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STFGX - State Farm Growth Fund
| STFGX Invests In: Growth and value stocks of large companies. Key Statistic: Very low turnover. |
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When it comes to investing in stock funds, there is always a debate over the best investment strategy. So how does an investor choose between low-expense index funds and actively managed stock funds?
Actually, investors don't have to choose between low fees and great returns. The best stock funds can deliver both.
STFGX is an example of a fund that offers the best of both worlds. The fund has blown away most other actively-managed stock funds with extremely low costs, a low initial investment, and an almost fully invested portfolio.
State Farm Growth Fund invests in consumer staples, inflation-driven industries, technology, and healthcare. Do not let the word "growth" fool you; it is difficult to imagine a more balanced strategy that combines both growth and value.
So what makes STFGX a great stock fund?
For starters, the insanely low expenses. The meager .12% net expense ratio1 is lower than most index funds. Why pay higher costs for an index fund with an average returns? This fund has outperformed the benchmark index and its category peers while keeping costs low at the same time.
Low turnover and broad industry diversification have also kept this fund's risk very low over the long-term. Believe it or not, the standard deviation of 15.942 is also well below the current market average. These numbers illustrate a classic buy-and-hold strategy that has performed well.
The fund's leadership over the past few decades has been rock solid. Each of the portfolio managers have been with the fund for more than 10 years. Their decisiveness and decades worth of discipline has paid off well for investors. Since March 2009, the managers made a bold decision to stay almost fully invested in the stock market; a decision that very few others were willing to make.
That decision paid off well for investors, and has been reflected in the fund's returns. The returns also illustrate the fund management's cautious market approach over the past few years, which has helped the fund outperform its peers and the market average over the 1,3,5, and 10 year periods.
All in all, this fund combines three of the most frugal strategies for stock investing: low level of turnover, a fully invested portfolio, and low management fees. The outstanding performance with this strategy makes STFGX a great pick.
1. (as of 11/30/08)
2. (3 year standard deviation as of 6/30/09)
Fund information is provided by Morningstar.
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