The past 10 years of market history has been interesting, to put it mildly.
In the middle of the past decade sits the financial crisis and Great Recession of 2008-09, as well as one of the worst stock market declines in a generation, punctuated by a panic in 2008 that included a 20% crash in just one week in October of that year.
Stock prices proceeded to rise more than 150% since March 2009, despite a near-bear market decline in the second half of 2011 when the S&P 500 Index fell 17%. Also in this decade, bond prices appear to have ended their 30-year secular bull market run.
Fast-forward to today, mid-October 2014, and we face an increasingly uncertain and volatile market environment.
With so much negative sentiment pervading the global capital markets, and looking back over our self-dubbed “interesting decade,” I thought it would be interesting to see if any mutual funds were able to put up positive returns through it all. There aren’t many, but here’s a look at three mutual funds that have posted positive returns in each of the past 10 calendar years.
Waddell & Reed InvestEd Conservative Fund (WICAX)
We begin our brief list with one of the only mutual funds in the universe with 10 consecutive years of positive returns that is not a bond fund — InvestEd Conservative (WICAX), a tactical allocation fund by Waddell & Reed.
In fact, I could not find one single stock fund of any kind that has a 10-year running streak of gains.
While the majority of calendar years since 2004 finds InvestEd Conservative in the bottom half of category peer performance rankings, the one year that mattered most, 2008, finds the fund in the top 2% with a positive return of 1.6%. Compare this to a return of -37% on the S&P 500 Index and you see the value of the play-not-to-lose strategy that serve investors well in bear markets.
If you’re curious about its current portfolio, WICAX was recently allocated at approximately 38% stocks, 32% bonds and 30% cash, with the underlying holdings being Waddell & Reed mutual funds. However, its tactical style is sure to make for varying allocations, depending upon market and economic conditions.
WICAX charges 0.95% in fees and a maximum sales charge of 4.25%, but it does have a very low initial purchase minimum of $750.
Neuberger Berman Strategic Income (NSTAX)
A few standouts, such as Neuberger Berman Strategic Income (NSTAX), not only have a decade of gains but also a 10-year annualized return really worth bragging about.
At 7.2%, the 10-year return for NSTAX is just shy of the S&P 500 Index return of 7.5%. Not bad for bonds!
What helps the management navigate markets is the flexible, go-anywhere style, which enables the Neuberger Berman team to find compelling securities at all range of class, credit quality and regional exposure.
Although this fund often has significant weighting in high-yield bonds, this fund has demonstrated its ability to avoid the heavy stock-like declines that the pure high-yield class typically suffers in bear markets.
While the expense ratio is above average at 1.15% and while NSTAX also has a maximum sales charge of 4.25%, investors looking for income may like the 2.8% yield that comes along with the solid 10-year history.
The minimum initial investment for NSTAX is $1,000.
TCW Total Return Bond (TGMNX)
As fate would have it, TCW Total Return Bond (TGMNX) made my recent list of bond funds for an unpredictable market. If you are looking for a balance of stability and risk management, this fund may be a wise consideration for your portfolio.
The TCW Total Return Bond fund specializes in mortgage bonds but balances risk with U.S. Treasury bonds. The management also has illustrated skill in navigating risk, as evidenced by the 1.4% gain in 2013, when the Barclays Aggregate Bond Index fell 2%.
Year-to-date, TGMNX is up 5.4%, which is just behind the bond index of 6.1%. This is quite notable, considering that the TCW Total Return’s bond holdings consist of more than two-thirds AAA-rated bonds.
You can get into TGMNX with an initial purchase of $2,000. Expenses are a cheap 0.73%, and this fund has no sales charge.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.