13
Morningstar FundInvestor
January 2
014
Leaders
Oakmark
OAKMX
Good stock picks in the tech sector and an over-
weighting to the rebounding financials sector helped
push this fund to the front of the pack in
2013
. The
fund returned
37
.
3%
in
2013
, reaching the large-blend
category’s top decile. Top contributors included
electrical component manufacturer
TE Connectivity
TEL
and
MasterCard
MA
—holdings since
2007
and
2010
—which gained
51%
and
71%
, respectively,
during the year. The fund also had a boost from
top-
10
holding
FedEx
FDX
, which gained more than
50%
during
2013
as the firm increased margins
and captured more of its clients’ shipping budgets.
Fidelity Diversified International
FDIVX
After a stretch of middling performance during the mid-
to late-
2000
s, manager Bill Bower has led this mutual
fund to a second straight year of peer-beating results.
The fund’s
25
.
2%
return in
2013
topped the bench-
mark
MSCI
EAFE
Index’s gain by more than
2
.
5%
and
outpaced most foreign large-blend peers. The fund
benefited from Bower recently increasing the fund’s
stake in financials, believing valuations in the sector
have reached a bottom. The fund’s second-largest
holding, Japanese financial-services group
Orix Corp-
oration
IX
, gained more than
90%
during
2013
.
Bower’s cyclical picks also paid off, with
Galaxy Enter-
tainment Group
GXYEY
, a casino and resort oper-
ator in Macau, posting triple-digit gains in
2013
.
Vanguard Tax-Managed Balanced
VTMFX
This fund’s elevated equity stake relative to conserva-
tive-allocation peers helped in
2013
’s rising markets.
The fund splits its assets evenly between a basket of
high-quality municipal bonds and a basket of stocks
with a lower dividend yield than the Russell
1000
Index to reduce the tax burden for shareholders. The
muni-bond side was a drag on returns, but the equity
weighting overcame that handicap. The fund has
consistently outpaced its typical peer over longer
stretches. Its
14
.
3%
return in
2013
placed it ahead
of nearly all peers.
Laggards
BBH Core Select
BBTEX
Despite gaining
26
.
5%
in
2013
, this large-blend fund
lagged more than
85%
of its peers in part because
of a sizable cash stake posing a headwind. The fund’s
managers are having difficulty finding solid busi-
nesses with strong cash flows trading at discounts to
their estimated intrinsic value. In turn, they’re hold-
ing a double-digit cash stake, which is higher than
normal. Holdings such as medical instrument firm
Baxter International
BAX
and retailer
Target
TGT
also weighed on results during the year, as they
gained just
7
.
2%
and
9
.
6%
in
2013
, respectively.
Scout International
UMBWX
This foreign large-growth fund struggled from a poorly
timed move into Japanese stocks in
2013
. Manager
Jim Moffett increased the fund’s traditionally low
stake in Japan—but not until later in the year, after
Japan’s early-year rally had boosted peers and the
MSCI
EAFE
Index benchmark. Materials sector hold-
ings also detracted from returns, with Chilean chem-
ical and mining company
Sociedad Quimica y
Minera de Chile
SQM
losing half its value in
2013
.
While long-term results remain strong, this fund’s
13
.
1%
gain in
2013
notably lagged the benchmark’s
22
.
8%
return.
Fidelity Strategic Real Return
FSRRX
This fund, which is designed to provide inflation pro-
tection, lost money in
2013
as inflation remained
relatively tame. The fund’s stake in slumping commod-
ities and U.S. Treasury Inflation-Protected Securities
(more than
50%
of assets combined as of September
2013
) contributed to its
2
.
2%
loss and bottom-decile
showing versus conservative-allocation peers in
2013
.
Other inflation-fighting allocation funds have suffered
similar setbacks.
œ
Contact Flynn Murphy at
Ten Worst-Performing Funds
Fund Name
YTD Cat Rank %
Appleseed
99
Royce Low Priced Stock Sv 99
Amana Growth Investor
98
First Eagle US Value A 98
Virtus Foreign Opportunit
98
American Century Equity I
97
FPA Capital
97
Fidelity Export & Multina 97
GoodHaven
97
Royce Micro-Cap Invmt
97
Ten Best-Performing Funds
Fund Name
YTD Cat Rank %
Artisan International Val
1
Berwyn Income
1
Dodge & Cox Balanced
1
Fairholme Focused Income 1
Morgan Stanley Focus Grow 1
Skyline Special Equities
1
T. Rowe Price Media & Tel
1
Third Avenue Real Estate 1
Vanguard Capital Value In 1
Vanguard Precious Metals 1
Oakmark Fund Finishes 2013 on Top
Leaders & Laggards
|
Flynn Murphy
