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3 Morningstar FundInvestor November 2016
Torray TORYX is our one laggard. The fund got burned
on some financials and vulnerable cyclical stocks in
the 2008-09 bear market. It has bounced around quite
a bit from year to year, hurting risk-adjusted results.
Small Growth
Most long-tenured small-growth funds in the Morn-
ingstar 500 have outlegged Vanguard Small
Cap Growth Index VSGAX , including some that were
recently mired in slumps.
Neuberger Berman Genesis NBGNXstands at the head
of the pack, though it takes a fairly bumpy ride to
get there. Judy Vale and Bob D’Alelio tilt a little to the
value side, more than most small-growth funds, and
that gave the fund a real edge back in 2000–02. Worries
about the fund’s hefty $10 billion asset base have
led us to hold the rating to Bronze, but it certainly has
rewarded patient investors.
I was surprised to see Royce Premier RYPRX so high on
the list given its poor five-year returns. However, the
fund held up quite nicely in the two bear markets, and
it is actually having a good 2016. Two things have
changed about the fund over that time. First, comanager
Whitney George, whose fondness for materials stocks
was a big cause of the recent slump, was let go. Chuck
Royce has remained as the other comanager throughout
the time, however. Second, the fund long held a lot
of cash, which reduced volatility quite nicely, but a flood
of outflows has brought cash down to nearly zero. So,
the first change may have reduced risk but the second
clearly raised risk. This rocky road tempers our en-
thusiasm despite the strong record over the two full
cycles, leading us to a Bronze rating.
Small Blend
Small caps are where it is easiest to beat the index,
right? Well, in the heart of small blend, the answer is
clear as mud. Bridgeway Ultra-Small Company
Market BRSIX had the third-best Sortino ratio, Vanguard
Tax-Managed Small Cap VTMSX was fifth, and
Vanguard Small Cap Index VSMAX finished in ninth
place out of nine funds. That’s kind of strange, isn’t it?
(I have published the small-blend and small-value
tables on mfi.morningstar.com.)
Continued on Page 4
Large-Growth Funds Over 2 Full Market Cycles
Name Ticker
Morningstar
Analyst
Rating
Sortino Ratio
03/01/00
to 09/30/16
Return %
03/01/00 to
09/30/16
Manager
Tenure
(Longest),Years
Jensen Quality Growth JENSX • 0.66 6.94 23.75
Fidelity Contrafund FCNTX • 0.63 6.82 26.08
Vanguard Capital Opportunity VHCOX Π0.55 7.33 18.67
American Funds AMCAP AMCPX Π0.55 6.35 20.42
LKCM Equity LKEQX • 0.52 5.93 20.75
Vanguard Primecap VPMCX Π0.51 6.46 31.33
T. Rowe Price Blue Chip Growth TRBCX • 0.42 5.42 23.33
American Funds Growth Fund of Amer AGTHX ´ 0.42 5.29 22.92
Amana Growth AMAGX ´ 0.42 5.22 22.67
Litman Gregory Masters Equity MSEFX — 0.41 5.34 19.83
Parnassus PARNX ´ 0.40 5.17 31.83
ClearBridge Aggressive Growth SHRAX • 0.38 5.12 33.00
American Funds New Economy ANEFX Π0.30 4.01 25.75
AMG Managers Montag &Caldwell Grw MCGFX ´ 0.29 3.71 21.92
Vanguard Growth Index VIGAX • 0.29 3.79 21.83
Fidelity Growth Company FDGRX • 0.26 3.50 19.75
Harbor Capital Appreciation HACAX Π0.22 3.05 26.42
American Century Growth TWCGX ˇ 0.21 2.89 19.08
Marsico Focus MFOCX ˇ 0.20 2.81 18.83
Large-Blend Funds Over 2 Full Market Cycles
Name Ticker
Morningstar
Analyst
Rating
Sortino Ratio
03/01/00
to 09/30/16
Return %
03/01/00 to
09/30/16
Manager
Tenure
(Longest),Years
Oakmark OAKMX Π0.86 9.89 16.58
Amana Income Investor AMANX ´ 0.82 7.84 26.75
Oakmark Select OAKLX Π0.79 9.61 19.92
T. Rowe Price Dividend Growth PRDGX • 0.68 7.29 16.58
Gabelli Asset GABAX — 0.60 7.19 30.58
Weitz Partners Value Investor WPVLX ´ 0.59 6.66 33.33
American Funds Fundamental Invs ANCFX Π0.58 6.93 23.58
Longleaf Partners LLPFX ˇ 0.58 7.66 29.50
American Funds Invmt Co of Amer AIVSX • 0.57 6.25 24.58
Selected American Shares SLADX ´ 0.47 5.63 21.83
Davis NY Venture NYVTX ´ 0.45 5.45 21.00
Vanguard Total Stock Mkt Idx VTSAX Π0.39 5.00 21.83
Vanguard 500 Index VFIAX Π0.39 4.82 0.50
Dreyfus Appreciation DGAGX ´ 0.37 4.34 25.83
Bridgeway Blue Chip 35 Index BRLIX • 0.35 4.31 19.25