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Best & Worst Mutual Funds of 2012

3 funds that delivered for investors in 2012 ... and 3 that didn't

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#2 Best Mutual Fund: Hennessy Cornerstone Growth Fund

YTD Return: +30%

Hennessy Cornerstone Growth Fund (MUTF:HFCGX), a small-cap growth fund, chooses 50 roughly equal-weighted small-caps from a pool of equities with more than $175 million in market capitalization. The fund selects common stocks with the highest one-year price appreciation at the time of purchase. Holdings include life sciences stocks like Cambrex (NYSE:CBM), specialty chemical manufacturers like American Vanguard (NYSE:AVD) — as well as Papa John’s (NASDAQ:PZZA).

Top 3 Holdings
1. American Vanguard:
4% of assets
2. Cambrex: 3.1% of assets
3. Susser Holdings (NASDAQ:SUSS): 2.7% of assets

Manager(s): Neil Hennessy has been lead manager of HFCGX since June 2000; the 30-year industry veteran manages the entire family of quantitatively managed Hennessy Funds, and he is president, director and chief investment officer. Hennessy ranked among Barron’s Top 100 Mutual Fund Managers from 2003 through 2008.

Takeaway: Hennessy is keenly focused on investing in companies that are growing faster than their peers, but not overpaying for that growth. He tends to wave off otherwise attractive growth stocks with price-to-sales ratios higher than 1.5. He’s doing something right: HFCGX’s three-year performance is nearly 11%.

Expense Ratio Front Load Deferred Sales Load Min. Initial Investment Assets Under Management
1.33% N/A N/A $2,500 $308.8 million

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