Choose stock funds with long-term record PICKING stock mutual funds

0 Comments | Oakland Tribune, Feb 21, 2005

So here's the 2005 No-Load Stock Mutual Fund Honor Roll as it appeared recently in Investment Educator — the newsletter my wife, Fran, and I publish — with performance numbers as of Dec. 31, 2004.

Ariel Fund (ARGFX), a mid-cap fund. Annual fee, 1.1 percent. Up 22 percent for the year, up 14 percent a year for three years, up 16.8 percent a year for five years and up 16.2 percent a year for 10 years. Minimum for regular accounts, $1,000, for IRAs, $250. Phone 1 (800) 292-7435.

Mairs & Power Growth (MPGFX), a large cap fund. Annual fee, 0.75 percent. Up 18 percent for the year, up 11.1 percent a year for three years, up 13 percent a year for five years, and up 13 percent a year for 10 years. Minimum for regular accounts,

$2,500, for IRAs, $1,000. Phone 1 (800) 304-7404.

Meridian Growth (MERDX), a mid-cap fund. Annual fee, 0.88 percent. Up 14.5 percent for one year, up 11.6 percent for three years, up 15.4 percent a year for five years, and up 14.2 percent a year for 10 years. Minimum for both regular and IRA accounts, $1,000. Phone 1 (800) 446-6662.

Muhlenkamp (MUHLX), small, mid and large cap. Annual fee, 1.14 percent. Up 24.5 percent over one year, up 13.9 percent a year for three years, up 15.1 percent a year for five years and up 18.2 percent a year for 10 years. Minimum for regular accounts and IRAs, $1,500. Phone 1 (800) 860-3863.

T. Rowe Price Capital Appreciation (PRWCX), a balanced fund (stocks and bonds).

Annual fee, 0.83 percent. Up 15.3 percent for one year, up 13.3 percent a year for three years, up 14.4 percent a year for five years, and up 13.9 percent a year for 10 years. Minimum for regular accounts, $2,500, for IRAs, $1,000. Phone 1 (800) 638-5660.

Ariel Fund, Meridian Growth and T. Rowe Price Capital Appreciation are holdovers from the 2004 Honor Roll and Mairs & Power Growth (on the roll in the past) and Muhlenkamp are new entries this year. Tamarack Enterprise Fund would continue on the Honor Roll this year except that it's now closed to new money, but anyone who bought shares before the fund closed should hang on. This year's Honor Roll allows investors to diversify into various sizes of portfolio components, small-cap, mid-cap and large-cap. Always order a fund's prospectus (covering risks and fees) and latest financial report (carrying the fund's portfolio) before investing money.

The Honor Roll is revised each February by Fran and I, and we suggest readers sell any funds no longer on the roll and buy the ones on the updated list. In keeping with the newsletter's asset allocation, no one should hold more than 15 percent of their portfolio assets in stock funds. Of course, financial independence is important and some readers may opt to hold onto funds that have been good performers though not on our list, and some may decide to hold more than 15 percent of their assets in stock funds. But don't load up on stock funds just because they offer two key traits, diversification and professional management. Stay away from bond funds and foreign funds.

More on mutual funds in upcoming columns.

Cliff Pletschet's Personal Finance column appears Sunday and Monday. Write him at P.O. Box 28147, Oakland, CA 94604; phone (510) 531-5620 or visit www.investment-educator.com.