The oldest mutual funds in the U.S. are still performing well, according to a recent article in Barron’s.
The funds—some of which survived the 1929 stock market crash—include Central Securities (CET), Adams Diversified Equity (ADX) and General American Investors (GAM). They are all closed end, the article reports, and “might not be bargains” but have seen gains of over 30% this year, “handily beating the S&P 500.”
According to the article, the performance of these older funds has been boosted in part by “high yields, cheap valuations, strong share-buyback programs, and good investing.” Mark Stoeckle, lead manager of the Adams fund, predicts that stocks will keep rising as the Trump administration “will do whatever they can to keep the economy good before the presidential election.”
The article also offers insights from retired director of investment analysis at S&P Jim Branscome, who says, “The alpha pond is being overfished.” Currently, he is finding bargains in quality municipal closed-end funds, explaining that while they’re leveraged, they also offer handsome yields. He says, “I don’t know any other prognosticators who think the market will earn [7%]. If you want to be in bonds for ballast, the Fed will be on hold, and we’ll be in a noninflationary environment. These are good funds.”