The Wall Street Journal-20080122-SmartMoney Fund Screen - Equity-Income Funds
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SmartMoney Fund Screen / Equity-Income Funds
The 1st Source Monogram Income Equity fund has an eight-year history of posting consistent market-beating returns.
Nevertheless, this hidden gem has managed to fly under the radar. The fund is located far from Wall Street, in South Bend, Ind., and with an asset base of just $350 million, it's tiny compared with some of its competitors. But it's a giant when it comes to returns: 1st Source's 10.3% average annual gain over the past decade is double that of the S&P 500-stock index.
Like its equity-income fund peers, 1st Source typically favors dividend-paying stocks. Equity-income funds have gained in popularity since the signing of President Bush's 2003 tax bill, which slashed the top rate on dividends to 15% from as much as 38.6%. Since then, fund companies have launched new offerings that take advantage of this more-favorable treatment.
We used to think highly of equity-income funds. After all, they invest in big dividend-paying companies that are typically well- prepared to weather market downturns. But raking in healthy dividend payments, particularly in this market, isn't a sure thing. Big banks and financial institutions are dividend payers that have long been favored by equity-income funds. But the subprime crisis has these stocks reeling. For now, we would avoid adding to an equity-income position or building a new one until some of the subprime dust clears. In the meantime, you can do your research, starting with this week's Fund Screen on equity-income funds.
The ones that made our list had a three-year track record that put them in the top 50% of their peer group. These funds had to be open to new money, require a minimum under $5,000 and charge less than 1.5% in annual expenses. As usual, we didn't include load funds.
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Income Generators
These 11 funds are top-performing dividend earners with low expenses.
Fund (Ticker)
1-Year 3-Year Average 5-Year Average Minimum Expense
Return Annual Return Annual Return Initial Investment Ratio
1st Source Monogram Inc Eq (FMIEX)
4.3% 12.2% 15.4% $1,000 1.15%
Alpine Dynamic Dividend (ADVDX)
-7.8 6.9 n/a 1,000 1.18
Amana Income (AMANX)
5.2 13.4 17.2 250 1.37
Columbia Dividend Income (GSFTX)
-0.9 9.1 11.6 1,000 0.80
Cullen High Dividend Equity (CHDEX)
-2.3 8.6 n/a 1,000 1.00
Gabelli Equity Income (GABEX)
0.2 9.2 12.4 1,000 1.43
Parnassus Equity Income (PRBLX)
5.2 8.8 9.4 2,000 0.99
Schwab Dividend Equity (SWDIX)
-3.5 7.3 n/a 100 1.04
Vanguard Dividend Growth (VDIGX)
-1.5 8.1 11.8 3,000 0.38
Vanguard Equity Income (VEIPX)
-3.6 7.6 11.1 3,000 0.29
Wells Fargo Advantage Div Inc (SDVIX)
-6.5 6.8 10.8 2,500 1.37
Note: Data as of Jan. 17, 2008
Sources: Lipper, Morningstar
