22
We are adding three funds to the Morningstar
500
this month.
Gold-rated
MFS Global Equity
MWEFX
is worth
a good look if you invest through a full-service broker.
David Mannheim and Roger Morley have built a
strong record by investing in high-quality companies
like
Nestle
NESN
and
Diageo
DGE
. They look for
steady growth at modest valuations. That’s not too
different from strategies you’ll see at other funds,
but they have executed it quite well.
The fund has returned an annualized
8
.
6%
compared
with
6
.
2%
for its
MSCI
World Growth benchmark
from its
1993
inception through February
2013
. Its
three-, five-, and
10
-year returns are all in the third
quartile of the world-stock category.
We are also adding
Arbitrage
ARBFX
fund. This
market-neutral fund seeks to extract the difference
between a merger bid and a stock’s current price
by shorting the buyer’s stock and buying the target
stock. If the deal goes through at or above the
offering price, the fund makes a nice return. If it
doesn’t go through, the fund loses.
This arbitrage approach produces returns that typically
look pretty good when the stock market dives. For
example, it lost
0
.
63%
in
2008
and gained
4
.
5%
in
2011
. See the facing page for more.
Finally, we are adding
Virtus Foreign Opportunities
JVIAX
. It’s run by our reigning International-Stock
Fund Manager of the Year, Rajiv Jain. This Silver-rated
load fund has delivered outstanding risk-adjusted
returns. Since Jain took over in
2002
, the fund has
produced annualized returns of
10
.
2%
versus
6
.
2%
for its benchmark. The fund outperformed four fifths
of its peers over the past
10
- and
15
-year periods, but
its Morningstar Risk rating is low.
Jain seeks well-run companies with low debt and
transparent accounting. The fund typically owns
50
–
60
stocks, and it takes a patient approach. It has
generally held up better than the competition in
difficult markets while posting middling or lagging
performance in sharp rallies.
Three Go Out
To make room, we are dropping three funds.
Legg
Mason Capital Management Value
LGVAX
is a Neutral-rated
1
-star fund that continues to under-
whelm with manager Sam Peters, just as it did in
the latter stages of Bill Miller’s tenure.
Artio International Equity II
JETAX
figures to have
new managers after Aberdeen’s purchase of Artio
goes through.
Polaris Global Value
PGVFX
is being dropped from
Morningstar’s coverage list.
Yield for Stock Funds
We are showing
12
-month yield for equity and
allocation funds and
30
-day yield for bond funds.
Because stock and allocation funds don’t make
monthly payouts, the longer time period makes sense
for them. However, for bond funds, the
30
-day
measure is better because it captures shifts in bond
yields. You will see
12
-month yield and
30
-day
yield headings in the data pages, so it should be clear
which is which.
œ
Summary of Changes
Add
Drop
Arbitrage
Artio International Equity II
MFS Global Equity
Legg Mason Capital Mgmnt Value
Virtus Foreign Opportunities
Polaris Global Value
Rating Change
To
From
Arbitrage R
´ •
Clipper
• Œ
Fidelity Floating Rate High Income
ˆŒ
GoodHaven
´ ‰
Janus Global Research T
´ •
Metropolitan West High Yield Bd M
•
—
MFS Global Joins the 500
Changes to the 500
|
Russel Kinnel
What is Morningstar
FundInvestor
500
?
The Morningstar FundInvestor
500
features the industry’s
best and most notable funds.
Use the list to get new
investment 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.
