newjerseynewsroom.com

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

In the past, whenever I've checked which mutual funds receive perfect ratings – "high" for performance, "low" for risk – from Morningstar, the financial publishing house, maybe only three or four qualified.

The other day, when I conducted the same pleasant experiment, I found that more than a score of stock and stock-plus-bond funds qualified – despite the abysmal stock market of 2008, when the Standard & Poor's 500 lost 37%.

To reduce that awkward number, I tossed out funds that just managed to squeak onto the list – funds labeled high/low despite their performance rating being merely better than average instead of "high."

Also defenestrated were funds that concentrate on one industry. Goodbye, Waddell & Reed Science A, a technology fund, and FBR Small Cap Financial.

Another casualty: a fund very similar to another fund in the same family. (Janus Aspen Balanced Institutional is the spitting image of Janus Balanced.)

Finally, out went funds that carry sales charges, simply because people who read the kind of stuff you're reading now tend to be smart enough not to need expensive outside guidance. So long, Mutual Discovery, First Eagle Value A, First Eagle Overseas A, and J.P. Morgan Small Cap Equity A.

That left 14 killer funds. Open to new investors, diversified, with no sales charges – and rated high for performance, low for risk. Six-star funds, I call them. (Morningstar's highest rating is five stars.)

Okay, should you actually invest in any of these six-star funds? You might be especially interested in some of these funds if your portfolio is deficient in that fund's category – say, small value funds – and if your exposure to the stock market could use a little beefing up.

In any case, check the fund's record. Has it been too volatile for you? Could you stomach a possible 30% loss in one year? Also check that the current manager is the person actually responsible for the fund's fine record, not some Johnny- or Jenny-come-lately.

Besides which, a good many rather wonderful funds have NOT been rated high for performance, low for risk – though they may have come close. I'm thinking of such gems as Fairholme (in Short Hills), Pimco Total Return D, and Vanguard Primecap.

Enough dilly-dallying. Here are the survivors, what they invest in, with their phone numbers, their minimum first investments, and Morningstar's take on them.

• American Century Equity Income: A large/value fund. Minimum: $500. Phone: 800-345-2021. Morningstar calls it "solid."
• American Century Strategic Allocation: Aggressive, a large/growth fund. Minimum: $2,500. Phone: 800-345-2021. But Morningstar considers its expenses too high.
• Forester Value, large/value: Run almost single-handedly by Tom Forester, it has a mere $8 million in assets – so it can be nimble. Minimum: $500. Phone: 800-388-0365. Morningstar is positive.
• Gabelli Small Cap Growth AAA: Small/blend. Minimum: $1,000. Phone: 800-422-3554. Morningstar reports that it has "held up relatively well."
• Janus Balanced: Large/growth: Minimum: $2,500. Phone: 800-525-3713. Morningstar is positive.
• Janus Midcap Value: Midcap/value. Minimum: $2,500. Phone: 800-525-0020. Morningstar calls it "one of the best ideas in its category."
• Osterweis: Midcap/blend. Minimum: $5,000. Phone: 800-700-3316. Morningstar believes that it "still looks good as a long-term holding."
• Meridian Growth: Midcap/growth. Minimum: $1,000. Phone: 800-446-6662. Morningstar is positive, despite the fund's concentrated portfolio (only 44 stocks recently).
• Manning & Napier Pro-Blend Moderate Allocation: Large/growth. Minimum: $2,000. Phone: 800-466-3863. Morningstar calls it "top-notch."
• Neuberger Berman Genesis: Midcap/growth. Minimum: $1,000. Phone: 800-877-9700. Morningstar calls it "excellent."
• Oakmark Equity Income: Large/blend. Minimum: $1,000. Phone: 800-625-6275. Morningstar is positive.
• Presidio: Small-cap/blend. Minimum: $10,000. Phone: 800-595-3166. Morningstar calls it "appealing."
• Royce Special Equity: Small-cap/value. Minimum: $2,000. Phone: 800-221-4268. Morningstar notes that the manager, Charles Dreifus, was its domestic fund manager of the year last year.
• Westport R: Midcap/blend. Minimum: $2,500. Phone: 888-593-7878. Morningstar calls it a winner.

Which fund might I myself invest in? I really like what I know about that Manning & Napier fund.

Coming: A list of fee-only Certified Financial Planners in New Jersey.

Warren Boroson, the author of more than 20 books, has been a financial columnist for various newspapers and magazines. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .