Concentrated Funds Can Be Good Choices by ProQuest


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									Money_0909.qxp   8/26/09    2:36 PM    Page 1

      48 Renal & Urology News                 SEPTEMBER 2009                                                                               

                                                                                Your Money

       Concentrated Funds Can Be Good Choices
      To get solid results, pick one with a strong long-term record and then hold on to it for years

      BY STAN LUXENBERG                                                                                                                             ing, investors can turn their backs
      MOST MUTUAL funds stay broad-                                                                                                                 on safe blue chips and race to buy
      ly diversified, holding more than 100                                                                                                         riskier small stocks. That happened in
      stocks. So if a few stocks blow up,                                                                                                           2005 when Yacktman trailed 98% of
      the funds may still deliver compe-                                                                                                            his competitors. But over long periods
      titive returns. But some funds take                                                                                                           of time, Yacktman’s approach pro-
      a bolder approach. These concen-                                                                                                              duces dividends. During the past
      trated portfolios own fewer than                                                                                                              decade, the fund has returned 6.7%
      50 holdings. The aim is to place big                                                                                                          annually, beating the S&P 500 by 8.5
      bets on a few stocks. If the choices                                                                                                          percentage points and topping 99%
      prove correct, the concentrated funds                                                                                                         of competitors.
      can rocket to the top of the stand-                                                                                                             Another fund that seeks to limit
      ings. Of course, the strategy comes                                                                                                           losses in downturns is Osterweis,
      with risk. Plenty of concentrated                                                                                                             which typically owns about 30 stocks.
      funds suffer big losses.                                                                                                                      When stocks decline, portfolio man-
        Should you avoid concentrated                                                                                                               ager John Osterweis often takes
      funds? Not necessarily. Some top                                                                                                              dramatic steps to protect his share-
      performers proved their worth during                                                                                                          holders. With mortgage markets in

      the downturns of recent years.                                                                                                                turmoil last fall, Osterweis sold some
        Consider Forester Value Fund,                                                                                                               financial stocks and shifted a third of
      which won a place in the record books                                                                                                         his assets to cash. That caution helped
      when markets collapsed in 2008. Of                                                                                                            him limit losses and outdo most com-
      the more 4,500 domestic equity              Investors should look at funds that perform steadily regardless of smaller size.                  petitors last year. During the past 10
      funds, Forester was the only one to                                                                                                           years, the fund has returned 5.8%
      make money for the year, according          trated funds follow predictable pat-           diverge widely. In 2007, Janus Twenty              annually, outdoing the S&P 500 by
      to fund tracker Morningstar, Inc.           terns. By studying past performance,           returned 35.9% and outdid 99% of                   7.5 percentage points.
      Portfolio manager Tom Forester              you may be prepared to weather dif-            its la
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