(PUB) Investing 2015

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World Value Funds May Be Due for a Rebound Tracking Morningstar Analyst Ratings | Russel Kinnel

is hardly a disaster. The fund looks for anything that’s cheap including distressed securities, merger-arbi- trage plays, and just plain-old low valuation stocks. A smattering of holdings in energy and basic materials have stung. The fund has been rated Silver since our ratings launch in November 2011 . It has a 51% cumulative return versus 47% for the category, and that’s really not bad for a lower-risk fund. Oakmark Global OAKGX is about flat for the year, which puts it in the third quartile for the year to date. Clyde McGregor and Rob Taylor have had some nice winners like Alphabet GOOG (nee Google) and Allianz ALV but also some laggards like Oracle ORCL and Union Pacific UNP . The fund had a Gold rating on the Nov. 15 , 2011 , launch of our ratings. It boasts a 64% cumulative return versus 47% for the world-stock category since then. The fund is now limited to those who invest directly through Vanguard, so it is open but in a less convenient way. Tweedy, Browne Value TWEBX is also a bit like Dodge & Cox in its application of value. We first issued a Silver rating on the fund on Jan. 13 , 2012 . The fund is down about 2% for the year to date as winners like Heineken HEIO have been offset by laggards like Royal Dutch Shell RDS .A and Standard Chartered STAN . The fund tends to be fairly defensive with its cash stake and wary of price risk. The fund is up about 44% since we gave it that Silver rating, and it lags the world-stock average of 47% . Tweedy, Browne Worldwide High Dividend Yield Value TBHDX is also rated Silver. It has lagged its sibling over the short and long haul partly because it doesn’t hedge currency exposure. The fund’s yield mandate has also given it a heavier foreign-equity weighting ( 70% ) compared with its sibling’s 50% weighting, and that has also held back returns. It received a Silver rating on Jan. 13 , 2012 , but it has lagged by a wide margin. It has returned 26% versus 47% for the peer group. K

Don’t give up on your global value manager. Value has lagged growth lately, and that means that most value investors in the world-stock Morningstar Category have rather-pedestrian records of late. But I wouldn’t worry too much about a short-term slump, as growth and value are always taking turns at the head of the tables.

What Are Morningstar Analyst Ratings?

Our ratings are chosen for long- term success. Analysts assess a fund’s competitive advantages by analyzing people, process, parent, performance, and price. They do rigorous analysis and then submit their ratings to a committee that vets their work for thoroughness and consistency.

Let’s look at six of our world-stock Morningstar Medalists with a value tilt.

Artisan Global Value ARTGX has the best year-to- date performance of the six funds presented here, with returns about flat and just below the category average. This fund has a Morningstar Analyst Rating of Silver and is closed to new investors, and I would certainly hold on here. The fund has found some of the better financials and tech stocks while largely avoiding energy and materials disasters. Our first rating on the fund was a Silver in June 14 , 2012 . Since that time, the fund has gained a cumulative 59% compared with 47% for the average world-stock fund. Dodge & Cox Global Stock DODWX is down 4% for the year to date owing to big losses in top- 20 holdings HP HPQ , Time Warner TWX , and EMC EMC , as well as its high emerging-markets weighting. The fund’s strategy often features buying solid businesses that are in a slump with the idea that merely returning to past profitability levels will be good for a nice pop. However, these examples illustrate that it doesn’t always work or, at least, there are bumps along the way. This fund had a Gold rating when we launched the ratings in November 2011 . Since then, the fund is up 64% versus 47% for the category. Franklin Mutual Global Discovery TEDIX is all about playing defense, so it’s a little disappointing that the fund is in the red for the year, though negative 1%