9
Morningstar FundInvestor
June 2
013
three- and five-year rolling returns over that stretch
didn’t once land in the category’s bottom quartile.
Roll With the Punches
Sometimes interpreting rolling returns isn’t as straight-
forward. Investors might see the three-year rolling
returns for
Oppenheimer Global Opportunities
OPGIX
topping the category
58%
of the time and hop
on board. Yet they shouldn’t overlook the
12%
of the
time it has landed in the category’s bottom quartile,
which reflects its High Morningstar Risk. That volatile
profile stems from manager Frank Jennings’ penchant
for small-cap stocks, heady growers, concentrated
sector bets, and top position sizes that at times have
bumped up against
10%
of assets. Apparently he’s
toning down his approach a notch, but it’s too soon to
tell whether the fund’s rolling returns will land more
consistently in the middle of the pack.
The three-year rolling returns for
Tweedy, Browne
Value
TWEBX
also look a little extreme, though for
very different reasons. Those rolling returns over
the past decade land in the category’s top or bottom
quartiles
85%
of the time, but take those with a
grain of salt. Over that stretch, the fund landed in the
mid-value, large-value, and (since
2009
) world-stock
categories, yet both traits are to be expected given
management’s approach. The fund’s deep-value
DNA
and focus on capital preservation mean its perform-
ance may lag quite a bit and for long stretches in up
markets, testing investors’ patience.
Yet we’d expect the fund to make up relative ground
by losing less money when the market sours. Its
23
.
4%
loss in
2008
was much lighter than the
MSCI
World’s
41
.
9%
swoon, and the fund also fared rela-
tively well in late
2011
’s downturn. A single year of
extreme outperformance or underperformance can
skew a fund’s rolling returns, but virtually all of this
fund’s top-quartile three- and five-year rolling returns
stem from its relatively strong showings in
2008
and
2011
. That, coupled with the fund’s Low Morning-
star Risk rating, suggests this fund is most suitable
for investors seeking strong downside protection, but
only those able to look past years of weak relative
returns when things aren’t as dire.
Let Some Funds Roll on By
Each of the funds above is a standout, but rolling
returns can also raise a red flag. For instance, those
for
CGM Focus
CGMFX
land in the large-blend
category’s top quartile
66%
of the time and in the
bottom quartile
29%
of the time. That may seem
like a good trade-off at first glance, but those bottom-
quartile periods have been particularly painful,
including a
48
.
2%
loss in
2008
and a
26
.
3%
loss in
2011
. Continuing on the
1
-star theme, rolling returns
for
Brandywine
BRWIX
fall in the mid-growth cate-
gory’s bottom quartile
42%
of the time, reflecting
that fund’s continuing challenges and raising the con-
cern that management’s stock-picking doesn’t have
the same edge it might have had
10
–
15
years ago.
Rolling returns are no silver bullet, but they can
be a powerful diagnostic tool, especially if used in
combination with other performance measures.
œ
Contact Michael Herbst at
Rolling-Returns Data as of
April 30, 2013.
36-Month Rolling Periods
120 Observations, 10 Years
The shading and percentages
correspond to how often the
fund’s returns landed in each
category quartile.
Fund Name
Total Ret
Ann.10
Yr USD
Total Ret
% Rank
Cat10Yr
Morningstar
Risk Rating
10 Year
Morning-
star Rating
Overall
Oakmark Global
OAKGX
10.9
14 Average
QQQQ
MFS Global Eqty
MWEFX
10.3
27 Below Avg
QQQQ
Oppenheimer Glbl Opp
OPGIX
11.9
3 High
QQQ
Tweedy, Browne Val
TWEBX
7.3
74 Low
QQQQ
CGM Focus
CGMFX
10.9
1 High
Q
Brandywine
BRWIX
4.6
99 Average
Q
Data as of May 30, 2013.
Rolling-Returns Summary
MFS Global Equity
MWEFX
Oakmark Global
OAKGX
40%
44%
16%
0%
45%
48%
6%
2%
CGM Focus
CGMFX
Tweedy, Browne Value
TWEBX
66%
4%
1%
29%
33%
8%
8%
52%
Oppenheimer Global Opp
OPGIX
58%
20%
10%
12%
Brandywine
BRWIX
15%
30%
13%
42%
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
1
2
3
4
Quartile
Quartile
