This is the first quarter that three growth and income funds have risen to the top 10 funds on a risk-adjusted basis. The No. 1 fund was American Century Growth & Income.
This ranking is based on five-year risk-adjusted returns using a model developed by LCG Associates, Atlanta, in cooperation with the Pension Research Institute, Menlo Park, Calif.
The first column of the table (shown above) explains how much downside risk the manager took relative to the fund's style benchmark. The one-and five-year omega returns describe how much the fund earned after subtracting the appropriate amount of downside risk for the average risk-averse investor.
The final column is the excess return the manager earned relative to a passive benchmark that replicates the manager's style.
For example, American Century Growth & Income took only two-thirds as much risk as the style benchmark. After adjusting for downside risk, the fund earned 32.4% in the previous year and an average of 21.1% for the past five years. However, if you could replicate this fund's style at no cost, you could have made 0.8% more with the passive benchmark.
It might be significant that a less risky group of funds is emerging at this relatively high point in the market. Data for the style indexes was provided by Independence International Associates Inc., Boston.