(PUB) Morningstar FundInvestor - page 776

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strained Bond and other non-traditional-bond funds
have also taken in huge sums this year.
Price Risk
Harken back to 2000–02 and you know the story
about equity price risk. The higher a multiple a stock
is trading at, the more vulnerable it is to disappoint-
ment. In 2000 , tech stocks got bid up to remarkably
high levels as though their growth would somehow
just keep accelerating. At the same time, tech specu-
lation drew off investment from the rest of the
world so that other sectors were pretty cheap. Thus,
the bear market left value stocks nearly unscathed,
but the Nasdaq lost 80% from top to bottom. There
are quite a few valuation measures, each with
pluses and minuses, but I’ll use price/earnings based
on the trailing 12 months. I have excluded real
estate funds from results because P/E for REITS isn’t
very meaningful.
Leading the high P/E funds is Dynamic US Growth
DWUGX (P/E 41) , an aggressive large-growth fund,
which always packs lots of price risk. Next is Brown
Capital Management Small Company BCSIX
(P/E 31) . While the fund does factor in price when
buying a stock, the managers are very patient with
their stocks even as the valuations rise.
Next is Touchstone Sands Capital Select Growth
PTSGX with a P/E of 29. The fund is on a roll of late,
but it, too, isn’t shy about owning higher P/E stocks.
On the low end is an eclectic group ranging from
Fairholme FAIRX (P/E 8) to Third Avenue Value
TAVFX (P/E 9 ) and DFA Emerging Markets Val-
ue DFEVX (P/E 9). If those funds are a bit extreme for
your tastes, consider Vanguard International
Value VTRIX and Tweedy, Browne Value TWEBX
or Vanguard US Value VUVLX .
Market Risk
The greater a fund’s exposure to the stock market,
the worse it will likely do in a bear market. Certainly
that’s a risk with CGM Focus CGMFX, which is
currently running 130% net long owing to leverage.
Manager Ken Heebner has the flexibility to also
go short, so quite a wide range of outcomes are pos-
sible in the next bear market.
A Tour of Risk in the Morningstar 500
Continued From Cover
Market Risk Ticker
Morningstar
Analyst Rating
Morningstar
Category
Morningstar
Rating Overall
Asset Alloc
Equity % (Net)
CGM Focus CGMFX ‰ Large Blend Q 128.22
Dynamic US Growth DWUGX — Large Growth QQQQ 100.00
Janus Overseas JAOSX • Foreign Lg Growth QQ 100.00
Columbia Acorn USA AUSAX — Small Growth QQQ 100.00
Matthews Pacific Tiger MAPTX ΠPac/Asia ex-Jpn Stk QQQQ 99.95
Marsico Focus MFOCX ‰ Large Growth QQQ 99.93
Weitz Hickory WEHIX • Mid-Cap Blend QQQQ 68.27
GoodHaven GO ODX ´ Large Value — 62.16
Man. & Napier Pro-Blnd Cnsrv Tm EXDAX ΠCnsrv. Alloc. QQQQ 32.51
Berwyn Income BERIX • Cnsrv. Alloc. QQQQQ 28.99
Vanguard LifeStrategy Inc VASIX ΠCnsrv. Alloc. QQQ 19.82
Hussman Strategic Total Return HSTRX ‰ Cnsrv. Alloc. QQ 17.63
Fidelity Strategic Real Return FSRRX ´ Cnsrv. Alloc. QQ 13.78
Credit Risk Ticker
Morningstar
Analyst Rating
Morningstar
Category
Morningstar
Rating Overall
Avg Credit
Quality
Vanguard Conv. Securities VCVSX ΠConvertibles QQQQ B
Janus High-Yield JAHYX ´ High-Yield Bond QQQQ B
Eaton Vance Inc. Fund of Boston EVIBX • High-Yield Bond QQQQ B
Metropolitan Wst Hgh Yld Bnd MWHYX • High-Yield Bond QQQQ B
Greenspring GRSPX — Moderate Alloc. QQQQ B
Eaton Vance Floating Rate EVBLX ΠBank Loan QQQQ B
Franklin Income FKINX ´ Cnsrv Alloc. QQQQ B
Fidelity Capital & Income FAGIX • High-Yield Bond QQQQ B
Vanguard Long-Term Treasury VUSTX • Long Government QQQQ AAA
Vanguard Inflation-Prtct Secs VIPSX ΠInflation-Prtct Bnd QQQQ AAA
Vanguard Interm-Tm Treasury VFITX • Interm. Gov. QQQQ AAA
Interest-Rate Risk Ticker
Morningstar
Analyst Rating Morningstar Category
Morningstar
Rating Overall
Avg Eff.
Duration
Vanguard Long-Term Treasury VUSTX • Long Government QQQQ 15.32
Vanguard Long-Trm Invst-Grd VWESX ´ Long-Term Bond QQQ 13.61
Vanguard Inflation-Prtct Secs VIPSX ΠInflation-Prtct Bnd QQQQ 8.31
PIMCO Frgn Bnd (USD-Hedged) PFODX • World Bond QQQQ 7.60
PIMCO Frgn Bnd (Unhedged) PFBDX • World Bond QQQ 7.59
Fidelity Tax-Free Bond FTABX ΠMuni National Lg QQQQ 7.30
PIMCO Unconstrained Bond PUBDX ´ Nontraditional Bnd QQQ 1.24
Vanguard Short-Term Tx-Ex VWSTX • Muni National Shrt QQ 1.04
PIMCO Short-Term PSHDX ΠUltrashort Bond QQQQ 0.95
Wells Fargo Adv S/T Muni Bd STSMX ´ Muni National Shrt QQQQQ 0.87
Eaton Vance Floating Rate EVBLX ΠBank Loan QQQ 0.15
High
Low
High
Low
High
Low