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7 star funds
These managers have proved their mettle in booms, busts and everything in between.
By Yuval Rosenberg, FORTUNE

NEW YORK (FORTUNE) - One thing you can count on is that the stock market almost never does what you expect it to.

And while the outlook always seems uncertain, this is a particularly dicey time, with questions about war and oil added to the usual clashing chorus of bullish and bearish indicators. If you'd prefer not to navigate these tricky waters yourself, there are plenty of mutual fund managers who would be happy to do the steering for you. Below, we profile seven outstanding candidates.

We set out to find veteran managers who have excelled in a variety of market environments over a long period of time. But we also wanted managers who outperformed their peers, a sign that they have succeeded not just because market conditions favored their style but because their investing discipline and stock-picking prowess helped them blow past the competition.

We started by asking Morningstar, the fund research firm, to screen for funds that have beaten their category averages by the widest margins over the past 15 years, a period that includes an extreme boom, an extreme bust, and most everything in between. We pared down this list of long-term winners by excluding funds that are closed to new investors and those narrowly focused on one sector. We also eliminated funds with high minimum investments or excessive expenses. Finally, we avoided any funds implicated in the scandals of recent years.

The funds that passed our test include two large-cap portfolios and two mid-cap offerings as well as one small-cap specialist, a world fund, and a so-called moderate allocation fund that combines stocks and bonds. You may recognize a number of the names here: Calamos, Dreman, Muhlenkamp. Others, such as Bruce, are more obscure.

These funds share certain traits that helped them outshine their rivals. First, all the managers you'll meet here are veteran performers. In fact, only William Frels of Mairs & Power Growth has a managerial tenure of fewer than ten years. (And as you'll see, Frels, 66, isn't exactly a neophyte.) Second, no matter how Morningstar categorizes them, most of these funds allow their managers some leeway -- the flexibility to think outside the style-box, as it were, which allows them to pursue their best ideas aggressively and hold on to their winners. That freedom, in the hands of managers such as these, produces exceptional results. Top of page

Leaders of the pack
These seven funds, which have towered over their rivals for the past 15 years, proved their mettle in booms and busts, and everything in between. Click on a fund name for FORTUNE analysis.
Fund (ticker) YTD return Net assets Exp. ratio Why we like it
Bruce (BRUFX) 31.2% $203 million 1.0% The father and son manager team have carte blanche to invest wherever they see potential gains.
Calamos Growth A (CVGRX) 47.0% $5.2 billion 1.2% Factors in economic conditions to manage risk rigorously while searching for high-growth stocks.
DWS Strategic Value A (KDHAX) 23.0% $1.6 billion 1.1% Likes to scoop up scandal-scarred and controversial stocks that others shun.
Mairs & Power Growth Inv (MPGFX) 20.3% $1.8 billion 0.7% Gets a critical edge from investing predominantly in companies based near its St. Paul headquarters.
Muhlenkamp (MUHLX) 29.1% $694 million 1.2% To limit losses, manager Ron Muhlenkamp looks for stocks with solid underpinnings.
Oppenheimer Global Opportunities A (OPGIX) 65.2% $1.8 billion 1.2% Invests in stocks that can benefit from breakthrough concepts and economic shifts.
T. Rowe Price New Horizons (PRNHX) 37.0% $5.4 billion 0.8% Finds stocks with market valuations of less than $2 billion, and sticks with them as they grow.
Data as of: November 24, 2009 Source: Morningstar
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