Jeff Tjornehoj on "Business for Breakfast" 1060 KRCN Tuesday, October 31, 2006 - Halloween Treats

A: Yes. I looked around for diversified domestic equity funds that havebeaten their peers this year by solid margins without taking on excessiveamounts of risk. Of course, I have to remind everyone this is not anendorsement of these funds or a recommendation to buy them. It's justletting the numbers speak for themselves.

Q: Okay, then--what funds make this list?

A: A fairly new fund popped up: the Johnson Equity Income Fund. We call ita large-cap growth fund, but whatever it's doing seems to be working outvery well: it has a year-to-date return of nearly 13.5% and volatility (asmeasured by daily standard deviation) among the lowest of all U.S. domesticequity funds. Great returns with low volatility--that's tough to beat.

Q: Okay. What else?

A: The ABN AMRO/River Road Small Cap Value Fund. We peg it in the small-capcore category, but that hasn't slowed this fund, which is up over 23% forthe year. It's a bit more volatile than the Johnson fund, but again,relatively low compared to the rest of what's out there.

Q: Next?

A: The Hennessy Total Return Fund. You can find another large-cap valuefund with slightly lower risk, but Neil Hennessy has found a market thatreally works, with his "Dogs of the Dow" strategy, and the fund is up over20%. That said, the longer record of this fund isn't so stellar--thethree-year return is near the bottom of large-cap value funds'.

Q: So, it's in a sweet spot right now...but for how long? And what about theother two?

A: Great point. There's a world of difference between a ten-month streakand a ten-year streak. And, frankly, no one knows if these funds will stillhave a hot hand one month or three years from now. But all three have showna propensity for mitigating risk, which is one consideration--an importantone--when evaluating a fund or any other investment.

Q: Great stuff. Thanks again, Jeff.

A: My pleasure. Have a good one.

#