Standard & Poor's Financial Services LLC is bullish on large-cap stocks — and is giving a nod to Walden Asset Management,
Invesco Ltd. and Brown Brothers Harriman & Co. as three firms that could produce top-performing large-cap mutual funds in 2011.
Traditionally large-cap equity does well in the third year of an economic recovery, said Dylan Cathers, an S&P mutual fund analyst. S&P's Global Investment Policy Committee believes that this category will outperform other equity categories in 2011.
Within the large-cap-equity universe, S&P has highlighted three funds that have performed well historically in such an environment — and could lead the pack in 2011:
• The Walden Social Equity Fund Ticker:(WSEFX), which was up nearly 17%, compared with 12.9% for its large-cap-core peers. S&P noted that the fund not only performed well but did so without incurring high levels of risk, and keeping costs below the peer group average of 1.28%.
• The
Invesco Van Kampen Comstock Fund Ticker:(ACSDX), which was up 16% in 2010 but also beat its peers for the past three- and five-year periods, according to the S&P Marketscope report that was released today. Furthermore, the fund's management team has been in palce since 1999.
• The BBH Core Select Fund Ticker:(BBTEX) is an S&P favorite because it has outperformed its peers for the past one-, three-, five- and 10-year periods without taking on too much risk, according to the report. And like the Walden and
Invesco funds, this one also has a lower expense ratio than its peers, according to S&P.
When looking at the entire fund universe, S&P noted that ProFund Advisors LLC's Internet UltraSector ProFund Ticker:(INPIX) was the top performer out of all funds ranked by S&P for 2010. The fund, which uses leverage, returned 54% as of Dec. 31
But this fund is risky, given that it uses leverage and is highly concentrated, Mr. Cathers said. As of July 31, the top 10 holdings accounted for 36% of its total assets.
“That's the tricky part,” Mr. Cathers said. “If you are going to buy that type of fund, you have to be willing to accept a level of volatility.”
