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As I wrote in The Contrarian, the lines between load
and no-load funds have increasingly blurred. No
matter how you buy your funds, you probably have
access to a wide array of both traditional no-load
and load firms. As the lines blur, fund companies find
they can cross them without angering their long-
standing advisor or investor bases.
More official load funds are now available in No Trans-
action Fee supermarkets. I’m taking advantage of
that change to upgrade our U.S. equity fund coverage
a bit. I’m adding two funds that typically have sales
charges that are now available with loads waived in
NTF
plans, as well as one from a traditional no-load
shop. That enabled me to get rid of three of the less
popular, more disappointing equity funds in the M
500
.
Now that deep value firm Hotchkis
&
Wiley is acces-
sible in
NTF
platforms, I’m adding
Hotchkis & Wiley
Value Opportunities
HWAAX
. The large-value fund
has a Morningstar Analyst Rating of Bronze and the
potential for strong returns when deep value is in
favor, though it does have its ups and downs. George
Davis and David Green have run the fund since its
2002
inception, and they’ve produced strong returns
that are well ahead of peers and benchmark. How-
ever, the fund did get burned in the
2008
bear market,
so know the risks before you buy. See the facing page
for more details.
I’m also adding
JPMorgan Equity & Income
OIEIX
.
This Silver-rated fund generally provides a smoother
ride than the Hotchkis fund. Its A shares are in
NTF
platforms with an expense ratio of
1
.
04%
. Manager
Clare Hart has done a strong job of balancing the
need for yield with the safety of strong balance sheets.
Thus, the fund doesn’t have the highest yield of an
equity-income fund, but it has better downside protec-
tion. In fact, its
2008
loss was in the best decile of
the large-value Morningstar Category.
American Century Select
TWCIX
is the third new
addition. Keith Lee and his team look for companies
with strong competitive advantages that can produce
stable growth. They combine fundamental analysis
with quantitative momentum data to build a fairly
focused growth portfolio. The fund has
54
holdings
and
38%
of assets in the top
10
names. They own
many of the best-known growth names in their top
10
including
Apple
AAPL
,
Amazon.com
AMZN
,
Face-
book
FB
, and
Alphabet
GOOG
.
Three Go Out
To make room, I’m dropping three funds that
have shrinking assets due to poor to middling returns.
Neutral-rated
Buffalo Small Cap
BUFSX
has
been losing managers, assets, and our confidence,
so it is going out.
Royce Micro-Cap
RYOTX
is a
1
-star fund that has
seen some manager changes of its own, so it is also
being dropped.
Finally, I’m cutting
Baron Opportunity
BIOPX
,
a pricey
2
-star fund that has not lived up to its
earlier promise.
K
What is Morningstar
FundInvestor
500
?
The Morningstar FundInvestor
500
features the industry’s
best and most notable funds.
Use the list to get new in-
vestment ideas and track the
funds you already own.
FundInvestor
subscribers have
access to one-page monthly
reports on all 500 funds on
mfi.morningstar.com. Just
type in the name or ticker of
the fund in the search box.
Two Load Funds Join the M500
Changes to the 500
|
Russel Kinnel
Summary of Changes
Rating Change (Upgrades)
Ticker
From
To
Fidelity Four-in-One Index
FFNOX
• Œ
Fidelity Puritan
FPURX
´ •
Vanguard Growth & Income
VQNPX
‰ ´
Rating Change (Downgrades)
From
To
Natixis ASG Global Alternatives
GAFAX
´ ‰
Weitz Hickory
WEHIX
• ´
Weitz Partners Value
WPVLX
• ´
New
Ratings
To
American Century Select
TWCIX
´
Hotchkis & Wiley Value Opps
HWAAX
´
Litman Gregory Masters Intl
MSILX
´
Loomis Sayles Gbl Eqty and Income LGMAX
´
Parnassus
PARNX
´
PIMCO RAE Fundamental Adv PLUS PFSDX
‰
USAA Income
USAIX
‰
Vanguard Tax-Managed Bal
VTMFX
Œ