The beauty of an equity-income fund is that it's a two-fer--investors get the benefit of investing in a company that not only looks promising, but also pays a dividend.
The FAM Equity-Income Fund (FAMEX) isn't your ordinary equity-income fund. For starters, it's a concentrated fund that currently has about 31 stocks in its portfolio. Second, all companies must pay a dividend, even if it's only one penny each quarter. Finally, since the fund's inception in 1996, about 15 percent of its assets have been in cash, primarily because the fund's managers are picky about what stocks make it into the portfolio and are disciplined in waiting for companies to hit the buy price. "My job is to take as much risk out of the investment process as I possibly can," says Paul Hogan, co-manager of the fund.
That discipline has paid off as the fund's three- and five-year performance records are ranked No. 2 in its category, according to Lipper. This fund is best suited for slow and steady returns rather than slick ones. Hogan adds that this fund has performed well in flat and sideways markets.
Dian Vujovich is an author, syndicated columnist and publisher of fund-investing site www.fundfreebies.com.
This story appears in the February 2005 issue of Entrepreneur. Subscribe »
