JPMorgan Equity Income Fund

When it comes to picking stocks, quality trumps timing, says Clare Hart, the lead manager of JPMorgan Equity Income (OIEIX). "With a quality company, a lot of times people will say, 'That's interesting, but I don't know what the catalyst is -- how are you going to make money on the stock?' " notes Hart. Her perspective: Just invest. With quality companies, it's worth the wait for the earnings to come. And based on her fund's performance, Hart seems to know what she's talking about. Over the past three years, $2.7 billion-asset JPMorgan Equity Income has returned an annualized 15.61%. That's tops among U.S.-registered, domestic equity-income funds, according to Lipper.

Hart initially invests in companies with at least a 2% dividend yield, though the fund's yield has now dipped to 1.86%. She shuns the highest-yielding stocks because she wants to know that her portfolio companies are reinvesting enough to grow earnings and to sustain or increase dividends. "Instead of squeezing every last penny out of companies, we really try to think holistically," she says. These days, Hart sees opportunity in the consumer discretionary and financial sectors. They're full of the sorts of companies that impatient investors overlook, she explains.

Source: Baron's

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