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I am adding two funds and dropping two. The new
entrants, with a Morningstar Analyst Rating of Silver,
are
Invesco Diversified Dividend
LCEAX
and Gold-
rated
DFA US Targeted Value
DFFVX
. To make room,
I am culling the small and disappointing
Royce
Low Priced Stock
RYLPX
and
Turner Midcap
Growth
TMGFX
.
Invesco Diversified Dividend has been a steady value
fund under Meggan Walsh. The fund is in the
top quintile of large-value funds for the trailing three-,
five-, and
10
-year periods. Since Walsh took over in
December
2002
, the fund has returned an annualized
9
.
5%
, versus
7
.
8%
for the Morningstar Category and
8
.
9%
for the Russell
1000
Value through Oct.
31
,
2015
.
Although dividends matter, the fund places greater
emphasis on finding companies with strong balance
sheets and healthy free cash flows. That gives the
fund greater defensive characteristics than typical
equity-income funds but a little lower yield. The
fund’s steady track record has helped it to grow to
$12
billion in assets under management.
The A shares have a
0
.
83%
expense ratio and a
5
.
5%
front load. See the facing page for more details.
I’m also adding
DFA US
Targeted Value, which is a
passive small-value fund. I’m drawn by the fund’s
low
0
.
37%
expense ratio, which makes it the cheapest
of
DFA
’s small-cap funds.
It’s actually a small/mid-cap fund. It aims to own the
cheaper half of small- and mid-cap stocks based
on price/book. It also tosses out the least profitable
companies of that subset, and it excludes heavily
regulated businesses such as utilities.
Although the word “targeted” might make you think
of “focused,” the fund actually owns about
1
,
500
stocks. The fund is different from an index fund in that
it doesn’t try to precisely match an index. Rather, it
takes a more flexible approach that allows it to trade
stocks when there is an eager buyer or seller willing
to give up most of the bid/ask spread. That trading
strategy makes the fund a better bet than most small-
and mid-cap index funds.
Meantime, Turner Midcap Growth has been dropped
from coverage. It has steadily been on the decline in
performance and assets, mirroring what’s happened
at parent company Turner Investments. The firm has
fallen from
$28
billion under management in
2008
to
$600
million today. That’s not a good sign for this fund.
Speaking of dismal performance, Royce Low Priced
Stock has been pretty dreary. The
1
-star fund changed
managers in November
2014
, replacing Whitney
George with Jim Stoeffel. Stoeffel has his work cut
out for him as the fund has had bottom-decile returns
for the past one-, three-, five-, and
10
-year periods.
K
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?
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500
features the industry’s
best and most notable funds.
Use the list to get new in-
vestment ideas and track the
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Funds From Invesco and DFA
Join Morningstar 500
Changes to the 500
|
Russel Kinnel
Summary of Changes
Add
Drop
DFA US Targeted Value
Royce Low Priced Stock
Invesco Diversified Dividend
Turner Midcap Growth
Rating Change (Upgrade)
From
To
T. Rowe Price International Discovery
´ •
Rating Change (Downgrades)
From
To
Fidelity Leveraged Company Stock
• ´
GoodHaven
´ ‰
MainStay ICAP Equity I
´ ‰
MainStay ICAP International I
´ ‰
MainStay ICAP Select Equity I
´ ‰
Royce Premier Invmt
• ´
Rating Change (Under Review)
From
To
Vanguard Energy Inv
Œ ˆ