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NUMBER CRUNCHER

Fifteen U.S. equity funds that stole the show in 2013 Add to ...

We look for the best performing U.S. equity and U.S. small- to mid-cap equity funds for one year ended Dec. 31

What are we looking for?

Despite a government shutdown and uncertainty tied to government stimulus, the S&P 500 Composite Total Return Index still managed to gain more than 38 per cent last year. Which funds focused on the United States performed best?

The screen

We screened funds in the U.S. equity and the U.S. small- to mid-cap equity fund categories for one year ended Dec. 31. U.S.-dollar, segregated, pooled, duplicate version and accredited-investor funds were excluded. We also omitted funds focused on a certain professional group and those with a minimum initial investment greater than $25,000.

What did we find?

Funds focused on smaller names in the United States stole the show in 2013.

The Formula Growth Fund was the top performer with a 59.8 per cent gain in the year to Dec. 31.

Many investors were expecting macro concerns to negatively affect the market in 2013, said Randy Kelly, the Montreal-based fund’s portfolio manager. But although there was lots to worry about, the actual effects were limited.

Mr. Kelly attributes much of Formula Growth’s success to a focus on management teams and individual company strengths. He spends much of his time on the road meeting with companies and looking for new investments.

There may still be room to run in 2014, but investors will have to know where to look, Mr. Kelly said.

“You might be more discriminating,” Mr. Kelly said. “If you ski, it’s like going from a blue square [hill] to a black diamond … You’re going to have to bob and weave to find the right stories and the right stocks.”

Consumer discretionary and energy are two sectors where Mr. Kelly will be looking for the right investment opportunity in 2014.

He also likes the technology space, which he says has been “maligned and tough” in recent years.

Two other U.S. small- to mid-cap funds rounded out the top three in the screen.

The Fidelity Small-Cap America fund gained 54.2 per cent in the period and posted the best three- and five-year track records. The CIBC U.S. Small Companies climbed by 50.7 per cent in the period.

15 Best-Performing U.S. Funds

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