Donald Trump's stock market rally proves godsend for these mutual funds

DEC 08, 2016
Some of the funds that have fared the best since the November election couldn't have won a bid for dog catcher in the past 12 months. There's no denying that the rally since the November 8th election has been massive. The Standard & Poor's 500 stock index has gained 5.4% in a month, and the Dow Jones industrial average has made six new closing highs since the election. Financial services stocks are up a blistering 17%.
Best since the election
Top-performing diversified U.S. funds with more than $1 billion in assets
Fund Ticker Morningstar Category 1 year net flow Cumulative return since Nov. 8
1 Fairholme FAIRX Large Value -$1,499.94 30.2%
2 Invesco SmallCapValue A VSCAX Small Value -$631.28 20.6%
3 Prudential QMA Small-Cap Value Z TASVX Small Value -$51.58 19.1%
4 DFA US Small Cap Value I DFSVX Small Value $276.44 19.0%
5 AMG Managers Skyline Special Equities S SKSEX Small Blend -$124.58 18.8%
6 Royce Opportunity Invmt RYPNX Small Value -$456.27 18.8%
7 Victory Integrity Small-Cap Value A VSCVX Small Value $332.94 18.7%
8 Hodges Small Cap Retail HDPSX Small Blend -$666.13 18.7%
9 JPMorgan Small Cap Value Select PSOPX Small Value -$151.80 17.8%
10 DFA US Targeted Value I DFFVX Small Value $596.22 17.6%
S&P 500 5.4%
Source: Morningstar
Note: Dividends, gains reinvested.
Consider the Fairholme Fund (FAIRX) the top-performing diversified U.S. stock fund since Election Day, soaring 30.2%. The fund has been as popular as a hellhound: Investors yanked an estimated $1.5 billion from it during the 12 months ended October, according to Morningstar. And no wonder: The fund lost 11.5% in 2015, lagging the S&P 500 by 12.87 percentage points, and trailed the blue-chip index by 16.41 percentage points in 2013. Its assets peaked in 2010 at $18.1 billion. A desperation play may have saved the fund, which used many of its largest, most liquid positions, such as Berkshire Hathaway (BRK), to meet redemptions. The move left Fairholme with its largest holding a 16% stake in St. Joe Company (JOE). The real estate development company has jumped 20.3% since the election. But what has rocketed Fairholme has been its second-largest holding, Fannie Mae preferred stock. It's up 110% since Donald Trump won the election. Its fourth-largest position, in Federal Home Loan Bank Board preferred stock, has built a 95% gain since then. CGM Focus (CGMFX ), another snakebit fund, has also soared since the election. The fund, run by longtime manager Ken Heebner, has seen an estimated $200 million flee the past 12 months. The fund has never quite hit its stride since 2007, when it turned a blistering 79% gain. Its current 10-year record puts it at the 98th percentile of its category, and assets have shrunk from $5.5 billion in 2007 to $954.1 billion. But the fund's three biggest holdings are Citigroup (C), Morgan Stanley (MS) and Bank of America (BAC), which have jumped 18.5%, 23.4% and 33.2%, respectively. The go-anywhere fund also had a short bet on the 30-year Treasury bond. Among the top performers since the election rally began was DFA U.S. Small Cap Value (DFSVX), up 19%. It was also the only fund among the top five with positive cash flow: An estimated $276.4 million flowed into the fund the past 12 months, according to Morningstar. The fund had overweightings in industrials, technology and energy. A few funds with enormous outflows have seen big gains since the election. Dodge & Cox Stock (DODGX), for example, saw $4.4 billion vote with its feet the past 12 months. It jumped 11.3% since the election. Oakmark Investor (OAKMX), which watched $3.7 billion flee, has gained 9.2%. And Artisan Mid-cap Value Investor (ARTQX), which saw $4 billion hit the exits, gained 10.2%. Fund flows typically follow performance, which explains the outflows from Fairholme and CGM Focus. Big flows don't necessarily mean big performance, but so far, investors haven't been terribly hurt by following the crowd. Vanguard Total Stock Market Index (VTSMX) was the most popular fund the past 12 months, gathering in $48.3 billion the past 12 months. It's up 6.4% since the election, vs. 5.4% for the S&P 500.

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