These 5-Year-Old Funds Are Standouts
See which newer funds are off to the best start.
A fund's fifth birthday can be a big milestone. These offerings qualify for five-year Morningstar Ratings and have track records long enough to meet most investors' performance screens.
To find the best-in-class among five-year-old funds, we developed a simple set of criteria. We limited the screen to the roughly 150 funds in this group that Morningstar analysts actively follow. Then we pared back the group by searching for top-half trailing five-year returns within each fund's respective category, while making sure that the current manager was responsible for that record. Finally, we eliminated those with above-average expenses.
As of Dec. 31, 2007, the screener pulled the following 12 funds:
Columbia Small Cap Value II Z (NSVAX)
Columbia Thermostat Z (COTZX)
FMI Large Cap (FMIHX)
JPMorgan Value Opportunities A (JVOAX)
Julius Baer Global High Income (BJBHX)
Manning & Napier Equity (EXEYX)
Schneider Value (SCMLX)
T. Rowe Price Retirement 2010 (TRRAX)
T. Rowe Price Retirement 2020 (TRRBX)
T. Rowe Price Retirement 2030 (TRRCX)
T. Rowe Price Retirement 2040 (TRRDX)
T. Rowe Price Retirement Income (TRRIX)
It comes as no surprise that most of these options have managers with well over five years of investment experience. Manning & Napier is a fund shop that Morningstar analysts have long admired for its experienced managers and the overall strong performance of its mutual fund lineup. Manning & Napier Equity (EXEYX) is a newer large-blend fund, but its team members average 15 years of investment experience. The fund has returned approximately 15% annually since inception, and although it wasn't around during the bear market of 2000-02, other funds in the shop's lineup boast superior bear-market returns.
Along the same vein, Greg Hopper, who runs Julius Baer Global High Income (BJBHX), has more than 20 years of fixed-income investing experience. Again, this fund was started after the early 2000s' bear market, which put a damper on returns for high-yielding bonds. But we think that Hopper's globe-scouring approach to high-yield investing should lead to competitive longer-term returns. Julius Baer has a strong record in international fixed-income investing and Hopper is backed up by experienced macroeconomic advisors and credit analysts.
Finally, the last five funds on this list are run by Jerome Clark of T. Rowe Price. The first four are target-date funds, while T. Rowe Price Retirement Income (TRRIX) is designed to dish out income for people who are already retired. To be sure, most firms' target-date funds, which shift their asset allocation to become more conservative over time, aren't five years old yet, but T. Rowe's low-cost offerings are best of breed. Clark's basic strategy is the same for each one. Recently, he increased the funds' allocation to emerging markets stocks because the 15-year T. Rowe Price veteran acknowledged that life expectancies are going up. Investors thus have a longer investment horizon and may need the additional income from emerging-markets stocks.
As with other screener lists, every fund listed may not earn strong recommendations from Morningstar analysts. But in this case, we think this is a good way to find newer funds that may have been flying under your radar.
Morningstar.com Premium Members can run this screen themselves by clicking here. (Note that the results may change as funds come in or drop out of the screen over time.) Not a Premium Member? You can still run this screen by taking a free, 14-day Premium Membership trial.
Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.