Funds of the Month

June 3, 2005

Consistent performers

Bear markets, mutual fund scandals, tech bubbles, and criminal investigations of accounting fraud at large corporations-it's enough to send an investor running for cover. In such uncertain times, it can be very comforting to own an investment that exhibits consistency.

Here are two mutual funds that have produced moderate-to-strong returns with limited risk and volatility. Both have five- and 10-year annualized returns of at least 10 percent. Meanwhile, neither fund has had a double-digit annual loss within the past decade. The managers have been with the fund families for years, and their experience shows. All of these factors help promote consistent performance, which can result in better compound returns over the long run.

OptionsAriel Fund. John W. Rogers Jr. has earned a reputation for his contrarian, albeit very successful, investment style-he chooses stocks when their near-term prospects seem low and sells them when they're back in favor.

Moreover, Rogers holds a stock until it reaches his estimate of its true value-which usually happens within three to five years. The fund's level of risk has ranged between below average to low, and it's recommended for an investor who's in for the long haul (which the fund defines as at least five years).

T. Rowe Price Capital Appreciation Fund. Kunal Kapoor, director of mutual fund analysis at Morningstar, has called this fund, "the perfect antidote for investors' nerves." The manager of the fund, Stephen W. Boesel, is known for his circumspect investment style. The fund's approach is to "work as hard to reduce risk as to maximize gains."