3.08.2007

Non-Retirement: Foreign Large Cap Growth Mutual Fund

Wylie Pick: Janus Overseas JAOSX

Selecting from mutual funds available through Etrade with no load or transaction fee and an initial $2500 investment or lower minimum and subsequent $100 or lower minimums, when looking for a Foreign, Large Cap Growth fund, I include higher than normal expenses and turnover in the Mutual fund screener to find seven options.

One of the seven funds is picked by Etrade as an "All Star" fund. Basically Etrade identifies funds they like in each category and flags then as All Stars. Several of my picks so far have also been picked by Etrade as All Stars but in this case, I think there is a better option. They recommend Excelsior International (UMINX). I like Janus Overseas (JAOSX).

Etrade's pick has a 'moderate' risk assessment while the Janus fund is assessed as 'high' risk.

Just to be clear- investing in this category can be a wild ride. But despite the assessment that UMINX has less risk than JAOSX, the worst one year performances show that UMINX has had a worse one year downward run (-27.43) than JAOSX (-23.89).

And Janus has been very well rewarded for its approach. I by very well I mean spectacularly rewarded.

Since the Janus fund has crushed the Excelsior fund in every period- most importantly the 10 year period, it would have to have pretty high expenses or high turnover or a new manager or something significant to make me think twice about not choosing a consistent winner like this. I do not anticipate that future returns will be this good but a fund with a long track record of tremendous performance has a lot going for it.

Turns out JAOSX has 5 stars from Morningstar, UMINX gets 4. JAOSX has lower expenses: 0.9% compared to 1.5%! JAOSX does have higher turnover- it is 62% compared to UMINX's 26%. The other 5 Foreign Large Cap Growth funds that came up in my search have turnover ranging from 72% to 138%, all higher than JAOSX so I do not mind a little more churn if the performance is this much better.

Janus Overseas' manager Brent A. Lynn took control of the fund on 01-01-2001. Check out this chart (From Yahoo) and look at this manager's first two years! That must have been rough.


The manager of the Excelsior fund has not been at the helm for quite as long but he also started in 2001.

So crushing returns, the lowest expenses, etc. The Wylie pick is Janus Overseas JAOSX.

2 comments:

Ken said...

I bought into this fund back in the late 90's for aroun $16 a share. Needless to say, I feel I've made a good investment. I am a chart reader and this is a great time to pony up a few more bucks. This will be over $60 in a month or two.

Wyliemoney said...

This fund is easy to feel good about, that's for sure. I worry about Janus though. Will Brent Lynn stick around as so many of his peers flee? Also, when Emerging Markets go down, how much will this fund suffer? I ask these questions, but continue to add to this fund on a regular basis...