The Top Funds Over Five Years: Bond Funds Take the Lead
by Charles Rotblut, CFA
Context is always important when looking at historical return data, especially five-year performance for mutual funds.
The period covered in this year’s Top Funds Over Five Years article starts on January 1, 2007—months before the severe bear market started. As of the end of 2011, neither the S&P 500 index nor the broader Wilshire 5000 index had rebounded back to the price levels they traded at at the start of the five-year period that this article covers.
In this article
- Bonds: Long and Long Term
- Two Gold Funds Stay on Top
- How to Judge the Numbers
- The Top Stock Funds
- Fund Listings
- Look Beyond Performance
- Costs Matter
- Further Evaluation
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The five-year period also saw a large drop in interest rates. Yields on the benchmark 10-year Treasury bond fell from 4.71% on December 29, 2006, to 1.87% on December 30, 2011. Since bond yields and prices are inversely related, bonds rallied over the past five years.
Given this backdrop, it should be no surprise that bond funds dominate this year’s list of the mutual funds with the best five-year performance. Out of the 10 top-ranking mutual fund categories, nine are in the bond arena. The only category preventing a clean sweep in the top 10 is the gold sector. Yet even gold lost some of its luster, falling from the top spot in last year’s ranking to ninth place in this year’s ranking.
Stock fund categories barely make an appearance in the top half of the performance rankings. The health care sector, which is less economically sensitive, elbowed its way into the 12th spot, while the technology sector does not appear until the 18th spot. To put these rankings into perspective, we track performance for 39 categories, shown in Table 1.
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Discussion
I don't recall ever seeing an analysis of the impact of a change in leadership on the performance of a fund.
I realize that the results of such a change might take a long time to emerge, and that obviously such a change could have negative as well as positive results.
But still, could there be a conclusion or signals that investors could use to better foresee potential gain or danger to a change in fund management? Has anyone produced such an analysis? This would be a worthwhile effort if such a study has not been produced. I apologize in advance if such a work already exists.
posted about 1 year ago by John from New York
Very interesting sector results over the five year period. Now,if we could only predict what and how the politians will impact the next five year period, we would all be in good financial condition.
posted 12 months ago by Roger from South Carolina
