The numbers below are 10 year results through August 28, 2012. Nothing special about that date, it's just when the moron got around to compiling these results. The cut line 10 years ago is a pretty bizarre one. Ten years ago we were in the final several months of the debacle that was 2002. Therefore, these results all exclude the big gains of the late 90s as well as the big declines of 2000, 2001, and 2002 through very late August.
From today until next March, one can take it to the bank that the annualized 10-year numbers for all of these funds will increase significantly. That is because poor performance days, weeks and months are falling off of the back end of the sample period. Looked at another way, we can say that current prices will be compared to starting prices that will be lower and lower.
Fund companies wishing to tout high 10-year returns will be well-advised to wait until March 2013 to do so.
Two of the MFM30, Vanguard Dividend Appreciation and Wasatch Heritage Growth, do not have 10-year track records, and are thus not included below. That leaves us with 28 funds. Therefore, instead of dividing the funds into quintiles, we will divide them into four quartiles of seven funds each. Following each fund name is its annualized percentage gain over the 10-year period.
Top Quartile
1. T. Rowe Price Mid-Cap Growth (PRMGX) 11.1%
The Champ! What's not to like here? Outstanding fund company, the same manager and strategy since 1992, low fees, above average in its category for 9 of the past 10 calendar years, not once in the bottom quartile in those years. Closed to new investors is MFM's understanding, but the fine print on that is confusing.
2. Yacktman (YACKX) 10.71%
The subject of our most recent post. Has won largely by playing defense and being patient. Not only super results, but excellent protection of capital.
3. Perkins Mid-Cap Value (JMCVX) 9.67%
Has the J in its ticker symbol because it used to be called Janus Mid-Cap Value. Another fund that has shown superior relative performance in down markets. Very consistent performer. One of the Moron's favorites.
4. Dodge and Cox International (DODFX) 9.58%
Certainly as good a choice as any for an international fund. Consistent, disciplined strategy. Very low fees, a team approach, from a company with old fashioned values. Founded in 1930, Dodge and Cox only has 5 funds and they do not advertise. This performance includes a loss of over 50% from late 2007 to early 2009. Nothing fancy here, but solid.
5. Fairholme (FAIRX) 9.53%
The only important question here is: Does Bruce Berkowitz know what he's doing? MFM thinks he does. There is still no cure for premature accumulation though, and Bruce's intelligence level will continue to fluctuate greatly from year to year. Investors here will be well advised to either understand their investment thoroughly, or just to go away and come back in 15 - 20 years.
6. Kinetics Paradigm (WWNPX) 9.30%
Outrageously high fees. Suspect strategy. Held up well in 2002, but got absolutely hammered in 2008 -- down over 53% in that calendar year alone. Still, for the moment anyway, the 10 year results are very strong. It's quite unlikely that such out-performance was due to luck alone, especially when one considers the abusive fees that the fund had to overcome to achieve it. MFM would love to dump this one from the MFM30, but its out-performance persists. Very strong year-to-date results.
7. FMI Large Cap (FMIHX) 9.28%
Only 29 stocks (topped by 3M, Walmart, and Berkshire Hathaway) and a turnover of 28%. Holds 11% cash and some foreign stocks. Not overly huge at $6 billion. Fund reports are way above average, and demonstrate a concern for the macro-economics as well as bottom up stock picking. MFM feels like these people can be trusted.
Second Quartile
8. Fidelity Contra (FCNTX) 9.26%With assets over $84 billion there is no possible way this fund can do what it has done, but it keeps on doing it and we keep holding on. Big positions in Apple, Google, Coca-Cola, and Berkshire Hathaway. This has become, de facto, Fidelity's flagship fund. At one time the monicker "Contra" was supposed to mean something about the strategy followed. Now it's just a name. It's a stock fund. And right now, despite its size, it's a good one.
9. Royce Special Equity (RYSEX) 9.23%
Gotta love a fund with SEX in its ticker symbol. Truly managed to not lose money, the manager is a real nerd about reading financial reports and deciding whether they should be classified as "fiction" or "non-fiction". The exercise has proved valuable. "only" lost a bit less than 20% in 2008. Closed to new investors as of February of this year. An easy fund to hold on to.
10. FPA Crescent Fund (FPACX) 9.19%
Maybe it's quirky. Maybe it's eccentric. Steven Romnick's goal is to provide equity-like returns with less risk than the overall stock market. So far he's been quite successful at doing so. Holds quarterly reviews in which he takes questions from investors. It's especially fun to hold this one when the overall market heads south.
11. Franklin Income (FKINX) 8.64%
This asset-allocation offering has been around forever, and it is good at what it does. Franklin-Templeton is actually a great company, and they may be especially strong on the bond side. A yield of over 6% (!!!) comes from a combination of bonds and dividend-paying stocks. Although returns over the past decade have surely been bolstered by falling interest rates, the Moron believes that this fund can keep regressing to a mean of 7 or 8% per annum. Generally a Steady Eddie, but we had a little drama a few years ago, when the fund was down 30% in 2008 and up 35% in 2009. Management fee is very reasonable at .63%, but there's certainly no reason to pay a 4.25% load to get in. An absolute behemoth at over $63 Billion.
12. Janus Contrarian (JSVAX) 8.49%
Can't really draw any conclusions from the ten-year numbers. Old manager had a superior record, then crashed and burned in 2008 and left without so much as a goodbye. New manager has adopted a more conservative strategy. He has done okay so far, but the jury is still out. Janus is not one of the best fund companies in MFM's opinion. Investors are justified in feeling used and abused when a manager, who should have a fiduciary relationship with them, loses big and then runs away.
13. Osterwies (OSTFX) 8.42%
A plain old stock picker's fund. Concentrated at just 33 stocks. Morningstar classifies it as "Mid-Cap Blend". Still a less than a billion dollars in its coffers, but just a little less. Relatively speaking, it has help up well in bear markets. For example, it was "only" down 12% in 2002 and 29% in 2008. But the long term numbers speak for themselves. Over the past 15 years, the annualized return is + 9.77%.
14. Franklin Small-Mid Cap Growth (FRSGX) 8.41%
This one can really fly in bull markets and can really get slaughtered in bear markets. If you're looking for action, you will find it here. Has been through some changes over the years, and had even changed its name. it used tro be called Franklin Small Cap Growth, but when it was flying high in the late 90's it grew rather portly and had to move up the capitalization ladder to put the money to work. One thing that has not changed is the manager. If we can just avoid those pesky downturns, this one will shine. Otherwise.....maybe not so much.
THIRD QUARTILE
15. Oakmark Equity Income (OAKBX) 8.20%
Manager has the ability to shift the concentration of stocks vs. bonds within wide parameters. recently, he has skewed towards dividend paying stocks as the best way to play defense. Remarkably smooth ride here.
16. T. Rowe Price Spectrum Growth (PRSGX) 8.1%
This fund of funds is organized in such a way that one does not pay double management fees, but rather pays the very reasonable fees that Price funds are known for. Guaranteed never to be the best or the worst growth fund. So far human input has managed to add to growth index returns. Probably will be able to do so in the future. Probably.
17. (tie) Columbia Value and Restructuring (UMBIX) 7.82%
Long time manager recently retired. What we have here at present is a portfolio of very high quality growth stocks. Lost 47% in 2008.
17. (tie) Mairs and Power Growth (MPGFX) 7.82%
45 holdings when last reported. Highest quality names with an emphasis on companies operating in the Minneapolis area. Conservative and patient with a low management fee. Should (!) hold up better than most growth funds in bear markets.
19. Litman Gregory Masters International (MSILX) 7.80%
Fund is divided among 6 subadvisors each running separate portfolios. Again, guaranteed never to be the best or the worst international fund. So far has beaten its peers fairly consistently. Great choice for international exposure.
20. (tie) Third Avenue Value (TAVFX) 7.22%
It's been a wild ride, and the past decade has not been one of the best. The Moron believes the risk is quite limited when holding for 5 years or more. A great diversifier because management analyzes companies from an entirely different perspective from most managers, emphasizing a school of analysis they refer to as "Fundamental Finance".
20. (tie) Vanguard Total Stock Market Index (VTSMX) 7.22%
The Great Dividing Line in our list. This fund represents par for the course of investing in U.S. equities. A market cap weighted index fund representing the entire U.S. market. Expense ratio is as close to zero as Vanguard can get it, recently .05% (!!!) Buy and hold this one and you will get what the market is willing to give you -- no more and only slightly less.
FOURTH QUARTILE
22. Sequoia (SEQUX) 6.60%
The Moron is surprised to find this one trailing VTSMX. For all their celebrated stock picking, over the past decade at least, the index wins. Still a great choice for an equity fund. A concentrated portfolio and managers who are among the best.
23. Franklin Balance Sheet (FRBSX) 6.44%
The Moron is surprised to see this one only slightly trailing the mighty and highly touted Sequoia Fund. Has had the same manager since its inception in 1990. Probably fair to call this an average fund that has held up at least somewhat better than average in bear markets. Long term record is certainly acceptable. Has in fact beaten VTSMX by over 2 full percentage points, annualized, when measured over a 15 year period.
24. Mutual Shares (MUTHX) 6.38%
Designed to hold up well in down drafts, it has usually succeeded in doing so. It did not do so in 2008, doing a little worse than average. Still, the downside capture ratio measured over 15 years is 70%. Not bad. May continue to lag the overall return of the market as it has over the past decade, but as a true value fund, the results should continue to be acceptable and the ride a little smoother.
25. Ariel (ARGFX) 5.69%
Disappointing. In recent years, returns have been characterized by huge swings up and down. Not in character with the "slow and steady" slogan. From peak to trough lost nearly 70% from late 2007 to early 2009. Then it took off like a riot. So what did we get for our pains? About 1.5% less annualized than the total stock market index fund.
26. Bridgeway Aggressive Growth (BRAGX) 5.68%
It's in for a dime, in for a dollar with this one. Hold on for a long, long, long time, and one just might win. Was brutally dismantled in the bear market of 2008. However its 15 year record still sparkles and shines. Certainly not for the faint of heart or the impatient. The one "Quant" fund on our list. Investing decisions here are made by computers according to proprietary formulas. In recent years, the fund has actually sported a negative management fee. (Just like our "Ideal Mutual Fund"). In other words management is actually putting extra money into the fund. This is by agreement, and in response to poor performance in recent years.
27. Jenson Quality Growth (JENSX) 6.62%
As the name says, invests in only the highest quality companies. Over time, investors should do fine here. However, the Moron sees no evidence that this fund will outperform an index of quality companies such as VDAIX. For that reason, will probably be dropped from the MFM30 soon.
28. Templeton Growth (TEPLX) 5.03%
Somebody had to be last, and it's sad that it had to be this venerable fund, of which the Moron will have much more to say later. Founded in 1954 by the legendary John Templeton, this was his firm's flagship fund. The Moron suspects that managers strayed from Sir John's principles in recent years, but now believes the fund is in better hands and back on track.
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