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Morningstar FundInvestor
February 2
015
Leaders
Franklin Utilities
FKUTX
This fund’s nearly
30%
return over the past year
reflects both its managers’ straightforward strategy
of focusing on regulated utilities and the market’s
recent preference for stability and income. While
other actively managed utilities funds often invest
in nonutilities sectors like energy and telecom,
Franklin Utilities favors more caution, devoting the
vast majority of assets to utilities firms. The fund
does have some energy exposure, but it’s below the
category average and consists mostly of pipeline
firms and other infrastructure firms with more predict-
able revenue streams. While the pullback in interest
rates has rewarded utilities investors over the
past year, this fund’s strategy has allowed it to mean-
ingfully outperform its category. And over the long
run, managers John Kohli and Blair Schmicker have
executed their strategy well, delivering lower
volatility than competing utilities funds and rela-
tively high yields.
PIMCO Investment Grade Corporate Bond
PIGIX
This Silver-rated corporate-bond fund has handily
bested its category, outperforming by
2
.
7
percentage
points over the past
12
months. Despite
PIMCO
’s
recent turmoil, this fund’s process is unchanged.
Manager Mark Kiesel and his team have rebounded
from a near-bottom-quartile loss in
2013
caused in
part by an overweighting in emerging-markets bonds.
Helping to drive Kiesel’s recent performance has
been a larger stake in bonds issued by cyclical indus-
tries. This fund’s long-term track record remains
very impressive. Over the past
10
years, it has topped
more than
90%
of competitors in its category.
Harding Loevner International Equity
HLMNX
The recent environment for foreign large-growth
funds has not been kind, and Harding Loevner Interna-
tional Equity has managed capably through some very
choppy waters. Over the past year, the fund’s
7
.
7%
return is
5
.
6
percentage points better than its foreign
large-growth category. The fund’s trio of seasoned
portfolio managers has a quality bias, and they have
used stock selection to weather recent storms
with resilient stock picks, particularly in technology
and consumer defensive.
Laggards
Fairholme Focused Income
FOCIX
The fund has lost
5%
over the past year, trailing
almost all of its peers in the high-yield bond cate-
gory. With concentrated bets and a preference
for distressed bonds, this fund offers plenty of risk.
Manager Bruce Berkowitz’s bets haven’t paid off
of late. Berkowitz’s recent successes here, such as a
big stake in a
2018
Sears
SHLD
bond, have been
significantly overshadowed by hard-hit positions, such
as its Fannie Mae and Freddie Mac preferred shares.
Investors should remember that while this is a high-
yield bond fund, its concentrated positions mean that
it doesn’t move in sync with the high-yield market.
Oakmark International
OAKIX
Weighing on this large, Gold-rated foreign large-
blend fund in recent periods has been a significant
investment in developed European markets other than
the United Kingdom. The fund has been hurt by
investments in firms like
BNP
Paribas, Royal Phillips,
and Credit Suisse. The result has been a negative
2
.
5%
return over the past year, which is meaningfully
below its peer group. The recent performance is in
stark contrast to Oakmark International’s solid track
record, which has included besting more than
95%
of
its category rivals in four of the five previous years.
LKCM Equity
LKEQX
This fund has lagged the large-growth category over
the past year, with a
6
.
5%
return that is about
half its category’s average. Above-average weightings
in industrials companies, as well as in
GOOGL
, were among the culprits. Over the longer
term, however, this Silver-rated fund is a solid
choice. Manager Luther King has navigated tough
markets well, outperforming the average large-
blend fund in
2011
but also during the
2007
–
09
credit
crisis and the early
2000
s’ bear market.
K
Ten Worst-Performing Funds
Fund Name
YTD Cat Rank %
CGM Focus
100
Delafield Fund
100
FPA Perennial
100
Fairholme
100
Vanguard Precious Metals 100
Dodge & Cox Balanced
99
Dreyfus Opportunistic Sma 99
FPA Capital
99
LKCM Equity Instl
99
Oakmark Global I
99
Ten Best-Performing Funds
Fund Name
YTD Cat Rank %
Osterweis
1
Permanent Portfolio
1
T. Rowe Price Global Tech 1
Vanguard Interm-Term Bond 1
Vanguard Long-Term Invest 1
Artisan Value Investor
2
First Eagle Overseas A
2
Harbor Real Return Instl
2
Scotia Dynamic U.S. Growt
2
Vanguard Strategic Equity 2
Franklin Utilities Posts Strong Results
Leaders & Laggards
|
Robert Goldsborough