The Best Mutual Funds for Your Goals: The Kip 25
Investing editors Manny Schiffres and Nellie Huang took your questions about this year's picks for the Kiplinger 25.
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They're all great funds, but I lean toward the funds that have managers with long track records, who have been with their funds for decades. Will Danoff at Fidelity Contrafund, Joel Tillinghast at Fidelity Low-Priced Stock. They're not all Fidelity funds though--and not all managers have been with the same fund: Jeffrey Gundlach has been investing in bonds exactly the same way for 20 years, but his fund is new way he manages DoubleLine Total Return. Chuck Akre, of Akre Focus, is another veteran with a new fund. -
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Now that's an interesting question :-) I would say that between my IRA and 401K accounts, I own 6 of the funds: Fidelity Low-Priced Stock, Harbor Int'l, Harbor Commodity Real Return Strategy, Merger Fund (about which we posted a story today), Fidelity New Markets Income and Loomis Sayles Bond. At some point, I'll probably add Fidelity Contrafund and Dodge & Cox Stock. So I think it's fair to say I put my money where Nellie's mouth is -
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Here is the recent story on the Merger Fund that Manny mentioned. -
I would say this about Heebner and CGM Focus: it is one of the most volatile and unpredictable diversified funds on the planet (technically, I believe Focus is considered a non-diversified fund but what I mean is that it's not a sector fund). When Ken is good, he's really, really good; and when he's bad, he's really, really bad. So, I don't know about the "soon" part of your question, but I'm pretty sure that Ken will get back in sync with the marekts at some point. And when that happens, Focus will shoot the lights out. And when that happens, investors will pile into the fund, only to be disappointed when the fund tanks again. In general, because of the investors behave, I think most folks are better off looking at less-volatile funds
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JD, Manny just about covered it, but here is our most recent article about Heebner and CGM Focus: www.kiplinger.com. As Steve Goldberg writes, "the lesson of CGM Focus is to avoid funds that try to time their exit and entry into a market sector or two."
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I think someone starting out who doesn't know anything about investing should start by reading Kiplinger's. As far as our Kip 25 funds go, many of them have low minimums, especially if you open your account as an IRA or sign-up for automatic investing. Homestead Small Company Stock for instance, has a $500 minimum (and that's not for an IRA account).
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Many, if not most, fund companies have smaller minimums for IRAs than for regular taxable accounts. Also, if your employer offers a 401K or 403B, that's a great way to save for the long term. And if your employer offers a match, you MUST invest enough to take full advantage of the match. You can't walk away from found money.
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I wrote about how to get started with investing a couple of years ago for Kiplinger's "Starting Out" column.
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This is an issue we pay attention to with all the funds on our list. Contrafund, for instance, has $84 billion in assets. But it's a large-cap fund, investing in large-company stocks. And it continues to do well--Year to date, through last Friday, it's our best performing stock fund on the list: up 13%
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Thanks, Stacy. Slt, here is the archive of all of our Starting Out columns, which are aimed at 20-and-30-somethings. You might find the pieces on Roth IRA's, target date funds, and investing lessons for Generation Y particularly helpful.
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Size really matters with funds that are investing in small-company stocks where the liquidity--i.e., the number of shares trading daily--is low. Once a fund manager starts to trade in and out of small stocks--in which he has a sizeable investment--he can influence the pricing of that stock. Manny have I articulated this well?
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Tar Heel, because I sent so much tuition money to Duke over the years, tell you what I'm going to do: I'm going to make a project of collecting all of the Kip 25 updates since we started this feature 8 or 9 years ago and see how we come out. But for the reasons I mentioned before, the results are not going to be perfect. Send me a note at mschiffres@kiplinger.com and I'll get back to you with the results. And, yes, past performance doesn't predict future performance, which is why it's so improtant to hold down fees (one thing you can predict) and to never pay a load (sales charge)
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John60, you can use our Mutual Fund Finder to screen for funds based on 1-, 3-, and 5-year returns. Unfortunately, we don't have a screen for 10-year returns set up.
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If you're talking about ALL of the K25 funds, sure, you'd need to have more than one brokerage account. My feeling is that the technology has gotten so much better, especially the reporting of tax info (which you can download directly from the bigger brokerages), that I don't think you should sweat having a couple or three accounts if you really want access to all (or most of) these funds w/o transaction fees
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I am a 70 yr old retired lady who owns her own home and is a very conservative investor. I would like my nest egg of $200,000 to generate additional income to supplement my social security and pension. I would appreciate your comments on the Vanguard funds I am considering as "All in One" funds to meet my needs. I am considering the Managed Payout Distribution Fund "VPDFX" - versus their Wellesley Fund.
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Marianne, to tell you the truth, I haven't looked at the managed payout funds lately, so I can't comment on them (Stacy, do we have a story from a year or two ago that you can post?). Re Wellesley Income, it's what I call an inverse balanced fund. The typical balanced fund is 2/3 stocks, 1/3 bonds. Wellesley is 1/3 stocks (big, dividend paying blue chips, primarily) and 2/3 high quality bonds. It has the advantage of low fees, typical for Vanguard. I guess my overall comment about the fund is that if you want that sort of asset allocation and you want blue chip stocks, it's a perfectly defensible way of getting that kind of exposure. In general, I prefer to arrive at the asset allocation decision first, then buy the best and most appropriate stock funds and the best and most appropriate bond funds for the desired allocation
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Here's a piece on payout funds from Kiplinger's Retirement Report.
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