504 / 708
22
I am adding
Harbor Small Cap Value
HASCX
and
Clear-
Bridge Mid Cap
SBMAX
to the Morningstar
500
.
Both funds have Morningstar Analyst Ratings of Bronze.
Harbor Small Cap Value is a strong-performing fund
run by Atlanta-based Earnest Partners. Manager
and firm founder Paul Viera runs a proprietary model
that examines success characteristics of various
industry sectors to find what figures will point to win-
ning names. Then market and macroeconomic
conditions are factored in and finally fundamental
analysis winnows the field to a portfolio of about
60
stocks. The fund charges
0
.
85%
for “institutional”
shares that have a
$50
,
000
minimum and
1
.
22%
for investor shares with a
$2
,
500
minimum. See the
facing page for more details.
ClearBridge Mid Cap is a mid-blend fund that is
available in No Transaction Fee supermarkets without
a load. The fund has been run by Brian Angerame
and Derek Deutsch since May
2005
. The fund is nearly
a pure play on mid-caps as it doesn’t have much
outside its market-cap band. Management looks for
stocks trading at a discount to the Russell Midcap
Index but with superior returns on equity and cash flow
yield. Performance at the
$2
billion fund has topped
the mid-blend peer group but slightly lagged the bench-
mark. The fund charges an expense ratio of
1
.
20%
.
To make room, I am dropping Neutral-rated
Natixis
ASG Global Alternatives
GAFAX
and unrated
AMG
River Road Select Value
ARSMX
.
Natixis
ASG
Global Alternatives has fallen in our
opinion, and we lowered it to Neutral from Bronze in
August. We think the fund’s methodology for repli-
cating hedge fund returns by running regressions on
hedge fund factors is too indirect and lacks expo-
sure to some important less-liquid strategies. In addi-
tion, performance has been declining.
I’m also dropping
AMG
River Road Select Value
because it’s a small fund that’s getting smaller. Over
the past
12
months, the fund has had more than
$60
million in outflows and is down to a total of
$40
million. The drop in assets has led fees to bounce
to
1
.
50%
today from
1
.
43%
a few years ago. The fund
has a
3
-star Morningstar Rating, so it’s not like returns
have been a disaster. But the flow trend makes me
wonder how much longer the fund will be around.
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.
2 Bronze-Rated Stock Funds Join the
Morningstar 500
Changes to the 500
|
Russel Kinnel
Summary of Changes
Add
Drop
ClearBridge Mid Cap
AMG River Road Select Value
Harbor Small Cap Value
Natixis ASG Global Alternatives
Rating Change (Downgrades)
Ticker
From
To
Invesco Equity and Income
ACEIX
´ ‰
Invesco Growth and Income
ACGIX
´ ‰
Rating Change (Under Review)
From
To
Fidelity Leveraged Company Stock FLVCX
ˆ´
New
Ratings
To
American Beacon Intl Equity
AAIPX
´
Fidelity Independence
FDFFX
‰
Fidelity Mortgage Securities
FMSFX
•
Harbor Small Cap Value
HASCX
´
Lateef
LIMAX
‰
Royce Total Return
RYTRX
´
T. Rowe Price Growth & Income PRGIX
´