3
Morningstar FundInvestor
June 2
014
The Fantastic 48
Continued From Cover
FPA Capital
FPPTX
Keep an eye out for the day this Silver-rated fund
reopens. Managers Dennis Bryan and Arik Ahitov
want strong companies trading at modest valuations.
It’s not easy to find many companies like that, and
that’s why the fund has a big cash stake and is closed
to new investors. The fund offers a nice way to get
exposure to stocks while still playing defense.
Franklin Income
FKINX
Franklin Income is a little like Berwyn Income, only on
a much grander scale. This allocation fund also
courts a fair amount of credit risk, only it does so with
a massive $
93
billion asset base. The fund’s sizable
yield and strong performance in the rally have made it
extremely popular. Remember, though, that yield
requires credit risk, and there’s a price to be paid in
years like
2008
.
Harbor Capital Appreciation
HACAX
Harbor International
HAINX
These funds are cheapest when you buy them directly
from Harbor with a minimum of $
50
,
000
, but you
can also buy slightly pricier share classes for $
2
,
500
from fund supermarkets.
In both cases, you have experienced managers plying
a disciplined strategy. Harbor Capital Appreciation
is a U.S. large-growth fund run by Sig Segalas and his
associates at Jennison. Harbor International is a
foreign large-blend fund run by Northern Cross. Both
are standouts.
LKCM
LKCM Equity
LKEQX
and
LKCM Small Cap Equity
LKSCX
are good below-the-radar funds run out of Fort
Worth, Texas.
Luther King has been using the same strategy since
he founded the firm in
1979
. He’s a value investor
in search of companies with strong cash flows and
high returns on equity but trading at a modest
valuation. King is joined in management by a trio of
experienced hands who have helped guide the
funds to steady results.
Mairs & Power
Mairs & Power Balanced
MAPOX
and
Mairs &
Power Growth
MPGFX
have made an art of buying
high-quality stocks that they can hold for a long
time. Manager Bill Frels is set to retire at year-end,
but the fund still passes the tests; his comanagers
started in
2006
, and each has more than $
1
mil-
lion invested.
MFS Massachusetts Investors Trust
MITTX
A drop to a
0
.
70%
expense ratio has nudged this fund
onto the list for the first time. Managers Kevin Beatty
and Ted Maloney look for a slew of good growth
and quality characteristics like strong cash flow, great
management, and above-average earnings growth.
Beatty is the longer tenured one, and since his
2004
start date, the fund has beaten the S
&
P
500
by nearly
100
basis points annualized.
Mutual Quest
MQIFX
Likewise, Mutual Quest’s falling expenses have ele-
vated it to our list. Unfortunately, the closed Z
shares are the only ones to qualify. This fund is run
the deep-value Mutual Series-way by the skilled
Shawn Tumulty and Keith Luh.
Primecap
All six Primecap funds make the list. Three are from
Vanguard, and the other three are under its Odyssey
label. Two of those six remain open to new investors:
Primecap Odyssey Growth
POGRX
and
Primecap
Odyssey Stock
POSKX
. Their outstanding analysts
and managers simply outresearch the rest of the
growth world. I suggest starting your growth search
with these two funds and seeing if you can find
one to top them.
Selected American
SLADX
Yes, despite recent struggles and the departure of Ken
Feinberg, this fund is still running more than
100
basis points a year ahead of the S
&
P
500
under Chris
Davis’ watch. We took it down to Bronze when
Feinberg left, but we still think Davis’ Buffett-inspired
strategy should win in the end.
