Andrew Rosen, CFP, a partner in Diversified, LLC, an investment advisory firm with $320 million in assets under management, Wilmington, Delaware. LifelongAdvisors.com
Amid this year’s highly volatile stock market, various financial advisers have shifted more of their fund choices from passive index-tracking to active management. Reason: This year’s market crash opened up opportunities for top fund managers to spot bargains while avoiding the most vulnerable sectors. Also, fees for actively managed funds have dropped over the past several years.
All that is in sharp contrast to what happened during the long bull market, when low-fee exchange-traded funds (ETFs) and index mutual funds soared in popularity and outperformed actively managed funds.
Over the past decade through 2019, just 11% of actively managed large-cap mutual funds outperformed the S&P 500 Index and just 22% of foreign funds beat the S&P International 700 Index. In 2020 through June 30, however, 41% of actively managed large-cap stock funds and 57% of foreign stock funds outperformed their respective benchmarks. Some stellar fund managers have been posting significant gains at a time when the overall market was still in negative territory.
What to do: Consider investing in these two funds with top managers that have outperformed indexes over the long and short term…
T. Rowe Price Blue Chip Growth (TRBCX) focuses on large US companies that have proven they can thrive even in a slow-growth economy. It’s 10-year annualized returns of 18.2% topped the S&P 500 Index’s 14% gains. This year through June 30, it was up 11% versus the index’s 3% drop.
WCM Focused International Growth (WCMRX) looks for dominant, fast-growing companies mostly in developed nations. Its annualized returns of 9.9% since its 2011 inception topped the MSCI EAFE’s 2.8%. In 2020 through June 30, it was up 4.4% versus the index’s 12.6% drop.