In a flat stock market, dazzling jumps by just a few stocks in a fund can make the difference between running with the pack and leaving it in the dust. Below, managers of the second quarter's three top-performing mutual funds each pointed out one of the stocks that explained their big returns. (Calvin E. Chung co-manages Credit Suisse's small-cap growth fund for institutional investors, which had the second-highest return among all funds. He also co-manages a larger sister fund for retail investors with almost identical holdings. The ticker symbol shown here is for the retail fund, available to individual investors.)
William E. Seale
"As long as the economy continues to recover, I would look for the energy sector to continue to be a good buy," fund manager William E. Seale said, noting that demand for oil and gas tends to rise as the economy gains momentum.
The energy fund, which was up 12.10 percent for the second quarter, is designed to track and magnify movements in the Dow Jones Energy Sector Index, a measure of the overall performance of U.S. energy stocks. (A $100 rise in the index yields a $150 rise in the fund.) So Seale, chief investment officer at the Bethesda-based ProFund Advisors, does not pick specific energy stocks. However, ExxonMobil Corp. shares make up 37 percent of the fund's holdings, by far its largest single stock position.
Calvin E. Chung
Credit Suisse Small Cap
Growth Fund (WSCGX)
"Small-cap investing is almost always more about specific companies than it is about sectors or areas," said Calvin E. Chung, one of three managers for the fund.
Growth potential led Chung to the fund's largest holding, Centene Corp. The health maintenance organization contracts with state governments to provide managed care to Medicaid recipients.
While Credit Suisse's institutional small-cap growth fund surged ahead by 14.96 percent in the quarter, the retail version of the fund -- with holdings, including Centene, that were identical but lacked one major sale -- ended the quarter basically even, compared with an average loss of 2.38 percent for small-cap growth funds overall.
Alberto W. Vilar
Fund manager Alberto W. Vilar has made big bets on Internet companies catering to consumers, such as Amazon and eBay, and made big profits in the past year. Such calls helped make the Amerindo Technology Fund the top-performing mutual fund in the second quarter, scoring a 22.16 percent gain. But half of the past quarter's return came from health care stocks.
One standout was Gilead Sciences Inc., a San Francisco Bay area firm that develops drugs to fight infectious diseases such as AIDS and hepatitis B.
"You've got to have staying power with the stocks that are still growing formidably," said Vilar, who shuns mature companies such as Dell Inc. or Oracle Corp.
-- Anitha Reddy