Jump Into a Top-Notch Fund
These no-load stock funds have market-beating returns and below-average annual expenses.
From Kiplinger's Personal Finance magazine, July 2006
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The pool of no-load stock funds that require $1,000 or less as an initial investment is shrinking. But several funds make the cut and have market-beating returns and below-average annual expenses. All of the funds listed here have three-year annualized returns to May 1 that beat the 15% record of Standard & Poor's 500-stock index.
On the low end, just $250 gets you into the Hodges fund (three-year annualized return, 39%; symbol HDPMX; 866-811-0224). Father-and-son team Don and Craig Hodges steer this fund toward firms of all sizes that have increasing profits. Lately, the Hodges duo has been finding value in deep-water drillers, construction-equipment makers, steel companies and blue-chip industrial stocks (see Hot Hands, Hot Picks). Just over half of the fund is now invested in large companies.
The Hodges fund's low minimum was a plus for Dayna Lantrip, who lives in The Woodlands, Tex., outside Houston. "I'm a single mom, and I don't have much of a savings account to speak of," says Lantrip, 37, who does accounting and bookkeeping work. She bought shares of the fund in May 2005 on the advice of a friend, and since then it has gained more than 40%.
A fine choice with a $500 minimum investment is Excelsior Value & Restructuring (26%; UMBIX; 800-446-1012). This $6.2-billion fund invests in undervalued companies that are restructuring or are in industries that are consolidating. Lead manager Dave Williams often finds bargains in firms that are saddled with debt. The fund is cashing in on ongoing consolidation in the energy sector, with a 19% stake in that category.
A grand is your ticket into Selected American Shares (18%; SLASX; 800-243-1575). Third-generation money manager Chris Davis, along with his partner, Ken Feinberg, have perfected the art of identifying solid, well-run companies at depressed prices. Selected American's portfolio is made up almost entirely of large companies, and financial stocks account for about half of the fund's holdings.
-- Katy Marquardt