The S&P 500 stock index has returned 10.2% annually during the past three years and the Barclays Capital Aggregate bond index only returned 5.7%.
Investors have been pouring into stocks that produce dividend payments. Reliable performers reward shareholders with quarterly dividend checks year after year.
Many dividend companies are mature businesses with a rich cash flow.
A growing number of flexible mutual funds advocate a different strategy—selling stocks and shifting to cash when conditions warrant.
For years, many financial advisors gave clients standard advice: Buy a diversified portfolio of stocks and bonds and hold it through up and down markets.
By weighing stocks on basic financial measures, fundamental funds are beating traditional benchmarks.