(PUB) Investing 2016

2

The Corrections Continued From Cover

The 25 Hardest-Hit

Total Rtn % YTD (Mo-End)

Total Rtn % Rank Cat YTD (Daily)

Return % (Day to Day) 05-17-15 to 01-31-16

Morningstar Analyst Rating

Name

Ticker

Notes

—

Vanguard Precious Metals and Mining

VGPMX

-2.20

91

-37.24

A rebound in commodities could be explosive for this fund.

DFA Emerging Markets Value

DFEVX

-5.64

50

-29.96

A low-cost play on emerging markets.

´

Matthews China

MCHFX

-14.88

91

-29.21

More pure play on China, which hurt in January.

´

Harbor Commodity Real Return ST

HACMX

-1.79

44

-28.50

Invests in energy, agriculture, and metals.

•

PIMCO Commodity Real Ret Strat

PCRDX

-1.62

34

-28.47

Same as above Harbor Fund.

•

Vanguard Emerging Mkts Stock Idx

VEMAX

-6.00

63

-28.09

Soon to have one third of assets in China.

´

— —

Delafield Fund

DEFIX

-9.06

97

-27.73

A big materials bet is killing this fund.

Oppenheimer Gold & Special Minerals

OPGSX

0.48

71

-27.27

A closed gem with a bias toward China and India.

Vanguard Energy

VGENX

-1.51

3

-27.04

A pending manager change gives us pause.

ˇ

Dodge & Cox International Stock

DODFX

-9.40

97

-26.66

Great fund, bad stretch. I may buy some more.

Œ

Lazard Emerging Markets Equity

LZOEX

-2.82

3

-26.57

Contrarians betting on Russia.

•

—

Fidelity Select Energy Portfolio

FSENX

-2.30

5

-26.23

A little more exploration exposure than Vanguard Energy.

Longleaf Partners

LLPFX

-7.27

88

-25.87

Taking shots on many fronts, but good managers remain.

•

Vanguard Capital Value

VCVLX

-9.89

98

-25.42

A long slump has moved us to downgrade the fund.

ˇ

Parametric Emerging Markets

EAEMX

-4.43

23

-25.16

Dials back weighting in China, Korea, and Brazil.

´

T. Rowe Price New Era

PRNEX

-3.23

8

-24.31

New manager shifted to defensive stocks.

ˇ

FPA Capital

FPPTX

-7.11

66

-24.20

Big energy bet has hurt this normally cautious fund.

´

T. Rowe Price Emerging Markets Stock

PRMSX

-5.93

60

-23.95

Growth bias helped in 2015, but less so in January 2016.

´

Harding Loevner Emerging Markets

HLEMX

-5.15

38

-23.34

A little less risk than most emerging-markets funds.

•

Longleaf Partners International

LLINX

-10.93

98

-23.21

We downgraded this fund in July 2015.

ˇ

Fairholme

FAIRX

-11.35

99

-22.87

Financials and Sears have taken a hit.

•

Eventide Gilead

ETGLX

-12.49

97

-22.74

Biotech and small-cap tech are down.

ˇ

—

Westport Select Cap

WPSRX

-10.99

98

-22.33

United Rentals down 33% in January.

Oppenheimer Developing Markets

ODMAX

-5.82

56

-22.32

A closed gem with a bias toward China and India.

•

—

Bogle Small Cap Growth

BOGLX

-10.35

97

-22.27

Tech and biotech hurt in January 2016.

Data as of 01/31/2016.

full-throttle on oil production in order to hurt its chief rival for dominance in the Middle East.

big emerging markets are commodities producers and therefore have been pummeled by the plunging prices. Many of the Latin American countries, as well as Russia and many Middle Eastern nations, are dependent upon commodities. Vanguard Emerging Markets Stock Index VEMAX is down 9% annualized over the past three years, 5% over the past five, and up 2% over the past 10 . Things are not quite as bleak for some of my favorite Asia funds such as Matthews Asia Dividend MAPIX , which has slightly positive trailing returns owing to its defen- sive nature and a lack of exposure to Brazil and Russia. Developed-Markets Equities and High Yield— A Correction Stocks and high-yield bonds have given back a chunk of their gains going back to the 2009 rally, but if

Bankruptcies and bond defaults are soaring in com- modity-land. Arch Coal filed for bankruptcy in January, making it the fourth major coal company to do so. This has put stress on high-yield and bank-loan funds as energy is a significant part of their markets. Although most conservative high-yield funds have been light on energy, they’ve all felt some degree of pain. Investors have likewise responded by pulling billions out of bank-loan and high-yield funds to the tune of $20 billion and $11 billion, respectively, in 2015 . Emerging Markets—A Regular Bear Market It stands to reason that slowing Chinese growth would have an impact on emerging markets, as China is the largest one. But it goes beyond that. Many other