1.28.2007

Non-Ret: Large Cap Value

My Pick: American Beacon Large Cap Value Planahead AAGPX

Etrade's new and improved mutual fund screener pulled up several selections. One that is appealing based on performance and low expenses and turnover is ING Corporate Leaders Trust LEXCX. Upon further investigation I found that 18.57% of its assets are invested in Exxon. If I wanted that much invested in Exxon, I would buy its stock. For this portfolio, I am looking for funds that diversify in each sector they cover so I kept looking.

Another that has had strong returns is Mutual Beacon Z BEGRX. Fortunately I was researching this category before etrade replaced its S&P mutual fund reports with their own. The old reports showed historical and current investment styles- indicating if the fund invests and has invested in large cap value holdings exclusively or if it invests in small and large companies, value and growth oriented companies, etc. I emailed etrade customer service and they responded within 24 hours as promised that this information was no longer available. Etrade now offers re-hashed data available at Morningstar. You can see a little of what has happened with BEGRX by looking here. In 2004, this fund would not have come up in a value search at all, it was a 'blend' fund (both growth and value)- so its performance going back 3 years should not be compared to a straight value play over that period. Also, almost 1/3rd of the companies it invest in are mid cap companies or smaller and 1/3rd of its holdings are international companies. If you want a fund that is well-diversified in and of itself, this could be a good choice, but if you are looking for a large cap domestic value fund, this is not the droid you are looking for- despite its 'category.'

Compare that to the fund I choose. It has most of its money invested in large or gargantuan sized companies and has remained in the value category as far back as Morningstar lists. With a low 0.84% expense ratio and low 26% turnover, this suits my needs. the only consideration is that it has a lot- I mean a LOT of money (5.253 billion) under management. Since it invests in gargantuan sized companies, I am less concerned that it has gargantuan amounts of money to invest, but it is something to keep an eye on.

2 comments:

Anonymous said...

This fund sucks big time

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