How Five Funds Thrived Over the Past 15 Years
Past performance doesn't predict future returns, but these funds all have virtues that give them a leg up.
At the risk of stating the obvious, the past decade has been a bad one for stocks. At this point, the S&P 500 Index is essentially flat over the past 10 years. As real as it feels to all of us now, evidenced by the continued lack of investor flows into equity funds, it's an unusual occurrence: A look at rolling 10-year returns since early 1980 shows that the S&P 500 has recorded negative 10-year returns only about 6% of the time since then; all of the occurrences have been in the past couple of years.
Investors should be willing to consider stocks today--based on a variety of indicators, including valuations for large-cap stocks and the current, low level of interest rates. But assessing funds' 10-year returns is hardly inspiring. Sure, there are a couple of no-brainers at the top of the list: Fairholme Fund (FAIRX), for example, tops the large-blend chart with a 12.27% 10-year annualized return, thanks to manager Bruce Berkowitz's concentrated approach to value investing. But many, many other funds have produced meager results at best, while others are still in the red over the past 10 years.
In an attempt to gauge investment acumen over a more normal long-term period for stocks, investors can extend their evaluation period. Try 15 years, which includes two bull phases for stocks as well as two bear periods. Overall, the S&P 500 Index gained an annualized 6.74%. While that's still below the long-term historical range of 8% to 10%, it's at least respectable.
Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.