With many mutual fund investors looking overseas for investment opportunities that will generate attractive yields for their portfolios. Standard & Poor’s still found a lot of value among domestic funds, and highlighted several of them in its first U.S. Mutual Fund Excellence Awards Program, the company announced Monday.
S&P Equity Research, a division of the New York-based credit rating agency, named the winners during a webcast. S&P identified 29 funds that achieved the highest overall five-star quantitative ranking in each of their respective categories, and gave them gold, silver and bronze placements.
The Jensen Portfolio took the gold among domestic large-cap equity mutual funds. That fund is able to enjoy the best of both worlds, literally, as it invests in dividend-paying U.S. stocks that get a good portion of revenue from international markets. The Jensen Portfolio fund has a strong track record, too, because it invests in companies that have had strong financial profiles over a 10-year period.
“They fit the trend, where investors are looking for high-quality defensive companies with non-U.S. growth,” Todd Rosenbluth, a senior director and mutual fund analyst at S&P Equity Research.
As the U.S. economy trudges on, and investors look for signs of a sustainable recovery, they often look to small-cap mutual funds for leadership. S&P thinks that the Janus Triton Fund, has a lot to offer those investors, and gave the fund the gold medal award. Historically, small-cap stocks have outperformed large-cap stocks in bull markets, but Janus Triton has been an exceptional performer since it launched in February 2005, according to Rosenbluth. It outperformed its peer funds during the downturn in 2008, and again in 2009, when the market bounced back after bottoming in March that year.
Janus Triton has also held high-quality stocks recently, namely Jacksonville, Fla.-based Landstar System, Inc., which provides freight transportation services and supply chain solutions to shippers. The company saw its third quarter earnings improve and has recently made key acquisitions in its space. “The defensive characteristics of some of its holdings will hold up better in volatile markets,” Rosenbluth said.
Not all investment categories had a full slate of funds that received honors. In the fixed-income space, S&P decided to honor just two funds. The American Century Government Bond Fund took gold, and the T. Rowe Price New Income Fund claimed silver. Rosenbluth said when it came down to it, the fixed-income category did not offer up enough outstanding funds to fill out the category. That might be instructive for investors and advisors who have been pouring money into fixed-income instruments lately. S&P was looking for funds with low risk, high yields and strong performance. Although S&P came across hundreds of funds with five-star rankings, an overwhelming of them either had positive performance and neutral risk, or the inverse, Rosenbluth said. Unfortunately, only two fit into S&P’s model for the award selection.
“I didn’t get to choose my favorite, the model did,” Rosenbluth said. “I did not have the option of adding a third fund without violating our rules.”
For the full list of winners, see below.