(PUB) Investing 2015

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9 Morningstar FundInvestor June 2015
list. Morningstar has maintained a Bronze rating on
the fund, demonstrating confidence that Linehan is
well-equipped to manage the transition.
T. Rowe Price International Stock PRITX
This foreign large-growth fund also got a new
manager recently, but Richard Clattenburg, taking
over for Bob Smith after nine years on the fund,
is less experienced. Clattenburg has been a named
comanager on the fund since 2010 and can lean
on Smith throughout 2015.
This offering still has its strong points, including
reasonable fees and an experienced team of
analysts and portfolio managers. But Morningstar
has lowered the fund’s Analyst Rating to Neutral
to reflect a lower level of conviction in Clattenburg’s
ability to run the show successfully.
Performance Has Dipped
The returns test for the Fantastic funds is a strict one.
The offerings need to beat their prospectus benchmark
over the lead manager’s tenure, a test that’s typically
tougher than clearing a category average.
American Funds American Mutual AMRMX
This large-value fund’s sturdy portfolio fell behind
the benchmark in 2014 by 0.84 percentage points,
which is a relatively small shortfall and still strong
enough to finish in the category’s top decile.
Even so, the benchmark shortfall put the fund a
hair behind the Russell 1000 Value Index for
the period beginning in January 2006 , the start
date for the fund’s longest-serving managers.
Fundholders have good reason to stick around,
however. The fund still receives a Gold rating for its
proven, dividend-focused approach, reasonable
fee, and tested management team. The strategy has
lagged in some more-speculative rallies and holds
up best during market declines, such as 2008. This
one is a keeper.
FPA Capital FPPTX
Longest-serving manager Dennis Bryan put up strong
relative returns at this mid-value fund in the four years
after he joined the management team in November
2007, but this fund fell behind in 2012 and has had
trouble picking itself back up. It trailed the Russell
Mid Cap Value Index by double digits in 2013 and 2014,
erasing the fund’s impressive gains coming out of
the financial crisis.
This fund is no stranger to periods of underperformance,
but the current management team hasn’t endured a
similar period. As such, Morningstar downgraded the
fund in May 2015 to Bronze from Silver, a sign of
waning conviction. Patient investors are likely to fare
well here over the long term but don’t expect a
smooth ride.
Mairs & Power Balanced MAPOX
This moderate-allocation offering was subject to a
new performance test for the 2015 Fantastic list.
Previously we considered longtime manager Bill Frels’
record, but when he retired at the end of 2014,
performance rested with comanager Ron Kaliebe,
who has been assigned to the fund since 2006 .
Performance over Kaliebe’s tenure has been strong
overall, but the fund did trail the benchmark in
five of the nine calendar years.
Morningstar has maintained a Silver rating on this
fund through the management change, indicating
conviction in Kaliebe’s ability to maintain the fund’s
prudent approach. The investment process
stresses sustainable competitive advantages
and above-average earnings growth.
Vanguard Wellington VWELX
One of our favorite funds, Gold-rated Vanguard
Wellington, fell out of the Fantastic 50 . The reason is
that its returns since the end of 2002 now lag the
S& P 500. Yes, an allocation fund with a pure equity
benchmark has a very high bar to overcome, but
those are the rules I set out. Wellington’s past 12
months saw the fund produce returns that were
about half of those of the S&P 500. That was pretty
good for its peer group but not enough to keep it
ahead from the beginning of Ed Bousa’s tenure. So, it
is out of the Fantastic 50 but still a keeper. K
Contact Laura Lutton at