Our Take on the Quarter's Best-Performing Funds
These funds have great three-month returns, but most take on a lot of risk.
We've always warned about the perils of chasing short-term performance, and with the market once again enjoying a powerful rally, that warning bears repeating.
With the exception of the bear-market category, which aims to shelter profits when the market declines, every fund category Morningstar tracks has posted gains for the quarter. In another indication that we're in a bull market, fund companies have been running ads touting the performance of their recent winners, such as Fidelity Leveraged Company Stock (FLVCX), which invests in stocks of companies with heavy debt-to-equity ratios.
But the fundamentals of successful investing haven't changed. We think investors are better off focusing on funds with proven long-term performance, low expenses, and sensible strategies. With only a couple of exceptions, most of the top performers for the second quarter don't fit those requirements.
To learn more about our take on the second quarter's standouts, Premium Members can click on the Analyst Report links below.
|Top-Performing Funds in 2003's Second Quarter*|
| Net Assets |
( $mil )
| Morningstar |
|Despite its impressive near-term results, we think investors should approach Fidelity Leveraged Company Stock (FLVCX) with caution. Read the full Analyst Report.||38.04||241||N/A|
|Don't get burned by joining Jacob Internet (JAMFX) for its moment in the sun. Read the full Analyst Report.||37.65||95|
|Legg Mason Opportunity Trust (LMOPX) isn't a core holding. For those looking to add some spice to their portfolios, however, the fund's superior management and adventurous style lend it considerable appeal. Read the full Analyst Report.||35.41||2,008|
|Dreyfus Small Company Value Fund (DSCVX) has been a major disappointment. Read the full Analyst Report.||33.53||177|
|Clearly, AMIDEX35 Fund (AMDEX) still has the potential for tremendous gains. Yet its potential to plunge is daunting. And its odd makeup--it's essentially a tech/telecom play with one fourth of its assets in a pharma firm--makes it an even tougher sell. Read the full Analyst Report.||32.73||9|
|Kopp Emerging Growth's (KOPPX) potential gains aren't worth the actual pain it can inflict. Read the full Analyst Report.||31.90||431|
|Heartland Value Fund's (HRTVX) longer-term record is fairly compelling when stacked up against the entire small-value category. Read the full Analyst Report.||31.50||1,097|
|Firsthand Technology Innovators Fund (TIFQX) should do well when small-cap tech stocks are in vogue, but even so, we think it takes on too much risk to make it a worthwhile holding. Read the full Analyst Report.||31.05||53|
|CGM Focus Fund (CGMFX) has one of the best three- and five-year records among small-blend funds and domestic-stock funds in general. But it's also an extremely concentrated and risky offering. Read the full Analyst Report.||30.83||433|
|We've lost some confidence in Tocqueville Small Cap Value (TSCVX). Read the full Analyst Report.||30.74||62|
|* Table includes the top-performing funds in Morningstar's coverage universe. |
Three-month returns through 06-23-03.
Morningstar Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.