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Attention Fund Investors: Bs are OK

Posted by: Lauren Young on January 11, 2007

Back in high school, my father used to tell that Bs are for truck drivers, but when it comes to fund investing, I disagree.

While my story in the current magazine highlights the mutual funds that receive A ratings from BusinessWeek in individual stock and bond categories, there are plenty of good funds with a B or B+ that are worth a careful look.

One stock fund I find intriguing is Baron iOpportunity, which gets a B+ in the all-cap fund category. It’s actually more like a New Economy fund: Google, Etrade, Apple, and Yahoo! are some of its largest bets. Overall, the fund’s top holdings account for one-third of the fund’s assets. “This fund is a bit more aggressive than the typical all-cap fund,” says manager Michael Lippert. But its five-year annualized return of 13.2% rewards investors for taking that risk.

Another B+ fund that didn’t make the ultimate cut for my story is the
the $12 billion Pimco RCM Real Return Fund, which invests primarily in U.S. Treasury’s Inflation-Indexed Securities, better known as TIPS. “TIPS are the lowest risk investment conceivable, even cash can be more risky since the inflation-adjusted returns of cash are quite volatile,” says John Brynjolfsson, the fund’s manager. “TIPS have not yet received the respect they deserve.”

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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