10
Did you get a refund from the
IRS
? I’ve got some rela-
tively low-risk ideas for you.
By relatively low risk, I mean relative to other funds
in the category. I screened for highly rated funds that
are low-risk relative to their category, have above-
average aftertax returns for the past
10
years, and a
minimum investment of $
10
,
000
or less. I’ve ordered
them in absolute terms from lowest risk to riskiest.
Fidelity Intermediate Municipal Income
FLTMX
(minimum $
10
,
000
) is a fine investment for the
big-ticket bills you might have coming in a few years,
such as a tuition bill, a house, or a car. The fund’s
humble
1
.
4%
30
-day yield tells you to keep
your expectations in check, but it’s a well-run, low-
cost fund.
Manning & Napier Pro-Blend Conservative Term
EXDAX
(minimum $
2
,
000
) typically holds about two
thirds of its portfolio in bonds. Management employs
a value strategy for equities and invests in high-
quality bonds on the fixed-income side. It will shift its
asset mix a bit as it has discretion to move equities
between
15%
and
45%
of the portfolio. Its aftertax
return for the trailing
10
years is a pleasing
5
.
1%
,
which tops
70%
of the conservative-allocation group.
First Eagle Overseas
SGOVX
(minimum $
2
,
500
)
is a broker-sold fund that’s all about protecting on the
downside. The team runs a flexible value approach
focusing on foreign stocks and corporate bonds. The
fund also typically holds a slug of cash and gold
to help preserve capital. Matthew McLennan, Kimball
Brooker Jr., and Abhay Deshpande look for healthy
companies trading at a sizable discount to their esti-
mates of intrinsic value. That discount helps limit
likely losses if things go south. The fund’s losses in
2008
and
2011
were much smaller than most peers’.
Vanguard Dividend Growth
VDIGX
(minimum
$
3
,
000
) still holds a lot of appeal. As yield-chasing
drives big-dividend stock prices up, this fund is a
bit ahead of the curve as it’s looking for companies
that should boost their dividends. The dividend
doesn’t have to be that big today. Donald Kilbride has
done an outstanding job executing that strategy,
and the fund’s
9
.
8%
aftertax
10
-year return lands in
the top
2%
of large-blend funds.
Sequoia
SEQUX
(minimum $
5
,
000
) has moved to
curb inflows by limiting new purchases to investors
who go directly to the fund company. So, it’s a little
less convenient than a fund you can buy through
the supermarkets. However, management’s skill in
finding great companies at modest prices makes
it worth the hassle. Bob Goldfarb and David Poppe
won’t put shareholders at risk by investing when
stocks look too pricey. So, cash builds as the market
surges. Today, cash is
16%
of assets.
Conestoga Small Cap
CCASX
(minimum $
2
,
500
)
is pretty mild-mannered for a small-growth fund.
Management looks for companies with strong fran-
chises, modest debt, and high management owner-
ship. We’ve looked closely at the pending transition
of management at this fund and feel comfortable
about it. William Martindale will retire in
2014
, but
comanager Robert Mitchell will remain and Joe
Monahan will become a comanager. Mitchell has
been a comanager for more than a decade, so we
remain confident here.
Westport
WPFRX
(minimum $
2
,
500
) is an under-the-
radar mid-cap fund worth knowing. The $
600
million
fund is in the hands of Ed Nicklin, who has been run-
ning funds since
1986
and this fund since
1997
. The
fund’s
15
-year return of
9
.
7%
annualized is in the top
15%
of the category. Nicklin looks for turnaround
situations where a company can rebound to produce
a high return on capital. His brand of turnaround
investing isn’t to be confused with deep value, though.
He tends to buy strong companies with one problem
rather than companies on the verge of bankruptcy.
You can see the difference in years like
2008
, when
the fund’s
30
.
3%
loss was much less than seen at
deep-value funds.
œ
7 Funds for Your Tax Refund
The Contrarian
|
Russel Kinnel
Our Contrarian Approach
I go against the grain to find
overlooked funds that may be
ready to rally.
