Kiplinger\'s Personal Finance - 04.2020

42 KIPLINGER’S PERSONAL FINANCE^ 04/2020

THE LAST TIME WE CHECKED

in with FIDELITY INTERMEDIATE

MUNICIPAL INCOME, longtime

manager Mark Sommer

had just retired. Now,

Kevin Ramundo, coman-

ager since 2010, is retiring,

too, in June. “I’m going

to spend time hiking the

Appalachian trail and ski-

ing,” he says. Fund man-

ager changes make us

wary. But this fund is run

by a team of mostly long-

time members who follow

a well-honed process.

The team, which in-

cludes comanagers

Cormac Cullen, Michael

Maka, Elizah McLaughlin

and Ramundo, along with

three traders and 20-

odd analysts, discuss and

debate every position in

the fund. “While we

don’t always agree,” says

McLaughlin, “our fund

decisions are fully vetted

by the entire team.” They

look for reasonably priced

bonds with stable finances.

Managing risk is a prior-

ity, too, and the team uses

a proprietary tool to moni-

tor the portfolio.

Municipal bonds, which

pay interest that is exempt

from federal and some-

times state income taxes,

have had a great run in

recent years. The 2017

tax law included changes

specific to munis that

crimped supply just as

investors began to clamor

for the bonds. “There’s an

imbalance in supply and

demand,” says Cullen,

and that has helped prop

up muni bond prices.

Over the past 12 months,

Intermediate Muni Income

returned 7.4%. That’s a

solid absolute return for the

fund. But it lags Bloom-

berg Barclays Municipal

index and the typical

intermediate-term bond

fund. Ramundo says low

volatility has led to nar-

rowing gaps in muni-fund

returns. “The differences

in performance among the

top funds remain pretty

tight,” he says.

But Intermediate Muni

Income tends to shine in

down markets. In 2013,

the typical intermediate-

term muni fund lost 2.3%;

Fidelity Intermediate

Muni Income beat 77%

of its competition, with

a 1.5% loss.

After strong perfor-

mances two years in a

row, the fund’s managers

are cautiously optimistic.

Munis are richly valued,

says Cullen. But steady,

low interest rates and a

strong U.S. economy, cou-

pled with strong demand

for munis and tight supply,

make it “reasonable to ex-

pect continued support

for munis.” NELLIE S. HUANG

[email protected]

INVESTING

THE KIPLINGER 25 UPDATE

A Deep Bench

Bodes Well

KEY DATA FOR OUR MUTUAL FUND PICKS

U.S. Stock Funds Symbol

Annualized

total return Expense

1 yr. 5 yrs. 10 yrs. Yield ratio

D.F. Dent Midcap Growth DFDMX 32.8% 15.0% — 0.4% 0.98%

Dodge & Cox Stock DODGX 11.3 10.2 12.5% 2.4 0.52

Mairs & Power Growth MPGFX 18.4 10.4 13.0 1.8 0.64

Parnassus Mid Cap PARMX 18.6 10.3 13.0 1.3 0.99

T. Rowe Price Blue Chip GrowthTRBCX 19.8 15.8 16.9 0.6 0.70

T. Rowe Price Dividend Growth PRDGX 22.9 12.8 13.7 1.9 0.64

T. Rowe Price QM US Sm-Cp GroPRDSX 19.1 11.4 15.7 0.6 0.80

T. Rowe Price Sm-Cap Value PRSVX 11.1 9.4 11.6 1.4 0.85

T. Rowe Price Value TRVLX 15.8 8.7 12.2 2.1 0.78

Primecap Odyssey Growth POGRX 9.7 12.3 14.2 1.2 0.65

Vanguard Equity-Income VEIPX 15.7 10.3 13.1 3.1 0.27

Wasatch Small Cap Value WMCVX 7. 8 9.5 1 2. 8 2. 1 1. 2 0

Annualized

International total return

Stock Funds Symbol

Expense

1 yr. 5 yrs. 10 yrs. Yield ratio

AMG TimesSquare Intl Sm-CapTCMPX 13.3% 7.9% — 2.3% 1.23%

Baron Emerging Markets BEXFX 5.3 3.7 — 2.0 1.36

Fidelity International GrowthFIGFX 24.7 8.7 9.4% 1.6 0.99

Oakmark International OAKIX 7.6 3.8 7.0 3.9 0.98

Annualized

Specialized/ total return

Go-Anywhere Funds Symbol

Expense

1 yr. 5 yrs. 10 yrs. Yield ratio

Vanguard Health Care VGHCX 13.1% 8.0% 14.2% 1.6% 0.34%

Vanguard Wellington‡ VWELX 17.7 8.9 10.1 2.8 0.25

Annualized

total return

Bond Funds Symbol

Expense

1 yr. 5 yrs. 10 yrs. Yield ratio

DoubleLine Total Return N DLTNX 6.9% 3.0 — 3.1% 0.73%

Fidelity Adv Strategic Income FADMX 8.3 4.4 5.0% 2.9 0.69

Fidelity Intermed Muni IncomeFLTMX 7.4 2.9 3.6 1.2 0.37

Fidelity New Markets Income FNMIX 6.4 5.7 6.2 4.5 0.84

Met West Total Return Bond MMWTRX 9.7 2.8 4.7 2.1 0.67

Vanguard High-Yield CorporateVWEHX 10.4 5.6 7.0 4.1 0.23

Vanguard Sh-Tm Inv-Grade VFSTX 5.8 2.5 2.6 2.1 0.20

Annualized

total return

Indexes 1 yr. 5 yrs. 10 yrs. Yield

S&P 500-STOCK INDEX 21.7% 12.4% 14.0% 1.9%

RUSSELL 2000 INDEX* 9.2 8.2 11.9 1.5

MSCI EAFE INDEX† 12.1 5.1 5.8 3.2

MSCI EMERGING MARKETS INDEX 3.8 4.5 3.8 2.7

BLOOMBERG BARCLAYS AGG BND IDX# 9.6 3.0 3.8 2.0

Kiplinger 25 funds are no-load; you can buy them without sales

charges. For more about the funds, visit kiplinger.com/links/kip25.

As of January 31. ‡Open to new investors if purchased directly through the fund company.

*Small-company U.S. stocks. †Foreign stocks. #High-grade U.S. bonds. —Fund not in existence for

the entire period. SOURCES: Fund companies, FTSE Russell, Morningstar Inc., MSCI, S&P Dow Jones

Indices. Yields listed are SEC yields for bond funds; weighted average portfolio yields for stock funds.