A Debt Premium?
A good year for leverage has been a great year for this fund.
The books haven't yet closed on 2012, but the attributes that have led to success for mutual funds this year are coming into view. Among U.S. stock funds, bigger has mostly been better so far in 2012, with only the mid-cap value category surpassing Morningstar's three large-cap peer groups through the close of October. Barring a reversal of fortune between now and New Year's Eve, leverage will also rank among the year's performance contributors. Thus far in 2012, funds that favor more heavily indebted firms have fared better, on average, than those with lineups focused on financially healthier companies.
Crunching the Numbers
In the year to date through October, the Credit Suisse Leveraged Equity Index has outpaced the S&P 500 by roughly 2 percentage points. Leverage comes with the territory in the financials sector, and it's been the best-performing area of the market this year. Indeed, Financial Select Sector SPDR (XLF) has sailed past the S&P 500 by more than 11 percentage points so far in 2012.
Shannon Zimmerman does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.