by Tom Taulli | October 2, 2012 7:15 am
2012 has been a friendly year to mutual funds. Of course, that’s thanks to a stock market in full bull mode, with the S&P 500 up a sizzling 15% through three quarters.
Some of the hottest categories to date have included large-growth stocks, health care, emerging-market bonds, global real estate and foreign small/mid growth.
In looking for the best mutual funds for 2012 year-to-date, we included at least a couple requirements — for instance, a fund needed to have at least $1 billion in assets, and also had to be actively managed.
Here are the five top mutual funds that stood out:
Category: Large Growth
Fund Return for 2012: 25.86%
Category Return for 2012: 15.11%
Assets Under Management: $2 billion
Large-cap companies are a magnet for investors looking for stability — a trend that has tipped the scales in favor of the Hartford Growth Opportunities Fund (MUTF:HGOAX).
Hartford Growth Opportunities takes a riskier growth approach, but has been rewarded by hot holdings like Amazon (NASDAQ:AMZN), eBay (NASDAQ:EBAY) and even LinkedIn (NYSE:LNKD), which have seen respective growth of 47%, 60% and 90%!
Though HGOAX’s aggression is a bit toned down since its 2008 days — after HGOAX took a 45% beating compared to a 37% drop in the S&P 500 — heavy holdings in tech and consumer cyclicals means investors still can expect a fair share of volatility.
HGOAX’ load-waived A shares charge 1.22% in fees and require a $2,000 minimum investment.
Category: Health Care
Fund Return for 2012: 35.18%
Category Return for 2012: 22%
Assets Under Management: $4.8 billion
Health care already tends to be a stable business, and the huge demographic shift of advancing boomers in the U.S. — not to mention aging populations in Europe and parts of Asia — make the sector’s long-term prospects look even brighter.
One fund that hasn’t had to wait for the long-term, though, is the T. Rowe Price Health Sciences Fund (MUTF:PRHSX). A key reason is its focus on smaller companies, which have the opportunity for huge upside thanks to breakout drugs and treatments. Some of the fund’s holdings include Pharmacyclics (NASDAQ:PCYC), Incyte (NASDAQ:INCY) and Regeneron Pharmaceuticals (NASDAQ:REGN).
PRHSX also has posted a strong long-term track record, returning 14.76% annually for the past 10 years.
Health Sciences is a no-load fund that charges 0.82% in expenses and requires a $2,500 minimum investment.
Category: Emerging-Market Bonds
Fund Return for 2012: 15.98%
Category Return for 2012: 13.01%
Assets Under Management: $5.1 billion
While it has been a rocky year for stocks in emerging markets, the story has been different for their debt.
Global investors have been searching for higher yields, and one of the beneficiaries has been the TCW Emerging Markets Income (MUTF:TGEIX) fund.
Portfolio managers Penny Foley and Dave Robbins invest in a wide array of debt, ranging from high-quality sovereign securities to high-risk corporate junk bonds. But the pair have been able to navigate risk well, averaging 14.4% returns in the past three years.
The current yield of 5.56% is attractive, but keep in mind that a big part of this year’s 16% gains has come from the rise in the values of the underlying bonds.
TGEIX is a no-load fee that charges 0.87% in expenses and requires a $2,000 minimum investment.
Category: Global Real Estate
Fund Return for 2012: 29.50%
Category Return for 2012: 22.35%
Assets Under Management: $1.7 billion
The real estate market has come back to life this year — but not just in the United States. Various countries, such as Australia, have seen continued strength on the homes front.
A fund that takes a global approach to real estate is Third Avenue Real Estate Value Investor (MUTF:TVRVX), which is managed by Michael Winer. He focuses on finding value plays that have sustainable cash flows, and the stocks he targets usually have rising valuations and higher rents.
TVRVX’s major holdings include Vornado Realty Trust (NYSE:VNO), Brookfield Asset Management (NYSE:BAM) and even Lowe’s (NYSE:LOW), and includes other positions in Hong Kong, Canada, the U.K. and Singapore.
TVRVX is a no-load fund that charges a pricey 1.4% in expenses and requires a $2,500 minimum investment.
Category: Foreign Small/Mid Growth
Fund Return for 2012: 18.81%
Category Return for 2012: 16.65%
Assets Under Management: $3.3 billion
Foreign equities have been a rough play this year thanks to the issues hampering Europe and Asia. Still, foreign small- and mid-cap companies have been able to grow, and thus have produced some nice winners.
Just look at MFS International New Discovery (MUTF:MIDCX). The fund has top notch portfolio managers — which include David Antonelli, Peter Fruzzetti, Jose Luis Garcia and Robert Lau — who scour the world looking for bargains, especially companies with strong moats and healthy cash flow prospects. The fund has a long-term approach, reflected in its low 44% turnover ratio.
MIDCX’s top holdings include Bunzl (U.K.), Amadeus IT Holding SA (Spain) and Swedish Match.
You can avoid an initial sales charge through Discovery’s C shares, but if you redeem your shares within the first year, you may be subject to a contingent deferred sales charge of 1%. Expenses are a hefty 2.17% on C shares, however. MIDCX requires a $1,000 minimum investment.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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