Three mutual funds that might do well next year all have one thing in common: they weren’t chosen because they were the absolute top performers in 2011. Instead, they were chosen on the basis of diversification, strong performance, level of risk and cost basis, said S&P Capital IQ mutual fund
The three funds S&P Capital IQ cited as worthy of a closer look for 2012 are:
Sequoia, up 13.6% in 2011, has a below-average turnover rate (23% as of late 2011) as its management has a long-term investment strategy, Rosenbluth said in the report. The fund has fairly high exposure to health care stocks, and holds stocks that have S&P strong buy ratings such as
Multi-cap fund SunAmerica Focused Dividend Strategy, up 12.4% for 2011, had a below-average performance in 2010, but has strong performance over three and five years, according to the report. The fund’s Sharpe ratio is above average, the expense ratio is 0.95% and it has benefited from its dividend focus “as investors have sought out yield during the market’s volatility in 2011,” according to Rosenbluth.
The two best-performing funds from 2011 (of all those that S&P Capital IQ gives a five-star rating to) were
The takeaways when looking at fund performance for 2011 are that most funds will look back on the year as a forgettable one — most mutual funds either stayed roughly flat or underperformed a benchmark — and that investors should not necessarily chase last year’s winning funds, Rosenbluth said.
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