(PUB) Investing 2016

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13 Morningstar FundInvestor March 2016
Leaders
Akre Focus Retail AKREX, with a Morningstar Analyst
Rating of Silver, has continued its impressive run of
outperformance, besting 96% of its mid-growth peers
over the 12 months. Lead manager Chuck Akre and
his team have made a significant overweighting in the
financials sector this past year. Financials have
gotten hammered, but Akre’s picks like Markel MKL,
MasterCard MA , and Visa V have done quite well.
Other strong performers include retailers Dollar Tree
Stores DLTR and O’Reilly ORLY.
Columbia Dividend Income ’s GSFTX lead manager
Scott Davis has stuck to his knitting with this
large-value fund. The fund has outpaced 95% of its
peers over the past year and more than nine out
of 10 competitors over the past five and 10 years. Davis
buys steady free-cash-flow-generating firms whose
future dividends will grow commensurate with cash
flows. Meaningful contributors to outperformance
this past year have included top holdings Microsoft
MSFT and Johnson & Johnson JNJ, as well as
Public Storage PSA and insurer Chubb CB, which
recently was acquired by ACE.
Silver-rated Vanguard Short-Term Bond ’s VBIRX big
weighting in government bonds means the fund
outperforms when investors grow wary of lower-
quality corporate bonds. We’ve just had a bout
of credit selling, leading the fund to beat 97% of its
short-term bond peers the past 12 months.
Bronze-rated Hennessy Focus HFCSX has bested 96%
of its mid-growth competitors over the past year
and 98% of its category peers over the past five years.
Among the fund’s recent winners have been top
holding O’Reilly Automotive ORLY, American Wood-
mark AMWD, Markel MKL, and Alphabet GOOGL .
Laggards
Despite very strong long-term performance, Third
Avenue Real Estate Value TAREX has lagged 98% of
its global real estate competitors over the past year.
Brookdale Senior Living BKD, timberland owner and
manager Rayonier RYN, and Singapore real estate
development group City Developments have all hurt
the fund. The fund has used the weakness to boost
its positions in Rayonier and City Developments.
The fund stands out from its peers because it favors
real estate operating companies over REITS. Thus,
you’ll often find it near the top or bottom in a short
time period.
Over the past year, Silver-rated ClearBridge Aggres-
sive Growth SHRAX has trailed 95% of its large-
growth peers. That’s a marked contrast to the previous
several years, when the fund had delivered strong
performance, and it’s also a blemish on a strong long-
term track record—the fund has bested nearly two
out of every three peers in the trailing 15-year period.
Its recent weakness has come at the hands of
several culprits, including an overweighting to the
energy sector—names like Anadarko Petroleum
APC and Newfield Exploration NFX in particular have
detracted—as well as poor stock selection in the
information technology sector.
Neutral-rated PIMCO Unconstrained Bond PUBDX
has struggled over the past year, lagging nearly
eight out of every 10 competing non-traditional-bond
funds. PIMCO Unconstrained Bond’s lead manager
Marc Seidner had positioned this fund for a relatively
healthy economy. Once fears of slowing growth
in China hammered the markets, the fund’s negative
duration and exposure to credit and emerging-markets
debt resulted in underperformance. K
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Ten Worst-Performing Funds
Fund Name YTD Cat Rank %
CGM Focus 100
Dreyfus Opportunistic Sma 100
Matthews China Investor 100
T. Rowe Price Media & Tel 100
Vanguard Precious Metals 100
Eventide Gilead N 99
Fairholme 99
Fidelity OTC 99
Oakmark Global I 99
Oakmark Select I 99
Ten Best-Performing Funds
Fund Name YTD Cat Rank %
FMI International 1
First Eagle Overseas A 1
JOHCM International Selec 1
Jensen Quality Growth J 1
Mairs & Power Growth Inv 1
Permanent Portfolio 1
Vanguard Interm-Term Bond 1
ASTON/River Road Select V 2
Appleseed Investor 2
FAM Value Investor 2
Akre Focus Is at the Top of the Heap
Leaders & Laggards | Robert Goldsborough