The Best Mutual Funds the Last Three Years
Evaluating the best mutual funds over the last three years can isolate investment opportunities that have out-performed others during a difficult market environment (2007 through 2009). Many funds still have not recovered from the declines they experienced in that period, and these funds may continue their trends. Utilizing tools that use ranking systems can be a helpful aid. Morningstar is one reputable rating agency that ranks mutual funds on performance, risk, investment style and expenses, among other features. Their ratings range from one star (worst) to five stars.
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Screening for Three-year Performance
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Using online filtering tools such as Yahoo Finance's mutual fund screener, investors can sort through thousands of funds using multiple Morningstar criteria. To find the best mutual funds over the past three years (as of November 30, 2010), a search can be conducted by best performance returns. The funds mentioned in this article result from a query requiring a Morningstar rating of three or more stars and three-year annualized returns of 15 percent or more.
No. 1: Oceanstone Fund (OSFDX)
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The Oceanstone Fund has not been in operation long enough to have a five-year annualized performance, but its three-year annualized returns are at the top of the list of all funds in this screen. From December 1, 2007 to November 30, 2010, OSFDX returned an average 59.29 percent per year. According to its fund summary, the fund is nondiversified and can frequently trade across a broad spectrum of securities. OSFDX has a maximum initial sales charge of 5.43 percent. Minimum investment is $2,000.
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No. 2: Van Eck Intl Investors Gold I (INIIX)
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Van Eck International Investors Gold Fund I-class shares are available to large investors only. It has a 24.12 percent three-year annual return. This nondiversified mutual fund invests in gold-related securities such as stocks of gold mining companies, precious metals bullion, other mutual funds and derivatives (options and futures). The sales charge is 1 percent. Minimum investment is $1,000,000.
No. 3: Direxion Mthly 10 Year Note Bull 2X (DXKLX)
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The Direxion Monthly 10 Year Note Bull 2X Fund is also a nondiversified mutual fund that uses leveraged investments that track the 10-year U.S. Treasury index. As of November 30, 2010, it has an annualized three-year return of 18.49 percent before expenses. DXKLX seeks to replicate the monthly price of the 10-year Treasury bond on a leveraged basis. Financial instruments such as options and futures contracts multiply the returns of the underlying index. Due to its use of leverage, this fund typically advances and declines at two times the rate of the 10-year U.S. Treasury bond. The sales charge is not available and the minimum initial investment is $25,000.
Similar Themes
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As with the Van Eck International Investors Gold Fund, almost all of the funds that surfaced in this query are focused in the precious metals (gold) segment of the market. Their high returns are tied to the significant gain in the price of gold and silver during that period.
Due Diligence
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As always, consult an investment adviser and/or read the fund prospectuses carefully.
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