22
We are adding one Silver-rated fund and two Bronze-
rated funds and dropping three disappointing funds to
make room.
First, we’re adding a value index fund.
Schwab
Fundamental US Large Company Index
SFLNX
employs a fundamental indexing strategy rather
than the typical market-cap-weighted strategy. The
weighting of each stock is based upon cash flow,
sales, and dividends. As a result, the fund has a value
bias and a lower market cap than an index such
as the S&P
500
or Russell
1000
.
While some proponents have gotten a little carried
away with claims of their superiority to cap-weighted
benchmarks, fundamental indexes still ought to make
fine investments. This one charges
0
.
32%
—a decent
fee, though you can find value and core indexes for
cheaper. However, it has a nice low minimum invest-
ment of just $
100
.
See the facing page for more.
We’re also adding Bronze-rated
American Century
Heritage
TWHIX
. Led by David Hollond and Greg
Walsh, the fund has executed a straightforward
growth strategy well. From the start of Hollond’s
tenure in
2007
, the fund has returned an annualized
7
.
9%
versus
4
.
4%
for the average mid-growth fund.
The fund generally has done best when market
trends continue on an extended run. That’s a sure
sign that this fund still has a momentum compo-
nent to its strategy.
The managers look for companies with accelerating
earnings and revenue, and they’re willing to pay high
valuations for them. However, the fund doesn’t set
minimum levels of growth. As a result, the portfolio
sometimes holds names with growth rates that are
relatively low but that have been rising. The top hold-
ings include tech names like
NetApp
NTAP
and
LinkedIn
LNKD
alongside railways like
Kansas City
Southern
KSU
and
Canadian Pacific
CP
.
We are also adding
Vanguard FTSE All-World
Ex-US Small Cap Index
VFSVX
. It’s the cheapest
foreign small-cap index fund with a fee of just
0
.
45%
. The fund has about
16%
of assets in emerg-
ing markets.
Three Go Out
To make room, we are cutting
Harbor International
Growth
HIIGX
. As noted in Fund Manager Changes
on Page
14
, Harbor has fired Marsico manager Jim
Gendelman and replaced him with managers from
Baillie Gifford. It’s an understandable change given
Marsico’s struggles, but Baillie Gifford hasn’t been
a standout either.
We are also dropping two other momentum funds.
Brandywine Blue
BLUEX
has been on an extended
losing streak as its take on momentum just hasn’t
worked. We rate it Neutral and bid it adieu. The
fund’s returns land in the bottom decile of its peer
group for the trailing one-, three-, five-, and
10
-year periods.
We are dropping
Chase Growth
CHASX
, which
has lagged its peers over most trailing periods and
has been dropped from coverage.
Send Us Your Requests
Is there a fund you’d like to see in the Morningstar
500
? We’re all ears. Just send an email to russel.
œ
Summary of Changes
Add
Drop
American Century Heritage
Brandywine Blue
Schwab Fundamental US Lg Co Idx
Chase Growth
Vanguard FTSE All-Wld ex-US SmCp Idx Inv
Harbor Intl Growth
A Fundamental Index Fund
Joins the 500
Changes to the 500
|
Russel Kinnel
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