In Warren Buffett’s most recent letter to shareholders, he updated a data point that never gets old: Just how much Berkshire Hathaway (BRK.A, BRK.B) shares have outperformed the Standard & Poor’s 500-stock index. Between 1965 and the end of 2017, the S&P 500 has put up a plenty-respectable 15,508% … but Berkshire shares have delivered an overall gain of 2,404,748%!
Yes, Buffett’s clout means he can swing some deals that regular investors can’t get, but those returns are still a resounding seal of approval for the value investing principles that the Oracle of Omaha espouses. And those principles should drive even higher returns in the future – especially if higher interest rates put heavily indebted firms at risk.
“The economic environment continues to favor corporate earnings,” says Jim Barnes, Director of Fixed Income at financial services company Bryn Mawr Trust. If earnings are threatened by higher borrowing costs, however, that could make the companies with the healthiest balance sheets and more prudent approaches much more desirable – thus, value stocks could seem even more attractive very quickly.
“Classical value investing principles are timeless, and after one of the longest bull markets in history, they are extremely important today,” says Don Wilson, CIO of Brightworth, an Atlanta-based investment company.
Closed-end funds are an excellent way to invest in a broad swath of value stocks. In addition to the ease of getting exposure to dozens or even hundreds of stocks in just one fund, many CEFs boast much higher yields than their mutual fund and exchange-traded fund counterparts. Here are five such funds that value-minded investors should consider.
Disclaimer
Data is as of April 13, 2018. Distribution rate can be a combination of dividends, interest income, realized capital gains and return of capital, and is an annualized reflection of the most recent payout. Distribution rate is a standard measure for CEFs. Fund expenses provided by Morningstar. Click on ticker-symbol links in each slide for current share prices and more.
In 2023, bank savings rates are on the upswing, thanks to high interest rates. The same goes for certificates of deposit, where savings returns are at historically high levels. Take 12-month CD rates, with returns around 5% up to 5.3%.
State Farm Balanced Fund STFBX, Vanguard Wellington Fund VWELX and Fidelity Advisor Balanced Fund FAIGX. Each has a Zacks Mutual Fund Rank #1 (Strong Buy) and is expected to outperform its peers in the future.
Quant Active Fund: It has given a return of 22.02% in 10 years. The fund tracks Nifty 500 Multicap 50:25:25 Total Return Index. Invesco India Multicap Fund: It has given a return of 18.11% in 10 years. The fund tracks Nifty 500 Multicap 50:25:25 Total Return Index.
Did you know there's a relatively low-risk investment that can earn you a near 7% annualized return right now? With inflation recently at a 40-year high, there's a Treasury bond that pays an inflation-adjusted rate of nearly 7% -- the Series I Savings Bond.
High-quality bonds and fixed-indexed annuities are often considered the safest investments with the highest returns. However, there are many different types of bond funds and annuities, each with risks and rewards. For example, government bonds are generally more stable than corporate bonds based on past performance.
Fidelity Select Software & IT Services (FSCSX, $18.45) has not only survived the Crash of 1987, the Tech Wreck of 2000-02 and the Great Recession, but it has emerged as the top-performing fund since inception.
Morningstar Rating ("star rating") In our analysis, we found that the star rating effectively sorted funds based on their future performance, with higher-rated funds far likelier to survive and outperform average peers than lower-rated funds.
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