22
We’re swapping bond funds in the Morningstar
500
.
Vanguard Total International Bond Index
VTIBX
goes in and
American Funds American
High Income
AHITX
goes out.
At
13
months old, Vanguard Total International Bond
Index is a fairly new fund, but it’s already up to
$24
.
3
billion. With an expense ratio of just
0
.
23%
for
Investor shares and
0
.
20%
for Admiral, this is a
very cheap way to get exposure to foreign debt.
The fund hedges its currency risk. By hedging away
currency exposure, the fund significantly reduces
volatility as currency typically accounts for a good
deal of the volatility in a foreign bond fund. How-
ever, the drawback is that you don’t get any foreign-
currency exposure if you are looking to diversify
away from the dollar.
If you do want foreign-currency exposure from your
foreign bond fund, consider
PIMCO Foreign Bond
Unhedged
PFBDX
.
Meanwhile, to make room I’m dropping American
Funds American High Income Trust. We rate this huge
2
-star fund as Neutral because we’ve been unim-
pressed by its strategy and execution. Although the
fund has had its moments, it lost more than its peers
in
2008
and its
10
-year returns are merely middling.
New Data on MFI site
We have added
15
-year returns to the
data pages. That takes you back to the
2000
–
02
bear market, so it’s pretty interesting. To
find them, go to the FundInvestor
500
tab and
then click on a category.
Some of the top returns you’ll see belong to funds like
Oakmark Select
OAKLX
,
FPA Crescent
FPACX
,
and
AMG Yacktman
YACKX
. But maybe more note-
worthy are those where the five- or
10
-year returns
are less impressive. Provided that the manager was
there the whole
15
years, you can take heart that
the fund may be a decent bet for a rebound.
Bridge-
way Ultra-Small Company Market
BRSIX
is
one of the more dramatic entries with bottom-quartile
10
-year returns but top-quartile
15
-year returns.
It’s a micro-cap fund that naturally reflects when
micro-caps are in or out of favor.
American Century Equity Income
TWEIX
has a
middling
10
-year record but strong
15
-year returns.
That’s really a reflection of its cautious positioning.
If you include the earlier bear market, the fund’s
charms are now more apparent.
Royce Low-Priced Stock
RYLPX
is another
fund with brilliant
15
-year returns and lousy
10
-year figures.
On the flip side, there are some funds with lousy
15
-year returns that you might find surprising.
The closed
Loomis Sayles Small Cap Growth
LCGRX
has top-decile
10
-year returns but bottom-
decile
15
-year figures. However, managers Mark
Burns and John Slavik are only on the hook for
the
10
-year returns as they started in April
2005
.
Janus Enterprise
JAENX
likewise has bad
15
-
year results and solid
10
-year results. However, Brian
Demain has been at the helm as lead manager
only since
2007
and as assistant manager since
2004
. So I wouldn’t be discouraged by the dismal
15
-year return.
œ
What is Morningstar
FundInvestor
500
?
The Morningstar FundInvestor
500
features the industry’s
best and most notable funds.
Use the list to get new in-
vestment ideas and track the
funds you already own.
FundInvestor
subscribers have
access to one-page monthly
reports on all 500 funds on
mfi.morningstar.com. Just
type in the name or ticker of
the fund in the search box.
Vanguard Total International Bond Joins
the M500
Changes to the 500
|
Russel Kinnel
Summary of Changes
Add
Drop
Vanguard Total Intl Bd Idx Inv
American Funds American Hi Inc Tr
