A New Winner on the Mutual Fund Charts

Thomas Soviero has replaced Ken Heebner at the top of the mutual fund rankings. His secret: companies with poor credit. Soviero's $4.2 billion Fidelity Advisor Leveraged Company Stock Fund averaged 15 percent annual returns for the 10 years through Mar. 31, best among 3,617 diversified U.S. equity funds tracked by Morningstar (MORN). Heebner, whose CGM Focus Fund (CGMFX) held the top position for the previous 11 quarters, slipped to ninth place with a return of 14 percent. "Debt doesn't have to be a four-letter word," says Soviero in an interview at Fidelity's Boston offices. "When it works in your favor, good things can happen."

Soviero buys stock in junk-rated companies that can produce enough revenue to pay down debt or make smart acquisitions. He favors industries whose economics are improving. "It's easier to swim with the tide at your back," says Soviero, who occasionally buys investment-grade companies.