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13 Morningstar FundInvestor October 2015
Leaders
T. Rowe Price Capital Appreciation PRWCX
This fund has a Morningstar Analyst Rating of Gold
and has posted fabulous performance thus far in 2015,
besting 99% of its moderate-allocation peers. Lead
manager David Giroux made a good call keeping dura-
tion low. He also boosted equity weights of consumer
staples and utilities, while paring energy and financial
services. Two stock picks that have been winners are
AutoZone AZO, which has beaten analysts’ estimates
for six straight quarters, and financial-services tech-
nology leader Fiserv FISV.
Fairholme FAIRX
This Silver-rated fund has topped 96% of its large-
value peers since the start of 2015—a marked
turnaround relative to a bad 2014. Thus far in 2015,
large insurer American International Group AIG,
which is the fund’s biggest investment at a whopping
29% of assets, has meaningfully outperformed the
broader market amid strong investment performance
and the favorable conclusion of a lawsuit filed by
pre-financial crisis shareholders. AIG’s strength has
more than offset weakness at asset play Sears
Holdings SHLD , which is down 31.5% this year, and
Bank of America BAC.
Oppenheimer Global OPPAX
This Silver-rated fund has outperformed 87% of com-
petitors in its world-stock category in 2015 through
strong stock selection from names in the United States
and abroad. Smartphone component producer Murata
Manufacturing has been a winner. So have other tech
and health-care names including programmable logic
device maker Altera ALTR, which is the target of an ac-
quisition by Intel INTC, and health-benefits giant
Aetna AET, which recently announced a bid to acquire
Humana HUM. Although manager Rajeev Bhaman
and his team court slightly more volatility than the fund’s
average peer, that volatility hasn’t harmed the fund,
which continually has outperformed its category and
the MSCI All World Stock Index.
Laggards
Berwyn BERWX
With a 13.2% loss in 2015, this fund is lagging 92%
of its competitors in the domestic small-blend Morn-
ingstar Category. While the fund has posted strong
performance over longer periods, its struggles this
year can be attributed to poor stock selection, as
the fund has had a meaningful stake in the struggling
materials sector and has been hurt by investments
in toymaker Leapfrog LF, services and solutions firm
Unisys UIS, which has shed 59% this year, and
offshore oil rig fabricator Gulf Island Fabrication GIFI .
Oakmark Global OAKGX
This Gold-rated fund has trailed 89% of its world-stock
peers in 2015, losing 9.7% for the year. The fund
has substantial overweightings in the financials and
technology sectors, and certain bets in those indus-
tries, including Oracle ORCL, Intel INTC, and Franklin
Resources BEN, have struggled this year. Other
weak performers have included Union Pacific UNP,
Applied Materials AMAT, Tenet Healthcare THC,
and General Motors GM. Managers Clyde McGregor
and Rob Taylor have strong contrarian instincts and
pay little attention to their benchmark or the category
norm, which can mean occasional periods of
calendar-year underachievement. However, the fund’s
long-term track record makes it one of its category’s
best options.
Fidelity Investment Grade Bond FBNDX
This Silver-rated fund has been hurt by a bullish out-
look on credit and an overweighting in corporate
bonds. The fund has lost 0.3% thus far in 2015, lagging
81% of intermediate-term bond rivals this year. As
investment-grade corporate spreads have widened,
lead portfolio manager Jeffrey Moore has seen his
best opportunities right now in corporates, and partic-
ularly in financials, which benefit from improving
balance sheets. Moore has proved himself to be adept
at identifying pockets of relative value within a rela-
tively constrained universe. The fund also has a solid
process and one of the lowest fees in its category. K
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Ten Worst-Performing Funds
Fund Name YTD Cat Rank %
Delafield Fund 100
Longleaf Partners 100
Janus Contrarian T 99
Loomis Sayles Investment 99
Artisan International Inv 98
GoodHaven 98
Manning & Napier Equity 98
Royce Micro-Cap Invmt 98
Royce Special Equity Mult 98
Franklin Income 97
Ten Best-Performing Funds
Fund Name YTD Cat Rank %
ASTON/Montag & Caldwell B 1
Diamond Hill Small-Mid Ca 1
DoubleLine Total Return B 1
Fairholme Focused Income 1
Fidelity Overseas 1
Scotia Dynamic U.S. Growt 1
T. Rowe Price Capital App 1
T. Rowe Price Global Tech 1
T. Rowe Price Media & Tel 1
Vanguard Interm-Term Invm 1
T. Rowe Price Capital Appreciation
in a Groove
Leaders & Laggards | Robert Goldsborough