Morningstar Checks Under the Hood of Some Auto Funds
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Friday, November 12, 2010

Morningstar Checks Under the Hood of Some Auto Funds

Fundsters with an appetite for auto stocks may want to check out today's Morningstar Fund Spy column, which highlights some of the most prolific auto-based funds in the market.

The Fidelity Select Automotive fund [see profile] made the top of Morningstar's list of funds that held Ford stocks and funds that invested in auto-parts companies. "As the only automobile-specific mutual fund, its dramatic ups and downs over the past few years have mirrored the auto industry's," wrote David Kathman, fund analyst with Morningstar.

"It lost a brutal 61 percent in 2008 but rebounded with a 122 percent gain in 2009 and has gained another 35 percent so far in 2010 (as of Nov. 11), the best in the miscellaneous sector category."

According to Kathman, Ken Heebner's CGM Focus fund [see profile] is the only other fund to appear on both of lists and it was also among the biggest Ford and GM holders two years ago. "Heebner is known for concentrated portfolios with large sector bets and rapid turnover, resulting in volatile funds that tend to rank at either the top or the bottom of their categories in any given year."

FPA Paramount [see profile] was another fund mentioned with "significant exposure to the auto industry".

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