Time To Invest In Mutual Funds?
I was reading this article from the New York Times by Tim Gray called “Three Strategies That Kept Sizzling:
Ken Heebner, manager of CGM Focus, achieved a double distinction with his fund. He placed among the top performers for the most recent quarter and the five-year period. For the quarter, CGM Focus, which invests mainly in large-capitalization domestic stocks, returned 30.3 percent, while for the five years ended Sept. 30, it returned 32.9 percent, annualized.
Mr. Heebner’s offering isn’t for the faint-hearted. He shovels shareholders’ money into relatively few stocks 23 in late September and rapidly zips in and out of investments. When I buy a stock I say, What factors would cause me to change my view? he said. If I see them, I immediately sell. And if I see something I like better, I immediately sell. If there�s an emerging opportunity, I don’t want to miss it.
As a result, his portfolio has a higher-than-average annual turnover rate 333 percent, versus 90 percent for the average stock mutual fund, according to Morningstar. His returns also zigzag more than those of other funds in his Morningstar peer group.
Mr. Heebner sniffs out trends economic, social or demographic and then tries to find well-run companies poised to benefit from them. Lately, that has meant loading up on energy shares. On June 30, the most recent date for which data is available, he held the American depositary receipts of Petroleo Brasileiro, the giant Brazilian oil company, and Cnooc, one of China’s big producers, as well as shares in several oil services outfits. Energy stocks accounted for a third of his portfolio.
If you can live with that sort of volatility, you might get some terrific gains. Note, however in 2002, the Fund was down 28%. But for 2007 its up a whopping 60%!!!! Makes my 18% return seem extremely pathetic in comparison!
I was also looking at buying TAVFX which buys undervalued companies. But its returns have been less than mine and they require a $10,000 minimum to invest in. But its a lot less volatile, but with it comes a lower return.
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October 13th, 2007 at 5:12 pm
It’s a good fund, very high alpha:
http://finance.yahoo.com/q/rk?s=CGMFX