22
Three Vanguard funds are being merged away:
Vanguard Developed Markets Index
VDMAX
,
Vanguard Tax-Managed Growth & Income
VTGLX
, and
Vanguard Growth Equity
VGEQX
. All
three funds are now closed to new investment.
Vanguard Tax-Managed International
VTMGX
is going to survive, and Vanguard Developed Markets
Index will merge into it. However, the fund will be
renamed Vanguard Developed Markets Index and will
be run like the merging Vanguard Developed Markets
Index without the tax management.
That leaves us with three openings. Here’s how we’ve
filled them.
First, a Vanguard Fund
Vanguard Managed Payout Growth & Distribu-
tion
VPGDX
is designed to help retirees manage
their withdrawal strategies. This fund, which has a
Morningstar Analyst Rating of Bronze, aims to pay
out
4%
each year. The fund invests in a mix of bonds
and stocks through a mix of Vanguard funds, most
of which are passively managed.
However, it isn’t as plain-vanilla as the firm’s target-
date funds. The fund has a market-neutral sleeve
and commodities, the former to boost income and the
latter to keep pace with inflation.
It carries a $
25
,
000
minimum because it is intended
to be a core fund for managing income. See facing
page for more details.
Aston/Montag & Caldwell Balanced Joins
Aston/Montag & Caldwell Balanced
MOBAX
is
an appealing mix of growth stocks and bonds. It
takes the same growth stock strategy you know from
Aston/Montag & Caldwell Growth
MCGFX
and
adds in a high-quality bond portfolio. The bond side is
half corporates, plus government bonds and Trea-
suries. Run by Ron Canakaris and Helen Donahue, the
fund is appealing if you want exposure to growth
stocks but fear the volatility of a pure equity fund.
A Mostly Passive Emerging-Markets Fund
Parametric Emerging Markets
EAEMX
is the third
new fund to join the Morningstar
500
. It’s a passive
emerging-markets fund with an emphasis on frontier
markets. Frontier markets are the smaller, more vol-
atile end of emerging markets. Parametric argues that
they add diversification. The fund tries to handle the
limited liquidity in markets like Slovenia and Columbia
by keeping position sizes small.
In a sense, you get a flatter version of an emerging-
markets index fund. There is less in the biggest
countries in emerging markets and more in the little
guys. The fund is a little like some
DFA
funds in that
it doesn’t tightly track an index, but it also eschews
stock-picking. It aims to minimize trading, and it buys
the largest companies in each country. The fund
charges
1
.
42%
, which is
OK
for an emerging-markets
fund but kind of high for a passive fund. We rate it
Bronze, and it has returns since
2006
that are pretty
close to the category average.
FMI Focus Now Broadview Opportunity
FMI
Focus has been renamed
Broadview Oppor-
tunity
BVAOX
to reflect the change in advisor.
The managers haven’t changed, but the longtime
subadvisor, Broadview, now controls the fund.
We maintain our Silver rating on the fund.
œ
Summary of Changes
Add
Drop
Aston/Montag & Caldwell Balanced Vanguard Developed Mrkts Indx
Parametric Emerging Markets
Vanguard Growth Equity
Vanguard Mngd Payout Grw& Dst
Vanguard Tax-Managed Grw& Inc
Category Change
From
To
Dynamic US Growth
Large Growth Mid-Cap Grwth
Janus Growth & Income
Large Growth Large Blend
Janus Overseas
Frgn Lg Growth Frgn Lg Blend
Oakmark Equity & Income
Moderate Alloc Aggressive Alloc
Invesco Equity and Income
Moderate Alloc Aggressive Alloc
Vanguard and Montag Funds
Join the 500
Changes to the 500
|
Russel Kinnel
What is Morningstar
FundInvestor
500
?
The Morningstar FundInvestor
500
features the industry’s
best and most notable funds.
Use the list to get new in-
vestment ideas and track the
funds you already own.
FundInvestor
subscribers have
access to one-page monthly
reports on all 500 funds on
mfi.morningstar.com. Just
type in the name or ticker of
the fund in the search box.
