18
I told you about the top-performing Morningstar
500
funds in
2013
. Now it’s time to look at the worst
relative performers. There were none in the bottom
percentile, but there were two in the next-to-worst
and three more in the third-from-worst.
The theme of most of these five laggards was caution.
In a year when stocks skyrocketed, it’s not surprising
that conservative funds lagged. Two of the funds have
big cash stakes.
Another theme is exposure to natural-resources plays
of one kind or another. Slowing growth in China
and lower inflation in general hit natural-resources
stocks hard.
Appleseed
APPLX
This focused, socially responsible investing fund is
more aggressive than cautious. Its problem is pretty
obvious as it’s right at the top of the portfolio. The
fund has a
13%
position in
Central GoldTrust
GTU
,
a closed-end fund that invests only in gold bullion.
Ouch. That fund lost
26%
of its value in
2013
. Apple-
seed also owns a
5%
position in
Sprott Physical
Gold Trust
PHYS
, which lost about the same amount.
The rest of the portfolio was pretty respectable, but
the fund’s
19
.
1%
return put it in the next-to-last
percentile of mid-value funds. Despite a dismal
2013
,
the fund is still well ahead of the S
&
P
500
since its
2006
inception.
Royce Low Priced Stock
RYLPX
Manager Whitney George had a rough year as the
fund gained just
12
.
9%
. This Silver-rated fund had a
sizable basic-materials bet to the tune of about
14%
.
While that’s a fairly small amount of the portfolio,
even a small stake in a money-losing sector can kill
your performance when just about everything else
is up
20%
–
40%
. George has trimmed the bet a little,
but the returns are still weak. The fund isn’t simply
a bull-market laggard, though. It was middling in
2008
but surged in the rally years of
2009
and
2010
only to
get smacked in the tough year of
2011
, as well as the
past two years. The fund’s
15
-year numbers are still
strong, but recent returns have been dismal. It needs
a rally in materials to turn around.
Amana Growth
AMAGX
The first part of any performance story about an
Amana fund is always the fund’s lack of financials.
It follows Sharia principles, which forbid it to invest
in companies that loan money at interest. It sailed
through the financial crisis but has a rough go of it
when financials rally, as in
2013
. The fund returned
a modest
22
.
8%
because of a lack of financials expo-
sure and some sluggish tech names like
SAP
SAP
and
Apple
AAPL
. Retailer
PetSmart
PETM
also held
it back.
Virtus Foreign Opportunities
JVIAX
This fund’s defensive consumer names and over-
weighting in India held returns to a meager
5
.
4%
.
In addition, Rajiv Jain hasn’t been able to find many
sustainable growth stocks in Japan and China.
Missing out on Japan really stung last year. Still, the
fund has thumped peers and the
MSCI
EAFE
since
Jain took the helm in
2002
.
First Eagle US Value
FEVAX
It’s not surprising that this fund would lag in a rally.
Although Jean-Marie Eveillard is no longer running
the fund, his belief in putting safety first remains
a driving force at the fund. It still holds some cash
and gold for a rainy day, and it tends to own cheap
defensive names that management hopes will bear
up in a down market. Some of its defensive names
like
Microsoft
MSFT
and
Comcast
CMCSA
did just
fine, but some value tech stocks and some energy
names held the fund back. Thus, the fund gained a
relatively modest
16
.
9%
in
2013
. The good news
is that the amount it lagged the S
&
P
500
by last year
was matched by the amount it outperformed in the
bear market.
œ
A Blend of Materials and Caution Led
These Funds to Weak 2013 Returns
Tracking Morningstar Analyst Ratings
|
Russel Kinnel
What Are Morningstar
Analyst Ratings?
Our ratings are chosen for long-
term success. Analysts assess
a fund’s competitive advantages
by analyzing people, process,
parent, performance, and price.
They do rigorous analysis and
then submit their ratings to a
committee that vets their work
for thoroughness and consistency.
