The Top Funds Over Five Years: Finding Common Themes in a Volatile Market
by Charles Rotblut, CFA
The past five years have truly tested the skills of mutual fund managers.
The equity markets went from boom to bust to rebound. The bond markets also fluctuated, especially in the high-yield spectrum. Emerging markets enjoyed strong economic growth. Then there were the commodity markets, which saw a bubble and a bust in the same calendar year.
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The upside to this is that investors now have a recent track record to judge how a fund performed in varying types of markets. Did the fund react well to rising markets? Are the losses experienced during the recent bear market acceptable? Can the fund consistently beat its benchmark, or is its performance dictated solely by the type of conditions the manager is facing?
These are all important questions to consider when evaluating a fund. Though the temptation might be to pick a fund based on its five-year performance, the reality is that the fund could experience large variances on a year-to-year basis. Therefore, take a close look at the annual returns and the volatility. Not every fund is suitable for every investor.
Table 1 presents the mutual funds with the best five-year performance overall and for each category as culled from AAII’s “Individual Investor’s Guide to the Top Mutual Funds” (sent to all members in February).
To read more, please become an AAII member or CLICK HERE.
