| The gaps between stock mutual funds’ 3- and 5-year returns are unusually large now, three years after the market hit bottom. The 3- and 5-year numbers are common benchmarks for tracking fund performance, so it’s important to understand what’s behind the big disparities. |
| The gaps are wide because funds are now wiping their 3-year records clean of the stock meltdown that ended on March 9, 2009. Five-year records look comparatively bad because they include the 17-month period when stocks tumbled 57 percent between October 2007 and March 2009. |
| For some perspective, gaps between 3- and 5-year annualized returns currently average 26 percentage points for U.S. diversified stock funds, according to Morningstar. Example: A fund returned an average 28 percent a year over the latest 3-year period, and 2 percent over five years. |
| Funds whose managers have succeeded in delivering less-volatile returns than the market have the smallest gaps between their 3- and 5-year numbers. |
| Below are the 10 U.S. diversified stock funds with the smallest gaps, for the periods ended March 7, according to Morningstar. Funds with fewer than $100 million in assets are excluded. |
| Fund name (ticker) Morningstar stock fund category 3-year average annualized return 5-year average annualized return or loss Percentage point difference between 3- and 5-year returns |
| Gabelli ABC AAA (GABCX) Mid-cap growth 5.7 % 3.5 % 2.2 |
| CGM Mutual (LOMMX) Large-cap growth 12.4 5 7.4 |
| Reynolds Blue Chip Growth (RBCGX) Large-cap growth 22.7 14 8.7 |
| FMI Provident Trust Strategy (FMIRX) Large-cap growth 16.7 4 12.7 |
| USAA Total Return Strategy (USTRX) Large-cap blend 13.1 0.4 12.7 |
| CGM Focus (CGMFX) Large-cap growth 12.4 -0.7 13.1 |
| Forester Value (FVALX) Large-cap value 16.8 3.4 13.4 |
| Flex-funds Muirfield (FLMFX) Large-cap blend 14.6 0 14.6 |
| Roosevelt Multi Cap Mid-cap growth 17.91 3.08 14.83 |
| Amana Trust Income (AMANX) Large-cap blend 19.79 4.95 14.84 |