rtmt 2025 (VTTVX) 10,949 24.8 -30.1 7.5 13.2 5.4 46 -42.4 -2.1 2.3 0.85
  Stk-LC Fidelity Disciplined Eq (FDEQX) 10,811 21.9 -40.1 10.8 14.5 10.2 46.3 -51.8 -6.8 0.4 -0.2 1.03
  TD2015 Vanguard Target Rtmt 2015 (VTXVX) 10,405 21.2 -24.1 7.5 11.4 4.9 37.9 -34.9 -0.4 2.9 0.71
  B-GenIT Fidelity U.S. Bond Index (FBIDX) 10,383 6.4 3.7 5.3 4.3 2.2 7.1 4.8 5.1 4.4 6 0.19
  B-GenIT T. Rowe Price New Inc (PRCIX) 9,641 12.3 1.4 6.3 4.1 2.8 12.4 3.1 6.5 5.3 6.3 0.22
C Stk-LC Janus Twenty J (JAVLX) 9,358 43.2 -42 35.9 12.3 9.4 56 -47 4.1 6.7 -2.5 1.24
  Stk-LC T. Rowe Price BlChpGr (TRBCX) 9,197 42.5 -42.7 13 9.7 5.9 56.5 -50 -2.6 1.4 -0.4 1.07
  TD2015 Fidelity Freedom 2025 (FFTWX) 8,881 30 -33.7 8.6 11.8 8.1 48.6 -44.2 -2.2 2.5 0.89
  Bal T. Rowe Price Cap Apprec (PRWCX) 8,784 33 -27.2 4.5 14.5 6.8 48.1 -36.4 0.4 4.4 9.2 0.86
  IntS-F Fidelity Intl Disc (FIGRX) 8,598 30 -44.3 18.9 24.2 18.5 59.5 -57 -4.9 4.9 3.3 1.23
  TD2015 Fidelity Freedom 2015 (FFVFX) 8,560 25.6 -27.2 7.8 10.3 7 39.2 -36.2 -0.5 3.1 0.72
  Stk-LC Janus (JANSX) 8,547 37.2 -39.9 15.2 10.5 3.9 54.6 -48.5 -1.7 1.8 -3.7 1.08

 



More on Mutual Funds

Getting Started in Fund Investing

The AAII Investor Classroom at www.aaii.com/classroom provides a step-by-step understanding of important investment ideas and techniques. It includes two mini-courses that focus on mutual funds. The first, "Understanding How Mutual Funds Work," covers the basic mechanics of funds for beginners:

The second, "Choosing the Best Fund for You," is for those who want to learn how to narrow the number of fund choices:

Managing Your Portfolio

For guidance on building and managing a portfolio of funds, go to the Funds/ETFs area at www.aaii.com/mfunds for these and other articles:

Trolling for More Data

For more in-depth fund data and screening tools, AAII's "Guide to the Top Web Sites" directs you to the best places on the Internet.

Sharing Ideas

AAII Funds/ETFs Discussion Board provides an arena where you can talk about investing in mutual funds with other AAII members. Share your ideas and ask questions of fellow members to get real-world advice.


Category & Style Definitions

Mutual Fund Categories

Mutual funds come in all shapes and sizes; there are thousands of mutual funds, each with its own characteristics. Many mutual funds, however, have shared investments that generally lead to other characteristics that are similar.

These shared characteristics allow us to divide mutual funds into categories; here we define the mutual fund categories used in AAII's Guide to the Top Mutual Funds. In the Guide, the individual fund listings appear alphabetically within each category.

The table on page 8 provides average returns and risk of funds by category, which illustrate some of the differences between these categories.

Stock Funds

Portfolio managers of mutual funds that invest in common stocks can choose from the stocks of different industries, stocks at different stages of development, and even stocks of different countries and regions. Over the stock market cycles, large stocks behave differently from small stocks, domestic stocks do not move in unison with foreign or emerging market stocks, and stocks in different sectors or industries react differently to the same economic and business conditions.

For investors to make initial investment decisions on stock mutual funds and to compare and evaluate the ongoing performance of investments in stock mutual funds, grouping similar funds together into cohesive categories is a logical first step. The stock fund categories provided in this guide to facilitate your selection and monitoring of fund investments encompass domestic funds, sector funds, and international funds.

Domestic Stock Funds

In funds categorized by stock size, the "cap" stands for capitalization (market share price times number of shares of common stock outstanding).

Large-cap stocks are usually stocks of national or multinational firms with well-known products or services provided to consumers, other businesses, or governments. Most of the stocks in the Dow Jones industrial average, the S&P 500 and the NASDAQ 100 are, for example, large-cap stocks. While some large-cap stocks are more volatile than others, a well-diversified mutual fund portfolio of large-cap stocks would perform similarly to most investors' conception of the stock market. Large-cap stocks, as a category, also tend to pay the highest cash dividends, although many large-cap stocks pay no dividends. Large-cap stock funds, in summary, tend to have the lowest volatility and highest dividend yield in the domestic common stock group.

Mid-cap stocks are, as their name implies, smaller than the largest domestic stocks. They are usually established firms in established industries with regional, national and sometimes international markets for their products and services. The S&P MidCap 400 index is a common benchmark for mid-cap stocks. These funds would tend to have lower dividend yields than large-cap funds and to have somewhat higher volatility.

Small-cap stocks are often emerging firms in sometimes emerging industries. But also, these small companies can be established firms with local, regional and sometimes even national and international markets. The benchmark for this group is the S&P SmallCap 600 index. These stocks must have liquid enough trading for mutual funds to invest and, although small, are still listed on the New York Stock Exchange, the American Stock Exchange or NASDAQ. These small-cap funds tend to be more volatile than large-cap and mid-cap funds, have very low dividend yields, and often do not move in tandem with large-cap and mid-cap funds.

The large-, mid- and small-cap categories capture a fund's predominant focus and are important because these size categories do not all behave alike in a market sense. The stocks do tend to move in somewhat different cycles and have pronounced differences in risk and return over time.

Neutral/Inverse Funds

Long-short funds hold sizable stakes in both long and short positions. Some funds are market neutral, dividing their exposure equally between long and short positions in an attempt to earn a modest return that is not tied to the market's fortunes. Others shift exposure to long and short positions depending upon their macro outlook or the opportunities they uncover through bottom-up research.

Contra stock market funds invest in short stock positions and derivatives. Because these funds often have extensive holdings in shorts or puts, returns generally move in the opposite direction of the benchmark index.

Sector Stock Funds

Sector funds concentrate their stock holdings in just one industry or a few related industries. They are diversified within the sector, but are not broadly diversified. They may invest in the U.S. or internationally. They are still influenced and react to industry/sector factors as well as general stock market factors. Sector funds have greater risk than diversified common stock funds. While there are a substantial number of sectors represented by mutual funds, a handful of sector designations cover most of the sector fund offerings: energy/resources, financial/banking, gold, health, real estate, technology, telecommunications, and utilities. As is clear from this sector category list, some sectors are of greater risk than others-technology versus utilities, for example. By definition, a sector fund is a concentrated, not diversified, fund holding.

International Stock Funds

International stock funds invest in the stocks of foreign firms. Some stock funds specialize in a single country, others in regions, such as the Pacific or Europe, and others invest in multiple foreign regions. In addition, some stock funds-usually termed "global funds"-invest in both foreign and U.S. securities. We have four classifications by type of investment for the international stock funds category-foreign stock funds, global stock funds, regional/country stock funds and emerging market stock funds.

International funds provide investors with added diversification. The most important factor when diversifying a portfolio is selecting investments whose returns are not highly correlated. Within the U.S., investors can diversify by selecting securities of firms in different industries. In the international realm, investors take the diversification process one step further by holding securities of firms in different countries. The more independently these foreign markets move in relation to the U.S. stock market, the greater the diversification benefit will be, and the lower the risk of the total portfolio.

In addition, international funds overcome some of the difficulties investors face in making foreign investments directly. For instance, individuals have to thoroughly understand the foreign brokerage process, be familiar with the various foreign marketplaces and their economies, be aware of currency fluctuation trends, and have access to reliable financial information in order to invest directly in foreign stocks. This can be a monumental task for the individual investor.

There are some risks unique to investing internationally. In addition to the risk inherent in investing in any security, there is an additional exchange rate risk. The return to a U.S. investor from a foreign security depends on both the security's return in its own currency and the rate at which that currency can be exchanged for U.S. dollars. Another uncertainty is political risk, which includes government restriction, taxation, or even total prohibition of the exchange of one currency into another. Of course, the more the mutual fund is diversified among various countries, the less the risk involved.

Balanced Stock/Bond Funds

In general, the portfolios of balanced funds consist of investments in common stocks and significant investments in bonds and convertible securities. The range as a percentage of the total portfolio of stocks and bonds is usually stated in the investment objective, and the portfolio manager has the option of allocating the proportions within the range. Some asset allocation funds-funds that have a wide latitude of portfolio composition change-can also be found in the balanced category. Some are also global balanced funds, allocating part of their portfolio to foreign investments.

A balanced fund is generally less volatile than a stock fund and provides a higher dividend yield.

Target Date Funds

Target date funds have year designations that investors can match to their planned retirement date. They invest in a mix of domestic and foreign stocks and bonds that becomes more conservative and income-oriented as the target date draws near--the allocation to stocks decreases and the allocation to bonds increases. Risk declines and income increases as the target date approaches. Once the target date has passed, they become income funds. Target date funds are composed of other funds from the same fund family-they are in essence funds of funds.

[For more on target date funds, see "Taking Aim at Your Retirement: A Look at Target Date Mutual Funds" by John Markese from the June 2009 AAII Journal.]

Bond Funds

Bond mutual funds are attractive to investors because they provide diversification and liquidity, which is not as readily attainable in direct bond investments.

Bond funds have portfolios with a wide range of average maturities. Many funds use their names to characterize their maturity structure. Generally, short term means that the portfolio has a weighted average maturity of less than three years. Intermediate implies an average maturity of three to 10 years, and long term is over 10 years. The longer the maturity, the greater the change in fund value when interest rates change. Longer-term bond funds are riskier than shorter-term funds, and they usually offer higher yields.

Taxable Bond Funds

Bond funds are principally categorized by the types of bonds they hold.

Government bond funds invest in the bonds of the U.S. government and its agencies, while mortgage funds invest primarily in mortgage-backed bonds. General bond funds invest in a mix of government and agency bonds, corporate bonds (investment grade), and mortgage-backed bonds. Government and general bond funds are further categorized by maturity: short-term, intermediate-term and long-term.

A special category of inflation-protected bond funds hold Treasury Inflation Protected Securities (TIPS).

Corporate high-yield bond funds provide high income but invest generally in corporate bonds rated below investment grade, making them riskier.

Convertible bond funds invest primarily in preferred stocks and bonds that are convertible into common stocks. These securities exhibit characteristics of both stocks and bonds by offering yield and the possibility of capital appreciation.

Municipal and State-Specific Bond Funds

Tax-exempt municipal bond funds invest in bonds whose income is exempt from federal income tax. Some tax-exempt funds may invest in municipal bonds whose income is also exempt from the income tax of a specific state.

International Bond Funds

International bond funds allow mutual fund investors to hold a diversified portfolio of foreign corporate and government bonds. These foreign bonds often offer higher yields, but carry additional risks beyond those of domestic bonds. As with foreign common stocks, currency risk can be as significant as the potential default of foreign government bonds-a particular risk with the debt of emerging countries. International bond funds are categorized as general or emerging.

Stock Fund Style Definitions

For domestic stock funds, one other element can be superimposed over stock size distinctions to better understand performance and risk in different market environments: the growth or value investment management style of the fund portfolio manager. In the Guide, style is indicated for domestic large-cap, mid-cap and small-cap funds after the fund name by a G for growth investing focus and a V for value investing focus. Funds with G and V follow both styles.

Growth Investing Focus

A small-cap growth fund will act differently than a small-cap value fund and a mid-cap growth fund is more likely to correlate with a small-cap growth fund than a mid-cap value fund. Portfolio managers of growth-managed funds seek out stocks that have either experienced rapid growth in sales or earnings or are expected to have rapid growth. Often these stocks have high price-earnings ratios (price per share divided by earnings per share) and are volatile when expectations for earnings or sales growth change even slightly. Few growth stocks pay any significant dividend, and they are often concentrated in industries such as technology, health, telecommunications and software.

Value Investing Focus

The value style of investment management emphasizes low price to earnings, low price to sales (price per share divided by sales per share), and higher dividend yields. The trade-off relative to growth stocks is that value stocks have a lower expected growth rate in earnings and sales, but also less risk. Value stocks are often concentrated in insurance, banking, and electric and gas utilities, for example.

For purposes of diversification and risk, it pays to keep in mind the growth/value investment style mix of your stock mutual funds.



Mutual Fund Contact Information

 

Family Fund Name Toll Free Phone Web Address
Advance Capital I 800-345-4783 www.advancecapitalonline.com
Al Frank 888-263-6443 www.alfrank.com
AllianceBernstein 800-227-4618 www.alliancebernstein.com
Alpine 888-785-5578 www.alpinefunds.com
Amana 888-732-6262 www.amanafunds.com
American Beacon 800-967-9009 www.americanbeaconfunds.com
American Century 800-345-2021 www.americancentury.com
Ameristock 800-394-5064 www.ameristock.com
AMF 800-527-3713 www.amffunds.com
Ariel 800-292-7435 www.arielinvestments.com
Artisan 800-344-1770 www.artisanfunds.com
AssetMark/Genworth Financial 800-664-5345 www.genworthwealth.com
Aston 800-992-8151 www.astonfunds.com
Auxier Funds 800-835-9556 www.auxierasset.com
Ave Maria 866-283-6274 www.avemariafund.com
Baron Capital Group 800-442-3814 www.baronfunds.com
Berwyn 800-992-6757 www.berwynfunds.com
Brandywine 800-656-3017 www.brandywinefunds.com
Bridges 866-934-4700 www.bridgesinv.com
Bridgeway 800-661-3550 www.bridgeway.com
Bruce 800-872-7823 www.thebrucefund.com
Buffalo 800-492-8332 www.buffalofunds.com
Caldwell & Orkin 800-467-7903 www.caldwellorkin.com
California Investment Trust 800-225-8778 www.caltrust.com
Causeway 866-947-7000 www.causewayfunds.com
Century 800-303-1928 www.centuryfunds.com
CGM 800-598-0778 www.cgmfunds.com
Chase 888-861-7556 www.chaseinv.com
Chesapeake 800-430-3863 www.chesapeakefunds.com
Clipper Fund 800-432-2504 www.clipperfund.com
Cohen & Steers 800-437-9912 www.cohenandsteers.com
Columbia 800-345-6611 www.columbiafunds.com
Commonwealth Intl Series Tr 888-345-1898 www.commonwealthfunds.com
Copley 508-674-8459  
Country 800-245-2100 www.countryfinancial.com
Coventry 800-282-8782 www.btim.com
CRM 800-276-2883 www.crmfunds.com
Davenport 800-281-3217 www.davenportllc.com
Direxion 800-851-0511 www.direxionfunds.com
Dodge & Cox 800-621-3979 www.dodgeandcox.com
Dreman 800-247-1014 www.dreman.com
Dreyfus 800-645-6561 www.dreyfus.com
Driehaus 877-779-0079 www.driehaus.com
Dupree 800-866-0614 www.dupree-funds.com
DWS 800-728-3337 www.dws-investments.com
Elite 800-423-1068 www.elitefunds.com
Empire Builder 800-847-5886 www.glickenhaus.com
Fairholme 866-202-2263 www.fairholmefunds.com
FAM 800-932-3271 www.famfunds.com
FBR 888-888-0025 www.fbrfunds.com
Federated 800-341-7400 www.federatedinvestors.com
Fidelity 800-544-8544 www.fidelity.com
First Eagle 800-334-2143 www.firsteaglefunds.com
Firsthand 888-884-2675 www.firsthandfunds.com
FMI 800-811-5311 www.fmifunds.com
Forward 800-999-6809 www.forwardfunds.com
FPA 800-982-4372 www.fpafunds.com
Fund X 866-455-3863 www.upgraderfunds.com
Gabelli 800-422-3554 www.gabelli.com
Greenspring 800-576-7498 www.greenspringfund.com
Guinness Atkinson 800-915-6566 www.gafunds.com
Harbor 800-422-1050 www.harborfunds.com
Harding Loevner 877-435-8105 www.hardingloevner.com
Hawaii Municipal 800-354-9654 www.leehawaii.com
Heartland 800-432-7856 www.heartlandfunds.com
Hennessy 800-966-4354 www.hennessyfunds.com
Henssler 800-936-3863 www.henssler.com
HighMark 800-433-6884 www.highmarkfunds.com
Hodges 866-811-0224 www.hodgesfund.com
Holland 800-304-6552 www.thehollandfund.com
Homestead 800-258-3030 www.homesteadfunds.com
Hussman 800-487-7626 www.hussmanfunds.com
ICON 800-764-0442 www.iconadvisers.com
IMS 800-934-5550 www.imscapital.com
ING 800-992-0180 www.ingfunds.com
Invesco Aim 800-959-4246 www.invescoaim.com
Iron 877-322-0575 www.ironfunds.com
James 800-995-2637 www.jamesfunds.com
Janus 800-525-3713 www.janus.com
Jensen 800-992-4144 www.jenseninvestment.com
Kalmar 800-282-2319 www.kalmarinvestments.com
Kinetics 800-930-3828 www.kineticsfunds.com
Laudus 800-447-3332 www.laudusfunds.com
Lazard 800-986-3455 www.lazardnet.com
Leavell 877-853-9876 www.leavellinvestments.com
Leuthold 800-273-6886 www.leutholdfunds.com
LKCM 800-688-5526 www.lkcm.com
Longleaf Partners 800-445-9469 www.longleafpartners.com
Loomis Sayles 800-633-3330 www.loomissayles.com
Madison Mosaic 888-670-3600 www.mosaicfunds.com
Mairs & Power 800-304-7404 www.mairsandpower.com
Managers 800-548-4539 www.managersinvest.com
Manning & Napier 800-466-3863 www.manningnapieradvisors.com
Marshall 800-580-3863 www.marshallfunds.com
Marsico 888-860-8686 www.marsicofunds.com
Masters 800-656-8864 www.mastersfunds.com
Matrix 800-366-6223 www.matrixadvisorsvaluefund.com
Matthew 25 888-625-3863 www.matthew25fund.com
Matthews Asia 800-789-2742 www.matthewsfunds.com
Merger 800-343-8959 www.mergerfund.com
Meridian 800-446-6662 www.meridianfund.com
Merk 866-637-5386 www.merkfunds.com
Metropolitan West 800-241-4671 www.mwamllc.com
Metzler/Payden 800-572-9336 www.metzlerpayden.com
Midas 800-400-6432 www.midasfunds.com
Monetta 800-241-9772 www.monetta.com
Muhlenkamp 800-860-3863 www.muhlenkamp.com
Nakoma 866-662-5662 www.nakomafunds.com
Needham 800-625-7071 www.needhamfunds.com
Neuberger Berman 800-877-9700 www.nb.com
New Century Portfolios 888-264-8578 www.newcenturyportfolios.com
New Covenant 877-835-4531 www.newcovenantfunds.com
Nicholas 800-544-6547 www.nicholasfunds.com
Northeast Investors 800-225-6704 www.northeastinvestors.com
Northern 800-595-9111 www.northernfunds.com
Oak Associates 888-462-5386 www.oakfunds.com
Oak Value Fund 800-622-2474 www.oakvaluefund.com
Oakmark 800-625-6275 www.oakmark.com
Oberweis 800-245-7311 www.oberweisfunds.com
Osterweis 800-700-3316 www.osterweis.com
Parnassus 800-999-3505 www.parnassus.com
Pax World 800-767-1729 www.paxworld.com
Paydenfunds 800-572-9336 www.payden.com
Permanent Portfolio 800-531-5142 www.permanentportfoliofunds.com
Perritt 800-332-3133 www.perrittmutualfunds.com
PIA  800-251-1970 www.piamutualfunds.com
PIMCO 800-426-0107 www.pimco-funds.com
Pinnacle 877-369-3705 www.pinnaclevaluefund.com
PRIMECAP Odyssey 800-729-2307 www.odysseyfunds.com
ProFunds 888-776-3637 www.profunds.com
Rainier 800-248-6314 www.rainierfunds.com
RBC 800-463-3863 www.rbcam.com
Reynolds 800-773-9665 www.reynoldsfunds.com
Robeco 888-261-4073 www.robecoinvest.com
Royce 800-221-4268 www.roycefunds.com
Rydex/SGI 800-820-0888 www.rydex-sgi.com
Schneider 888-520-3277 www.schneidercap.com
Schroder 800-464-3108 www.schroderfunds.com
Schwab 800-435-4000 www.schwab.com
Schwartz 888-726-0753 www.schwartzvaluefund.com
Scout 800-996-2862 www.scoutfunds.com
Selected 800-243-1575 www.selectedfunds.com
Sequoia 800-686-6884 www.sequoiafund.com
Sit 800-332-5580 www.sitfunds.com
Sound Shore 800-754-8758 www.soundshorefund.com
State Street Global Advisors 800-647-7327 www.ssgafunds.com
Stratton 800-472-4266 www.strattonmutualfunds.com
T. Rowe Price 800-638-5660 www.troweprice.com
TCW 800-386-3829 www.tcw.com
TFS 888-534-2001 www.tfscapital.com
The Arbitrage Fund 800-295-4485 www.thearbfund.com
The Westport Funds 888-593-7878 www.westportfunds.com
Third Avenue 800-443-1021 www.thirdavenuefunds.com
Thomas White 800-811-0535 www.thomaswhite.com
Thompson Plumb 800-999-0887 www.thompsonim.com
TIAA-CREF 800-223-1200 www.tiaa-cref.org
Tocqueville 800-697-3863 www.tocquevillefunds.com
Torray 800-626-9769 www.torray.com
Turner Investment Partners 800-224-6312 www.turnerinvestments.com
Tweedy Browne 800-432-4789 www.tweedy.com
U.S. Global Investors 800-873-8637 www.usfunds.com
USA Mutuals 866-264-8783 www.usamutuals.com
USAA 800-531-8722 www.usaa.com
Value Line 800-243-2729 www.vlfunds.com
Vanguard 800-662-7447 www.vanguard.com
Victory 800-539-3863 www.victoryconnect.com
W.P. Stewart 888-695-4092 www.wpstewart.com
Wasatch 800-551-1700 www.wasatchfunds.com
WB Capital 800-438-6375 www.wbcapitalfunds.com
Weitz 800-304-9745 www.weitzfunds.com
Wells Fargo Advantage 800-222-8222 www.wellsfargofunds.com
WesMark 800-864-1013 www.wesmarkfunds.com
Westcore 800-392-2673 www.westcore.com
William Blair 877-962-5247 www.williamblair.com
Wilshire 888-200-6796 www.wilfunds.com
Winslow Green 888-314-9049 www.winslowgreen.com
Wintergreen 888-468-6473 www.wintergreenfund.com
Wright 800-888-9471 www.wrightinvestors.com
Yacktman 800-525-8258 www.yacktman.com

 



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