(PUB) Investing 2015

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Ariel International Equity Joins M500 Changes to the 500 | Russel Kinnel

long slump, and it has seen about one third of assets under management leave in the past 12 months.

I’m also adding T. Rowe Price Summit Municipal Intermediate PRSMX to the Morningstar 500 . This Gold-rated fund offers a better expense ratio than most T. Rowe Price muni funds, but it requires a $25 , 000 minimum investment. Lead manager Charlie Hill has beaten four fifths of his peers over his 20 -year tenure at the fund. He avoids taking on a lot of credit risk and instead seeks to add value through sector and issue selection. It makes for a rather mild-mannered fund, but one that cautious investors will appreciate. To make room, I am dropping Wells Fargo Advantage Short-Term Municipal STSMX . Wells Fargo has dropped its no-load share classes, thus making it less appealing to the typical FundInvestor subscriber. K

I’m adding Ariel International Equity AINTX to the Morningstar 500 .

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.

The fund is run by Rupal Bhansali, a seasoned manager with an impressive resume. She’s worked for Soros Fund Management, MacKay Shields, and Oppenheimer Capital. She managed MainStay International Equity MSEAX from May 2001 to May 2011 , handily outpacing the typical foreign large- growth peer while largely matching the MSCI All Country World Index ex USA . She also runs Ariel Global Equity AGLOX and invests between $10 , 000 and $50 , 000 in each mutual fund. Bhansali describes her strategy as an all-weather approach that keeps an eye on downside protection, and she points out that her portfolios have held up well in past downturns. She looks for contrarian value plays such as Nokia NOK but also owns steadier names like Roche RHHVF . The fund has produced strong returns since its December 2011 launch, thanks in part to an overweighting in Japan that Bhansali put on early but has since reduced. The fund has enjoyed a number of winners in Europe such as Deutsche Boerse AG DB1 , Reckitt Benckiser Group 3RB , and Telefonica Deutschland Holding O 2 D. The fund is in its category’s top percentile for the trailing three years. Ariel Global Equity is in the top quartile for the trailing three years. The two mutual funds have less than $100 million in assets, but institutions have found Bhansali, and she currently manages more than $1 . 4 billion in assets across international and global mutual funds and separate accounts at Ariel. The fund’s expense ratio of 1 . 26% is decent given its small asset base. Third Avenue Value Goes Out To make room, I’m dropping Third Avenue Value TAVFX . The Neutral-rated fund has suffered a

Summary of Changes

Add Drop T. Rowe Price Summit Muni Interm Third Avenue Value Ariel International Equity

Wells Fargo Adv Shrt-Trm Muni

Rating Change (Upgrade)

From

To

T. Rowe Price High Yield

• Œ

Rating Change (Downgrades)

From

To

JHancock Floating Rate Income

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MainStay ICAP International

PIMCO All Asset All Authority Inst

T. Rowe Price New Income

T. Rowe Price Spectrum Income

Vanguard Windsor II Inv

First Eagle Fund of America

First Eagle US Value

Rating Change (Under Review)

From

To

MainStay ICAP Equity

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MainStay ICAP Select Equity

MainStay MAP

Sequoia

New Ratings

To

Janus D

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Meridian Small Cap Growth Investor

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Royce Special Equity Multi-Cap Service