It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
Tuesday, May 10, 2011
5 Top Value Funds for 401k Investing
Stable value mutual funds are good bedrock buys
May 10, 2011, 10:31 am EDT | By Tom Taulli, InvestorPlace Writer
For mutual fund investors and 401k plans, value investing is a common theme. On its face, value investing is fairly straightforward. It is about finding stocks that are selling below their real values.
But of course, there are some big challenges. After all, what is the real value of a company? And even if a stock is cheap, it could stay that way for a long time. Just look at companies like Microsoft(NASDAQ:MSFT) and Cisco (NASDAQ:CSCO). They have been dead money for about a decade.
Yet many great investors take a value approach. Examples include Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) icon Warren Buffett, Peter Lynch, Michael Price and Julian Robertson.
Of course, there are many value mutual funds to choose from. Here’s a look at some of the top operators:
American Funds American Mutual (AMRMX)
The American Funds American Mutual (MUTF:AMRMX) fund, which has $19.8 billion in assets, is managed by a group of four manages. All have tenures that extend at least several decades. In other words, they have a deep understanding of investments — as well as controlling risks.
Consider some of the top holdings: AT&T (NYSE:T), IBM (NYSE:IBM), United Technologies(NYSE:UTX), Microsoft and Abbott Laboratories (NYSE:ABT). Yes, these are very blue chip stocks.
For the long-haul, the conservative strategy has certainly done quite sell. The average annual return for the past 15 years was 7.70%.
BlackRock Large Cap Value (MDLVX)
Bob Doll, who is the chief equity strategist at BlackRock (NYSE:BLK), is one of the top investors on Wall Street. Of course, he is also a frequent guest on CNBC.
For the most part, Doll takes a broad view of the markets — trying to find the areas with the best opportunities. From there, he tries to locate good values by using sophisticated quantitative models.
Actually, Doll currently manages the BlackRock Large Cap Value (MUTF:MDLVX) fund, which has $1.8 billion in assets. But keep in mind that oll has a conservative bent. So, even when he makes the right calls, do not expect huge gains.
Gabelli Equity Income (GCAEX)
Mario Gabelli is the manager of the Gabelli Equity Income (MUTF:GCAEX) fund, which has $2 billion in assets. He is a legendary investor, who has managed money since the 1970s. He likes to do intensive number crunching to find deep values.
Gabelli also has a strong background in industries like media and materials. No doubt, these are likely to have continued growth prospects.
He also realizes that the big gains come from holding onto positions for the long haul. Thus, the turnover ratio of the Gabelli Equity Income fund is only 14%.
Invesco Van Kampen Growth and Income (ACGIX)
The Invesco Van Kampen Growth and Income (MUTF:ACGIX) fund, which has $7.5 billion in assets, looks for those investments that are often left for dead. True, this can be risky — but the valuations can be compelling. Besides, the portfolio managers try to find catalysts that will get the stock price moving upward.
But it’s certainly tough to do. After all, the fund has been stung on making plays for companies likeBP (NYSE:BP).
Don Yacktman is another big-name on Wall Street. He has managed the Yacktman (MUTF:YACKX) fund since 1992.
He does look for good values but also likes companies with strong barriers to entry. Some of his top holdings include News Corporation (NASDAQ:NWS), PepsiCo (NYSE:PEP), Procter & Gamble(NYSE:PG), Microsoft Corporation and Coca-Cola (NYSE:KO).
He also has a good sense of timing. After the financial crisis, Yacktman got bullish on equities. In 2009, his fund posted a gain of 59.31%.