Banner

Article

Six great mutual funds to buy now

We've drafted a starting lineup for you: small and large, offensive and defensive, old-timers and rookies-but winners all.

There are almost as many thousands of mutual funds as there are hopefuls at an American Idol audition. You can't possibly sort through them all and know which ones are worth an investment of your hard-earned dollars-so we did it for you.

We culled the masses, using a number of different criteria including, of course, performance. Four of the six funds we'll discuss in detail have five-year average annual returns of at least 11 percent, almost double that of the S&P 500, which reaped just 5.8 percent. But, since past performance is no guarantee of future results, we didn't want to be limited to past returns in compiling our list. So we had two experts weigh in: Greg Carlson, a mutual fund analyst at Morningstar, the Chicago-based tracker of stocks and mutual funds; and Janet Brown, money manager of DAL Investment Company in San Francisco, and editor of the No-Load Fund*X newsletter, ranked No. 1 for its 25-year, risk-adjusted performance.

We also eliminated from contention those funds that were closed to new investors or had restricted access, as well as those that had sales loads, an expense ratio of more than 1.5 percent, a required initial minimum investment of greater than $10,000, or an investment team who had been at the helm for less than five years.

So while each of these funds may not rank first on every score, taken together they'll serve as strong components of a well-diversified portfolio. And now, without further ado, here they are:

1. Aston/Montag & Caldwell Growth Fund rocks steady

"Canakaris invests in businesses that tend to generate a very stable level of profits, thus he owns large companies," explains Carlson. Indeed, the fund owns a number of established giants like Eli Lilly, Procter & Gamble, Halliburton, Walgreens, and McDonald's.

"This is the fund to own for those who want a great defensive holding that focuses on capital preservation," says Silverman. "While it may underperform when the market is moving rapidly up, it hits its stride when the market is flat, down, or choppy. As such it's a great selection for those with weaker stomachs or as an addition to a more aggressive portfolio.

Related Videos