KENTUCKY CROSSWORDS

Consumer Investments

Mutual Fund Picks of the Experts,
Kiplinger's and Money Agree on Seven Funds

By: Vicki A Benge

Introduction

The April 2011 edition of Money magazine revealed the publication's latest Money 70 list, picks of the top 70 mutual funds and exchange-traded funds (ETFs) according to the magazine. In the April 2011 edition of Kiplinger's Personal Finance, the Kiplinger 25 was published. This list is Kiplinger's top 25 choices in no-load mutual funds.

Earnings and expense data included in the Money 70 list were current through February 23, for the Kiplinger 25, through March 10. In comparing the publications' top choices in mutual funds, seven funds made the lists in both publications. In the fund categories of Go Anywhere, Kiplinger's picks two, Money three. None are the same. In Specialty Funds, Kiplinger's picks two, Money three, and none are the same. Money also picks a group of Balanced Funds. Kiplinger's 25 does not utilize this category at this time.

Large Cap Stock Funds: PRFDX

In the category of Large Cap Stock Funds, Money lists 11 and Kiplinger's picks six. Only one fund in this category made it on both lists: T. Rowe Price Equity Income, symbol PRFDX. The prospectus for the Equity Income Fund states the objective as "seeking substantial dividend income and long-term capital growth." The company's official documents on the fund list the total annual expenses as 0.72 percent. In addition, T. Rowe Price charges what the company terms its "small account fee" for accounts with balances of less than $2,000. According to Kiplinger’s, the fund has returned an annualized 4.5 percent over the previous ten-year period.

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Mid-caps and Small-caps: MERDX and PRSVX

Kiplinger's combines midsize and small-cap companies and lists six total. Money lists seven mid-caps and six small-caps. Identical picks in these categories were Meridian Growth (MERDX) and T. Rowe Price Small-Cap Value (PRSVX). Meridian Growth (MERDX) invests in midsize companies and according to the fund's prospectus seeks long-term growth. Fund documents also state that MERDX has returned 10-year annualized earnings of 10.60 percent for data through March 31, 2011.

The small cap pick Kiplinger’s and Money has in common, T. Rowe Price Small-Cap Value (PRSVX), has returned an annualized 12.22 percent since its inception on June 20, 1998 through March 31, 2011. The prospectus states that the fund seeks "long-term capital growth" by buying into U.S. small-caps "whose stocks appear undervalued." Total annual expenses to investors for PRSVX is listed as 0.97 percent in the official fund documents. There is also a 1.00 percent redemption fee on shares held less than 90 days.

International Stock Funds: DODFX and PRMSX

In the International Stock Mutual Funds category, Money lists 13 fund, Kiplinger's lists three, two of which are the same in both publications: Dodge & Cox International (DODFX) and T. Rowe Price Emerging Markets (PRMSX).

Dodge & Cox International (DODFX) lists total annual expenses to the shareholder as .65 percent in the fund’s prospectus. There are no fees on load, no sales charges on reinvesting dividends and no redemption fees. The prospectus states that the fund invests in both U.S. and foreign stocks, including those of emerging markets. According to Kiplinger's data, the fund produced an annualized return of 4.1 percent for the prior five years.

T. Rowe Price Emerging Markets (PRMSX) has returned an annualized 14.2 percent over the past ten years, according to Kiplinger's data. As the name of the fund implies, PRMSX invests in emerging markets and the prospectus states that the fund seeks long-term growth. The fund charges a 2 percent redemption fee on shares held less than 90 days and has an annual expense ratio of 1.27 percent for investors. PRMSX has returned an annualized 7.9 percent over the prior five years.

Bond Funds

Kiplinger's picks six bonds funds and does not categorized them by bond type. For example, there is a go anywhere fund, a short-term bond fund, a muni and a corporate, among others. The Money 70 list contains nine bond funds, also a mix of types. The two list have two picks in common: Dodge & Cox Income (DODIX) and Harbor Bond (HABDX).

Dodge & Cox Income Fund (DODIX) invests in a mix of bonds and fixed income securities. According to the prospectus, a minimum of 65 percent of the assets are based in the United States. The annual expense ratio to investors is 0.43 percent. According to Kiplinger's, DODIX returned an annualized 6.3 percent over the past 10 years.

Bill Gross, who also manages the biggest mutual fund on the market, Pimco Total Return, manages Harbor Bond (HABDX). According to fund documents, Harbor Bond has returned an annualized 8.17 percent pre-tax earnings since its inception on December 29, 1987. HABDX has an expense ratio of 0.80 percent, but has reduced management fees to 0.455 percent on assets greater than $1 billion. According to the prospectus, this fund invests primarily in investment grade B or better bonds, with a small percentage of assets in junk or speculative bonds.

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