Top Ten Funds

An overview of the top ten fund families chosen by Morningstar Fund Families online author David Kathman are: First Eagle and Oakmark at the very top both with $1,000.000 invested in the stocks and with good culture grading of an A for Oakmark and a B for First Eagle. He explained the grading process by which ranking is chosen as well as explaining the good culture grading of A, B, C, D, etc. It means their investing philosophy is sound or is lacking.

The other eight: Artisan at three at $737,000 with no good culture rating available; /four is Dodge & Cox at $664,773 also with an A for good sound investing philosophy; five is Royce at $537,826 who also gets an A; six is Davis at $499,412 also with an A; at the number seven slot is American Funds with $459,733 and a B grading; eight is Julius Baer at $312,917 also with a B grading. T. Rowe Price at $236,888 and an A is number nine and ten belongs to Janus at $227,172 and with a surprising rating of a D is in the number 10 slot.

What does all this mean, and why is Janus barely passing? It means, according to Morningstar that they listed their top fifty – only the top ten here – fund families according to the money they set aside for these funds. Each fund manager gets a vote of one; if a fund has more than one manager then each manager get a vote of one. As an example, if each one had 100,000, then that fund family would be rated with 300,000.

The grading of A, B, C, or D, or possibly an F, I would suppose, means that this fund family is caring and solicitous of its shareholders. In other words it has either a good investing philosophy or is somewhat lacking. In the first ten there are five excellent caring fund managers and three with good (B) and one not reported and one with barely a passing grade.

What about Janus and their grade of a D? In Mornignstar’s own words: “(Some families, such as Janus, are also hurt by the presence in their lineup of clone funds that lack manager investment in their own right; if such funds were eliminated from the mix, Janus would rank even higher.)”

What then are clone funds? Clone funds are mutual funds that try to match the performance of successful funds by imitating their strategy. ( In other words they are indexed funds. From the Morningstar report I learned that Vanguard and Fidelity clearly leaders in funds ranked only fifteenth and seventeenth because of their holdings of so many clone funds. They did not have the resultant capital and thus when the tallying was done according to assets they were pushed on down the line.

Still, it is important information that one gets from consulting with the Morningstar people when one is considering gambling with a large sum of money. When it is all weighed carefully with the current market conditions taken into consideration there will be less regrets later on.