tut@sun.uucp (Bill Tuthill) (12/09/85)
I think the best survey of mutual funds appears in a special edition of Forbes magazine published each year in August. Forbes measures mutual fund performance over three market cycles, however long they last. The last three cycles, according to their definition, started on 9/30/76 with a down cycle, and ended on 6/30/85 with an up cycle (actually we're still in this up cycle, but the survey appeared last August). Over this 8 3/4 yr period, Consumer Reports' top-rated fund, Lindner, earned a healthy 24.4%. But it did poorly in the 78-80 bull market, so it didn't earn a place on the Forbes honor roll. Since Consumer Reports' survey was done over a period that included two bear markets (12/80-7/82 and 7/83-7/84), conservative funds such as Lindner did very well. Here is the Forbes honor roll, with the average annual return over the last three market cycles: 33.3% Fidelity Magellan 28.0% Twentieth Century Select 27.5% American Capital Pace 26.4% Evergreen 25.4% Nicholas 24.9% American Capital Venture 23.8% Mass Cap Development 23.4% OTC Securities 23.1% Claremont Capital 22.7% Loomis-Sayles Capital Development 22.7% Sigma Venture Shares 22.6% Pennsylvania Mutual 22.3% Growth Fund of America 22.2% NEL Growth 22.1% Fidelity Destiny 21.5% Amcap 21.5% Tudor 21.0% United Vanguard 20.9% Janus 20.8% Scudder Development 20.7% Vanguard Explorer 20.7% Pioneer II 20.6% Acorn Note that you would have been better off with Lindner (which averaged 24.4%) than with Acorn (which averaged 20.6%) even though Lindner rates a D/A+ in up/down markets, whereas Acorn rates a B/A. But next August, after the current bull market, Lindner may not look so good. Here are the funds that averaged > 25% over the last three cycles: 8 yr 1 yr load expen UP/DOWN phone American Capital Pace 27.5% 20.2% 8.5% 0.62% B / A+ 800-231-3638 Evergreen Fund 26.4% 29.6% none 1.31% A+/ B 800-635-0003 Fidelity Magellan 33.3% 38.2% 3.0% 1.12% A+/ A 800-544-6666 Franklin Gold Fund 25.9% -22.0% 7.25% 0.90% A / C 800-227-6781 International Investors 27.4% -17.1% 8.5% 0.82% A / C 800-221-2220 Nicholas Fund 25.4% 39.0% none 0.82% B / A+ 414-272-6133 20th Century Growth 26.1% 25.4% none 1.01% A+/ C 816-531-5575 20th Century Select 28.0% 31.3% none 1.01% A+/ B 816-531-5575 United Services Gold 26.6% -28.7% none 1.11% A / C 800-824-4653 Weingarten Equity 25.1% 25.1% none 1.10% A+/ C 800-621-7321 The 8 yr column shows the average return over the last 8 3/4 yrs, while the 1 yr column shows the return from August 1984 to 1985. The load is the sales fee, and the expen column shows how much the fund managers skim off earnings every year. Note that American Capital Pace is a good deal over the long haul because its expenses are low. The UP/DOWN column shows the Forbes ratings for up and down markets; A equals upper 25th percentile, etc. I would stay away from gold funds at this point, although some time in the future they may come back strong (however many are heavily invested in South Africa). I don't know why International Investors did so poorly over the last year, when the dollar was falling sharply. 20th C Growth and Weingarten Equity have good overall return even though they do poorly in bear markets; buying them 2 months ago would have been great. Of course, Magellan, 20th C Select, Nicholas, and Evergreen are old standbys.