The best mutual funds for 2015 are most likely to be the ones coming from fund companies that are rich in experienced management who are supported by smart analysts.
One such mutual fund company is BlackRock, Inc. (BLK).In finding the best BlackRock funds for 2015, I began by weeding out the fund types and categories that tend to get hit the hardest with steep price declines in the event a significant correction takes place and those that typically don’t perform well in rising interest rate environments.
This eliminates funds with heavy allocations to foreign stocks, small-cap stocks, high-yield bonds and long-term bonds.
I then turned my sights on fund types that can potentially perform well in the late bull market phase, such as large-cap value funds and healthy blend cyclical, sensitive, and defensive sectors such as financials, energy and health, respectively.
Without further ado, I give you the best BlackRock funds for 2015:
Best BlackRock Funds for 2015: BlackRock Basic Value (MDBAX)
BlackRock Basic Value (MDBAX) may have just the right mix of style and sectors to hit the nail on the 2015 stock market head.
Basic Value’s style is large-cap value and top three sectors by allocation percentage include financials, healthcare, and energy, which all have potential to be market leaders in 2015.
Financial stocks are cyclical in nature and can do well in the late phase of a bull market, when interest rates are rising. Healthcare is already a hot sector but can also hold up if the market turns down. Energy is fast becoming a contrarian bet that may very well be due for a turnaround.
The exposure to energy has put a drag on 2014 returns for MDBAX but the three-, five- and 10-year ranks are all in top half in performance.
MDBAX has a reasonable expense ratio of 0.81% and has a 5.25% front load. But there are other share classes offered where investors may qualify to buy shares without a load.
The minimum initial purchase for MDBAX is $1,000.
Best BlackRock Funds for 2014: BlackRock Natural Resources (MDGRX)
BlackRock Natural Resources (MDGRX) is an energy fund but it is a solid choice for investors wanting to go long on a beaten-down sector that is due for a turnaround in 2015 or soon thereafter.
Click to EnlargeEnergy stocks are slipping on the recent oil slick and are now at multi-year lows. But buying beaten down stocks is the name of the value investor’s game. Furthermore, MDGRX is rich in large value, domestic energy names, such as Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX).
One large asterisk to place next to the BlackRock Natural Resources fund is that it is best-suited for buy-and-hold investors with patience. Performance hovers around average, except for long-term returns.
The lead fund manager, Robert M. Shearer, has been at the helm of this fund since 1997 when MDGRX was still part of the Merrill Lynch stable of funds. Shearer doesn’t mind holding stocks he believes in for a long time, as is evidenced by turnover ratios below 5% for the past five consecutive years.
But the patience appears to be a virtue (and a reward) judging by the 15-year rank of 14, which puts Shearer and BlackRock Natural Resources ahead of 86% of energy sector peers.
MDGRX has a below-average expense ratio of 1.06% and has a 5.25% front load. But there are other share classes offered where investors may qualify to buy shares without a load.
The minimum initial purchase for MDBAX is $1,000.
Best BlackRock Funds for 2015: BlackRock Moderate Prepared (BAMPX)
If, at the end of the year, the best mutual funds in 2015 share a one-word description, that word may be tactical, and BlackRock Moderate Prepared (BAMPX) could find itself within the cream of the tactical crop of BlackRock mutual funds.
The investment approach for BAMPX, according to BlackRock, is to invest “60% of its assets in underlying funds that invest primarily in equity securities and 40% of its assets in underlying funds that invest primarily in fixed income securities.”
From there, the manager of seven years, Philip J. Green, will balance the fund objective between long-term capital appreciation and high current income, with a greater emphasis on capital appreciation.
Historical performance for this fund of funds proves a smart tactical approach as evidenced by its outperformance of the average moderate allocation going on six of the past eight years. Part of the fund’s tactical side has it using short strategies, but the fund is mostly long in a moderate mix of stocks, bonds and cash.
Investors looking for a core holding that can provide income will also like the 2.9% yield.
BAMPX has a competitive expense ratio of 1.05% and has a 5.25% front load. As with most other BlackRock mutual funds, there are other share classes offered where investors may qualify to buy shares without a load.
The minimum initial purchase for MDBAX is $1,000.
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.
