(PUB) Investing 2016

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13 Morningstar FundInvestor April 2016
Leaders
Mairs & Power Growth MPGFX has continued to
post impressive returns in 2016, outpacing 99% of its
large-blend peers. Comanagers Mark Henneman
and Andrew Adams buy and hold financially sound firms
that deliver consistent above-average returns on
equity. The fund has a large overweighting to indus-
trials stocks, which have done well this year. Big con-
tributors to performance include capital goods firms
Graco GGG, Toro TTC, and Emerson Electric EMR—
all are up more than 14% this year. Additionally, the
fund has a large position in paint-producer Valspar
VAL , which recently announced it would be acquired
by competitor Sherwin-Williams SHW.
Silver-rated FMI International FMIJX has posted
exceptional results since its inception in December 2010
and has shown no signs of slowing down in 2016,
outperforming 93% of its foreign large-blend peers for
the year to date. The fund has approximately 20%
of assets in cash, helping it hold up well as global
stocks declined. Several of the fund’s top industrials-
sector positions such as Rolls-Royce Holdings RR .
and Smiths Group SMIN have posted solid returns.
The fund has also had an underweighting in hard-
hit financials, and those it does own—such as Fairfax
Financial FFH and Admiral Group ADR—have
done well.
Silver-rated Vanguard Long-Term Investment-Grade’s
VWESX focus on higher-quality debt makes it espe-
cially sensitive to interest-rate shifts. That, along with
its above-average duration, means this fund tends
to post strong returns when yields decline, as has been
the case this year (reflecting investors’ desire for less
risk). In fact, it has outperformed 95% of its corporate-
bond peers for the year to date.
Laggards
Bronze-rated Fidelity OTC FOCPX has lagged 98% of
its large-growth peers in 2016 because it tracks a
benchmark that is heavy in technology and healthcare.
Manager Gavin Baker invest most of the fund’s assets
in Nasdaq-listed or over-the-counter stocks—more than
70% of assets are invested in the technology and
healthcare sectors. Although the fund holds some
stocks that have done well this year such as Groupon
GRPN and Facebook FB, those bets were overshad-
owed by several stocks that were hit hard. Solar-
energy firm SolarCity SCTY and biotech firms Alexion
Pharmaceuticals ALXN, Regeneron Pharmaceuticals
REGN, and Biomarin Pharmaceuticals BMRN have all
declined more than 20% this year.
Gold-rated Artisan International Small Cap ARTJX has
struggled in 2016, trailing 99% of its foreign small/
mid-growth peers. The fund reduced its Chinese-stock
allocation as the Chinese stock market fell sharply
throughout 2015, and it increased its exposure to
Spanish and Italian stocks. So far, that bet hasn’t
worked out, as new large holdings such as Cellnex
Telecom CLNX, Melia Hotels MEL, and EI Towers
are each down more than 10% this year. Additionally,
the fund’s two largest holdings, German payment-
technology firm Wirecard WDI and Taiwanese contact-
lens producer Ginko International, have both fallen
by approximately 25%.
Gold-rated Templeton Global Bond TPINX has lagged
97% of its world-bond peers in 2016. Comanagers
Michael Hasenstab and Sonal Desai follow a contrarian
approach, showing a willingness to buy what the
rest of the market shuns. The fund has a bullish bet on
the dollar, which has hurt this year. The managers
have also avoided low-yielding sovereign bonds of many
developing countries instead focusing on emerging-
markets debt, which had dragged on performance. K
Contact Andrew Daniels at
Ten Worst-Performing Funds
Fund Name YTD Cat Rank %
Artisan International Sma 100
CGM Focus 100
Fairholme 100
Matthews China Investor 100
T. Rowe Price Media & Tel 100
Vanguard Precious Metals 100
Oakmark Global I 99
Oakmark Select I 99
Sequoia 99
Davis NY Venture A 98
Ten Best-Performing Funds
Fund Name YTD Cat Rank %
ASTON/River Road Select V 1
Artisan Value Investor 1
First Eagle Overseas A 1
Jensen Quality Growth J 1
Mairs & Power Balanced In 1
Mairs & Power Growth Inv 1
Manning & Napier World Op 1
PIMCO Inflation Response 1
Permanent Portfolio Perma 1
Royce Special Equity Mult 1
Mairs & Power Growth Has a
Hot Start to 2016
Leaders & Laggards | Andrew Daniels