Morningstar’s fund analysts doled out two Gold ratings in the past week to funds managed by Franklin Templeton Investments and Aston Funds.
According to David Kathman, an analyst at Morningstar, the 4-Star rated $4.5 billion Aston/Montag & Caldwell Growth fund stands out from the large-growth pack for the experience of its management team and its investment approach. “The 17 analysts and portfolio managers who run the fund average more than 20 years of investment experience, and nobody has left the team (for reasons other than retirement) in the past 25 years,” wrote Kathman.
The fund, which bets on a concentrated portfolio of 30 to 35 stocks, primarily mega-cap blue chips such as top holdings Coca-Cola, Apple, and Abbott Laboratories, will buy only stocks trading at least 10% below their estimated present value, and sell stocks that rise more than 20% above that value.
“This rather cautious approach to growth investing has caused the fund to trail its large-growth peers in speculative bull markets when risky assets are in favor, as it did in 2009-10, but to hold up quite well in risk-averse down markets such as those of 2008 and 2011,” wrote Kathman.
Also, the Franklin Utilities fund earned top honors among utilities funds. According to Kathman, of the three biggest actively managed utilities funds, the fund is the most traditional and conservative, betting on mostly regulated domestic electric and natural gas utility stocks.
“In contrast, rivals MFS Utilities and Prudential Jennison Utility have big chunks of their portfolios in non-utility sectors, mostly energy and telecom, and nearly 40% of the MFS fund's holdings come from outside of the United States, including 12% from emerging markets,” he wrote.
“These more diversified portfolios have helped those funds' returns at times, but also have made the funds significantly more volatile than this one, and arguably tougher to fit into a portfolio.”
