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Kiplinger’s Fund Performance Report

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Kiplinger’s Personal Finance magazine current issue [March 2020] shows the results of many top performing mutual funds over 1, 3, 5 and 10 years.

I particularly want to comment on the 5 and 10 year performance and prepared a chart abstracting results from the articles. Note that this information is subject to Kiplinger’s and its sources’ copyrights.

My feelings are that investors should only go into the stock market if they have a goal that is seven years or more. I believe that less than seven years increases the risk unduly. Because of this, my first look is always ten year performance. A second look is the five-year results. I pretty much ignore anything less than five years, particularly the 1- and 3-year performance results.

A Big Turnaround for Markets started on page 25 and shows the top 10 performing mutual funds in eleven categories that meet certain criteria that likely fit Kiplinger’s readers’ preferences. While the top 10 all had above-average performance, they also have a category average, and that is what I am referring to and used in the accompanying chart. I also included four top benchmarks for comparison purposes.

The bottom line is that, while some funds outperformed the market or its benchmarks, the average funds in every category did not for the last five or ten years. Further, none of the categories outperformed the large company funds or S&P 500 index for those two periods.

Now, this doesn’t mean that no funds outperform. Pretty much all of the funds listed in the Kiplinger’s article outperformed the index. However, I was looking at the category average which included all of these great performing funds plus all of the other funds which, on average, did not beat the index. If you are astute enough or lucky enough to invest in these top-performing funds, then good for you. However, if you diversify over a number of funds then your chances of selecting the best performers is diminished. I also noticed that the six funds are on the large company list for both five and ten years, so they are doing very well and its managers should be commended.

A takeaway from all of this is that trying to beat the market is extremely difficult, and drifting into numerous categories away from the large company funds didn’t seem to be effective.

I am a regular reader of Kiplinger’s. I like it; I like its short articles; I like the writing style, and I just like reading the publication. I usually don’t agree with many of the views expressed, but I like reading what they say and how they say it. Just because I do not agree doesn’t mean I should ignore what they say. I like to read opinions contrary to mine; it helps shape my opinions and how I advise clients. Further, no one should have locked in and unable or unwilling to change opinions. I recommend this publication and if you invest in the market, I suggest you pick up a copy and look it over. Try the current March 2020 issue and you can see the complete charts with all of the high performing funds.

A Big Turnaround for Markets started on page 25 and shows the top 10 performing mutual funds in eleven categories that meet certain criteria that likely fit Kiplinger’s readers’ preferences. While the top 10 all had above-average performance, they also have a category average, and that is what I am referring to and used in the accompanying chart. I also included four top benchmarks for comparison purposes.

The bottom line is that, while some funds outperformed the market or its benchmarks, the average funds in every category did not for the last five or ten years. Further, none of the categories outperformed the large company funds or S&P 500 index for those two periods.

Now, this doesn’t mean that no funds outperform. Pretty much all of the funds listed in the Kiplinger’s article outperformed the index. However, I was looking at the category average which included all of these great performing funds plus all of the other funds which, on average, did not beat the index. If you are astute enough or lucky enough to invest in these top-performing funds, then good for you. However, if you diversify over a number of funds then your chances of selecting the best performers is diminished. I also noticed that the six funds are on the large company list for both five and ten years, so they are doing very well and its managers should be commended.

Category average
Stock funds 5 years 10 years
Pages 25 – 31
Large company 10.10% 12.10%
Midsize company 8.60% 11.90%
Small company 7.90% 11.60%
Hybrid funds 6.30% 7.70%
Large company foreign 5.60% 5.50%
Small and midsize co. foreign 5.60% 7.50%
Global stock funds 7.10% 8.10%
Diversified emerging markets 5.00% 4.00%
Regional and single country 2.00% 5.70%
Sector 6.20% 9.30%
Alternative 1.10% 1.20%
Funds Kiplinger’s follow Average of funds
Page 41 5 years 10 years
12 U.S. stock funds 11.02% 13.32%
4 International stock funds 6.86% 8.05%
2 Specialized go-anywhere funds 8.70% 12.10%
Indexes as benchmarks Annualized returns
Page 41 5 years 10 years
S&P 500 11.70% 13.60%
Russell 2000 8.20% 11.80%
MSCI EAFE index 5.70% 5.50%
MSCI emerging market index 5.60% 3.70%

A takeaway from all of this is that trying to beat the market is extremely difficult, and drifting into numerous categories away from the large company funds didn’t seem to be effective.

I am a regular reader of Kiplinger’s. I like it; I like its short articles; I like the writing style, and I just like reading the publication. I usually don’t agree with many of the views expressed, but I like reading what they say and how they say it. Just because I do not agree doesn’t mean I should ignore what they say. I like to read opinions contrary to mine; it helps shape my opinions and how I advise clients. Further, no one should have locked in and unable or unwilling to change opinions. I recommend this publication and if you invest in the market, I suggest you pick up a copy and look it over. Try the current March 2020 issue and you can see the complete charts with all of the high performing funds.

Do not hesitate to contact me with any business or financial questions at emendlowitz@withum.com or fill out the form below.

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