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This Focused Fund Has Outperformed 80% of its Peer
Group |
Published: September 6,
2007
As
might be expected from a focused portfolio, SunAmerica
Focused Alpha Large-Cap (NYSE: FGI, $19.00) is a relatively
concentrated fund that stocks up heavily on its strongest
investment ideas. In fact, the fund's entire portfolio consists
of just 25 holdings -- the top ten of which soak up about 50% of
its $200 million asset base.
While that strategy might lead to increased volatility at times,
it will also greatly magnify winning picks (unlike a fund with
several hundred holdings, where the impact of any one stock is
greatly diluted).
Meanwhile, the "alpha" term in the fund's name is a performance metric that
measures the excess risk-adjusted return that a fund delivers
relative to a given benchmark. In other words, alpha can help
gauge whether or not a fund's manager brings added value to the
table and can measure the additional returns he/she has
generated above and beyond those implied by the fund's
volatility.
Superior alpha ratings suggest that shareholders are getting
more bang for their buck and are enjoying higher returns than
they might get from other funds with similar risk profiles. And
while FGI is still relatively young, thus far it has done an
excellent job of staying on course.
The portfolio is overseen by two veteran managers -- BlackRock's
Robert Doll, who provides ten of his favorite large-cap value
stocks, and Tom Marsico, who adds ten large-cap growth
selections. As a result,
blue-chip giants like AT&T (NYSE: T)
provide some stability during times of volatility, while
faster-growing companies like Las Vegas Sands (NYSE: LVS) allow
the fund to participate in strong market rallies.
Since its inception in 2005, FGI has only posted one negative
quarter. And over the past year, the fund has delivered a total
return of about +24% -- outpacing 80% of its peer group.
Best of all, value-minded investors will really appreciate the
fact that this premium fund is trading at a rock-bottom price.
The fund is currently trading at a discount of 12% to its
net
asset value (NAV), though this discount has been
shrinking in recent months.
With a bargain price, a rich 6.3% yield, a superior track record
and a strict focus on undervalued companies with sustainable
competitive advantages, FGI is poised to deliver market-beating
gains in the years ahead.Good investing!
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Nathan Slaughter
Editor
The ETF Authority, Half-Priced Stocks
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| To receive
in-depth guidance on today's leading exchange-traded funds (ETFs), plus
a proprietary ranking system designed to uncover today's most
profitable funds, please subscribe to
Nathan Slaughter's premium ETF investing newsletter -- The
ETF Authority |
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Income Security
of the Month
Our "Income Security of the Month" for July 2008 invests in
a fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of 24.9%
per year over the past five years -- this fund is perhaps most
appealing for its total return potential. Specifically, the fund has
delivered total returns of +263.9% since 2003, and
it ranks in the top 10% of its category over the past decade.
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10 Stocks for 2008!
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