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Westport
WPFRX
and
Westport Select Cap
WPSRX
are merging into mediocre Hennessy funds, so
I am dropping those funds from the Morningstar
500
.
In their place I’m adding
Hotchkis & Wiley Mid-
Cap Value
HWMAX
and
Lord Abbett Value Opportu-
nities
LVOAX
. Although both are load funds, they
are available in some big No Transaction Fee networks
without the load.
Lord Abbett Value Opportunities is a mid-blend fund
with a Morningstar Analyst Rating of Bronze. The fund
has been one of the top performers in its Morningstar
Category since it was launched at the end of
2005
and since managers Tom Maher and Justin Maurer
took over in early
2007
. (Maher has been a comanager
since inception.) The pair looks for small- and mid-
cap stocks that are trading near the low end of histor-
ical valuations but are still producing revenue or
profit growth. That explains why they end up in the
middle of the Morningstar Style Box.
The fund charges a
1
.
17%
expense ratio and has a
total of
$2
.
7
billion in assets.
Hotchkis
&
Wiley Mid-Cap Value plies the same deep-
value strategy found in other Hotchkis funds. It is
a sound strategy, but performance is often feast or
famine. In the past decade it had four top-decile
returns and four bottom-decile returns. But it has
seasoned managers, and this may be the low ebb
for deep value. If that’s true, then this would be a
good point to buy. Generally, a couple of years
of underperformance is a better time to buy than a
couple of years of outperformance.
Managers George Davis, James Miles, and Stanley
Majcher have been managing the fund since
1997
.
Majcher and Davis also have more than
$1
million of
their own money invested. The Bronze-rated fund
has an expense ratio of
1
.
27%
. See the facing page for
more details.
Fidelity Extended Market Upgraded
We upgraded
Fidelity Extended Market Index
FSEMX
to Gold from Silver.
The Premium shares now charge just
0
.
07%
and
require a
$10
,
000
minimum investment, a fraction
of the median mid-cap peer. That also compares
favorably with its closest index competitors in terms
of price and initial-investment requirements.
Vanguard Extended Market Index
VEXAX
follows
a similar index, but its Admiral shares charge
0
.
09%
at a
$10
,
000
minimum.
For those who can't meet that minimum, the fund's
Investor shares carry a
0
.
10%
expense ratio and
require only a
$2
,
500
initial investment, which offers
an edge over Vanguard's Investor shares at
0
.
22%
.
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.
Lord Abbett Value Opportunities Joins
the Morningstar 500
Changes to the 500
|
Russel Kinnel
Summary of Changes
Add
Drop
Hotchkis & Wiley Mid-Cap Value
Westport
Lord Abbett Value Opportunities
Westport Select Cap
Rating Change (Upgrade)
From
To
PIMCO High Yield
´ •
Fidelity Extended Market Index
• Œ
Rating Change (Downgrades)
From
To
Fairholme
• ‰
Rating Change (Under Review)
From
To
Fidelity Leveraged Company Stock
´ ˆ
New
Ratings
To
Janus Research
‰