In the first part of this series, we discussed why and how it is possible to beat the market, and we named some of the greats who have been able to do just that. By studying those who have consistently bested the market, my Foolish colleague Shannon Zimmerman unearthed three key characteristics that the great funds share:

  • Low fees
  • Low turnover
  • Proven management with an intelligent asset-allocation strategy

A mutual fund with all those features has the potential to outperform the market.

Peeking under the covers
For a fund to make the cut as a worthwhile investment, it must pass all of those tests. That's why Constellation Clover Core Value (CCEVX), the fund profiled in the first part of this series, was recommended in the inaugural edition of Shannon's Motley Fool Champion Funds. The management team here has been in place since the fund's inception, giving it a time-tested track record and a seasoned expert at the helm. And with lower fees and turnover than its category average, more of your money stays invested.

Just as importantly, a strategy that targets midsized-to-large companies that trade for less than they're worth lets the fund follow in the footsteps of many of history's best value investors. Take a gander at the fund's last reported largest half-dozen holdings to see just where its manager has been digging up such market-beating bargains:


% of portfolio

Merrill Lynch (NYSE:MER)


Valero Energy (NYSE:VLO)


ConocoPhillips (NYSE:COP)


Federated Investors (NYSE:FII)


Loews (NYSE:LTR)


Wells Fargo (NYSE:WFC)


Some of its largest holdings are concentrated in oil companies; clearly, the manager here thinks that oil prices won't retreat any time soon. Investing the rest in financial firms indicates that he believes the yield curve will normalize, ending the malaise that has recently hampered the industry.

From this Fool's perspective, those calls make a whole lot of sense. With global energy demands continuing to rise, and idiot politicians trying to make a mess of the laws of supply and demand, it's likely that viable new energy sources are still a long way away. That bodes well for existing oil-related firms. Plus, the Federal Reserve's recent announcement is being interpreted as a harbinger of a possible end to rate hikes, so it seems likely that interest rates will stabilize. That makes it far easier for financial companies to plan and profit from their business strategies.

Your edge
The best part of all that forecasting and predicting is that it's someone else's problem. By hiring an expert with a proven track record to do the forecasting, analysis, and stock-picking for you, you can get on with your life and still have a decent shot at outperforming the market. That's the philosophy with which Shannon runs Champion Funds. As a whole, his fund picks have easily surpassed their benchmarks over the life of the service. By focusing on finding the right funds with the right cost structures, the right management, and the right strategies, he has found the keys to successful fund investing. Join him today to learn how to hire someone else to beat Wall Street for you. Then you can focus on the rest of your life, and let a expert do the heavy financial lifting for you.

If you'd like to see more before joining, be my guest. We're such believers in low-cost investing that we'll give you a free, no obligation 30-day trial to Champion Funds.Simply click here to get started.

At the time of publication, Fool contributor Chuck Saletta had no ownership stake in any of the companies mentioned in this article. Federated Investors is an Inside Value selection. The Fool has a disclosure policy.