Top Performer Conservative Allocation Mutual Funds 2011

Introduction

Top Performer Balanced Fund

Investing can be done through various vehicles such as individual stocks and/or bonds, mutual funds, exchange traded funds (ETF), closed-end funds (CEF). One of the most well known investment types is mutual fund. Mutual fund investment can provide an instant portfolio diversification hence the fund usually invests in more than 10 stocks or bonds. Several things need to consider before investing in mutual fund include:

• The fund’s expense ratio, sales charge and other fees
• The fund’s age, size, and portfolio manager
• Fund’s performance over long term and short period (though past performance doesn’t guarantee future performance)
• Fund’s volatility and risk
• Other related changes to fund investment style or management
• Fund’s distribution that contribute to your tax bill

Balanced mutual fund or hybrid fund is one of the most popular mutual fund classes. These balanced funds can be classified into several categories such as conservative allocation, moderate allocation and world allocation. A Balanced fund is a mutual fund which invests in common stock, bonds, convertible and preferred stock. It usually has an objective of income provision and some capital appreciation with low risk. Why invest in balanced funds? Reasons are:

• The fund can provide instant portfolio diversification or one stop shop for many investment vehicles like stock, bond, preferred, convertible, etc.
• This fund can reduce volatility considerably since it is less aggressive than equity-only fund
• It can provide limited capital appreciation through investment in stock and regular income from bond portion

The following list is the top performer conservative allocation balanced fund in May 2011 (up to May 17th, 2011). This type of fund is ideal for conservative investor, near retirement or retired investors. This type of fund usually invests about 30-50% of asset in stock and 50%-70% of asset in fixed income (bond). More details about the asset allocation below. You can also check the fund long term and short term performance below. You can also find my new article about best performing no load conservative allocation funds.

Top Performer Conservative Allocation Balanced Mutual Funds May 2011:

1. SunAmerica 2020 High Watermark A
2. Natixis Income Diversified A
3. Catalyst/SMH Total Return Income A
4. Fifth Third Strategic Inc A
5. API Efficient Frontier Income A
6. Permanent Portfolio
7. WHG Income Opportunity A
8. IMS Strategic Income
9. Thrivent Diversified Income Plus A
10. MFS Diversified Income A

BBH Core Select N Fund (BBTEX)

The next fund, BBH Core Select N, is managed by one of the oldest and largest private bank in US, Brown Brothers Harriman. BBH Core Select also received variety of awards such as Lipper Fund Award 2010 (Large Cap core fund), Morningstar five stars rating, and Kiplinger’s 25 best funds. This fund invest primarily in large cap companies (i.e. Companies have a market capitalization of $5 billion or higher). Rule of thumb investing in large cap fund is to invest about 20-30% of total investment asset in this large cap fund for portfolio diversification.

BBH Core Select Fund

The investment in BBH Core Select fund is looking for long term capital growth based on after-tax basis. This BBH fund net assets investment is normally invested in domestic or foreign publicly traded equity securities. It invests in the direct securities or in the form of depository receipts representing an interest in these securities. This non-diversified fund normally invests in the companies that have market capitalizations greater than $5 billion. The fund manager usually invests in companies based on business attributes, management attributes, and financial attributes (more details on BBH funds website).

BBTEX Fund Details

BBH Core Select Fund details

• Fund Inception Date: November 1998
• Ticker Symbol: BBTEX
• CUSIP: 05528X604
• Net Assets: $597 million
• Beta (3yr): 0.82
• Rank in category (YTD): 32
• Year to Date Return: 9.28%
• Category: Large Blend
• Yield: 0.50%
• Capital Gains: N/A
• Number of Years Up: 8 years
• Number of Years Down: 4 years
• Turnover rate: 19%

Updated on May 17, 2011

Note: BBH = Brown Brothers Harriman

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Cons of TradeKing

• Need to improve its trading platform 
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• No support for international applicant/ investors

Note: For details about TradeKing, I have updated the best brokerage 2011 page.

Fidelity Low-Priced Stock Fund (FLPSX)

The next fund has a very interesting approach in investing in Mid Cap stocks. This Fidelity fund usually invests in small and mid cap companies. This fund may be more volatile than other large cap or big cap stock funds. Compare to its category (beta=1.12), this fund is less volatile (beta=1.08).

Investing in this fund may provide additional portfolio diversification. You may also check other Kip 25 fund in Mid Cap stock category such as Akre Focus, Meridian Growth, and Vanguard Selected Value. Rule of thumb is to have 5-10% total asset in this category.

As one of the Fidelity Fund Pick, the Fidelity Low-Priced Stock fund also has the longest tenured manager managing this fund. This fund also has assets totaling $36.42 billion. This fund was closed to new investors in December 2003 and has reopened in December 2008. This fund also received variety of awards such as Kiplinger’s 25 Best Funds, Bronze Award for Mid Cap Domestic Equity by Standard & Poor’s 2010 Mutual Fund Excellence Awards, and Top Value Line Overall Rank.

Fidelity Low-Priced Stock (Ticker: FLPSX)

Fidelity Low-Priced Stock fund seeks for capital appreciation. It normally invests the majority of the net assets in common stocks and low-priced stocks. This Fidelity Low-Priced Stock fund usually buys the stocks whose price is at or below $35 per share and most of these stocks are part of small and medium sized companies (i.e. small cap and mid cap). It may invest in stocks issued by either domestic or foreign issuers, either growth or value stocks or both. This fund may also invest in stocks not considered low-priced.

FLPSX Fund Details

• Fund Inception Date: December 1989
• Ticker Symbol: FLPSX
• CUSIP: 316345305
• Beta (3yr): 1.08
• Rank in category (YTD): 51
• Category: Mid-Cap Blend
• Yield: 0.37%
• Capital Gains: 0.0%
• Number of Years Up: 18 years
• Number of Years Down: 3 years

Updated on 5/14/2011

This fund is managed by Joel C. Tilinghast since its inception in 1989. The minimum initial investment for this fund is $2,500 for brokerage and IRA account. There is no minimum subsequent investment. If you are interested to invest in this fund, it doesn’t have any management fee (12b1) and any transaction fee (i.e. no sales-load). The expense ratio of this fund is 0.99% yearly. The fund can be purchased from 68 brokerages, include JP Morgan, T. Rowe Price, Schwab Institutional, TD Ameritrade, Vanguard, Schwab Retail, etc.

FLPSX fund has returned 18.29% over the past one year, 7.20% over the past three years and 4.94% over the past five years. With 4-stars rating from Morningstar, this fund performance has been very consistent especially over long term horizon. It has experienced 18 years of positive turnover and 3 years with negative turnover. The worst turnover was experienced in 2008, recorded at -36.17% and its best was in 2003, recorded in 40.85%.

As of March 31, 2011, the top 10 holdings of this top mid cap blend stock fund are United Health Group Inc, Fossil Inc, Next PLC, Metro Inc CL A SUB VTG, Oracle Corp, Abercrombie & Fitch Co CL A, Coventry Health Care Inc, Ross stores Inc, Seagate Technology, and Eni SPA. These ten holdings make up to 15.18% of the total net assets from the total of 884 holdings. The top 5 countries include USA (66.5%), Canada (6.64%), Japan (6.41%), United Kingdom (2.77%), and Netherlands (2.54%). Top 6 major market sectors are consumer discretionary, information technology, health care, financials, industrials, and energy.

Disclosure: No Position

Details about other Kiplinger's 25 Best Mutual Fund can be found in my main page.

Merger Fund (MERFX)

Merger Fund (MERFX) is one of the best alternative mutual funds for financial investing. Its objective is to provide capital growth.

This next fund can provide an alternative investment strategy to many investors. As part of market neutral category fund, Merger Fund invests in announced merger companies. This type of fund is usually less volatile and has a set of guarantee return. This fund is also featured in Kiplinger’s 25 Best Fund. This fund is being added recently in 2010 and will replace the previous Arbitrage Fund (Ticker: ARBFX) in Kip 25. Arbitrage Fund is removed due to it is closed to new investor.

According to its website (www.mergerfund.com), Merger Fund is the first mutual fund dedicated entirely to merger arbitrage. This fund has been around since 1989. As discussed, it also has one of the lowest volatility for stock funds with beta of 0.10. This fund is also very popular to retail investors and institutional investors with $4.53 billion asset.

Altenative Mutual Fund

The investment in Merger Fund is seeking for capital growth. The goal is achieved by engaging in merger arbitrage. The major net assets investment of this Merger Fund (at least 80%) is in the equity securities of merger-companies. The companies are involved in publicly announced mergers, tender offers, liquidation, spin-offs, takeovers, leveraged buyouts and other corporate reorganizations. This is a special investment approach to gain the most profit from the companies in such conditions.

Merger Fund MERFX Details

• Fund Inception Date: January 1989
• Ticker Symbol: MERFX
• CUSIP: 589509108
• Beta (3yr): 0.10
• Rank in category YTD: 12
• Category: Market Neutral
• Distribution: 0.32%
• Expense fee: 1.40%
• Turnover Rates: 182%
• Capital Gains: check website
• Number of Years Up: 19 years
• Number of Years Down: 2 years

Updated on May 2017

The Merger Fund was the first mutual fund devoted exclusively to merger arbitrage. Roy D. Behren has been the lead manager for this fund since 2007. Should you plan to invest in this fund, the minimum initial invest for either brokerage or IRA account is $2,000 and no minimum subsequent investment. This fund applies a 0.927% of management fee. MERFX is considered as a no sales load fund. The fund can be purchased from 81 brokerages, include T Rowe Price, DATALynx, JP Morgan, E Trade Financial, TD Ameritrade Inc, etc. This fund has no other class.

MERFX Fund

The annual report of expense ratio is 1.41%, which is lower than the average in the category (1.96%). Since its inception in 1989, this fund has experienced a total of 19 years up performance with the best total return in 2000 (17.58%) and 2 years of down period with the worst total return in 2002 (-5.67%). This fund receives 4-stars rating from Morningstar. MERFX fund has returned 4.09% over the past year and 3.46% over the past ten years. The year to date (YTD) return is 2.41%.

• Year 2017: 1.47% (YTD)
• Year 2016: 2.61%
• Year 2015: -0.82%
• Year 2014: 1.43%
• Year 2013: 3.61%

As of December 2010, the top 10 equity holdings of this fund are Alcon Inc, Bucyrus International Inc, McAfee Inc, Qwest Communications International Inc, King Pharmaceuticals, Inc, Alberto-Culver Company, Western Coal Corp, Genzyme Corporation, Potash Corporation of Saskatchewan and Undisclosed UK Media. The top countries in this fund include United States (77.14%), Europe (12.70%) and Canada (7.63%). The top 5 sectors include health care (18.90%), industrials (17.98%), materials (16.18%), financials (11.71%) and consumer discretionary (11.55%).
Investing in this Merger Fund involves principal risks such as:

• Reorganization risk
• Foreign investment risk
• Foreign currency risk
• Hedging risk
• High transaction cost due to high turnover rates

Disclosure: No Position

For details about this Merger Fund information, please check my Kiplinger’s 25 Best Fund page. Other Kiplinger's Best Mutual Funds:

• Harbor Commodity Real Return Strategy (HACMX)
• Loomis Sayles Bond Fund (LSBRX)

This Merger Fund (MERFX) was part of Kiplinger's 25 best mutual funds before.

Dodge & Cox International Stock Fund (DODFX)

Dodge & Cox International Stock fund (DODFX) is one of best foreign equity mutual funds. It invests in international companies stocks.

The next fund, Dodge & Cox International Stock fund, is a well known international stock offered by Dodge & Cox. The fund has been available for retail investor and institutional investor for the past decade. The fund performance has been great over the long term period. The following article will provide all the details about the fund information and performance in general. This Dodge & Cox International Stock fund is also part of Kiplinger’s 25 Best Mutual Funds.

Dodge & Cox International Stock (Ticker: DODFX)

While US companies have dominated the world economy for long time, international companies also provide additional value for world economy. The foreign companies provide about 55% contribution to world economy. These international companies can include companies in Europe (United Kingdom, German, France, Spain, Eastern Europe, etc), Japan, Australia, Canada, Hong Kong, South Korea, Taiwan, Emerging Markets (Brazil, China, India, Russia), and South East Asia countries (Indonesia, Malaysia, Singapore).

Investing in these international companies stocks definitely will provide true representation of asset diversification. One of the ways to invest in these companies is investing through mutual fund. If you are interested in exchange-traded fund (ETF) or closed end fund (CEF), please check my future article.

The investment objective of Dodge & Cox International Stock fund is seeking for both long term principal growth and income growth. It generally invests mainly in a diversified portfolio of non-U.S. companies’ equity securities especially medium to large well established companies (based on standards of the applicable market).

Best Performer High Yield Bond Closed End Funds 2011 Part 2

If you miss my first part of this Top Performer high yield bond CEF, please check the article. The following is the second part article. Investing in high yield bond funds may not be for every investor either long term or professional. There are several reasons to invest in this non investment grade bond funds:

• The fund may provide high current income due to its high interest rates
• It has priority of legal rights over preferred stocks and common stocks
• It has potential for capital appreciation if the bond is upgraded by credit rating agencies due to improvement in company business
• The bond fund is also less volatile than equity fund

The following is rated by its fund market performance up until May 6th, 2011. You will find the fund information below.

The 10 Top Performer High Yield Bond CEFs 2011: Pt 2 (until May 6^th, 2011) are:

1. Pacholder High Yield Fund
2. PIMCO High Income Fund
3. Credit Suisse High Yield Bond
4. Pioneer Diversified High Income
5. BlackRock Debt Strategies Fund
6. DWS High Income Trust
7. First Trust Strategic High Income
8. Managed High Yield Plus
9. Western Asset High Income Fund II
10. Wells Fargo Advantage Income Opportunities

updated on 6/1/2011