Less is more, as architect Ludwig Mies van der Rohe famously said. In that vein, we're replacing only two funds in the Kiplinger 25 this year.
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That compares with three or four in a typical year and is much less than the seven funds we swapped out a year ago. That compares with three or four in a typical year and is much less than the seven funds we swapped out a year ago.
Primecap Odyssey Growth (symbol POGRX) replaces Akre Focus (AKREX). We admire lead manager Chuck Akre, but his fund's high annual fee of 1.34% has always bothered us. Odyssey Growth charges a below-average 0.66% per year. On top of that, it has an outstanding record. The fund invests in midsize and large companies that are expanding at above-average rates and trade at favorable share prices. Over the past decade, Odyssey Growth lagged Standard & Poor's 500-stock index in just three calendar years (and one could argue that 2007 was a draw).
The fund has five managers: Theo Kolokotrones, Joel Fried, Alfred Mordecai, M. Mohsin Ansari and James Marchetti. Each has a chunk of his own money invested in the portfolio, and each one manages his own piece of the fund's assets. They all look for a catalyst--the introduction of a new product, a restructuring or the arrival of new executives, for example--that they think will push a stock higher over the next three to five years. Health care and technology dominate the fund: Biotech firm Seattle Genetics, Eli Lilly and American Airlines are its top three holdings. Over the past year, the fund beat 98% of its peers (funds that invest in large, growing companies) and the S&P 500, with a 29.6% gain.
T. Rowe Price International Discovery (PRIDX) replaces Matthews Asian Growth & Income (MACSX). Asia remains promising, but we think a more diversified approach may better suit the Kiplinger 25 and our readers. So how about investing in a fund that bets on small firms around the world? Enter International Discovery, which holds about 250 small and midsize companies in developed nations (80% of assets) and emerging countries.
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