Some of the best (and worst) mutual funds

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

Did you ever hear of the Intrepid Small Cap Fund? Of course not. Unless you're a mutual fund junkie.

I myself discovered this interesting fund while doing my irregular search for "six star" funds – mutual funds rated five stars (highest) by Mornmingstar, with a "high" for performance plus a "low" for risk. Not an especially common combination.

Intrepid has returned 14.35 percent a year for five years – no, that's not a typographical error. In that terrible year of 2008, it lost a mere 7.12 percent. This year it's lagging its peers – up only around 14 percent — because it has lots of cash (19.3 percent of assets).

The fund tries to buy stocks of healthy companies, with lots of free cash flow, trading below their intrinsic value.

One problem: The original manager, Eric Cinnamond, resigned in September, for family reasons; but Jayme Wiggins, the new manager, had worked at the firm before.

The fund is still open to new investors, it's no-load (but with a redemption fee), and the minimum first investment is $2,500. Headquartered in Jacksonville, Fla. Phone: 866-996-3863. Intrepidcapitalfunds.com.

♦♦♦

Okay, now name a one-star fund that Morningstar actually recommends. Answer: Schneider Value, which is an "analyst pick." A small-value fund, over the past three years it has lost 9.61 percent a year. If you're a dyed-in-the-wool value player, it might be just right for you.

But even Morningstar grants that the fund is "only for the boldest investors."

Minimum purchase: $20,000. Phone: 888-520-3277.

It'll be interesting to see whether Intrepid Small Cap or Schneider Value does better over the next year.

♦♦♦

Among other six star funds, you might be interested in:

Auxier Focus is a large/value fund with a fine record: up 6.56 percent a year over 10 years. "This fund has considerable merit as a go-anywhere core holding." Minimum: $5,000; phone: 877-328-9437.

Fidelity Floating Rate High Income, which buys bank loans, was recently yielding 3.5 percent. A Morningstar "analyst pick." Minimum: $2,500. Phone: 800-544-6666.

Janus Balanced hasn't been shooting out the lights this year, but its long-term record is impressive: up 5.04 percent over 10 years. Minimum: $2,500. Phone: 800-525-0020.

Royce Special Equity, a small/blend fund, is run by Charlie Dreifus (pictured), who took over from the legendary Charles Royce. Its stunning 10-year record: up 12.33 percent a year. Minimum: $2,000. Phone: 800-221-4268.

Vanguard Dividend Appreciation Index buys stocks that have regularly boosted their dividends. Top five holdings: PepsiCo, Procter & Gamble, McDonald's, IBM, and Johnson & Johnson. Writes Morningstar: "... a fine choice to be a core holding." Minimum: $3,000. Phone: 800-662-6273.

♦♦♦

If you're looking for a good fund family, consider the Manning & Napier funds, four of five of which get five stars; the exception (Small Cap) gets one star. No-load funds; minimum purchase: $2,000; phone: 800-466-3863.

For foreign exposure, the Matthews funds are intriguing. Of seven funds rated, the average rating is 4.0. No-load funds, their minimum is $2,500. Phone: 800-789-2742.

♦♦♦

Can you guess what the following 12 funds have in common? Alliance Bernstein 2000 Retirement, 2005, 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050, and 2055? All 12 of them, in a row, get a single star – and five of them are "perfect" – low for performance, high for risk. What's lower than one star? Zero stars, I guess.

♦♦♦

You'll never guess what famous fund now gets one star. Vanguard Asset Allocation. (I've never been able to interview the managers, so I'm not grieving.) Another great fund from the past that now gets one star: Northeast Investors.

♦♦♦

Okay, which of all the foregoing funds do I myself own?

Answer: Fidelity Floating Rate High Income.

Which do I plan to buy?

Vanguard Dividend Appreciation.

If I were much younger and much more aggressive an investor, would I buy Intrepid or Schneider? Not Schneider: $20,000 is too much for me to bet. But otherwise ... I'd do the sensible thing and buy both.

Readers are invited to send financial questions to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .