(PUB) Investing 2016

2

Where to Invest in 2016 and Beyond Continued From Cover

My Favorites for 2016

Upside Capture Ratio 10 Yr

Downside Capture Ratio 10-Yr

Morningstar Analyst Rating

Expense Ratio %

Manager Tenure, Yrs (Longest)

Top Manager Ownership Level

Name

Ticker

Category

American Century Value

TWVLX

Large Value

0.97

22.3 $100k–$500k

89

90

•

American Funds New World *

NEWFX

Diversified Emerging Mkts

1.03

16.5

>$1M

96

85

Œ

Artisan Global Value

ARTGX

World Stock

1.32

8.0

>$1M

•

Artisan Value

ARTLX

Large Value

0.98

9.8

>$1M

´

Dodge & Cox Global Stock

DODWX

World Stock

0.65

7.6

>$1M

Œ

Fidelity High Income

SPHIX

High-Yield Bond

0.72

15.5

>$1M

116

71

Œ

Fidelity Low-Priced Stock

FLPSX

Mid-Cap Value

0.79

26.0

>$1M

106

102

•

Harbor Real Return

HARRX

Inflation-Protected Bond

0.57

8.0

0

•

Harding Loevner Emerging Markets

HLEMX

Diversified Emerging Mkts

1.45

17.1

$50k–$100k

111

106

•

Matthews Asia Dividend

MAPIX

Diversified Pacific/Asia

1.05

4.8 $100k–$500k

•

Sound Shore

SSHFX

Large Value

0.92

30.6

>$1M

101

105

•

T. Rowe Price High Yield 1

PRHYX

High-Yield Bond

0.74

19.5

0

Œ

Vanguard Capital Value

VCVLX

Mid-Cap Blend

0.47

7.5 $100k–$500k

129

145

´

Vanguard High-Yield Corporate

VWEHX

High-Yield Bond

0.23

7.8

$500k–$1M

•

Vanguard Inflation-Protected Secs

VIPSX

Inflation-Protected Bond

0.20

4.3

0

Œ

Vanguard Shrt-Term Infl-Prot Sec Idx

VTIPX

Inflation-Protected Bond

0.20

3.2

0

*Load fund. Data through 11/30/2015. 1 Mark Vaselkiv has between $500,000 and $1 million invested in T. Rowe Price Institutional High Yield TRHYX.

Lower-Risk Investments Value Without Much Energy or Materials Value funds have been hit across the board, but those with meaningful energy and basic-materials stakes have been hit hardest. That’s a little scary as it is tough to call the bottom, especially with growth in China slowing. So, in the less-risky bucket I’ll add value funds that don’t have much in those areas. Artisan Global Value ARTGX This recently reopened fund is one of the better ways to take advantage of bargains in the value sphere. Managers David Samra and Dan O’Keefe look for turn- arounds with healthy balance sheets. They seek companies with high returns on capital that are trading at discounts to their private market value. Today, they have only 3% in energy but a huge 40% financials weighting. That’s a bold move, but they did a great job of avoiding banks in 2008 because they were wary of leverage, among other things. The fund had its first year of underperformance in 2015 , and that led to some outflows, so they reopened the fund in the fall.

Dodge & Cox Global Stock DODWX Dodge & Cox Global Stock is a more conventional take on value investing. Its managers are patient value investors buying stocks when they suffer from bouts of unpopularity and waiting for them to rebound. The fund’s 7% energy weighting and 2% materials weighting are about in line with the category and benchmark, as are most of its sector weightings. It is a little more adventurous in emerging markets where it owns a 14% weighting versus 5% for the peer group. That has held it back lately. On the plus side, it has some of the lowest fees in the category. Sound Shore SSHFX This fund shows that focused portfolios don’t have to be high-risk. Management only owns 40 stocks, but it limits stock weightings to no more than 3 . 5% . It also avoids deep-value stocks, which tend to be higher risk/higher reward. Rather, it favors stocks that have shown some signs of recovery and have strong competitive positions. The end result is a fairly consis- tent portfolio and performance. Its desire for com- panies with competitive positions has led it away from materials and energy and into financials, tech, and