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Morningstar FundInvestor
July 2016
Leaders
Mairs & Power Small Cap
MSCFX
has posted
excellent results since its inception in
2011
, and it has
shown no signs of slowing down in
2016
, outper-
forming
98%
of its small-blend peers for the year to
date. The fund, which has a Morningstar Analyst
Rating of Silver, has benefited from strong stock selec-
tion in the industrial machinery space—
Oshkosh
OSK
,
Donaldson
DCI
, and
Toro
TTC
are all up more
than
20%
this year. The fund’s sizable positions in
real estate investment trusts
Agree Realty
ADC
and
Physicians Realty Trust
DOC
have also contributed
to results this year, as both are up more than
28%
.
Silver-rated
Harding Loevner International Equity
HLMNX
has outperformed
96%
of its foreign large-
growth peers for the year to date. Thanks to its
managers’ quality bias and focus on valuation and
risk control, it does well during volatile times. That’s
been the case this year—the fund’s
3
.
5%
gain is
significantly better than the
3
.
0%
loss for the typical
fund in the foreign large-growth Morningstar Category.
The fund has benefited from an underweighting
to hard-hit financials, specifically banks, and those
that it does own—such as
Itau Unibanco Holding
ITUB
and
Turkiye Garanti Bankasi
—have done well.
Gold-rated
Vanguard Wellesley Income
VWINX
has
outperformed
90%
of its peers in the allocation–
30%
to
50%
equity category in
2016
. This fund is more
rate-sensitive than most peers, as evidenced by its
above-average duration, and that has contributed to
results as interest rates continued to decline this
year. In addition, security selection in the investment-
grade corporate-bond space has been strong. The
fund has further benefited from having an under-
weighting in noncorporate bonds.
Laggards:
Bronze-rated
Touchstone Sands Capital Select
Growth
PTSGX
has lagged
99%
of its large-growth
peers thus far in
2016
. This concentrated fund has
nearly
75%
of assets in technology and healthcare
stocks, and that has hurt results this year. The fund’s
large biotech exposure has dragged on results—
Regeneron Pharmaceuticals
REGN
,
Alexion Phar-
maceuticals
ALXN
, and
Incyte
INCY
are all down
more than
25%
this year. Additionally, tech firms
Palo
Alto Networks
PANW
and
Baidu
BIDU
are down
more than
12%
. The fund also owns
LendingClub
LC
,
which has lost more than
60%
in
2016
amid alleged
misconduct and regulatory probes.
Bronze-rated
American Century International Growth
TWIEX
has trailed
83%
of its foreign large-growth
peers for the year to date. Stock selection in the indus-
trials sector has been poor: The firm owns airlines
International Consolidated Airlines
IAG
,
Qantas
QAN
,
and
Ryanair Holdings
, all of which are down more
than
19%
this year. Despite having an underweighting
in poor-performing financials, the fund owns banks—
such as
Intesa Sanpaolo
,
Bank of Ireland
BIR
, and
Barclays
—that have been pummeled. Additionally,
some of the fund’s tech bets, such as
Wirecard
WDI
and
Worldpay Group
WPG
, are down more than
12%
this year.
Bronze-rated
PIMCO Total Return
PTTRX
has lagged
85%
of its intermediate-term bond peers in
2016
.
The fund’s managers expected the Federal Reserve to
raise interest rates throughout
2016
, and as a result
it had a lower duration than its typical peer. That’s
proved costly as global market uncertainty caused
the Fed to hold off on interest-rate hikes thus far. The
fund’s bullish bet on the U.S. dollar by shorting
emerging-markets currencies has also proved costly,
though the Brexit-inspired flight to quality spurred
a dollar rebound.
K
10 Worst-Performing Funds
Fund Name
YTD Cat Rank %
Oakmark Global I
99
Sequoia
99
Touchstone Sands Capital
99
Dreyfus Opportunistic Sma 98
FPA US Value
98
Fidelity Leveraged Compan 98
Matthews China Investor
98
Oppenheimer Global A
98
Eventide Gilead N
97
Janus Balanced T
97
10 Best-Performing Funds
Fund Name
YTD Cat Rank %
Artisan Value Investor
1
Champlain Mid Cap Adv
1
Fairholme Focused Income 1
Jensen Quality Growth J
1
Mairs & Power Growth Inv 1
Matthews Emerging Asia In 1
PIMCO Inflation Response
1
Permanent Portfolio Perma 1
Vanguard High-Yield Tax-E 1
American Century Equity I
2
Mairs & Power Small Cap
Leads the Way
Leaders & Laggards
|
Andrew Daniels