(PUB) Investing 2016

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A Conservative Bond Fund Joins the M500 Changes to the 500 | Russel Kinnel

AMG GW& K Core Bond is probably still a fine fund, but we dropped coverage when AMG switched to GW& K from PIMCO . It’s down to just $440 million in assets, too. MFS Global Equity Downgraded to Silver We lowered MFS Global Equity MWEFX to Silver from Gold because it won’t be as strong after an upcoming retirement as it is now. David Mannheim, who has run this fund with various comanagers as well as on his own since it opened in 1992 , will retire in 12 - 24 months. Roger Morley, who became a comanager on the fund in 2009 , will remain in place. And Ryan McAllister will become a comanager on this fund on Sept. 30 , 2016 . Mannheim is exceptionally seasoned and skilled, and McAllister has no portfolio-management experience yet, so the team won’t be as robust once Mannheim leaves. That said, the team will be much better than average after Mannheim retires. Morley is quite experienced and talented himself. McAllister has good credentials and will serve as a comanager for at least nine months before Mannheim departs, allowing a good transition. And the modified team will be supported by the same roster of stock analysts—which currently includes 28 U.S. specialists and 35 foreign experts— as the current team. K

I’m making two changes to the Morningstar 500 this month.

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 first addition is a new member of the Fantastic 48 . Baird Short-Term Bond BSBIX has a Morningstar Analyst Rating of Silver and is a very cheap depend- able short-term bond fund. The fund charges just 0 . 30% and has a $25 , 000 minimum investment. Mary Ellen Stanek and team have built a strong record since this fund launched in 2004 . They avoid derivatives and leverage to focus on basic investment-grade debt. At the moment, a little more than two thirds of the fund’s assets are in investment-grade corporate bonds — the rest are in mortgages. The fund is also available for a $2 , 500 minimum in No Transaction Fee platforms for an expense ratio of 0 . 55% . Bronze-rated Polen Growth POLRX has impressed with its performance since it was launched in 2010 , though the firm actually has a track record going back to 1989 . Managers Damon Ficklin and Dan Davi- dowitz are patient growth investors who look for quality growth companies such as Alphabet GOOG , Visa V, and Nike NKE . The knock on the $1 . 1 billion fund is its 1 . 25% expense ratio. Two Go Out To make room, I’m dropping Marsico Growth MGRIX and AMG GW&K Core Bond MBDFX . Marsico Growth has been mired in a long slump. That’s spurred outflows, which led to rising fees. The firm has also seen key departures among analysts and managers and a smaller staff overall. We rate the $302 million fund Neutral because of these issues. See the facing page for more details.

Summary of Changes Add

Drop

Polen Growth

Marsico Growth

Baird Short-Term Bond

AMG GW&K Core Bond

Rating Change (Downgrades)

From

To

Franklin Federal Tax-Free Income

• ´ Œ •

MFS Global Equity

New Ratings

To

Artisan Global Equity

´ ´

Polen Growth