3
Morningstar FundInvestor
January 2
014
supported by Colin Hudson, Matt Logan, and Edward
Wojciechowski, who have good resumes for the
task at hand, there’s plenty of appeal left in this fund.
FPA Perennial
FPPFX
is an appealing mix of growth
and value characteristics run by Eric Ende, Steve
Geist, and Greg Herr. They look for small- and mid-cap
stocks that have high returns on capital, low debt,
and potential for above-average growth. They have
produced strong long-term returns with modest
risk. The fund has only $
326
million in assets in part
because it was a load fund with no salesforce.
However, it was recently converted to no-load, so
it’s worth a good long look.
LKCM Equity
LKEQX
is another old-school fund that
a lot of folks have missed. It’s a large-cap fund that
emphasizes quality companies with low debt. That
leads to stocks like
Monsanto
MON
,
Apple
AAPL
,
and
Honeywell
HON
. As you might guess, the fund
held up nicely in
2008
and
2011
, though it lagged
a bit in
2013
. Lead manager Luther King is a very
experienced investor backed by a surprisingly large,
35
-member investment team. Thus, you have a
small fund with low fees but the backing of a big
group of skilled professionals.
American Funds Capital World Growth & Income
CWGIX
is still a giant, but it has been heavily
redeemed of late along with many of its fellow Amer-
ican Funds. This fund’s appeal hasn’t changed a
lick, however. American has outstanding global
analyst coverage and low costs. This fund has posted
uninspiring five-year returns, but it has earned
excellent
10
- and
15
-year results. Sometimes, the
best opportunities are right there under our noses.
If you have this fund in your
401
(k) or it’s offered
through your advisor, you’re in luck.
Aston/Montag & Caldwell Growth
MCGFX
is well-
positioned if
GMO
is correct that U.S. high-quality
stocks are the place to invest over the next several
years. Ron Canakaris and his team have long favored
such issues. This fund, which has disappointed in
the past couple of years, has historically rebounded
nicely from periods of underperformance. More
important, its emphasis on quality has made it a fairly
stable investment in troubled times.
Royce Special Equity Multi-Cap
RSMCX
isn’t tech-
nically forgotten as it’s still pretty young. But inves-
tors have known about Charlie Dreifus’ accounting
chops for eons and they’ve overlooked this fund,
which has a mere $
180
million to its name. Dreifus
owns a focused portfolio of stocks that meet rigor-
ous tests for balance-sheet health, cash flow, and
valuation. Historically his funds have held up well
in downturns, and I’d expect the same here.
Dodge & Cox Stock
DODGX
isn’t small, but it’s one
of the best funds to get more than $
1
billion in redemp-
tions in
2013
and $
10
billion the past three years.
Dodge simply does value investing well and charges
its shareholders little. You’ll be hard-pressed to find
more experience and continuity than at Dodge
&
Cox.
Managers own the firm and have to sell back after
they retire, thus ensuring stability for the long term.
It’s a great core holding for patient investors.
Cash
When asset prices rise, cash makes sense as a way
to be ready for the next downturn. Of course, your
current return on cash is going to be near zero until
something gets cheap, and then you might enjoy
a very nice return. As Warren Buffett likes to say, in
investing you don’t have to swing at a pitch you
don’t like. You can take a thousand pitches before
you find one you like.
How Have My Past Picks Fared?
Come to
during January as I’ll
walk through how my past buying recommendations
have fared.
œ
What the Experts Say
Bill Gross
Stay on the short end of the yield curve. The Fed won’t hike rates until 2016.
Brian Rogers
Few things are cheap. Emerging markets are among the better opportunities.
Bob Johnson
Economic growth will remain moderate in the 2.0% to 2.5% range in 2014.
David Marcus
The most attractive opportunities remain in the developed European markets.
Jason Hsu
Raising equity weightings in 2014 will likely prove extraordinarily costly.
Dan Fuss
We are greatly reducing our position in long maturity, very high-quality debt.
Dennis Stattman
Japanese equities offer the best risk/reward trade-off.
Jeffrey Gundlach
Emerging-markets bonds should outperform U.S. high-yield bonds.
