(PUB) Investing 2016

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13 Morningstar FundInvestor September 2016
Leaders
T. Rowe Price Dividend Growth PRDGX, with a
Morningstar Analyst Rating of Silver, has been a top
performer for the year to date, outperforming 93%
of its large-blend peers. Strong selection in the health-
care sector helped returns: Drug manufacturer
Pfizer PFE , healthcare plan provider UnitedHealth
Group UNH, and medical-device producer Becton
Dickinson BDX are all up double-digits this year. The
fund has also benefited from its lack of exposure
to poor-performing biotech stocks. The fund’s over-
weighting to strong-performing industrials stocks
has also contributed to results. Top individual picks
in the industrials space include business-services
firm Iron Mountain IRM and security firm Tyco Inter-
national TYC, both of which are up more than
35% this year.
Vanguard International Growth VWIGX has outper-
formed 90% of its foreign large-blend peers so far
in 2016. This fund tends to invest more in emerging-
markets stocks than most of its peers. That hurt
the fund in 2015 and for the first two months of 2016
as emerging stocks fell sharply, but it has helped
propel the fund back to a top-decile year-to-date
return through Aug. 31, 2016, thanks to the rebound
of semiconductor firm ARM Holdings ARM , online-
retailer MercadoLibre MELI, and apparel designer
Adidas ADS, which are up more than 40% this year.
Gold-rated Loomis Sayles Investment Grade Bond
LIGRX has outperformed 96% of its intermediate-
term bond peers in 2016. Longtime manager Dan Fuss
follows a contrarian approach and has flexibility
to invest in non-U.S.-denominated fare, including both
sovereign and corporate debt. The fund’s corporate
credit stake has helped drive results this year, thanks
in part to rebounding commodity prices, which boosted
the prices of its energy and basic-materials holdings.
Laggards
Neutral-rated Marsico Focus MFOCX has lagged
96% of its large-growth peers thus far in 2016.
The fund is down 2% this year, but the S&P 500 is up
about 8%. The main culprit has been bad stock
selection in the healthcare sector. Drug manufacturer
Pacira Pharmaceuticals PCRX is down nearly 50%
this year, while biotech Regeneron Pharmaceuticals
REGN dropped more than 30% before it was sold
in March. Additionally, the fund’s overweighting to
poor-performing consumer cyclicals stocks such
as Chipotle Mexican Grill CMG and Nike NKE have
dented results.
Bronze-rated Litman Gregory Masters Select Inter-
national MSILX has lagged 98% of its foreign large-
blend peers in 2016. Several European financials such
as Lloyds Banking Group LLOY and Credit Suisse
CSGKF have plunged more than 20% this year. The
fund also has a substantial overweighting to the
United Kingdom, and the British pound’s decline in
the wake of the Brexit vote hurt the fund’s returns
in U.S. dollar terms. The fund also owned Valeant
Pharmaceuticals International VRX—which plum-
meted over questions about its business strategy—
and Allergan AGN, which fell after its planned merger
with Pfizer PFE fell apart.
Fidelity Puritan FPURX has underperformed 81% of its
allocation—50% to 70% equity peers for the year to
date. Subpar stock selection in the healthcare sector—
most notably Allergan—and the industrials sector
dragged results down. However, it is still in the top
decile for the trailing three- and five-year periods. K
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10 Worst-Performing Funds
Fund Name YTD Cat Rank %
Artisan International Sma 100
Matthews China Investor 100
Matthews India Investor 100
FPA US Value 99
Sequoia 99
Litman Gregory Masters In 98
Oakmark Global I 98
Scotia Dynamic U.S. Growt 98
Touchstone Sands Capital 98
Dreyfus Opportunistic Sma 97
10 Best-Performing Funds
Fund Name YTD Cat Rank %
Artisan Value Investor 1
Champlain Mid Cap Adv 1
Longleaf Partners 1
Mairs & Power Growth Inv 1
Permanent Portfolio Perma 1
Vanguard High-Yield Tax-E 1
Champlain Small Company A 2
Fidelity New Millennium 2
Franklin Income A 2
JOHCM International Selec 2
T. Rowe Price Dividend Growth
in a Groove
Leaders & Laggards | Andrew Daniels