We're trotting out the gloomy numbers again:
- More than 7,000 mutual funds are vying for your investment bucks.
- Fewer than 25% of them actually outperform the S&P 500 over the long haul.
And?
Even stock investors searching for the 10 best stocks should pay attention, because more than 90 million Americans own mutual funds. (Just think of what's stuffed in your 401(k).) So the news that most funds lag lazy indexes should be taken sitting down.
Drum roll, please ...
There are, however, great funds out there ready to make you money. The 10 best-performing mutual funds of the past 10 years:
|
Fund |
Ticker |
10-Year Return* |
Recent Holdings |
|---|---|---|---|
|
Matthews Korea |
MAKOX |
27.16% |
Samsung Electronics, Kookmin Bank, SK Telecom |
|
CGM Focus |
CGMFX |
25.92% |
Companhia Vale do Rio Doce (NYSE:RIO), Countrywide Financial (NYSE:CFC), Research In Motion (NASDAQ:RIMM) |
|
Vanguard Precious Metals & Mining** |
VGPMX |
23.73% |
Aber Diamond, Barrick Gold, Peabody Energy |
|
Jennison Natural Resources |
PGNAX |
22.94% |
Freeport McMoRan (NYSE:FCX), Suncor Energy |
|
U.S. Global Accolade Eastern Europe |
EUROX |
22.71% |
Vimpel Communications (NYSE:VIP), Mobile Telesystems |
|
USAA Precious Metals & Minerals |
USAGX |
22.43% |
Goldcorp, Agnico-Eagle Mines |
|
Kinetics Internet |
WWWFX |
21.95% |
Leucadia National, NYSE Euronext, Gemstar-TV Guide (NASDAQ:GMST) |
|
Oppenheimer Developing Markets |
ODMAX |
21.07% |
Petrobras, America Movil (NYSE:AMX), China Mobile |
|
CGM Realty |
CGMRX |
20.63% |
Companhia Vale do Rio Doce, Las Vegas Sands |
|
Wasatch Micro Cap** |
WMICX |
20.47% |
O2 Micro International, Power Integrations |
OK, so international markets, precious metals, and small caps have done well over the past decade ... that doesn't help us going forward. What's worse, two of the 10 best funds are now closed to new investors.
But that's OK. You don't want to chase past performance anyway.
The foundation of greatness
Let's take a step back and see what we can learn from the 10 top-performing funds.
|
Metric |
Equity Fund Average |
Top 10 Funds by Performance |
|---|---|---|
|
Manager tenure |
3.8 years |
8.4 years |
|
Expense ratio |
1.51%* |
1.32% |
The best funds of the past 10 years had, on average, longer-tenured managers and charged less to manage your money. Those two facts are so important that they bear repeating: The best mutual funds of the past 10 years had long-tenured managers who charged less to earn you more money.
Even better, eight of the 10 best mutual funds of the past decade did not charge loads -- the onerous upfront sales fees that some funds try to get away with charging.
For all 90 million of you ...
So, if you're looking to invest in one of the best mutual funds of the next 10 years, you know where to start: with long-tenured managers who don't charge you an arm and a leg to invest.
Not coincidentally, that's the drum our team at Motley Fool Champion Funds has been beating for years, and to great success. Those are some of the very first characteristics we screen for in prospective funds, and Champion Funds has found success with that formula: Recommended funds are easily beating their benchmarks. (In fact, the two CGM funds are formal Champion Funds recommendations.)
If you'd like to see our entire list of recommended funds, click here to join the service free for 30 days. One of the next decade's best performers just might be lurking therein.
This article was originally published Aug. 11, 2006. It has been updated.
Neither Tim Hanson nor Brian Richards owns shares of any company mentioned. NYSE Euronext is a Rule Breakers recommendation. Petrobras is an Income Investor pick. The Fool's disclosure policy never underperforms.
