13
Morningstar FundInvestor
April 2
013
Leaders
Baron Growth
BGRFX
This mid-cap growth fund beat out
97%
of its peers
with an impressive
21
.
09%
climb over the past
12
months. Manager Ron Baron is choosy about stock
picks. He keeps a close eye on the quality of manage-
ment and only buys companies that he estimates
can double in price over the next four to five years.
His pickiness paid off handsomely in the past
12
months. Sectors with particularly successful stock
picks include consumer cyclical, financial services,
health care, industrials, and technology. Top holdings
like insurance provider
Arch Capital Group
ACGL
,
auto-parts manufacturer
LKQ Corporation
LKQ
, and
railroad company
Genesee & Wyoming
GWR
all
posted double-digit returns.
Invesco Equity & Income
ACEIX
This moderate-allocation fund posted a
14
.
33%
gain
over the trailing
12
-month period, better than more
than
95%
of its category peers. Manager Tom Bastian
and his team invest in undervalued stocks with strong
fundamentals, as well as convertible bonds, invest-
ment-grade corporates, and Treasuries. The fund held
a higher allocation to stocks and convertibles than
peers, which boosted its returns as stocks outper-
formed bonds. Smart stock picks helped returns even
more. Top holdings
JPMorgan Chase
JPM
,
eBay
EBAY
, and
Viacom
VIAB
gained
5
.
83%
,
46
.
94%
, and
32
.
44%
, respectively.
Longleaf Partners International
LLINX
Longleaf’s foreign large-cap fund bested
95%
of its
category peers by gaining
16
.
53%
in the trailing
one-year period. The managers buy deeply discounted
stocks, ignore benchmark country and sector weight-
ings, and hold an extremely concentrated portfolio.
A strategy this bold can experience periods of bumpy
performance, such the fund’s rough
2011
, but its
recent performance has been strong. Its industrials
and basic-materials picks did exceptionally well.
Building materials company
Lafarge SA
LG
was a
top holding and gained a whopping
41
.
01%
. Industrials
picks
Ferrovial SA ADR
FRRVY
and
Koninklijke
Philips Electronics
PHIA
posted returns over
40%
.
Laggards
Permanent Portfolio
PRPFX
This conservative-allocation fund eked out
1
.
66%
over the trailing
12
-month period, lagging more
than
95%
of its category peers. The management team
has maintained a static allocation since the
1980
s
with the stated goal of keeping pace with inflation: The
fund invests
20%
in gold,
10%
to Swiss francs,
15%
to real estate and natural-resources stocks,
5%
to
silver,
35%
to U.S. Treasuries, and
15%
to aggressive-
growth stocks. As expected, fund performance hinges
heavily on gold prices, and in the past
12
months
gold and silver fell sharply. The higher weighting to
Treasuries also dragged on returns as Treasuries
lagged other bond sectors, such as corporate bonds.
Perkins Mid Cap Value
JMCVX
This mid-cap value fund gained
11
.
47%
over the trailing
one-year period and still lagged
89%
of its category
peers. The management team buys undervalued funds
with strong free cash flows, reasonable debt, and
clean balance sheets, and it is not afraid to hold some
of the portfolio in cash. These precautions protect
it in rough years but can cause it to lag in rallies. This
has been the case in the past
12
months. The cash
stake has been a drag on performance as stocks rallied,
and while most stock picks have not lost money,
they’ve lagged the gains of peers.
Fidelity Mortgage Securities
FMSFX
This fund gained
3
.
19%
in the trailing one-year period,
worse than
86%
of the intermediate-term bond fund
category. The managers will also buy a small sprinkle
of nonagency mortgages and asset-backed securities
if they think the extra yield is worth the credit risk.
This is in heavy contrast to most intermediate-term
bonds, which typically hold Treasuries and corporate
bonds in addition to mortgages. The fund’s lack of
exposure to corporates and lower-quality bonds held
it back as those sectors outperformed.
œ
Contact Kailin Liu at
Ten Worst-Performing Funds
Fund Name
YTD Cat Rank %
Buffalo Mid Cap
99
Hussman Strategic Total R 99
Royce Low Priced Stock Sv 99
Royce Micro-Cap Invmt
99
First Eagle US Value A 98
Janus Overseas T
98
Janus Twenty T
98
Royce Premier Invmt
98
Royce Value Svc
98
Wasatch Core Growth
98
33
Ten Best-Performing Funds
Fund Name
YTD Cat Rank %
ClearBridge Aggressive Gr
1
Fairholme Focused Income 1
PIMCO Fundamental Advtg A 1
PRIMECAP Odyssey Aggressi 1
PRIMECAP Odyssey Growth 1
Vanguard Capital Opportun 1
CGM Focus
2
Invesco Equity and Income 2
T. Rowe Price Tax-Free Sh 2
Vanguard PRIMECAP Core In 2
3
Baron Growth On a Roll
Leaders & Laggards
|
Kailin Liu
