Carlson’s Choice Mutual Funds
I keep our portfolios streamlined with my best ideas, but some of you want more than one fund for a sector. For these readers, we’ll take a look at some other funds to consider.
One of my favorite approaches to stock market investing is to invest with a good stock picker who buys only his or her best ideas. We are in a stock picker’s market, and I expect such concentrated funds to do much better than index funds. TCW Select Equity is a concentrated portfolio of growth stocks. There are some concentrated funds of value stocks to consider for your Managed Portfolio as a balance.
Longleaf Partners had a positive return through the bear market despite a slide in 2002. The stocks in the portfolio often make most observers uncomfortable. Yet, the fund’s history shows the managers know how to uncover real value. The managers also keep most of their personal wealth in the fund.
Oakmark Select takes a similar approach and also has outstanding long-term returns. Excelsior Value & Restructuring has a similar style, but it did not fare as well in the bear market. It bought into fallen technology stocks too early in the decline.
A concentrated portfolio with less of a deep value approach is Torray Fund. The managers buy a couple of dozen stocks they really like and hold them for years for big pay offs.
You also can diversify the Core Portfolio.
For Core U.S. Stocks, one fund to consider is Masters Select Equity. This fund contracts with managers at top funds with different styles (growth and value, large and small stocks). The fund buys only the top picks of each manager, giving the fund a diversified portfolio of the best ideas of proven managers. Over time, it beats the broad market indexes. It beats my choice of American Century Equity Income in rising markets and lags in falling markets.
Other Core funds I like that have a value bias are old favorites Dodge & Cox Stock and Tweedy, Browne American Value. They are steady funds that beat the averages long term.
Superb small stock funds are harder to find, because the good ones usually close to new investors.
Two of my all-time favorites are Heartland Value and Third Avenue Value. Heartland Value is more diversified, while Third Avenue Value often ventures into bankruptcy situations and securities other than common stocks. Any of the funds from the Royce family also is a good small stock fund supplement to a portfolio. Charles Royce and his team have a knack for finding very small companies that generate large gains.
I’m adding to the web site a table of all my Carlson’s Choice Mutual Funds. The table includes alternate funds from each category with tickers, telephone numbers and total returns over different time periods during the last 52 weeks. This is my personal “select fund” list.
