Select the best concentrated portfolio funds
Funds with higher risks and higher rewards
Concentrated portfolio mutual funds often produce outstanding results. Often the funds have names such as focused, select, or may have a number such as twenty or fifty to indicate the number of stocks in the portfolio. Often these funds may have over 15 percent of the funds assets in one stock. One theory as to why these funds produce better result is that the manager is only selecting the stocks he sees as having the best upside potential.
These funds can seriously affect your asset allocation. Many of these funds invest in sectors or single countries. Some funds invest only in the USA while others have few restrictions where they invest at all. These funds tend to rise and fall more than other funds with the market. If the manager is right you will profit handsomely, if he is wrong you will not be happy. While the author likes these funds he does not recommend any more than seven percent of any one fund in your portfolio.
How do you go about picking one of these funds? Picking these funds is not an easy task. The manager is key to these funds success in the market. Fund screeners do not screen these funds out. Many fund companies offer these types of funds. A poorly managed focused fund can increase your risk and diminish your returns.
Focus funds focus growth
The author’s top picks for concentrated portfolio funds.
Yacktman Focus Fund symbol YAFFX. This five star fund was up 120 percent in the period from March 9, 2009 to March 9, 2010. The fund is run by Donald Yacktman who founded Yacktman asset management in 1992. This fund had nearly 63 percent of its assets in the top ten holdings as of September 30, 2009. This fund is classified by Morningstar as a large value fund.
Yacktman Fund symbol YACKX. This is another five star fund run by Donald Yacktman. This fund had only 53 percent of its assets in the top ten holdings as of September 30, 2009. This fund is also classified by Morningstar as a large value fund. This fund was also up 120 percent in the period from March 9, 2009 to March 9, 2010.
Westcore Select Fund symbol WTSLX. This five star fund was up 92 percent in the period from March 9, 2009 to March 9, 2010. William Chester has run this fund since 2001. This fund is classified as a mid cap growth fund by Morningstar. The fund had over 47% percent of its assets in the top ten holdings as of September 30, 2009.
Akre Focus Fund symbol AKREX: This is a new fund run by a very experienced manager Charles T. Akre.
Wintergreen Fund symbol WGRNX. This four star fund is up over 72 percent in the period from March 9, 2009 to March 9, 2010. This fund is classified as a world stock fund. It has over 50 percent of its assets in the top ten holdings as of September 30, 2009.
Royce 100 fund symbol RYOHX. This five star fund is run by the legendary Charles Royce. This fund is not nearly as concentrated as the above funds which are common for a small cap fund. This fund was up 96 percent in the period from March 9, 2009 to March 9, 2010.
The Janus twenty fund is also a five star fund in this area but is closed to new investors at the time of writing. This fund is on the verge of becoming bloated but one I would hold and add to.
Concentrated funds can really boost your portfolio’s performance. They are more risky than more broadly diversified funds. Manager selection in these funds is of utmost importance.
These funds can be an important part of your portfolio but be sure to maintain a good asset allocation.
While having the concentrated portfolio funds will go a long way towards meeting your financial goals as investor more diversification is highly recommended. Develop your own asset allocation and invest in the best funds in those asset classes. Once the investor has their asset allocation select the best small cap, best mid cap, large cap, global, bond funds for their portfolio.