Our first mutual funds First Cut looks at the opposite ends of the return spectrum: the funds with the highest 12-month returns and the funds with worst 12-month returns. “The winners” may include managers with a knack for picking stocks currently in favor. “The losers” may include funds holding undervalued stocks.

In identifying such funds, we looked specifically at no-load domestic stock funds. These are equity funds whose objectives do not mandate that an investment manager focus on a specific sector or industry and do not levy a load for buying or selling.

To ensure the funds were accessible to most individual investors, we eliminated funds and share classes designated as only being available to institutional investors, solely sold through advisers or only offered through retirement plans. The upper limit for minimum initial purchase was set at $50,000.

Low cost was another requirement. The funds identified are no-load and have expense ratios no higher than average for all domestic stock funds.

Finally, we required the funds to have at least $25 million in assets under management (AUM) and neither be leveraged nor inverse funds. The AUM requirement was used to exclude those funds at greater risk of being closed.

Table 1 below shows the top 10 performers and the bottom 10 performers.

—Charles Rotblut, CFA, AAII Journal editor