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What a difference three months can make. With the debt crisis in Europe now seemingly under some control and the Federal Reserve still keeping interest rates low, stocks and bonds appreciated nicely during the three-month period ended September 30, 2010. Indeed, most of the losses sustained in the second quarter were recouped. This good performance continued as we moved through October. If the stock market remains a leading economic indicator, it appears to say that our economy will continue to grow. Note that these recent ups and downs give further credence to the strategy of dollar-cost averaging, since no one can expect to pick the perfect point in time to commit new funds.

Many of the equity funds listed in our table met or exceeded the performance of their respective benchmarks (S&P 500, the Russell 3000, the MSCI EAFE, and the MSCI WORLD) during the three months ended September 30, 2010, rising between 10% and 16% each. One exception was the EPH China A Fund (EPHCX). It outpaced most other funds by about four to five percentage points. This fund, a Pacific Equity fund, seeks long-term capital appreciation by investing at least 80% of its assets in non-U.S. stocks of companies of all market capitalizations that are economically tied to China. Subscribers should note that this fund began trading on July 31, 2009. As such, this short history prevents Value Line from assigning it Ranks.

Another fund that outperformed others by several percentage points over the past three months is American Funds EuroPacific Growth Fund A (AEPGX).  This fund holds a blend of European and Pacific Basin equities and seeks long-term growth of capital. It may also hold a portion of its investments in developing countries. While it currently has an average Overall Rank, its recent performance has benefited from the appreciation of stocks based in China. The fund also has an average Risk Rank, making it a good choice for a variety of investors.

A third fund that outperformed over the past three months ended September 30, 2010 is American Funds New Perspective Fund A (ANWPX).  This fund invests in large-cap growth companies with established track records, both in the U.S. and abroad. As of September 30, 2010, the fund was about 35% invested in U.S. stocks, 35% in European stocks, 15% in Asian stocks, and 9% in Canadian and Latin American issues. Its recent performance has also benefited from appreciation of Asian stocks. This fund has an average Risk Rank, making it a suitable choice for investors seeking a worldwide growth fund with average risk.

Listed below are 15 of the largest funds in our 19,000+ Mutual Fund database.  These funds’ total assets account for about 10% of the assets of all the funds we follow.  As such, many investors are affected by how these funds perform.

 

 

Results

Through

Sept.30

2010

FUND NAME/

TICKER

Fund

Size

(in

billions)

3 Mos

6 Mos

1 year

5 years

American Funds Growth Fund of America A

AGTHX 

$151

10.7%

-2.2%

7.8%

1.5%

 

 

Vanguard Total Stock Market Index

VTSMX 

123

11.6

-1.1

11.0

1.1

American Funds EuroPacific Growth A

AEPGX 

103

16.8

2.8

7.0

5.9

Vanguard 500 Index

VFINX 

94

11.3

-1.5

10.0

0.7

American Funds Capital World Growth & Income A

CWGIX 

78

16.8

2.3

6.6

4.7

American Funds Capital Income Builder A

CAIBX 

77

11.8

3.8

8.8

3.9

EPH China A

EPHCX 

72

18.8

9.0

34.1

 

Fidelity Contrafund

FCNTX 

70

12.2

3.1

14.7

3.8

American Funds Investment Company of America A

AIVSX 

58

11.7

-1.2

8.7

1.3

American Funds Income Fund of America A

AMECX 

65

10.6

3.6

12.7

1.9

Dodge & Cox Stock

DODGX 

37

10.9

-4.3

6.7

-1.5

American Funds Washington Mutual A

AWSHX 

48

12.0

0.5

12.3

0.7

American Funds New PerspectiveA

ANWPX 

42

14.1

1.1

9.0

5.1

American Funds Fundamental Investors A

ANCFX 

50

12.1

-0.8

9.8

3.0

Franklin Income A

FKINX 

54

7.9

4.1

13.9

4.4

S&P 500 Index

 

11.3

-1.4

10.2

0.5

Russell 3000

 

11.5

-1.1

11.0

0.9

MSCI EAFE

 

15.8

-1.5

0.5

-0.2

MSCI WORLD

 

13.2

-1.8

4.6

-0.4

Barclays Aggregate Bond

 

2.5

6.1

8.2

6.0

Barclays High Yield Bond

 

6.7

6.6

18.4

9.1