CGM Focus Fund: My New Performance Leader

Posted by Sun on September 28, 2007
Post viewed 2209 times, 5 so far today

Advertisements

cgm fundFor quite some time, Dodge & Cox International Fund (DODFX) was the top performer in our mutual fund investments. Less than two months ago, our investments in the fund have returned more than 100%. However, the market downturn since then has eroded some of the gains. Now the overall return of this fund is down to 88%.

Then a new leader has quietly emerged recently and it’s CGM Focus Fund (CGMFX), a fund that once I was considering cut loss due to its high turnover ratio (300% in 2006). I am glad I didn’t :)

The following is a chart comparing YTD return of CGMFX against S&P 500, which speaks for itself. As of September 27th, S&P gained 9.46% while CGMFX returned 61.57%!

cgmfx.png

So what’s behind the fund’s astonishing run this year? According to a news report on Bloomberg.com, CGMFX

has more than two-thirds of the fund in energy, commodities and mining companies, three of the 10 best industry groups in the S&P 500. The fund has risen 59 percent this year, driven by Potash Corp. of Saskatchewan Inc. in Saskatoon, Saskatchewan, the world’s biggest maker of fertilizer, and Houston-based oil-services company Schlumberger Ltd. Shares of Potash have more than doubled this year and Schlumberger has surged 67 percent.

From the fund’s semi-annual report, CGMFX investments include

  • Oil service: 19.4%
  • Metals and mining: 12.8%
  • Oil - Independent production: 9.2%
  • Offshore drilling: 4.5%

Among the fund’s top 25 holdings, 7 of them have gained more than 100% so far this year and 10 have returned more than 50%.

No wonder it can perform so well.

If you enjoyed reading this post, please consider subscribing to my full RSS feed (What's RSS feed?). Or you can also choose to have free daily updates delivered right to your inbox.

Featured Financial Products
  • Feeling the pain at the pump? Find out how you can get up to 5% cash back with these gas rewards credit cards. It's the money you have to spend anyway. Why not get some back?
  • Ready to buy stocks/ETFs with zero commission? Check out the Zecco review and try Zecco Trading to get 10 free trades/month.

Categories : Investing, Mutual fund Tags: , , , ,

Check Out These Related Articles
6 Comments
September 29, 2007

CGM Focus is a great fund with a great manager, but
when you invest you must be prepared for rapid turnover
and dizzying volatility. If you can successfully deal with these two issue (most invester can’t) this fund
is a winner.

Posted by AJ Wimberly
October 4, 2007

Sun,

When I compare CGMFX,DODFX, with my FSEAX, I can see where DOD went wrong: August. The fund manager must have made some poor moves that month, perhaps moved by the whole credit crunch brouhaha. I stayed in FSEAX and have realized a 60% gain since I entered some months ago.

M

Posted by M
October 6, 2007

Actually, I don’t feel D&C would make any dramatic change in their investment just because of the fluctuation in one month. If you look at the historical returns of the fund, the third quarter was always the weakest, but the forth was much stronger. Let’s see how the fund will perform in the last three months of the year.

Posted by Sun
Share Your Thouhgts
Your opinion matters. Please use the form below to share your thoughts on CGM Focus Fund: My New Performance Leader with us.

(required)

(required)


Recent Entries