The article's methodology doesn't strike me as a credible guide for separating likely future winner funds from likely future loser funds. It seems to conclude from the fact that the winningest funds happen to share characteristic X that funds with characteristic X are likely to outperform funds that don't have characteristic X. But that's a logical fallacy. For example, the article observes that:
Many of the top funds have teams of managers instead of individuals, which allows for specialization by the stock pickers.The WSJ could have (but didn't) research and report whether team-managed funds as a whole tend to outperform funds with individual managers. We don't have enough data to answer that question conclusively, but according to our CRSP Mutual Fund database about 2/3 of all stock funds are team-managed. And in 2007, 58% of indivdual manager stock funds beat the S&P 500, but only 49% of team-managed stock funds beat the index.
The article also reports that funds with "low expenses" and a "buy-and-hold approach" make good investments. That has certainly been shown empirically here and elsewhere, but few of the funds on the WSJ's list reasonably meet those criteria -- only 7 of the 30 funds have expense ratios below 1% and turnover below 50%. (And even 50% turnover -- selling the average stock after only 2 years -- is a generous definition of "buy and hold")
But the best advice in the article is in the first paragraph:
Don't chase past returnsOf the 30 past winners, only 13 beat the index again in 2007
| Ticker | Fund Name |
Return
|
| CSSPX | Cohen & Steers Global Realty Fund, Inc; Class I Shares |
-18.58
|
| SCMVX | RBB Fund, Inc: Schneider Small Cap Value Fund |
-17.08
|
| UBVLX | Undiscovered Managers Funds: Undiscovered Managers Behavioral Value Fund; Institutional Class Shares |
-8.64
|
| DFSCX | DFA Investment Dimensions Group Inc: US Micro Cap Portfolio |
-5.22
|
| SMCDX | Wells Fargo Funds Trust: Wells Fargo Advantage Mid Cap Discipline Fund; Investor Class Shares |
-4.89
|
| DFSTX | DFA Investment Dimensions Group Inc: US Small Cap Portfolio |
-3.06
|
| RPFEX | Davis Series, Inc: Davis Opportunity Fund; Class B Shares |
-2.15
|
| CAMOX | Advisors' Inner Circle Fund: Cambiar Opportunity Fund; Investor Class Shares |
-1.86
|
| FSLBX | Fidelity Select Portfolios: Brokerage & Investment Management Portfolio |
-.15
|
| MPSCX | Morgan Stanley Institutional Fund Trust: US Small Cap Value Portfolio; Institutional Class Shares |
.13
|
| RGFAX | Royce Fund: Royce Heritage Fund; Service Class Shares |
1.20
|
| WMICX | Wasatch Funds, Inc: Wasatch Micro Cap Fund |
2.23
|
| RYLPX | Royce Fund: Royce Low-Priced Stock Fund; Service Class Shares |
2.32
|
| VMCVX | VALIC II Mid Cap Value |
2.80
|
| RSVAX | RS Investment Trust: RS Value Fund; Class A Shares |
3.76
|
| GGSAX | Goldman Sachs Trust: Goldman Sachs Growth Strategy Portfolio; Class A Shares |
4.58
|
| REBSX | Russell Investment Company: Equity II Fund; Class I Shares |
4.77
|
| S&P 500 Daily Reinvested Index |
5.49
|
|
| EXHAX | Manning & Napier Fund, Inc: Pro-Blend Maximum Term Series; Class A Shares |
6.00
|
| PHGAX | Target Asset Allocation Funds: Target Growth Allocation Fund; Class A Shares |
6.22
|
| PRSGX | T Rowe Price Spectrum Fund, Inc: Spectrum Growth Fund |
8.65
|
| ACTWX | Columbia Acorn Trust: Columbia Acorn Select Fund; Class Z Shares |
9.20
|
| ACDAX | AIM Equity Funds: AIM Capital Development Fund; Class A Shares |
10.69
|
| PGSGX | JPMorgan Trust II: JPMorgan Small Cap Growth Fund; Class A Shares |
12.34
|
| ANCFX | Fundamental Investors, Inc; Class A Shares |
13.55
|
| HIACX | Hartfd:Cap App HLS;IA |
17.40
|
| PRNEX | T Rowe Price New Era Fund, Inc |
40.69
|
| IGNAX | Ivy Funds: Ivy Global Natural Resources Fund; Class A Shares |
43.59
|
| FAGNX | Fidelity Advisor Series VII: Fidelity Advisor Energy Fund; Class T Shares |
44.84
|
| PRGNX | Jennison Natural Resources Fund, Inc; Class B Shares |
45.03
|
| FNARX | Fidelity Select Portfolios: Natural Resources Portfolio |
50.08
|