Good mutual funds

[stahleyp]

Hey guys,

 

A few of us were talking about different funds in another thread that are worthwhile. I'm sure most of us have accounts that can't trade stocks (401ks, 403bs, etc) and having a list of solid funds might be worthwhile or some just might prefer the fund route.

 

Most of these are fairly diversified funds (probably won't have insane years like Chou or Fairholme) but are all very solid.

 

Here are a few I like:

 

BRUFX - a pretty unique fund. Solid fund with long term managers and very good performance.

 

Anything by Primecap - a solid growth manager. Most of their funds are closed but a couple are still open (POSKX and POGRX)

 

Anything by Dodge and Cox - yes, value has struggled over the past decade but these guys are still in the 1/3 of managers over the past 10 years even after their horrible run in the 2008. They're in the top 2% of funds in their category in the past 5 years (DODGX). Their international fund (DODFX) is in the top 14% of funds over the past decade. They have relatively low expenses and very solid management.

 

SIGIX- probably my favorite Emerging Markets fund. He used to manage at Matthews and has a solid record at both places. Also, relatively low expenses for an EM fund.

 

Mairs and Power is another good fund company. I like the MSCFX but it's closed now.

[valuedontlie]

It's a small fund and carries expensive fees but I've followed VISAX for some time now. Foreign small-cap fund and runs a bit higher on the valuation side as they look for "quality" names.

 

Have had decent overlap in ideas like Lumax International and Bouvet ASA over the years.

[thowed]

I haven't done deep research on them, but I've seen a lot I like about SMVLX, LYRIX and PKSFX.

 

I guess everyone knows AKREX - I don't know if he's going to retire soon though and what happens then.

 

The US Feeder of Fundsmith has been amazing so far.  He put in c.US$150m of his own cash in it last year, which is some proper skin in the game.

 

Agreed - BRUFX is a very interesting one.

 

I like owner-managed firms as a good filter to start with, and ideally less than 30 holdings.

 

(I'm UK-based, but am always interested in good funds anywhere, and these ones cropped up on my radar).

[fareastwarriors]

I own some BERIX.

 

I also own BRUFX and unfortunately, FAIRX and SEQUX as well...

[frugalchief]

MXXVX - Matthew 25 Fund.  Only fund ran by the manager, he has large part of net worth in it, good history, semi-concentrated.

[Jurgis]

Disclaimer: I haven't done much DD on mutual funds recently. Various fund-restricted 401(k)s I have don't offer much selection. I just pick what's available. I don't currently invest into mutual stock funds outside 401(k)s. With that said, couple that have not been mentioned yet:

 

Parnassus funds.

 

Fidelity Contrafund and Fidelity Low-Priced Stock Fund. For both returns might be weighted down by the fund size.

 

 

[TwoCitiesCapital]

When I pick mutual funds - I tend to pick mutual funds that have some structural advantage that I find difficult to replicate myself.

 

PIMCO, known for their bonds, has the StocksPLUS strategies where they buy the relevant index swap (S&P 500, MCI ACWI, etc. etc. etc.) instead of the physical stocks. The remaining cash/collateral is invested in short-term fixed income securities with the goal of beating the LIBOR+ spread on the swap to add fixed income alpha to the beta equity exposure.

 

The StocksPlus fund for U.S. has outperformed the S&P in most time periods. If I'm not mistaken, the StocksPlus Long Duration (uses long bonds instead of short bonds) is the single best performing "actively" managed, large cap equity fund in the U.S. since its inception. Obviously, it's benefitted from the bull market in rates as well, but the structure of the fixed income exposure has its advantages

 

Also, PIMCO has also teamed up with Research Affiliates to offer "PLUS" versions of Research Affiliates equity indices which are heavily value tilted. So you can get RA's solid, research driven, value approach with quarterly rebalancing in the same leveraged+fixed income approach.

 

These are structural forms of cheap leverage and active collateral management that I'd be unable to replicate myself so I tend to lean towards these types of funds when I want broad index exposure.

 

Am curious to hear of other types of mutual fund structures/strategies that board users believe provide structural advantages.

 

[stahleyp]

Hey two,

 

The long duration one has absolutely killed it. Wow. It also isn't a huge fund either. It actually lost less in 2008 too. Interesting. Though I'm not sure I quite understand how it works. Thanks for the idea. Is that the one you have?

 

Ehh...two of the three managers have none of their own personal money in it. I don't like that.

[Jurgis]

I wonder if there are possible situations in which Pimco StocksPLUS blows up. Counterparty risk? Though they are probably careful with that.

 

(Somewhat unrelated) Way back (around 2006-2008?) I was looking at Pimco bond fund and they were holding all kind of weird stuff (structured products? currency swaps? derivatives?). I was wondering if they gonna blow up, but they never did. I think their bond funds still do that a lot. I hold some PONDX.

 

 

[TwoCitiesCapital]

Hey two,

 

The long duration one has absolutely killed it. Wow. It also isn't a huge fund either. It actually lost less in 2008 too. Interesting. Though I'm not sure I quite understand how it works. Thanks for the idea. Is that the one you have?

 

Ehh...two of the three managers have none of their own personal money in it. I don't like that.

 

Keep in mind - stocks and bonds have both gone through a mega-rally - so of course having a leveraged fund that bought long rates + stocks was going to do well. Dunno how good the return expectations are going forward with rising rates, but the bar for outperformance is low. PIMCO simply has to outperform the 3moLIBOR +/- a spread with the fixed income portion of the portfolio.

 

That's not something I can mimic myself.

 

I'm bearish on U.S. equities so I don't own either the StocksPlus or StocksPlus Long Duration funds. Once U.S. markets are better valued, that is how I would prefer to get my passive exposures though.

 

 

I do have a massive chunk of my portfolio in their StocksPlus version of the RAE Fundamental Index for emerging markets (PEFIX) for the structural fixed income leverage and the structural advantage of RAEs fundamental weightings.

 

 

[TwoCitiesCapital]

I wonder if there are possible situations in which Pimco StocksPLUS blows up. Counterparty risk? Though they are probably careful with that.

 

(Somewhat unrelated) Way back (around 2006-2008?) I was looking at Pimco bond fund and they were holding all kind of weird stuff (structured products? currency swaps? derivatives?). I was wondering if they gonna blow up, but they never did. I think their bond funds still do that a lot. I hold some PONDX.

 

PIMCO does utilize a lot of derivatives - but most of their strategies do NOT use them to obtain economic leverage for the portfolio. They simply use them because relative pricing is better than physical alternatives OR because they derivatives are more liquid than physical alternatives and etc. Futures, CDS/CDX, options, and interest rate swaps are used extensively across their funds/strategies.

[stahleyp]

A pretty good fund company closes doors (at least for their mutual funds):

 

https://www.tfscapital.com/wp-content/uploads/TFS-Mutual-Funds-Closing-Letter-FINAL.pdf

 

Gates was featured in Flash Boys and was a proponent of IEX.

[mhdousa]

 

The US Feeder of Fundsmith has been amazing so far.  He put in c.US$150m of his own cash in it last year, which is some proper skin in the game.

 

(I'm UK-based, but am always interested in good funds anywhere, and these ones cropped up on my radar).

 

Looks interesting. Tried to find out some info, but the website is not super helpful. Anyone know any more about this?

[Ross812]

Wellington. Cheap, Diversified, been around for 80+ years and has a solid long term track record.