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Fund Spy: Morningstar Medalist Edition

5 Medalists Swimming Against the Tide in Financials

These proven managers are going against the current.

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Financial stocks, particularly bank stocks, have had a long stretch of poor performance. The financial crisis of 2008 was the most painful period, of course, but the sector has often struggled since then as well. Over the past decade through Aug. 16, 2016, financial sector funds trailed the Russell 1000 Value Index and the S&P 500 by an annualized 4.4 and 5.9 percentage points, respectively. Due to renewed concerns over the accuracy of banks’ book values and their ability to generate solid returns on equity in the future, the performance gap is similar over the trailing three years (coinciding roughly with the last time the S&P’s financials weighting peaked in mid-2013), and the past 12 months stand out as a particularly trying time.

Some of our favorite U.S. large-cap equity funds see significant investment opportunities in the beleaguered sector, so they sport big financials stakes—and have seen their recent performance suffer as a result. Let’s take a closer look at those funds that earn Morningstar Analyst Ratings of Gold or Silver and have weightings in financials that at least double the S&P 500’s recent 13.8%.

Greg Carlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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