It’s time for my annual look at “what’s hot” in the
mutual fund world. Here are four mutual funds that have more
than doubled the S&P 500 returns over the past 12-months, and have
also beat the S&P’s returns over the past three and five years.
Specifically, qualifying funds must have returned 28%
over the past year, and averaged 12% and 13% annual returns,
respectively, over the past three and five years. Also, passing
funds must be available at most stock brokers, and be no-load,
meaning that you pay no sales commissions, and require $2,500 or
lower minimum initial purchases.
Here are the top four funds in terms of 12-month
returns that meet those requirements. Reflecting current market
conditions, technology and small-cap focused funds dominate the
Firsthand Technology Opportunities
(TEFQX): Holds 36 tech stocks, and with its top 10 holdings
comprising 55% of total assets. Top holdings include the usual
suspects: Facebook, Amazon, Netflix, Alphabet (Google), Alibaba,
etc., but with small- and mid-caps comprising 36% of the portfolio,
Firsthand doesn’t overlook up-and-comers either. The fund returned
53% over the past 12-months and 23% and 26%, on average annually,
over the past three and five years. Reflecting the relatively stable
list of major tech players, Firsthand only changes 19% of its
portfolio (turnover) annually.
Delaware Smid Cap Growth Fund
(DFCIX): Holds 35 U.S.-based small- and mid-cap stocks with
Weightwatchers International, Match Group and Collegium
Pharmaceutical accounting for 16% of total assets. Returned 51% over
the past 12-months, and averaged 16% and 17% annually over three and
five years. Following a momentum strategy, Delaware turns over 159%
of its portfolio annually.
Wasatch Micro Cap ((WMICX):
Holds 88 mostly small- and micro-cap stocks, overweighted
technology, but also with big positions in healthcare, industrials,
financial services and consumer cyclical. Returned 43% over the
past 12-months and averaged 17% and 16% returns over three and five
years. Annual turnover is 31%.
Kinetics Small Capital Opportunities
(KSCOX): Following a “deep value” strategy, Kinetics holds
only 28 stocks, and its biggest holding Texas Pacific Land Trust,
accounting for 26% of assets, was first added to the portfolio in
March 2005. Other big holdings include Icahn Enterprises and DREAM
Unlimited, which together comprise another 15% of total holdings.
Kinetics has returned 42% over 12-months, and averaged 15% and 13%
annually over three and five years. A classic buy-and-hold investor,
annual portfolio turnover is only nine%. The downside of that
long-term approach is that yearly performance tends to be erratic.
For instance, Kinetics suffered losses in calendar 2014 and 2015,
years when the overall market enjoyed positive returns.
As always, past performance doesn’t predict the future. Formerly
successful stock picking strategies can fall flat when market
conditions change. All performance data courtesy of Morningstar (www.morningstar.com).